2002 - Harness Tracks of America, Inc.

HARNESS TRACKS OF AMERICA
Executive Newsletter
A daily fax and e-mail report on racing and gaming developments in North America and beyond
Stanley F. Bergstein, Editor
MAGNA STRIKES 11TH TIME
Magna Entertainment tossed another hundred
million in the pot yesterday, entering an agreement
to buy Lone Star Park near Dallas. Magna’s chairman,
Frank Stronach, called the purchase “another
step in MEC’s program of expanding its racing
and wagering operations through the ownership of
the country’s premier racetrack properties.” The
agreement calls for $80 million in cash and assumption
of liabilities including a capital lease obligation
of some $19 million to the city of Grand Prairie.
The track was built for $100 million and opened
six years ago. Lone Star joins Bay Meadows,
Golden Gate Fields, Great Lakes Downs,
Gulfstream Park, The Meadows, Portland Meadows,
Remington Park, Santa Anita, Thistledown
and Multnomah Greyhound Park as part of the
Magna stable.
A twelfth property appears on the Magna horizon,
because Robert O’Malley, CEO of Suffolk Downs,
said this week that negotiations for Magna to lease
Suffolk “are continuing and I’m optimistic there
will be a deal. There’s just some added housekeeping
that has to be done before it happens.”
SHAWN SCOTT AFTER VERNON
Shawn Scott, the 35-year-old gambling entrepreneur
who bought Delta Downs for $10 million and
sold it to Boyd Gaming for $130 million, has agreed
to loan Vernon Downs $400,000 for operational
purposes and also has purchased at least 19,000
shares of stock -- 4% of the total -- as he moves to
gain a controlling interest in the track. Justice
Cheney, president of Vernon, told the Associated
Press that Scott is negotiating with other large
shareholders, including bankruptcy officials, to end
up with a majority of the stock. How this will affect
an option held by Eric Cherry, Sandy
Goldfarb and Steven Goldberg is uncertain.
March 7, 2002
That trio has notified Vernon in writing that they
intend to exercise their option to purchase the
track, pending shareholder and regulatory approval.
Should Scott succeed in obtaining enough
shareholder support to block approval of the option,
it could clear the way for him to acquire
Vernon. All actions have been delayed by a pending
audit and SEC inquiries.
FATE OF MILLIONS IN DOUBT
The continuing civil war in Maryland racing has
once again put a multimillion purse subsidy in
doubt. The speaker of the Maryland House,
Casper R. Taylor Jr., chose not to introduce a bill
on racing’s behalf this week because thoroughbred
and harness interests still have not reached a mutually
satisfactory compromise. When the Baltimore
Sun asked Taylor if it was a longshot that
money would be approved in the budget crisis atmosphere
of the current legislative session, Taylor
said, “I’ll guarantee that it is.”
Taylor had been looking for a compromise bill on
the so-called 6:15 law, which Rosecroft felt all parties
had signed off on some time ago. Under that
proposed compromise, Rosecroft would have
waived the 6:15 p.m. barrier on thoroughbred simulcasting
in return for free enterprise, in which
all signals, in and out of the state, would be available
to all at any time. Rosecroft’s GM and CEO,
Tom Chuckas Jr., told the Sun, “From Day One,
our position has been the same; it was always a
trade.” It is customary, of course, in disputes like
this, to paint the harness side as the villain in media.
It happened in New Jersey as well as Maryland,
where the runners would like the whole pie.
Still to be resolved is the issue of whether monies
paid by the tracks into a fund for track improvements
can be retrieved for purse purposes. As
Taylor indicated, that might be a longshot too,
unfortunately, but Rosecroft will continue
to pursue it.