Horse Racing
Magna Reports $46.5 Million In Losses in the First Quarter
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With its premier venues Santa Anita, Gulfstream Park and Laurel Park racing simultaneously, winter has often been the strongest season for Ontario-based racetrack operator Magna Entertainment, but the company reported yesterday it suffered a net loss of $46.5 million in the first quarter of the year after turning a profit of $2.5 million during the same period last year.
The company, which has lost $306.3 million the past three years, attributed poor first-quarter results to the loss of eight live racing days at Santa Anita because of poor weather and drainage problems with its new synthetic surface, weak business at Gulfstream Park and a steep decline in on-track wagering at Laurel.
Magna also had write-downs of assets totaling $37.3 million related to discontinuing a racetrack venture in Dixon, Calif., closing a poorly performing racino in Austria and expenditures toward a failed legislative effort to get "Instant Racing" video lottery games installed at its Portland Meadows track in Oregon.
Quarterly revenue fell from $254.2 million in the first quarter last year to just less than $231 million this year. Revenue generated in Maryland fell by $3.5 million.
Magna Entertainment Chairman Frank Stronach told investors in a conference call the company will continue on the debt-reduction plan it implemented last year. With real estate valued at $1.4 billion, one investor asked when he would take the wrecking ball to Santa Anita Park and Golden Gate Fields.
"We're not in the wrecking business," said Stronach, who did, however, say that if the regulatory environment in California continues to favor the expansion of Indian casinos and not racing, he "will have no problem converting some of those valuable pieces of real estate."
Magna's main rival, Churchill Downs Inc., announced yesterday a net profit of $800,000 in the first quarter of the year compared with a net loss of $8.4 million during the same three-month period last year.
At the end of last year, Magna announced its ability to continue was in doubt. The Nasdaq Stock Market warned the company would be delisted if its share price did not rise above $1 by August. The stock fell yesterday to 41 cents.
-- John Scheinman
