Magna Entertainment reported a 17% reduction in operating losses to $87.4 million for 2006, and increased revenues by 16% to $702 million.
And in a continuing effort to drive down debt, new chief executive officer Michael Neuman said MEC would continue to do “anything and everything to monetize the non-productive assets of the company,” including considering a sell-off of Palm Meadows Training Center in Florida and/or San Luis Rey Downs in California.
The company has reportedly sold off more than $400 million in property assets since 2005 in a concerted effort to drive down debt that reached $700 million at the end of last September.
“On the one hand, it’s unfortunate that land values escalate to the point where it is no longer economically feasible to house the horses; on the other hand, it’s a nice problem to have,” said Neuman when asked about selling the training centers. “Part of our analysis in southern California and Florida is to determine just whether…we can take up the slack among not only our live track facilities, but by utilizing tracks that are owned by others in the region.
Declining slot revenues at Remington Park and Gulfstream Park were a hot topic in the hour-long conference call that was not attended by MEC chairman Frank Stronach.
Chief financial officer Blake Tohana blamed the opening of two competing Native American casinos in Oklahoma in the latter half of 2006 as contributing to a disappointing $215 net-win average at Remington Park.
“I think the negative trend is reversing,” Tohana said.
Net-win at Gulfstream Park was reported at $373 in the final quarter of 2006, but had fallen off “significantly” in January and February, officials said. Neuman said bills had recently been introduced into the Florida Legislature to address several concerns, including the lack of ATM’s in slots facilities.
Neuman was asked if a $300 net-win annual average was possible when all 1,200 slots are in effect at Gulfstream.
“I don’t think that is an unrealistic view,” said Neuman, who was hired as CEO Feb. 27, the date originally scheduled for the earnings release and conference call.
“The challenge we faced in the fourth quarter was that the costs were too high for the revenue received from that building,” Neuman said of Gulfstream. “Those costs weren’t in line with the revenues we produced during that time period. We have taken steps to address those costs.”
Progress in the proposed Dixon Downs racing complex was also discussed. Published reports suggest that significant concessions were made by MEC in light of local protests, including agreeing to never house alternative gaming such as slot at the northern California.
“Yes, we have said there won’t be slots there, but frankly that’s not saying much, because the California Legislature, in their previous compacts with the tribes, had already made it clear that that was going to be the case in any event,” said Neuman, who added MEC would instead lobby for legislation authorizing Instant Racing machines.