Loving horse racing too much -- with other people’s money

‘On the contrary. Magna’s all-powerful chairman, Frank Stronach, loves horses and racing. He has invested countless millions of his own dollars in his personal breeding and racing operation, and his passion for the game led him to buy racetracks from Gulfstream Park to Santa Anita. He wasn’t motivated by the desire to install slot machines or any other hidden agenda. He genuinely thought he could make horse racing more enjoyable and more popular. Yet the man who loves racing has plunged the sport into a crisis. ‘It is a crisis because of an economic fact that has always been the equivalent of a ticking time bomb for U.S. horse racing. Many of the country’s most important tracks were built decades ago and occupy large tracts of prime urban real estate. Any developer could find better uses for them than operating a four- or five-month race meeting. Such tracks have continued to exist because of their owners’ commitment to the sport.’

‘Creditors have no interest in reviving a company that brought on its own demise with a series of disastrous financial moves. It bought Gulfstream Park for $90 million, then demolished it and spent $240 million to build a new facility that most fans regard as inferior to the old one. Because Gulfstream needed stabling for more horses, Stronach decided to build the Taj Mahal of stable areas, Palm Meadows, at a cost in the vicinity of $100 million -- an investment that returns no revenue. ‘Magna bought Laurel and Pimlico for an inflated price of $171.5 million -- and yet ceded a larger portion of future slot machine revenues to the seller. With its debts mounting, Magna stayed afloat by borrowing money from another Stronach company, MI Developments, infuriating shareholders who didn’t want their money squandered on unprofitable racetrack projects.’