Magna Finally Faces Up to the Market

Probably figuring that its latest SEC filing would be thoroughly ignored amid all the focus on its bankruptcy, Magna Entertainment (MEC) filed a Form 8-K yesterday with the Securities and Exchange Commission in which it finally admitted that some of its race tracks and land holdings aren't worth anything like what Frank Stronach paid for them not all that long ago.

The 8-K, which is required whenever there is an event that materially affects a company's business, reports that on Monday MEC's audit committee approved a $136 million write-down in the value of the company's assets. In particular, the write-downs included the value of racing licenses for Lone Star Park in Texas, Golden Gate Fields in California, and the Maryland Jockey Club's tracks, Laurel and Pimlico. Other reductions in value were allocated to The Meadows harness track, to the now-shuttered operations at Portland Meadows and at Stronach's Austrian Racino, and to the value of land that MEC owns in Dixon, California, once the intended site of a thoroughbred track.

No mention in the SEC filing of the value of Santa Anita, Gulfstream or other Magna properties.  But the unforgiving nature of bankruptcy proceedings may sooner rather than later show exactly how much of the value of MEC's assets as carried on its balance sheet has any relation to the real world.

Comments

Post a Comment

Popular posts from this blog

The Economics of Owning a Race Horse in New York

I've been wanting for some time to write about the economics of racing from the owners' and trainers' point of view. And the quarterly ritual of preparing financial statements for my Castle Village Farm partnerships has finally provided both the motivation and the data to get started. So, this post will look at racing from an owner's point of view. I'll follow up later with a look at the economics of being a trainer. In both cases, I'll be focusing on the New York racing scene, that is, as an owner or a trainer stabled at Aqueduct or Belmont, and making an annual pilgrimage to Saratoga. New York has the best purses around -- they'll average over $700,000 a day at the upcoming Saratoga meet -- but it also has very high expenses. So, even with the kind of horses that most of us are satisfied to have -- solid, hard-working thoroughbreds -- not a stakes horse, but not a $4,000 Finger Lakes claimer either -- it's not easy to come out ahead -- even when you...
Read more

NEWSPAPER RESTRUCTURING IS PAINFUL, BUT NECESSARY

Financial pages are full of developments and changes at newspaper companies and these are being commented upon anxiously by those in the industry. Unpleasant conditions certainly abound, but these development are not indications that the industry is dead or dying in the near future. What they signal is that things which worked in the past are not working now, that newspaper companies are badly in need of restructuring, refocusing, and renewal, and that the boards of the companies and the company managers are taking badly needed action. The techniques for restructuring are no mystery. First, you need some cash. This can be obtained by attracting new capital through investment or loans. New York Times Co. did this recently by borrowings $250 million from Carlos Slim. Other firms are looking for friendly investors with liquidity. Another way of raising cash is by turning assets into cash. A classic move made by many types of firms is the sell their building and lease back any space that i...
Read more

Is the future of digital journalism an outside job?

Making small digital news providers sustainable has become the holy grail of journalists and the search continues for workable business models and revenue streams. Advertising may produce some revenue, but it will never generate sufficient resources to support digital journalism because so little advertising money is available for sites with small audiences. About three-quarters of all online advertising goes to the top 10 sites and Google, Facebook, Microsoft, and Yahoo account for about 60 percent of all online revenue. This leaves very little advertising expenditures to be contested among all other players--of which news providers are only a small fraction. At the same time, the prices paid for online advertising are falling because there are so many sites offering advertising, the advertising inventory is nearly infinite, and audiences continue fragmenting. This means the majority of funding for start-up digital journalism must come from elsewhere and online news sites—especially s...
Read more