Magna suffers $4.4M loss

Deficit in Md. came during Preakness quarter

Laurel Park meet to cut back

More industry woes

August 07, 2008|By Sandra McKee | Sandra McKee,Sun Reporter

On the day Magna Entertainment Corp. announced a $4.4 million quarterly loss in Maryland, the president of the Maryland Jockey Club said yesterday that the Laurel Park fall meet will be cut by 11 days.

While Magna's total quarterly loss of $21.4 million was in line with past performances for the struggling corporation, the loss in Maryland was unusual because it came in the quarter that includes the Preakness Stakes.

The Maryland losses are being primarily attributed to a 12 percent loss in handle, a Preakness betting decline of $13.7 million from 2007 and a loss of $1.7 million in maintenance contributions from the Maryland Thoroughbred Horsemen's Association.

"This is the first time we've been down [in this quarter], in quite awhile," said Tom Chuckas, who became head of the MJC in May. "It's because of [declines] in our live import and export handles and a soft Preakness. Those are the main contributing factors. They're very concerning because they are our two biggest sources of revenue, and it is following a national trend."

The quarterly loss and Laurel racing cutback follow Wednesday's report in The Sun that the MTHA will not fund the state's six major fall stakes races, including the Grade I Frank J. De Francis Dash, Grade III Safely Kept Stakes and the Laurel Futurity, leaving only state-bred or state sired stakes.

And yesterday the MJC confirmed yesterday's report that it is closing the barn area at Pimlico Race Course effective Aug. 31, pending approval by the Maryland Racing Commission at its Aug. 19 meeting.

"It was a very difficult decision," Chuckas said of closing Pimlico's barns. "It is not something the MJC wants to do. But business is down significantly and operating three facilities is a significant expense. But we're not evicting anyone. We're relocating everyone to Laurel or Bowie. The MJC is taking on that expense. I know we'll be upsetting a normal way of life. I appreciate that. And we're going to do everything we can to make the move as easy as possible."

Maryland racing secretary Georganne Hale said she will disperse letters this morning to everyone affected by the Pimlico barn closings with information about their new assignments at Laurel Park or the Bowie Training Center.

"They'll indicate on that letter whether they are accepting or declining, sign it and then return it to me," she said. "At that point, I'll have a clearer picture of what we're looking at."

Hale said she has tentatively assigned about 180 Pimlico horses to Laurel Park, where 226 stalls are available and the other 250 Pimlico horses to stalls at Bowie, where 450 stalls are open. She said she also has enough room to accommodate the 170 workers who live on the backstretch at those two sites, but that it will require people to double-up, as they already do at Laurel.

An equally difficult decision was to cut the number of racing days at Laurel this autumn from last year's 76 to 65. But the days had to go, Chuckas said, for the same reason MTHA executive secretary Wayne Wright said the stakes had to go: a lack of money.

"The MTHA and MJC had no choice but to suspend the fall stakes schedule," Chuckas said. "We've been in discussions for months and there just isn't any other answer. Cutting the stakes and the days are the only way to maintain the present purse levels and keep us competitive with surrounding states. There really was no choice.

"It's disappointing, but our goal is to maintain the $160,000 a day purses and thereby the quality of our races."

The MTHA said the only way the fall stakes schedule would be run is if Magna wanted to sponsor the races or find sponsors for the required purse money. Yesterday Chuckas said, "At this juncture, I don't know what is or isn't available in terms of sponsors."

He also said he had not been in touch with former MJC chief executive officer Joe De Francis to find out if he is interested in fronting the purse money for the De Francis Dash, which honors his father, Frank. De Francis, who sold the last of his ownership stock to Magna a year ago, yesterday expressed shock over how quickly Maryland's racing industry has slid in the past few months.

"The De Francis Dash is something my sister and I are very proud of," De Francis said. "It is one of only three Grade I races in Maryland and one of just five Grade I sprint races in the country. And, it honored our father. My sister and I are very disappointed that after everything Frank De Francis did for Maryland racing that between the MJC and the MTHA, they couldn't find a way to run the race honoring his memory.

"At the same time I understand completely the issues and challenges that have forced this action. And as disappointed as we both are, we're 100 times more alarmed and worried about the current state and possible future of the industry."

De Francis said he could not comment on the possibility of his family supporting the Dash until after he and his sister discuss it.

"We haven't even thought about it," he said. "We had no idea this was happening."

During the Magna conference call yesterday, Magna chairman and CEO Frank Stronach said the company will not reach its goal of being debt free by December.

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