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Wednesday, August 29, 2007

Gulfstream Folly Could Be Peanuts Compared To This

- Magna Entertainment may be bleeding money, but Frank Stronach continues to live on the high horse, with an average pay package, since 2002, of $47 million, according to the Toronto Globe and Mail. And his bank accounts will grow even fatter after Magna International shareholders approved Stronach's plan to accept a $1.5 billion investment from the Russian aluminum magnate Oleg Deripaska who, with a net worth of $13.3 billion, ranks #40 on Forbes Magazine's list of wealthiest people, and is thought to be the richest man in Russia. Deripaska's RUSAL is said to account for 16% of the world's aluminum production. Deripaska will own 42% of a new holding company that will control Magna Int'l, the same percentage as will Stronach.

But while Frankie is ceding his sole control over the giant automobile parts maker that he built, to his everlasting credit, from a single machine shop in Toronto, under the terms of the deal, Mr. Stronach stood to gain $150 million up front from the sale of half his consulting contract, as well as millions more in annual dividends. [Wall Street Journal] There had been word of opposition to the deal amongst major shareholders, and the Globe and Mail suggested that they could at least have organized to obtain a better deal for themselves.

If they were smart, in return for a yes vote, they'd have demanded that Mr. Stronach be stripped of one of his more dangerous powers: He can sell control of Magna without the other shareholders receiving a dime. In Bay Street parlance, Magna has no “coattails” – nothing to ensure that all shareholders are given equal treatment if there's a takeover.

Had they been organized, minority investors could have proposed an elegant compromise. You want this deal, Mr. Stronach? Fine, but we want coattails. We want to know that if someone's going to pay $150 for your shares, they're going to offer the same for ours.
Stronach sees the deal as an opportunity for him to become involved in the Russian automaking industry, which he sees as an emerging and potentially lucrative market, and Deripaska is well-connected with Vladamir Putin, and married to the daughter of former president Boris Yeltsin. But Russia is a scary place.....even for those who have moved outside its borders. And Deripaska has been described as being "ruthless," and recently had his U.S. visa rescinded amid concerns about the accuracy of statements he made in a meeting with the Federal Bureau of Investigation. So Frankie seems to be venturing into a territory that is potentially far more treacherous than his ill-fated reconstruction of Gulfstream Park.

- Laurel Park's takeout reduction has failed to stimulate handle, and the track will not experiment with takeout cuts in the near future, Laurel's top official said Tuesday.
Lou Raffetto, chief operating officer of Laurel's owner, the Maryland Jockey Club, said the analysis of the five-day period from Aug. 15-19 revealed that average all-sources handle on Laurel's races was down from $1.66 million a day to $1.52 million a day, a decline of 9.2 percent. Raffetto said he used those five days because they matched up to last year's meet on an apples-to-apples comparison, based on the number of races run, the number of runners on the cards, and the number of turf races run.
......
"The little guy, it doesn't appear as if he cares" about the takeout level, Raffetto said. "The big guy may look at Laurel at August and say that it's great we cut the takeout, but we're only doing $1.5 million a day, and it's hard to play in those small pools." [Daily Racing Form]
The problem with the pool sizes is kind of a Catch-22; you're trying to attract big handle with lower takeout, but that extra handle would distort the small pools so as to nullify any takeout reduction for big bettors. As far as small bettors go, the effect of the extra money to churn would only be felt over a far longer period of time than the ten days of this meeting. And, as Raffetto also pointed out, it didn't help that the meet competed with Saratoga. I have to plead guilty for not supporting this worthy experiment in large part because of that. And that's something that I, and other horseplayers who did the same, may come to regret in the future when tracks point to this meeting and ask why they should reduce their take.

- And back to Magna for a moment, I saw this disclaimer in the company's press release announcing the deal.
This press release may contain statements that, to the extent that they are not recitations of historical fact, constitute "forward-looking statements" within the meaning of applicable securities legislation.......We use words such as "may", "would", "could", "will", "likely", "expect", "anticipate", "believe", "intend", "plan", "forecast", "project", "estimate" and similar expressions to identify forward-looking statements. [CNN Money]
The folks at Siro's might want to consider posting a similar warning at its handicapping seminars.

8 Comments:

Anonymous said...

alan,

getting back to the whip issue for a minute. from the DRF article on today's race by Criminologist:

"Criminologist crushed a 10-year-old inner turf course record when she rolled through the stretch under Edgar Prado to win Wednesday's $81,700 Perfect Sting Stakes........
Prado guided Criminologist off the hedge around the second turn, and though he took his stick out in the stretch, he never used it."

cheers

alan said...

Thanks for pointing that out. Another commenter noted recently that Prado is judicious with his use of the whip, and I've since definitely noticed that to be the case.

Anonymous said...

...and meanwhile back at Saratoga, today two young women were handing out Capital Play information at the Union Ave. main gates....

Michael said...

today two young women were handing out Capital Play information at the Union Ave. main gates....

Standard guy queston: Where they hot?

Anonymous said...

Michael -

Standard chick response: They looked cooler than I did in this humid weather ;)

I think that they were from the all female PR firm that Capital Play had at their last press conference…..The one where O’Farrell mentioned that he was dissed in ‘some blogs’ – hence the missing reference in the new CD and conference of bringing all ‘the pretty girls to the track, so that the men will follow.’ He did tell a story about a female horseplayer dragging a guy to the track and they got married blah, blah, blah…

I am way off topic and my husband said to let you know that he though that the ‘girls were a seven out of ten.’

Back to the form to see if the Del Mar shipper in the 6th at Saratoga should be considered.

alan said...

Did he really say that they dispensed with the "pretty girls" thing because it was dissed in blogs?

They are a persistent bunch, aren't they?

Lenny said...

I wrote an editorial to the DRF regarding the Laurel takeout and it may be published this week. To summarize I think Laurel needs to overhaul its wagering menu. Get rid of the P6, which has been nothing short of a joke, add rolling doubles and pick threes and lastly make the P4 the last four races or just pick a race to start it on like they used to. When the P4 was races 4-7 everyday it was less complicated. Now one day it starts on race 6, then the next day race 7, then race 5, its almost impossible to know when it starts, especially when the DRF says last four races, when that is not always the case. I also think that if they insist on having a "jackpot" wager on the menu they should bring back the Twin Trifecta. At least that had six figure payoffs from time to time.

Lenny

Anonymous said...

Right, just when you think you've heard it all LATG posts news of Frank Stronach's plan to get into the auto mfg business in Russia. Now we know where he gets his racetrack design and renovation schemes from, unemployed Russian industrial design genuises.The sooner he exits the American racing scene the better. Just imagine him with any kind of ownership of NY racing?! Stronach could make even Empire look good.
/S? Green Mtn Punter