The company has yet to see payoff from hundreds of millions of dollars invested to develop casino complexes around its racetracks. On Dec. 28, Magna shares closed under $1 for the first time.
The November referendum could determine whether Magna can install slot machines at Laurel Park. Magna and Maryland horsemen contend that revenue from slots is, as Magna director Joseph A. De Francis put it, "absolutely essential to the viability and survival of the horse industry in Maryland."
But Magna has been unable to make money even with slots at its two U.S. racetracks that have them, financial filings show. Some Maryland political leaders have questioned whether Stronach's company is fit to hold a slots license if the referendum passes.
Nationally, the horse racing industry has seen a steady decline in live attendance, handle and race purses, and it is facing stiff competition from newer gambling attractions such as Indian casinos. Still, Magna's closest competitor, Churchill Downs Inc. of Louisville, Ky., made a profit of $29.8 million on revenues of $376.7 million in 2006, and all but one of its major tracks showed operating profits.
Stronach did not respond to repeated interview requests by phone, e-mail and letter. De Francis, who sold his family's remaining stake in Laurel and Pimlico to Magna in September and stepped down as a Magna executive, said the company has learned from its mistakes and would operate a profitable gambling business in Maryland.
John Franzone, chairman of the Maryland Racing Commission, says many of Magna's problems stem from poor management - a problem that he says goes to the top. "After so many managers [who have come and gone], you have to look in the mirror and say, `Why did this keep happening?' " he says.
Entrepreneur
In 1957, three years after emigrating from Austria with only a few hundred dollars, Frank Stronach started a tool-and-die shop that, over the ensuing decades, grew into one of Canada's great entrepreneurial successes. His Aurora, Ontario-based Magna International is now a $24 billion global auto-parts empire.
As he built one of Canada's largest fortunes, Stronach also became one of the top breeders and owners in thoroughbred racing. He has won almost every major award in the business and has amassed countless wins in big races, including four Breeders' Cup races and the 2000 Preakness with Red Bullet.
But he wanted to own more than horses.
