MEC's Lease to Operate Bay Meadows Coming to an End

A Magna Entertainment Corp. official, conceding the company's control of Bay Meadows Racetrack will soon end after five years of operation, said the Toronto-based racing giant wasn't given the opportunity to negotiate a lease extension for 2005 with the track's owner.

The owner, Bay Meadows Land Company, announced it has formed the Bay Meadows Racing Association and is assuming operations of the San Mateo, Calif., track on Jan. 1. Bay Meadows has two meetings per year and shares the major Northern California racing calendar with Magna-owned Golden Gate Fields across the San Francisco Bay in nearby Albany.

"Quite honestly, there weren't any (negotiations)," Magna's chief United States counsel, Scott J. Daruty, said. "We were supposed to meet, but this past Friday (May 7) they called to say they had decided not to (extend the lease). The next day (the announcement) was in the paper."

The performance of Magna, which had been Bay Meadows' operator since 2000, was not an issue, Daruty said.

"They never expressed to us at any point any unhappiness, nor were any discussions held along that line," he said. Magna had twice previously received one-year lease extensions after the original management contract expired at the end of 2002.

In making the announcement, Terrence Fancher, chief executive officer of BMLC, named former Magna executive Jack Liebau as president of the new association. Liebau was president of Bay Meadows from 1992 to 2000, a post he retained as director of Magna's California operations until his resignation in late January. He returned as a consultant to Fancher a month later.

Fancher has been with BMLC since 1997, when Paine-Webber owned the property. Stockbridge Real Estate Fund currently owns it. Much of the track property -- 90 acres of the original 173-acre site -- has already been developed into housing, commercial and office space. What remains is currently undergoing a development review process with the city of San Mateo. City officials envision it as the hub of a transit corridor. Fancher estimates the approvals will require three more years and any future development would hinge on economic factors. In the meantime, he says the track will continue to operate.

Charlene Kiley, currently the controller of BMLC, was appointed chief financial officer of the new racing association. Mike Ziegler, vice president of administration and assistant general manager of Magna's Santa Anita Park, is returning to Bay Meadows in a similar role. Ziegler, 34, a Bay Area native, began his racing career as an assistant to Liebau at Bay Meadows in 1995.

Magna's monopoly over major Northern California racing ends with the conclusion of Bay Meadows' fall meeting Nov. 7. Daruty said the company, which retains ownership of Golden Gate and has plans to develop 263 acres near Sacramento into a state-of-the-art $250 million track by 2007, remains committed to providing year-round racing in Northern California.

"We all know that at some point Bay Meadows is going to go away and we as an industry need to have a long-term answer to that when it happens," Daruty said.

Daruty said that Magna has not formulated any plans to speed up the Dixon Downs project. He declined to comment on a pending dispute between Golden Gate and Bay Meadows over date allocations for 2005.