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Showing posts from November, 2008

Magna's Latest Scam

Frank Stronach may have thought that he'd avoid too much press comment by putting out a press release on his latest chimerical reorganization plan the day before Thanksgiving, but, unfortunately for him, the media and the markets were still wide awake.
The plan, in the unlikely event it's actually completed, would leave Stronach firmly in control of the race track company Magna Entertainment, and would take another Stronach entity, MI Developments, and its unhappy minority shareholders, out of the business of sinking ever more money into Frank's flawed vision. But it's a long way from putting out a press release to realizing the plan in practice.
Even though the press release only appeared online at 11:26 this morning, it's already been well reported by, among other, Ray Paulick, the New York Times,the Thoroughbred Times and the Toronto Globe and Mail.  Generally, the story has been presented as a way for the minority shareholders in MI Developments, who have been mi…

Dead Heat at Aqueduct - But Everyone Gets the Same Payoff in the Exotics

Nothing all that unusual about a dead heat in racing. But I suspect there were a lot of Pick 4 and Pick 6 winners at Aqueduct today who were thinking that something was a bit amiss when they saw the payoffs.
Here's what happened: Yield Bogey, at 6-1, and Blues Street, at 15-1, dead-heated for the win in the ninth and final race at the Big A.  The win payoffs were a predictable $7.80 for Yield Bigey and $15.00 for Blues Street; remember, the payoffs are calculated by first subtracting the takeout, then setting aside enough to repay the amounts bet on the winners, then dividing what's left into two equal pots which are then allocated among the winning tickets for each horse, so bets on the horse going off at higher odds will get a higher payout. Similarly, there were two different payoffs for the exacta, tri, superfecta, late daily double and Pick 3, in each case reflecting the different amounts bet.
But when it came to the Pick 4 and the Pick 6, there was only a single payoff.  I…

Magna Update: A Shorter Leash

In yet another sign that time is running out for Magna Entertainment, the company announced today that it had secured one more extension of its $40 million revolving credit loan from the Bank of Montreal.  But the real news was that, instead of the one-month extensions that Magna had been able to get the past few months, this one was for only 11 days, until next Friday, November 28th.
For those few days of grace, Magna had to pay another $250,000 in fees, as they have each time the loan has been extended recently. Looking at their balance sheet, I'm not sure where they were able to find even that much spare cash.
Everyone knows that Magna doesn't have the cash to pay off the loan, to say nothing of the $200 million-plus that Magna Entertainment -- the race track company -- owes to its parent, MI Developments.  My guess, and it's only a guess, is that Magna Entertainment's new bankruptcy advisors, Miller Buckfire & Co., have found some asset that they think they can s…

Churchill Downs Inc. v. Magna -- By the Numbers

I'm not particularly a fan of Churchill Downs Inc.; their take-no-prisoners war with the owners and trainers over the division of online wagering revenue hurts horsemen and chases away potential bettors.
But, in contrast to the other major players in racing, one has to give Churchill credit for knowing how to run a business.  Compared to NYRA, just emerging from bankruptcy, and Magna, whose every financial report brings it closer to collapse, Churchill has a solid balance sheet, enough cash on hand so that not only can it be sure of opening the doors every day, but, mirabile dictu, there's even a profit for the shareholders. However, the way that Churchill earns its profit makes an important statement about the state of racing today.  Increasingly, Churchill's profits are coming not from live racing but from internet wagering and slot machines.
To see how profits are shifting, we need to loook at some numbers from Churchill's latest quarterly financial report, filed with…

Magna: the Gory Details

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As I noted last night, Frank Stronach's Magna Entertainment Corp. has posted another large quarterly loss.  For the quarter that ended on September 30th, Magna lost $48.4 million, bringing its accumulated losses over the last decade to a staggering $626 million total (over $300 million of those losses incurred just in the past three years).
Now that I've had a few hours to analyze the latest quarterly report, it's more apparent than ever that this is an enterprise on serious life support.  The distressing outlook for Magna that I discussed when their mid-year report came out in August has, if anything, become even worse.
In a sign of increasing desperation, Magna announced that it had hired the investment banking firm Miller, Buckfire & Co. to advise on restructuring, sales of assets and possible joint venture options.  Miller, Buckfire isn't your ordinary investment banker, doing whatever kind of deals it can put together.  No, these guys specialize in salvaging fai…

Magna - Another Day, Another Loss

Magna Entertainment Corp., Frank Stronach's vehicle for running racetracks, has just posted its third quarter results (cleverly released at 10 pm, so as, I suppose, to minimize public attention).
The good news, such as it is, is that the level of quarterly losses has more or less stabilized. Magna lost $48.4 million in the quarter ending September 30, 2008, compared to $49.8 million in the same quarter last year.  I guess that's progress.  For 2008 to date, though, through September 30, Magna's total loss is $116.1 million, compared to $70.8 million for the first nine months of 2007.
The quarterly report is filled with lots of detail, shedding some light on how long Magna can hold out without giving up its "crown jewels at Gulfstream, Santa Anita and Maryland. It's too late in the evening for me to decipher the teeny tiny print on my screen right now, but I'll take a longer look at the numbers tomorrow.

Belmont Trend Continues on Downward Path

The New York Racing Association has just released the final numbers for the recently concluded Belmont meet.  As one would expect, they're  all down from the same meet last year, at least when calculated on a per-day basis. This year's meet had four more racing days than in 2007, so some of the aggregates are higher, but that doesnt hide the negative trend.
According to the NYRA press release, the average all-sources daily handle for the Belmont meet was 8.3% below last year's figure, coming in at $9.63 million per day.  NYRA did not say how much of that handle was bet on-track or through NYRA's own phone and internet account system; those are the bets that contribute the most to NYRA and to horsemen's purses. Off-track bets, whether through OTBs, other tracks, internet sites, etc., pay much less of the takeout to NYRA.  Trends around the country suggest that on-track wagering is falling at a faster rate than total handle, so the hit to NYRA's bottom line could …