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Tuesday, November 14, 2006

24/7 Slots

- I didn't realize that the casino at Pocono Downs, and therefore I suppose the rest of those which will open in Pennsylvania, are open 24 hours a day, seven days a week. CEO Robert Soper said, "Hopefully, we'll never close again." That's sick! It reminds me of a story I once read about a Denny's Restaurant that intended to finally close one year on Christmas day, but they couldn't find the keys to lock the place up. And another thing - only one-third of the machines at Pocono are in a non-smoking area. Oh man, can you imagine this place on a Tuesday morning at 5:30 A.M. in the smoking section? And you think I'm hardcore because I like to go to Aqueduct at 4 PM in the dead of winter for simulcasting?

Elsewhere in the state, Magna's sale of the Meadows Racetrack has finally closed; the company received $175 million, with another $25 million due once a permanent racino opens. The closing allows Magna to fully repay $112 million to MI Developments, the real estate spinoff from Magna International (the automobile parts company), that owns a controlling share in Magna Entertainment Corp (the racetrack company).

If this all sounds like a cozy family affair, it seems that's not exactly the case. Magna (the racetrack company, heretofore to be referred to as MEC) faced some severe financial penalites from MI Developments (MID) if the sale had been delayed any further. ...As a result of MEC failing to meet certain deadlines specified in the MEC Bridge Loan...the interest rate for all amounts under the MEC Bridge Loan was increased by 2.5% per annum effective November 7, 2006. [CNW Telbec]. Whatsmore, MEC would have been assessed a $500,000 penalty had the closing gone beyond Nov 17. This is what MID's CEO John Simonetti has to say about MEC:

"Once The Meadows transaction closes, non-core asset sales will have enabled MEC to retire over $250.0 million of debt...However, MEC still has significant work to do in order to bring its debt and interest expense down to acceptable levels. Given our significant equity investment in MEC, we continue to evaluate whether, and to what extent, MID should participate in MEC's ongoing recapitalization efforts. And in this respect, I believe that no alternative should be ruled out."
Not exactly a vote of confidence, and anything but a guarantee of future funding. MID is also financing Gulfstream's slots facility, at interest of 10.5%! I wonder how MID treats companies that they're not associated with! It seems to me that MEC is little more than a company that's completely beholden to a real estate corporation which owns 96% of its voting rights. MID explains its investment in MEC thusly:
MID’s relationship with MEC provides the Real Estate Business with the opportunity to participate in the development or redevelopment of MEC’s lands and properties, including those used in its core racing and alternative gaming operations.
Oh yeah, I'm sure horse racing is a huge priority in the boardroom at MID, y'think? Nice to know that MEC, and thus MID, will be a partner in New York racing should Empire Racing get the franchise. I wonder if NYTHA President Richard Bromze was aware of all of this when he accused NYRA of conducting a "fire sale" of NY racing assets.

While the money starts to flow at Pocono, a battle with more significant implications is taking place in Philadelphia, where five companies are battling over the right to build two stand-alone parlors there. Philly will be the largest city in the country with casinos once they're built.

Back to Magna (the racetrack company); on Wednesday, Gulfstream will become the first in Broward County, Florida to open its slots parlor in a soft opening; promotion efforts will commence the day after a gala opening on Thursday. They'll have only around 500 machines to start, and the tracks there are all limited to 1,500 by law. That gives you an idea of just how massive the racino at Yonkers will be when it has its full complement of 7,500 slot machines!

8 Comments:

Pete from Gowanus said...

Just catching up on the blog after meeting a harrowing deadline. Some thoughts from the last week:

Re the Dubai flap, check out 20/20 on Friday night. My friend Jason Levin was one of the folks interviewed about "The Dark Side of Dubai," should be interesting!

My own personal take on the Bernardini retirement is to basically agree with the idea that it's absurd. The Sheikh ain't gettin' his billion back so what's the point?

The only possible reason I see for it is that they think maybe Bernardini really isn't that good and that Invasor and Discreet Cat are better so why not retire him relatively unexposed?

No surprise to see various industry sources get their panties in a twist trying to protect/defend the Sheiks' position. Isn't he kind of like the fish poker player that the pros send a limo to pick up? Kudos to the DRF for not kowtowing. As for the Bloodhorse, not so much. . .

Film Maker's one of my favorites -- here's to her!

And Alan, do you think I'd look good with Mike Score's haircut?

alan said...

>>And Alan, do you think I'd look good with Mike Score's haircut?

Not sure, though I thought it might be a good look for your dad. For you, I thought something more along the lines of Mark Messier.

Superfecta said...

I think they've handled the slots well at Delaware Park (i.e. in a way that I don't have to see them as a horse racing fan, but can enjoy the semi-decent restaurants they bring)...it will be interesting to see how it goes over at Philly Park.

Pete -- I recently moved from Park Slope and miss the Waterfront Ale House (and the Gowanus Yacht Club) -- nice to see a familiar place name.

Pete from Gowanus said...

Thanks Alan, for that painful hair loss reminder!! I guess it's true that the hair comes from the dam side. . .

Superfecta, where did you move? There are rockin' beer bars all over this town. I'm going to be in THE GATE later, to have a few pops before the Detroit Cobras show and (hopefully) toast my Hollywood Pick Six score. . .

Green Mtn Punter said...

Alan, I thought MEC dropped out of the Empire Racing syndicate due to financial problems? I still don't like the Churchill Downs presence in Empire, either. CD is making a big play to become the permanent home of the Breeders Cup; hope the BC Committee nixes that idea in short order. CD is too beholden to the KY breeders who, in turn, would do the NY breeding industry no favors. Let's keep NY racing in the hands of those whose interests are most clearly tied to it's success, i.e., NY racing industry people, including NYRA, who have done a super job with the lousy hands the NY pols have been dealing them for the past 50 years. Besides, competition is good for the industry, and NY must remain right at the top of the heap
in order for the thoroughbred industry elsewhere to prosper!

Superfecta said...

Pete -- I used to live around the corner from The Gate, lovely place. I'm near Philly now, which has ludicrous liquor laws, but some fine brewpubs and a great Belgian beer bar called Monks.

I do miss Bierkraft, but hey, at least I'm closer to the track I visit most often (Delaware Park)!

alan said...

GMP - I'm not aware of Magna dropping out; if anyone has a link to story that they have, please send it along.

Green Mtn Punter said...

Alan, I searched DRF archives for a story on Magna dropping out of Empire and found none. I guess it might have been a story speculating that Magna might be eased out of the Empire syndicate due to MEC's poor recent operating history, the Gulfstream debacle, Magna's controversial image in the industry, not to mention Stronach's autocratic personality. With CDI, Woodbine, Delaware North, Scientific Games, NYTHA,et al, also in the mix, it will be an interesting Board of Directors, to say the least! Who will end up in the driver's seat? Given the politics involved, and the skillful way Empire has played it's hand so far, I would have to put the future book on Empire as an even money favorite at this point, unless the Ad Hoc Committee comes in with nothing short of a papal blessing of NYRA's bid. For many reasons, it will be a lot easier for Spitzer to go along with Empire, the new kid on the block - code name "Reform Racing Group", than with NYRA, one of Spitzer's favorite whipping boys, won't it? Is there really any hope that NYRA could still prevail? Would love to hear it if you have a rosier scenario!