Magna VP: Gulfstream a 'Renaissance of the Horse Industry'
Updated: Wednesday, April 5, 2006 10:40 AM
Posted: Wednesday, April 5, 2006 8:27 AM
Donald M. Amos, Magna Entertainment Corp.'s executive vice president and chief operating officer, told members of the Kentucky Thoroughbred Farm Manager's Club April 4 that horseracing was in need of a renaissance, and that newly renovated Gulfstream Park represented MEC's vision for that rebirth.
Dressed in business casual and appearing at ease with those he called friends, Amos spoke in a deliberate tone and a perceptible Canadian accent while spelling out his company's plans to consolidate--and pioneer--technologies he said would drive Thoroughbred racing in the coming decades.
"Horseracing has a great past, and as we all know it held a monopoly for many years," Amos told the Lexington group. "But the world changed, and horseracing was looking in the rear view mirror and screwed up a monopoly. It forgot to develop a marketing plan.
"Our vision at Magna is to become a global internet gaming company based on live racing content," he said. "This is something we are working at; this is a work in progress. (The) question we have to ask now is where does a horse race track fit in with modern consumer needs. We know what consumers want; they want choices."
Amos said MEC has attempted to: modernize its facilities ("a lifetime process"); expand global simulcasting; improve wagering experiences through technology; and improve the corporate landscape by eliminating regulatory barriers.
He cited Magna's investment of over $1 billion in "fixed assets," most notably in track acquisition and infrastructure. He said another $75 million had been spent in "maintenance capital," and another $530 million in recent "asset improvements," bringing total outlays to $1.6 billion.
"When the critics tell us we're not doing what we say, I say look at the trail--the cash flow."
Amos said Magna tracks would attempt to create a "new prototype," one where tracks could stay open 18 hours a day, seven days a week, year-round.
Amos said a prime Magna goal was to increase stall capacity and efficiency and thus maximize field sizes. He said a new policy at each track would require an average of one start, per stall, per month to keep the track's equine inventory more profitable.
"When you have five- to six-horse fields, that usually generates between $500,000 and $650,000 in betting revenue. When you bring that to field to 10, that brings you to $1.1 million and the net effect of that is a 50% share going to horsemen."
Amos touched on the future construction of a slots facility at Gulfstream in the wake of recent voter referenda in favor of the video machines, as well as a "joint retail and commercial venture" consisting of pedestrian mall of shops and restaurants that would generate foot traffic, leading those not otherwise inclined to find themselves at the gates of a racetrack.
"In Florida we've already invested $411 million on the future of live racing." Amos said. "We're committed to making it work."
Amos also mentioned the recent formation of PariMax, a new Magna-owned company designed to oversee its electronic distribution assets--including XpressBet, MagnaBet, HRTV, RaceONTV, and its 30% stake in AmTote International.
Amos called for uniformity in pari-mutuel laws, growth through deregulation, and fairer tax laws on expanded gaming, saying the industry needed to keep in lockstep in order to attract and keep big bettors currently lost to rebate shops and other gambling ventures.
Admitting the new Hallandale, Fla., track posed some "drawbacks to traditionalists," Amos said notwithstanding some fair criticism the facade was "breathtaking" and reminiscent of a "Roman coliseum."
Amos offered the "Horse Wizard" betting machines ("we've got the concept right"); the Magna 5 wager, a series of stakes races at Magna tracks coast-to-coast; the unique interstate competition of the 'Sunshine Millions;" and a wider turf track at Gulfstream as ideas put forth by the company that are beginning to yield results.
Amos' visit comes just weeks after Magna announced record year-end losses of $105.3 million, extending its three-year run of red ink to more than $306 million. On March 14, Magna announced the departure of chief executive officer Ton Hodgson after only a year at the helm, leaving chairman Frank Stronach in that capacity until a replacement is found.
News of the change sent Magna stock tumbling 7.9% the next day, prompting Stronach to hold a hastily-called teleconference to allay investor fears.
Asked if he might be tapped as the sixth CEO in the company's nine-year history, Amos said though he retained an "internal, quiet confidence in my abilities," he joked he was "long in the tooth" and preferred to be known as "a team player who develops those around him."
When asked if the many changes in leadership have affected what he termed earlier in the evening as an often "unfair public perception," Amos admitted that public confidence was predicated on fiscal responsibility.
"We don't need to own 100% of everything," Amos said, referring to the company's recent announcement that it would look to enter in to joint partnerships of its flagship properties, including Santa Anita.
"We do need to get rid of our debt and get our balance sheet in order," he said.
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