Magna tracks struggle despite slot revenues

These should be happy times for Magna Entertainment Corp. Its premier track, Santa Anita, begins its prestigious Oak Tree meet Wednesday.

Instead, these are troubled times for the owner of 11 U.S. tracks and the HRTV network. MEC is more than a half-billion dollars in debt and looking to sell assets to get back to even.

Shares of MEC stock dipped to a putrid $1.65 in August, an incredibly low price considering the company owns horse racing palaces such as Gulfstream Park and Santa Anita Park.

I'll admit I don't know what's going on under the hood at Magna headquarters. Then again, who does? But here's one example of how badly the company is struggling: MWC successfully lobbied in three states for slot machines at its racetracks and can't turn a profit.

MEC is operating 650 slots at Remington Park in Tulsa, Okla. The casino operation began in November 2005.

Then there is The Meadows just outside of Pittsburgh. After slots were approved there in late 2004, Magna cashed out for $275 million by selling The Meadows to Millennium Gaming and partners. Millennium owns and operates two fine Las Vegas casinos, the Cannery and the Rampart.

That was a sweetheart deal for MEC. Yet it paled to when the company won the right to install slots at Gulfstream Park in Hallandale, Fla. It was a potential dream racino with a terrific patron base in a great location.

Despite a healthy investment in the facility to attract new fans, the 1,200 slot machines at Gulfstream are earning approximately $80 per day per machine, well below analysts' forecasts.

MEC's slot-machine successes have been washed over in a sea of red ink. The $275 million from The Meadows is spent. Remington is doing fine, and it's reasonable to assume Gulfstream can mature into a cash cow if the right business decisions can ever be made.

Still, it must be discouraging for racing interests in Kentucky, Maryland, Ohio and Massachusetts that are desperately lobbying for slot machines to protect their racetracks and breeding industries. Opponents can point to Magna tracks that granting them slot machines hasn't done much good at all.

• SUPER DERBY -- One of the budding stars in the handicap division is Grasshopper, the big favorite in the $500,000 Super Derby at Louisiana Downs on Saturday. The colt gave Kentucky Derby winner Street Sense all he could handle last month in the Travers at Saratoga. I won't be betting against him, unlike Rags to Riches last week.

• SOUTH POINT -- The South Point race book is resuming its Pick 5 handicapping contest on the Santa Anita races beginning next Thursday.

• ORLEANS -- The Orleans has finished remodeling its race-book patron area. More than 100 new individual TV monitors are in place as well as 25 Interactive Player Terminals where bettors can deposit cash and then bet from their seat.

Richard Eng's horse racing column is published Friday. He can be reached at rich_eng@hotmail.com.