Battered by Slots, Ohio Track Is Put on the Block by Magna
Struggling to compete with casinos and racetracks with slot machines in neighboring states -- problems that mirror those plaguing the Maryland horse racing industry -- Thistledown racetrack outside Cleveland was put up for sale yesterday by owner Magna Entertainment.
Magna, which operates 10 thoroughbred tracks in the country, including Laurel Park and Pimlico, also plans to sell Portland Meadows in Oregon. The public company, controlled by auto parts magnate Frank Stronach, who turned 75 yesterday, lost $288.3 million between 2004 and 2006, and $23.4 million in the quarter ending June 30.
Once-thriving Thistledown, which hosts the $300,000 Ohio Derby, posted a pretax loss of $4.5 million last year, and Magna reported spending $3.1 million on a referendum that would have permitted slots at Ohio racetracks that failed last November.
"Magna has basically told us it's a nationwide problem within their company, and they're not willing to run any track at a deficit anymore," said Dave Basler, executive director of the Ohio Horsemen's Benevolent and Protective Association.
After Magna reported its most recent quarterly loss, Stronach announced an immediate strategic review of company operations to reduce debt and shed non-core assets.
Stronach issued a statement yesterday, saying: "Although MEC remains strongly committed to the racing industry, the fact remains that Thistledown and Portland Meadows are confronted with very difficult operational and regulatory challenges. Furthermore, MEC is very much committed to continuing to sell assets and to strengthening its balance sheet."
Thistledown has had trouble competing with casinos and slots-supported racetracks in Indiana and West Virginia. Meantime, Presque Isle Downs, a new track 90 miles from Cleveland in Erie, Pa., has siphoned away horsemen by offering huge purses, despite generating only slightly more than half the money bet on races at Thistledown.
Maryland racetracks face the same problems, losing business to smaller tracks with slot machines in Delaware, Pennsylvania and West Virginia that have smaller fan bases that wager less money.
"It's a very alarming and disturbing trend," said Joe De Francis, a Magna executive vice president and president of the Maryland Jockey Club. "The fact that Ohio has fallen so far so fast is a very, very sad reflection of where we're heading in Maryland if the playing field is not leveled and we can't compete on level terms with our neighbors."
-- John Scheinman