Restructuring Magna Entertainment for a Prosperous Future

Magna Entertainment (MECAQ) is the largest ownerThis should be the base upon which the revitalization
of Horse racetracks in America.  It also owns aof Magna can be built.
wagering platform, XpressBet, Casino properties Santa Anita Park in Arcadia, California is one of the
connected to its tracks and other horse racing relatedmost beautiful racetracks in North America.  It should
entities.  Currently, the firm is operating under Chapteralso be preserved as part of the Magna entity when it
11 bankruptcy.  It’s founder and Chairman, Frankemerges from bankruptcy.  With both Gulfstream and
Stronach has promised aggressive action to fix itsSanta Anita remaining in the company’s portfolio it
problems.will be well on its way toward creating strong growth
 The horse racing industry, like many businesses, hasand income for its shareholders.
suffered during this tough economic downturn.  Firms Additional properties that should be preserved under
with excessive debt have experienced extremea newly reformulated Magna Entertainment would be:
difficulties, Magna is no exception.  The company had- San Luis Rey Downs (San Diego, CA)—a
gone through an ambitious buying spree from 1999thoroughbred training center.
through 2002.  During this time period it purchased- XpressBet—its online wagering platform.
Golden Gate Fields (Albany, CA), Gulfstream Park- Steufex TM—a straw based bedding product with
(Hallandale Beach, CA), Thistledown (North Randall,facilities in Austria and North Carolina.
OH), Portland Meadows (Portland, OR), Santa AnitaAll of these entities will add value to the company’s
Park (Arcadia, CA), Laurel Park (Laurel, MD), andcore assets, Gulfstream and Santa Anita.
Pimlico (Baltimore, MD) where the Preakness is held.  All other racetracks should go on the auction block
Recently the firm sold Lone Star Park (Grand Prairie,with the proceeds used to retire debt.  Any other
TX) and Remington Park (Oklahoma City, OK) to theexcess land should also be sold off as real estate
Chickasaw Nation.  Now it appears, with itsconditions improve.  It should make an aggressive
bankruptcy filing, the rest of these properties are onmove now to sell off all of its off-track betting (OTB)
the auction block.facilities connected to its tracks.  The online
 Laurel Park and Pimlico are expected to beexperience is rapidly gaining popularity and unless an
auctioned off sometime in January 2010.  Included inOTB has the appeal and appearance of a race-book
the package is also the Bowie Training Center inlike they have in Las Vegas, NV.  The company
Baltimore, MD.  Presently there are a number of bidsshould also dump its investments in other subsidiaries in
for these prized facilities including from Penn Centrala timely and profitable manner.
Gaming.  Penn Central owns a number of racetrack Magna Entertainment runs excellent operations in an
facilities, racinos and casinos around the country. efficient and profitable manner.  They just got caught
What price these tracks fetch will help reducein the economic downdraft coupled with a decline in
Magna’s debt load.  More needs to be done.interest in horse racing.  Add to that the tremendous
 Magna should preserve its crown jewel, Gulfstreamdebt load the company took on and the seeds of
Park, in order to continue to be a viable and eventuallyfailure were sown.  The entity can remain a vital
prosperous entity.  Additionally, it should maintain itsoperation by holding onto its prized possessions,
Palm Meadows Training Center in Palm Beach County,Gulfstream Park and Santa Anita Park.  With the
Florida.  Gulfstream is a wonderful property withprescriptions above Magna can have a prosperous
additional development opportunities and a Casino. future.