Magna Entertainment, the Aurora, Ontario-based racing company that owns Laurel Park and Pimlico, reported third-quarter losses yesterday of more than $34.5 million. The publicly traded company, which lost $95.6 million in 2004, has lost more than $65.6 million in the first nine months of the year.
The third-quarter losses were accompanied by an announcement that Magna has sold the Meadows, a standardbred track with year-round racing in Washington County, Pa., to Las Vegas-based Millennium Gaming and a Los Angeles investment firm for $225 million. The Meadows, which Magna will continue to run for the new ownership, holds the rights to apply for a license to operate between 1,500 and 3,000 slot machines following state legislation in July 2004 that legalized alternative gaming at Pennsylvania racing facilities.
Nevertheless, with the company carrying a debt of approximately $564.8 million, Magna executives said they considered the sale of the Meadows to be part of its strategy, announced in July, to sell off "non-strategic real estate, racetracks and other assets."
"We're under a campaign of fiscal reform to make sure our balance sheet for our shareholders is in great shape," said Dennis Mills, vice chairman of Magna Entertainment. "You don't just look at slots, you look at the overall strategic approach. [Magna Chairman] Frank Stronach's vision is the jewels of thoroughbred racing represent that best hope for global export [of Magna racing content]. To make sure your icon or jewel tracks are in good fiscal shape, you have to take a look at assets that are non-strategic."
The sale of the Meadows leaves Magna with nine thoroughbred tracks in North America, including Gulfstream Park, Santa Anita and the Maryland tracks. Besides the Meadows, Magna this year has sold another harness track, real estate in Florida and its Colonial Downs management contract for a combined total of approximately $125 million. Mills reiterated that Laurel Park and Pimlico remain part of Magna's long-term strategic planning.
-- John Scheinman