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Family owned and controlled businesses face challenges because of difficulties in passing firms on to succeeding generations of the family. Tax issues are a common problem, but the biggest challenges involve finding effective managers among the family and the needs for new capital that diminishes family control. How family members view the company over time create problems for sustainability. Individuals who establish firms tend to view it as a business enterprise; their children tend to see it as supporting the family; and multigenerational family businesses tend see it has providing status in the community. These latter priorities can interfere with profit and reinvestment objectives and endanger long-term sustainability. As a consequence of these kinds of factors, only about 30% of family firms are passed to a second generation and only 13% reach a third generation. This brings us to the challenges facing media firms. Three big companies—News Corp., Viacom, and New York Times Co.— a...

Magna Entertainment, the company that operates Frank Stronach's race track empire, announced late Friday that it is in default on its loans from PNC Bank to the Maryland Jockey Club, Pimlico and Laurel.  In addition, Magna also disclosed that it has notified Wells Fargo Bank and the Bank of Montreal that it is in default on their loans as well. While, according to the Magna Entertainment press release, none of the affected lenders have as yet commenced legal action to secure their claims, the lenders have reserved their right to do so at any time.  This means that the choice of whether, and where, to enter bankruptcy may no longer be for Stronach to make. In the words of the old Tennessee Ernie Ford song, every day Magna is another day older and deeper in debt.  It can't be long now. The ultimate parent company of the Stronach conglomerate, auto parts supplier Magna International, recently reported a loss of $148 million for 2008. Losses at the peak of Stronach's pyramid s...

Magna Entertainment just announced that Jerry Campbell has resigned as a member of the Board of Directors. I don't know the background, but it's safe to assume that he may just be trying to get out ahead of the bankruptcy.  Who needs all that tsuris? In addition to Magna's other troubles, Campbell's resignation means that Magna Entertainment is no longer in compliance with the Toronto Stock Exchange rule that requires at least three "independent" directors on a company's audit committee. Good luck trying to find another "independent" businessperson who wants to sign on to this particular ship of fools.

Well, we all pretty much knew it was coming, but today's announcement that Magna Entertainment (the race track company) and MI Developments (the real estate company) are abandoning their much-ballyhooed reorganization plan makes it more likely than not that we'll see Frank Stronach in bankruptcy court next month. Under the plan that had been announced last fall, MI Developments would have injected substantially more cash into Magna Entertainment, and ultimately Stronach would have taken over complete control of the racing empire. The collapse of the plan, in the wake of strong criticism -- and threats of lawsuits -- from MI Developments' minority shareholders, puts Magna Entertainment in an impossible cash position. Without the reorganization plan, Magna Entertainment will now face accelerated repayment of a variety of loans, both to MI Developments and to outside parties such as the Bank of Montreal. The details are available in the Magna statement and in Ryan Conley...

I recently forged my way the myriad of news reports on networks, papers, and web sites and discovered lots of attention-grabbing stories: Reuters had a story about the death of Mickey Rourke’ 18-year-old pet chihuahua. CBS News reported on cart that transforms into a sleeping tent for the homeless. Associated Press told me that Twitter was limiting message length and intending to start testing ways to make money. The New York Times informed me about people walking and running in stairwells as a means of keeping fit. CNN reported that Lance Armstrong’s stolen bicycle had been recovered. The Los Angeles Times reported on a city council candidate criticizing a rival for being defense attorney that represented a client who was accused of shooting a sea lion four years ago. ABC News carried a story on its website about efforts to produce cola containing cow urine in India. MSNBC reported that Starbucks is increasing the products its offers in offers as part of an effort to improve its perfo...

Just when we thought the horse market couldn't get any worse, there's news that the economy of Dubai, whose ruler, Sheikh Mohammed, is also the world's most important thoroughbred buyer, has become the latest victim of the global economic crisis.  As the two-year-old sale season begins, there couldn't be worse news for prospective sellers. The two-year-old sales start this coming Tuesday, with Ocala Breeders Sales Co.'s select sale, to be followed in short order by the rest of the select sales: Fasig-Tipton Calder on March 3rd, Barrett's in California on March 10th, OBS again on March 17-18, and Keeneland on April 6-7. Already, the portents for the two-year-old market have been reflecting the gloomy economic climate.  The general consensus seems to be that prices will be off at least 30-40% from the peaks of recent years. As of Sunday morning, 22 of the 200 horses in the sale catalog had been scratched, most before they even took to the track for Frday's br...

The Las Vegas Review-Journal reports that TrackNet, the Churchill-Magna alliance, has reached an agreement with the Nevade Pari-Mutuel Association that will permit the Vegas race books to resume taking parimutuel pool bets on the Churchill and Magna tracks as early as today. The race books had been blacked out for 16 days, as TrackNet sought higher fees for its simulcast signals. No details on how much the fees have been increased are available, but they've certainly been raised from the historically low levels that the tracks let Vegas get away with for years.  My guess, though, is that the new agreement will still pay CHurchill and Magna less -- a lot less -- than the 6-7% for purses and another 6-7% for the sending track that has been the goal of the Thoroughbred Horsemen's group.  Fes for the simulcast signal from major tracks in recent years have tended to be between 3% and 5%, which is then divided between the track and the purse account. An interesting freature of the T...

Just when we thought Albany couldn't screw things up any more in New York racing, we've learned (thanks to Tom Precious's excellent reporting in the Blood-Horse ) that the on-again, off-again deal for slot machines at Aqueduct is once more off again. To be sure, the parties say that there are just a few little hitches before the contract between New York State and the designated casino operator, Delaware North, can be signed. And, after all, it's only been four months since New York Governor David Paterson anointed Delaware North as the operator, mainly on the strength of its promise of $370 million in up-front payments to the state.  So what are these little hitches? Well, first, the $370 million seems to have vanished. Or, as Delaware North preferred to phrase it, they need to "restructure the financing package" and find new lenders. Since, as Alan Mann points out , the original source of the money was the soon to be extinct Merrill Lynch, it's not exact...