- 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!