Odds On Racing - Harness Racing

Magna Entertainment Scraps Track Plans

August 10, 2007

After reporting high quarterly losses, Magna Entertainment Corp. is scrapping plans to build a horse racing track near Detroit Metropolitan Airport and proposed racing developments in New York and California. The Canada-based company also is ending horse racing near Vienna, Austria, and selling property in Ocala, Fla.

Magna Entertainment, whose application for a track in Romulus was approved by Michigan in 2005, notified the state's Office of the Racing Commissioner late Thursday it was relinquishing its license.

"It is an unfortunate situation, especially as we are in the midst of receiving race date applications for next year," state Racing Commissioner Christine White said in a statement. "However, we remain hopeful that thoroughbred racing will continue in Michigan."

Magna on Thursday reported a net loss of $23.4 million, or 22 cents a share, in the April-June quarter, down from a loss of $26.3 million, or 25 cents a share, during the same period last year.

"We are extremely disappointed with the second quarter results," Frank Stronach, chairman and interim chief executive officer, said in a statement. "We recognize that immediate and drastic action is required and we have commissioned a strategic review of the company."

The Detroit area's two existing tracks are in the suburbs of Hazel Park and Northville, but those are harness tracks. This means the third track license is up for grabs, said Liana Bennett, a spokeswoman for the commissioner's office.

A message seeking comment was left Friday for a Magna Entertainment executive.

Magna had proposed a $100 million horse racing complex in Romulus that would have included up to three racing tracks set inside each other, a 170,000-sqaure-foot entertainment pavilion for simulcast racing and 33 barns to accommodate 1,056 horse stalls and three grooms quarters. It also had proposed building a 33,000-square-foot research and development building on 212 acres off Interstate 94.

The company also announced plans to sell property in Porter, N.Y., in Niagara County. Magna purchased 800 acres of land on Lake Ontario in 2000 with plans for an entertainment complex that was to have included a racetrack, but the company never moved forward on the project.

In California, Magna had proposed building a 260-acre horse racing track, entertainment complex and retail project in a town that serves as a pit stop for travelers along Interstate 80 between Sacramento and San Francisco. But voters in Dixon rejected the $250 million complex in April.

The company said it also decided not to pursue the project because it was uncertain it would get a license for the necessary dates to make the track a "viable operation."

Stronach is founder and chairman of Canadian auto parts supplier Magna International Inc., which spun off Magna Entertainment in 2000. Stronach was viewed as the front-runner to buy Chrysler from DaimlerChrysler AG before he lost out to Cerberus Capital Management LP.

Stronach also is one of the top owners and breeders in thoroughbred racing, winning the Eclipse Awards as breeder of the year for past three years. Among his top horses on the track were 2004 Horse of the Year Ghostzapper, 2000 Preakness winner Red Bullet, 2000 2-year-old male champion Macho Uno and 1998 Breeders' Cup Classic winner Awesome Again.