Magna sells Pa. harness track

Pimlico, Laurel owner announces quarterly net loss of $34.5M

Horse racing

November 10, 2005|By BILL ORDINE | BILL ORDINE,SUN REPORTER

Magna Entertainment Corp., the Canadian company that owns Maryland's thoroughbred racetracks and the Preakness, announced yesterday that it had reached an agreement to sell its ownership interest in The Meadows, a harness track near Pittsburgh.

The sale, to a company that operates casinos in Las Vegas and a California-based investment firm, is expected to gross $225 million for Magna Entertainment, which will continue to manage racing operations.

"It was not an easy decision to sell The Meadows but one we concluded was the right decision in terms of maximizing return to our shareholders," said Tom Hodgson, president and chief executive officer of Magna Entertainment. The Meadows is one of the sites expected to get thousands of slot machines as a result of legislation enacted in Pennsylvania last year.

The announcement was made during a conference call with financial analysts to discuss Magna Entertainment's third-quarter performance. In the three months ending Sept. 30, the company had a net loss of about $34.5 million, but that was an improvement over the same period for the previous year, when the net loss was $50.3 million.

Because the racing business is seasonal, the third quarter is generally regarded as the poorest for Magna Entertainment, which is the largest North American owner and operator of racetracks, based on revenue.

Magna Entertainment has faced financial difficulties common to the horse racing industry and announced in the summer plans to sell about $150 million in non-strategic assets. So far this year, the company has sold or agreed to sell a management contract for $10 million, a harness track in Canada for $54 million, 157 acres of land in Florida for $51 million and most recently The Meadows.

During an earnings conference call last spring, the company announced it was suspending further major improvements at Pimlico Race Course and Laurel Park mainly because slot machine legislation in Maryland had stalled. And proceeds from the sale of The Meadows are not earmarked for Maryland's tracks.

"I don't think the two subjects are related," Hodgson said. "Further capital investments in Maryland, to summarize it simplistically, are going to be a function of what success we have in getting slots legislation there."

Currently, the company's most ambitious project is the overhaul of Gulfstream Park in Florida. A renovated facility is scheduled to open in January, and there are plans for a residential-commercial-retail complex to go along with a slots casino, pending government approvals.

bill.ordine@baltsun.com

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