Tough times at Magna

[NoCal Boy]

Magna stock is plummeting today. As I write this it is .52/share, down nearly 28% today. Debt is enormous at something like $700MM and asset sales are very difficult to consummate now given the poor market conditions.

[bane]

Lets put all our money together, buy stocks, oust Stronach, sale Gulfstream, suspend racing at Pimlico, and start to rebuild racing?

[Spectacular Sid]

http://www.health-in-action.org/library/pdf/Shaken%20Baby/Images/Waa%20cry%20baby2.jpg

What a shame!

[rrbauer]

Not to worry if you work at Santa Anita. They're selling the paintings and other memorabilia from the Turf Club at several auctions and should clear enough go make the payroll for the rest of the meet.

[takeout]

Lets put all our money together, buy stocks, oust Stronach, sale Gulfstream, suspend racing at Pimlico, and start to rebuild racing?
Don’t forget if slots pass in Maryland you have to pay DeFrancis for the next 20 years. :faint:

[MAGICHORSEMAN]

Does Frank still pay himself 30+ million per year. Has he had any other relatives work for magna for 2 months and leave the company and get a million buck severance pay? His nephew once worked in management for two months for a million bucks plus 2 months salary.

I think is spending alot of time with a new energy drink after making Gulfstream into a low rank track.

[andicap]

Lets put all our money together, buy stocks, oust Stronach, sale Gulfstream, suspend racing at Pimlico, and start to rebuild racing?

just for grins does anyone know how many shares there are outstanding. What would it cost to buy to the company at say 80 cents a share?. (a nice premium to today's price.)

That's a nice-sounding idea -- but do you really think horseplayers would agree on ANY course of action for the company?

Can the company even be saved?

I mean could you sell enough racetracks -- or the property that is -- to pare down debt?
I haven't seen the company's 10-K or anything but I'm betting you would get only a fraction of what they paid. How much cash flow is the company generating? What's the debt-to-cash flow ratio? Can you possibly get it down to a reasonable level?
Can you make the slots at GP work? Did they just administer it badly or are circumstances against them so much that slots can never work at GP?

(I mean, who screws up making money on slots? When I looked into buying an OTB/bar in Canada -- seriously, I'll write a long entertaining post about it someday; i had some major ideas on bringing in new customers -- the VLTs were the major draw. Real cash cows.)

How to repair the damage?

But of course, isn't it ALL of our fantasies to run a racetrack?

I wrote a column for the Blood-Horse about 15 years ago that talked about how interactive TV wasn't going to happen overnight. (there was huge hype about it at the time and I edited a publication about cable TV so I know how difficult it was going to be for a racing channel to get any kind of distribution.). In it, gave some of my ideas at the time for how to grow the sport as alternatives for just waiting around for a racing channel.

We all have them. Better promotion, better PR, more innovative marketing, better customer service. It's not just about the racing. Remember, marketing is more important than the product. Otherwise, people would drink Sam Adams much more than Bud. (Tho I'm not minimizing the product -- it still must meet minimal standards.)

[PaceAdvantage]

No matter how much you buy, doesn't Frank still own enough himself to retain controlling interest?

[kenwoodallpromos]

FOLD!!LOL!!

[rrbauer]

No matter how much you buy, doesn't Frank still own enough himself to retain controlling interest?

Depending on your perspective, Frank is either in-control or out-of-control.

Either way, it's the same difference!

[magwell]

Depending on your perspective, Frank is either in-control or out-of-control.

Either way, it's the same difference! Meanwhile its an hour till post time :)

[Spectacular Sid]

More about Frank's woes...but nothing about his ho's.

http://www.palmbeachpost.com/search/content/sports/epaper/2008/03/09/a1c_gulfstream_0309.html

[dutchboy]

129,000,000 class A shares X .80 = $103,200,000



just for grins does anyone know how many shares there are outstanding. What would it cost to buy to the company at say 80 cents a share?. (a nice premium to today's price.)

That's a nice-sounding idea -- but do you really think horseplayers would agree on ANY course of action for the company?

Can the company even be saved?

I mean could you sell enough racetracks -- or the property that is -- to pare down debt?
I haven't seen the company's 10-K or anything but I'm betting you would get only a fraction of what they paid. How much cash flow is the company generating? What's the debt-to-cash flow ratio? Can you possibly get it down to a reasonable level?
Can you make the slots at GP work? Did they just administer it badly or are circumstances against them so much that slots can never work at GP?

(I mean, who screws up making money on slots? When I looked into buying an OTB/bar in Canada -- seriously, I'll write a long entertaining post about it someday; i had some major ideas on bringing in new customers -- the VLTs were the major draw. Real cash cows.)

How to repair the damage?

But of course, isn't it ALL of our fantasies to run a racetrack?

I wrote a column for the Blood-Horse about 15 years ago that talked about how interactive TV wasn't going to happen overnight. (there was huge hype about it at the time and I edited a publication about cable TV so I know how difficult it was going to be for a racing channel to get any kind of distribution.). In it, gave some of my ideas at the time for how to grow the sport as alternatives for just waiting around for a racing channel.

We all have them. Better promotion, better PR, more innovative marketing, better customer service. It's not just about the racing. Remember, marketing is more important than the product. Otherwise, people would drink Sam Adams much more than Bud. (Tho I'm not minimizing the product -- it still must meet minimal standards.)

[Spectacular Sid]

But you're buying the debt along with the shares, right? That's the big burden.

[garyoz]

But you're buying the debt along with the shares, right? That's the big burden.

you assume the liabilities. That's the issue--debt maturities, interest expense and debt covenants.

[dutchboy]

Bankruptcy will get rid of most of the debt or the threat will force lenders to accepts X amt on the dollar. Accept 20-40cents on the dollar now or nothing to 10cents after bankruptcy is filed. It will also eliminate bad leases, bad labor contracts. Pension obligations can be passed to the the government pension guaranty fund/taxpayers.

Since most tracks were built years ago cities have built up around them so the real estate is worth a small fortune just based on location. What could the land Aqueduct or Belmont sits on be sold for?


But you're buying the debt along with the shares, right? That's the big burden.

[racefinder2]

Im pretty sure this is one of those tiered-class stocks,( have to research it), where even if you owned/bought a majority of the A-common shares, the voting shares (class B or something)would still be in control of mgmt decisions; in other words, the non-voting class stock is really just an investment in the current mgmt and the stock price. And the voting class shares are almost always controlled by inside holders/directors, making a takeover or change from outside almost impossible.
Does anyone own this stuff, have an annual rept, or know if Im correct here???

[Shenanigans]

But, but, but what's to become of Thistledown????:p

[dutchboy]

The Magna web site has their 2007 Q3 report on their web page. It is a 30+ pdf report if you want to look at it and the class A or B are shown on page 10 I believe.



Im pretty sure this is one of those tiered-class stocks,( have to research it), where even if you owned/bought a majority of the A-common shares, the voting shares (class B or something)would still be in control of mgmt decisions; in other words, the non-voting class stock is really just an investment in the current mgmt and the stock price. And the voting class shares are almost always controlled by inside holders/directors, making a takeover or change from outside almost impossible.
Does anyone own this stuff, have an annual rept, or know if Im correct here???

[racefinder2]

I have been going over that report, p.56 outlines the voting rights of the class A vs class B shares. Thanks again.

[thespaah]

Don’t forget if slots pass in Maryland you have to pay DeFrancis for the next 20 years. :faint:Slots? I was under the impression that the governor and the MD legislature drove the last nail in the coffin containing slots in MD...

[thespaah]

No matter how much you buy, doesn't Frank still own enough himself to retain controlling interest?depends who owns the highest percentage of outstanding stock..If for example Stronach owned 20% of the total stock and another company owned 20.1%, they would have controlling interest as the majority stock holder provided the other 59.9% were spread out with no one else holding a larger share than the other two ....I have no idea what Stronach's interest is..
It's an intriguing idea..Buying out Stronach....Clearly that compnay did far to much with too little money in the bank for a rainy day. MEC has far too many properties with suspect ROI..

[takeout]

Slots? I was under the impression that the governor and the MD legislature drove the last nail in the coffin containing slots in MD...
There’s going to be a people vote on in November. If it passes they say it will be another year before they actually get going. I’m not at all sure it will pass even with a people vote. I don’t care one way or the other and am not in Maryland but I do agree with those that can’t see any reason to make track owners (and former track owners) rich off of slot money. Indeed, I don't think track owners should get squat.

http://www.baltimoresun.com/news/local/bal-te.md.poll16jan16,0,5549890.story?page=1

[takeout]

I have nothing against Magna, but a lot of their problems look to be largely of their own making. The deal they made with DeFrancis in MD gives new meaning to the word bizarre. That wasn’t a deal it was suicide. As another poster pointed out to me in another thread, both parties have to get something they want for a deal to go through, but I can’t imagine what could’ve been THAT important to Magna, especially if that something wasn’t in some way guaranteed. By contrast look at the deal Penn Gaming made to buy Charles Town. Roughly 17 mil with slots a done deal. Both outfits bought rundown tracks but what a difference.

The sad part to us as horseplayers is that it doesn’t matter who owns these places or if they have slots or not. We’re still an afterthought at best.

[thespaah]

There’s going to be a people vote on in November. If it passes they say it will be another year before they actually get going. I’m not at all sure it will pass even with a people vote. I don’t care one way or the other and am not in Maryland but I do agree with those that can’t see any reason to make track owners (and former track owners) rich off of slot money. Indeed, I don't think track owners should get squat.

http://www.baltimoresun.com/news/local/bal-te.md.poll16jan16,0,5549890.story?page=1
I have to ask...Why the apparent hostility toward track owners? Without them, there's no racing. The sport dies.

[thespaah]

I have nothing against Magna, but a lot of their problems look to be largely of their own making. The deal they made with DeFrancis in MD gives new meaning to the word bizarre. That wasn’t a deal it was suicide. As another poster pointed out to me in another thread, both parties have to get something they want for a deal to go through, but I can’t imagine what could’ve been THAT important to Magna, especially if that something wasn’t in some way guaranteed. By contrast look at the deal Penn Gaming made to buy Charles Town. Roughly 17 mil with slots a done deal. Both outfits bought rundown tracks but what a difference.

The sad part to us as horseplayers is that it doesn’t matter who owns these places or if they have slots or not. We’re still an afterthought at best.
OI have maintained all along that hgorse racing in most states is merely tolerated. Hypothetically, if pari-mutuel wagering was not legal and ther were no tracks, how mant states ,especially those with either casion gambling or VLT's would approve wagering on horses?...Ya knwo what my answer is? ZERO....A big fat friggin donut..Why? IUMO Horse raciong is seen as only a source of revenue for state govts. With the gazillions pouring into state coffers form casinos and VLT's , why the hell would they need money from pari- mutuels? The short answer is , they wouldn't..I thnk most states are just waiting for tracks to go out of bsusness. At least those tracks the states can't shove VLT's into.
Yes, this my cynical side writing this..But I get my cynicism from the way soem states deal with their in state tracks..Right now the most racing friendly state looks to be PA..Two tracks built( Chester Doens and Presque Isle) and opened in the last two years. Slots going in them all. A robust OTB system(Penn Nat'l)...Good stuff....

[onefast99]

OI have maintained all along that hgorse racing in most states is merely tolerated. Hypothetically, if pari-mutuel wagering was not legal and ther were no tracks, how mant states ,especially those with either casion gambling or VLT's would approve wagering on horses?...Ya knwo what my answer is? ZERO....A big fat friggin donut..Why? IUMO Horse raciong is seen as only a source of revenue for state govts. With the gazillions pouring into state coffers form casinos and VLT's , why the hell would they need money from pari- mutuels? The short answer is , they wouldn't..I thnk most states are just waiting for tracks to go out of bsusness. At least those tracks the states can't shove VLT's into.
Yes, this my cynical side writing this..But I get my cynicism from the way soem states deal with their in state tracks..Right now the most racing friendly state looks to be PA..Two tracks built( Chester Doens and Presque Isle) and opened in the last two years. Slots going in them all. A robust OTB system(Penn Nat'l)...Good stuff....
You must be pretty new to the gambling biz. Pa had to do what they did to compete with neighboring states especially NJ, if they didnt there would be a lot of very unhappy people living in that state. Pa has presque but by no means will it ever compete with the NY tracks or even Monmouth Park in NJ. Presque is a middle of no-where VLT depository. The purses will be nice until they build a real casino somewhere close. The fact that horse racing is the father of gambling should be no secret to your darkside. People will always love the horses the object now a days is to make as much as you can when you have the people at your track so offer a casino and nice shopping and plenty of food. Philly park is not a crown jewel of any of this and Presque Isle will never be either. So your theory on how horse racing isnt needed is pretty much a poor observation at best.

[takeout]

I have to ask...Why the apparent hostility toward track owners?
Because I don’t see very many of them trying to do the right thing for their customers or the game. Maybe watching the fiasco in MD for the last 15 years has me a bit jaded.

[bane]

I have nothing wrong with Churchill, Mountineer, Keeneland, Harrah's and so on. But Magna and NYRA I'm not happywith.

[trying2win]

How can Frank Stronach be so smart in running his Magna auto parts division, but be so dumb when it comes to running racetracks? The same old news of Magna tracks losing money year-after-year doesn't surprise me. I get the impression that the so-called Magna experts figure that raising takeout rates (like someone said they did at Gulfstream recently), charging for live video, joining forces with the Churchill Downs group, restricting access to ADWs, charging all sorts of fees to enter their tracks, and raising the already exorbitant concession fees after losing money each financial quarter, is the way to boost revenues substantially. WRONG! IN MY OPINION. Here's a tip for Frankie or any one of his flunkies who may be reading this post. IMPLEMENT A PARADIGM SHIFT. DO THE OPPOSITE TO THOSE 'REVENUE BOOSTING IDEAS' you estimated would be brilliant in the past.

Attention Frankie! One of the great laws of the universe is 'GIVE AND YOU SHALL RECEIVE'. Magna Entertainment has been doing just the opposite of that for years. Start by lowering takeout rates by at least 20 % right across-the-board at all your Magna tracks, and watch your revenues skyrocket!


T2W

~"Stupid is as stupid does"

--Forrest Gump's mother

[PaceAdvantage]

Frankie got screwed many times over. Slots either never materialized for many of the tracks he purchased, or they failed to produce the kind of revenue needed to save the ship.

That, plus real estate values have plummeted....which doesn't help if he's looking to unload some of his racetrack portfolio in order to pay off some debt.

[onefast99]

Frankie got screwed many times over. Slots either never materialized for many of the tracks he purchased, or they failed to produce the kind of revenue needed to save the ship.

That, plus real estate values have plummeted....which doesn't help if he's looking to unload some of his racetrack portfolio in order to pay off some debt.
Commercial real estate has remained pretty stable. GP is worth a lot of $ that is why he is building the stores and restaurants to lure more people into his facility. Santa Anita is worth its weight in gold, some of the smaller tracks are still pretty strong as far as the real estate value goes.

[Spectacular Sid]

He always focused on the real estate value...one reason, he said, that the Fair Grounds didn't interest him.

[northerndancer]

How can Frank Stronach be so smart in running his Magna auto parts division, but be so dumb when it comes to running racetracks?

He was able to capitalize on the patents developed by the engineers that he sponsored. Then he took and used his leverage with vendors to verically intergrate his auto parts division.

He has tried going vertical by the purchase of AmTote and that has failed.

The biggest mistake he made was not understanding that the racing industry is a three headed monster not like a typical business transaction where you have two sides. The error in judgement was that of the horsemen and the players. This is strange because he is a horsemen but I guess did not really understand the depth at which the track owner has to deal with the horsemen in order to put a product out.

In relation to slot facilities they chose to sell the first facility that had slots....Flamboro Raceway in Ontario.

Bottomline when you continue to overpay for properties like he did with Lone Star, Thistledowns, Great Lakes & Gulfstream Park then you end up in a negative position.

[Hosshead]

Because of Magna's problems, do you think that players' accounts at XpressBet are in jeapordy ?

[rrbauer]

Because of Magna's problems, do you think that players' accounts at XpressBet are in jeapordy ?

Why would they be?

[northerndancer]

Because of Magna's problems, do you think that players' accounts at XpressBet are in jeapordy ?

It is not the players at Expressbet that should be worried but the players at other facilities such as Twinspires and other wagering outlets.

I am not sure when this stated to happen maybe with the NYRA bankruptcy that the courts have decided to ignore the fact that wagering funds are not for corporate use it is not the organizations non interest bearing line of credit.

If you think back to NYRA many of the wagering outlets got stuck holding an empty bag.... these simulcast outlets (tracks as well as IRG's of the world) did not receive the funds they had coming to them.

If you are a simulcast outlet that is waiting on a settlement from MEC then you should be scared very very scared as you could be next to hold the empty sack.

I believe it is PTC that is calling for a single nationwide clearinghouse of all wagers and maybe the MEC situation willl be the impetus to force that upon the powers that be..........

Get tied on it will be a bumpy ride!!!!!