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Sunday, November 04, 2007

Sweet and Sour Stronach

- Still reveling in his Breeders' Cup Distaff win with Ginger Punch, it was another good weekend on the track for Frank Stronach, and a particularly sweet one at that. His Adena Springs homebreds Sugar Shake and Sugar Swirl both won stakes races on Sunday for trainer Bobby Frankel.

Sugar Shake won the nine furlong Turnback the Alarm at the Big A with what couldn't be much easier of a trip. She stalked Darley's disappointing Folk, making her first start since fading to last in the Alabama, and was virtually handed the race when favored Altesse checked out on the backstretch with a broken rein. Folk was done rounding the turn; Sugar Shake inherited the lead, and held on in a not particularly dazzling performance, coming home in 13.45; final three-eighths in 39.41. This filly has never really been the same since she won a G2 and the G1 Santa Maria at Santa Anita last winter. She seemed to like that surface, but she won't find that natural dirt course at Santa Anita anymore. Victory Pool was third, and it seems to me via my unscientific observations that quite a few horses that last raced at Presque Isle Downs, as Victory Pool did, are doing pretty well in their next starts.

Sugar Swirl was a similar style of winner in Churchill's six furlong Very Subtle Stakes; she also stalked the pace and took over turning for home, and scored by three, at odds of 4-5. Pletcher's G City Gal, considered the only threat as the 7-2 second choice, faded to last.

Both Sugar Shake and Sugar Swirl are by stallion sons of Deputy Minister who stand at Stronach's Adena Springs - the latter is by Touch Gold, and Sugar Shake is by Awesome Again (the latter, according to the Adena website, the only Breeders' Cup winner to himself sire four Breeders' Cup winners). Frankie has certainly built an impressive racing/breeding machine to be sure. Unfortunately, the same can't be said of his racetrack empire, which continues to struggle along.

Late last week, Magna Entertainment announced its latest losing quarter, ended September 30, this one to the tune of $49.8 million. That is compared with $47.8 million, or 44 cents per diluted share, for the same period a year ago. [Baltimore Sun] Magna's auditors repeated its past assertion that the company's future as an ongoing concern is in doubt.

Stronach has been acting as the CEO of the company since the abrupt departure of Michael Neuman, whose main contribution in his four months on the job was to tell Santa Anita horsemen that Magna wouldn't fix their backstretch as previously promised. (Stronach subsequently stated that they would.) Frankie is evidently not having an easy time finding a permanent replacement for Neuman, telling the investors' conference call: "If any one of you in the investment community know of a person who in your opinion would be quite capable to be a CEO, I would very much like to hear of it." [Canadian Press] So if any of you are interested, please drop him a line.

The company has agreements to sell Great Lakes Downs (R.I.P.) and Portland Meadows, and indicated, without providing any details, that it has taken inquiries from potential buyers of Remington Park in Oklahoma City and Thistledown racetrack near Cleveland. But concern remains that the situation will grow so desperate that Magna will be forced to consider the sale of its prime properties, Santa Anita, Laurel/Pimlico, and Gulfstream.

With the exception of Remington Park, which derives much of its revenue from slot machines, the racetracks that the company is attempting to sell are not profitable, and the proceeds from the sales likely will not make an appreciable dent on the company's balance sheet, which lists $1.2 billion in assets compared with the company's market capitalization of $213 million. [Daily Racing Form]
Gulfstream was identified as the main reason for the company's continuing woes.
"The primary contributor to our weak financial result this quarter was Gulfstream Park, as its slots operation continues to underperform," chief financial officer Blake Tohana told the call.

"The average daily net win per machine was only $74 for the quarter. This must be improved." [Canadian Press]
The company is hoping that a new law permitting on-site ATM's will help, and has hired a veteran gaming executive in Steve Calabro as its VP of Gaming Operaions to help turn the floundering casino around; and Tohana added:
"Steve has already identified multiple improvement opportunities for Gulfstream Park's slots operation, including implementing a more effective and targeted marketing approach, changing out game types and denominations and creating a dedicated video poker area." [CNN/Money]
But things are so bad there that, as confirmed during the conference c all, Gulfstream's racino actually lost money in the quarter without even having that pesky horse racing around to subsidize! Maybe this is one racino that needs horse racing to bail it out!

But as is his style, Frankie continues to profess optimism for the company, in part due to the somewhat brighter outlook for slots in Maryland.
"I just invested $20 million - that means I believe in the future, and we have a lot of excess real estate and I have absolutely no worries that MEC will be a great company."
In fact, the $20 million was a stock purchase by one of his estate-planning vehicles, so don't expect to see him brown-bagging it to the races anytime soon. I don't know if 'ironic' is the right word, but it would certainly be something if Stronach's controversial razing of Gulfstream Park ultimately proved to be Magna's undoing. Some might offer that 'poetic justice' would be a more fitting description.

- Naissance Royale took the G2 Las Palmas at Santa Anita on Sunday for Christophe Clement, now 9 for 19 with eight stakes wins in the past year in California.
Naissance Royale was the first starter for Clement in Southern California since this summer at Del Mar, when In Summation and Rutherienne each won grade I races. [Bloodhorse]
Like Sugar Shake, Naissance Royale had last raced in the Spinster Stakes at Keeneland, and that one is shaping up as quite a key race. Two more horses who came out of that race, Rolling Sea and High Heels, ran 1-2 respectively in Saturday's Chilukki Stakes, and Lady Joanne ran a very respectable 4th in the BC Distaff last week. Another Spinster filly, Asi Siempre, brought $3 million from the Sheikh at the lively Fasig-Tipton sale on Sunday.

- Awesome Again, the 1998 Classic winner, has sired BC winners Wilko (2004 Juvenile), Ghostzapper (2004 Classic), Round Pond (2006 Distaff), and Ginger Punch (2007 Distaff).

5 Comments:

ljk said...

NY franchise post by Tom Precious at Bloodhorse.com with Bruno sounding somewhat conciliatory.

Precious has done a great job in breaking news on this story.

Late Scratch said...

Good catch, ljk, plus this quote from today's franchise article in Newsday:

'Spitzer "believes that it is in the interest of racing ... for there to be a seamless transition" from the current NYRA franchise to whoever gets the new one, spokesman Paul Larrabee said.'

"(W)hoever get the new one"!! Wow, that's sure a different tune. It would seem that the Gov's people have been making nice-nice with Bruno's.

ljk said...

Both comments make me believe the NYRA land claim eventually trumps everything and both Bruno and Spitzer believe it's possible the bankruptcy judge could shut down racing Jan 1.

On another topic, first I read here that "Magna's auditors repeated its past assertion that the company's future as an ongoing concern is in doubt." Then on Moran's blog I read a rumor of Churchill buying Gulfstream. Why would they want both Miami tracks, especially with Gulfstream's problems? And Churchill seems a little racino resistant to me.

I keep thinking that someone with some $$$$ and a vision could turn Hialeah into the Saratoga/Keeneland/Del Mar of the winter and put Gulfstream (and Magna)out of it's misery. You'd think that the Breeder's Cup would like a South Florida destination. How about a BC/Keeneland Association purchase of Hialeah?

Maybe I could get Dakota Fanning to make my pitch;)

alan said...

ljk - Right on about Tom Precious. He certainly seems to have a mole in high places.

Churchill buying Gulfstream? Hmmm....not really buying that. Like the Hialeah idea though, but I suppose that won't happen if and until Dade County approves slots.

ljk said...

I know that the Hialeah idea is more philanthropy than good business (but I did say that it would take someone with $$$$).

I just think the S Florida market is ripe for the taking and what's happened to Hialeah is a real shame.

I don't believe that racing requires slots for success and I think Del Mar, Keeneland, Saratoga, Oak Tree/Santa Anita, and Churchill prove it. Top notch racing at great venues doesn't need slots to succeed.