Magna's Ventures unit to purchase
premier U.S. racetrack
GREG KEENAN
The Globe and Mail
Saturday, June 26, 1999
Magna International Inc. has scored a deal to buy Gulfstream Park in
Florida, adding another of North America's premier racetracks to its
stable.
Magna's non-automotive Ventures company has reached a deal with
Gulfstream's Japanese owners Orient Corp. and Higashi Nihon
House to buy the track, sources familiar with the deal said. The latest
purchase gives Ventures two of North America's front-rank racetracks
after the purchase last year of Santa Anita in California.
The agreement could be announced in a few weeks, the sources said.
Ventures was created earlier this year to hold the auto parts giant's
non-automotive operations such as Santa Anita, a proposed European
television sports betting network and a potential theme park in Austria.
Racetracks will form the core business of the non-automotive operation,
20 per cent of which will be spun off to Magna shareholders later this
year with Magna eventually reducing its stake in the company to a
minority position.
Graham Orr, Magna's executive vice-president of corporate
development, could not be reached yesterday for comment.
Doug Donn, president of Gulfstream, said through a spokesman that he
will not comment on what the racetrack described as rumours.
"If and when Gulfstream is sold, an appropriate announcement will be
made," the spokesman quoted Mr. Donn as saying.
The sources familiar with the Gulfstream deal would not reveal the price
Magna's Ventures unit paid.
"It's a premier track," said Bill Hogwood, senior vice-president of racing
for Greenwood Racing, which owns Philadelphia Park in Philadelphia.
"It runs through January, February and most of March and it becomes
the major track at that particular time [of the year]," Mr. Hogwood said.
He estimated that Ventures paid a little more than $80-million (U.S.) for
the Miami-area track, which is less than the $126-million it paid for
Santa Anita, which is located in suburban Los Angeles.
Gulfstream has fewer racing dates and less real estate than the 305 acres
that Magna obtained when it bought Santa Anita.
Gulfstream holds the Florida Derby, a key winter race for three-year-old
thoroughbreds and will play host this year to the Breeders Cup, which
has become one of the glittering events in North American racing.
The driving force behind Ventures is Magna chairman and founder
Frank Stronach, who is one of North America's leading horse owners
and has been discussing for more than 18 months Magna's need to
expand beyond auto parts.
Mr. Stronach has said that specialty tourism and gambling represent
major growth areas as North America's population ages and industrial
jobs migrate to low-wage areas.
Those ruminations got him into trouble with Magna shareholders last
year when the proposal for the Austrian theme park and other
developments became public and investors feared Magna management's
focus would be taken away from its core automotive parts business.
Mr. Stronach has promised that no Magna managers will be involved
with Ventures, which is in the process of setting up a management team
and a board of directors before the scheduled September spinoff.
One of the members of that management team will be Lonny Powell,
who was named president and chief executive officer of Santa Anita and
a vice-president of Ventures earlier this month. He had been president of
Turf Paradise Race Course in Phoenix.
Magna has shifted assets worth about $300-million and cash of
$250-million into Ventures.
Sources said Magna will obtain about 250 acres of land with the
Gulfstream deal, which may offer similar opportunities to Santa Anita,
where plans call for retail and commercial development to complement
the racetrack operations.
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