Hard times in Magnaland

San Jose, Costa Rica

Frank Stronach’s grandiose vision of what racing and what he perceives to be entertainment are perhaps defined most clearly by those with the most critical view of performance.

Investors have clearly rendered a decision on bloated ego-driven delusional management as a business model and one of the largest, if hapless, operator of American racetracks faces almost inevitable delisting by the NASDAQ stock market.

Magna Entertainment, the folks who took the sunshine out of Gulfstream Park has the “for sale” sign hanging on virtually all of its racing and real estate holdings, will see its stock trade on the over-the-counter market after August 11 unless it is able to comply with market rules that require its stock to trade above $1 for 10 consecutive days. The stock (MECA), which closed at .735 cents on Thursday, has failed to reach $1 bid for more than 30 consecutive days and without the prospect of unimaginable good news on the horizon, there is little hope that it will manage to comply with the market’s regulations.

Magna, which is also traded on the Canadian Stock Exchange, is just off its 52-week low, 70 cents, and well below its high, $4.25. It is suspected that Stronach has stepped in to prop up his company’s shares in the past, when it traded at about $5, and, if true, could undertake such a measure again.

A must read while we’re on the subject of Magna:

Gary West’s take on Santa Anita: http://www.star-telegram.com/horse_racing/story/475821.html


Casino nation set for growth

Another government looks upon its citizens as the source of regressive taxation in the guise of legalized casino gambling.

If the expansion of casino-style gambling in New York as a source of revenue is troubling in an age when it is no longer a tourist-based enterprise but relies on resident citizens in the middle and lower income brackets to subsidize budget shortfalls, it also appears to have no end. We are well on the way to becoming a nation of pit bosses disguised as governments.

With Kentucky legislators and chamber of commerce members standing behind him, Kentucky Gov. Steve Beshear unveiled legislation on Thursday calling for a constitutional amendment to allow for up to 12 casinos--seven at racetracks and five at non-racetrack locations.

The five non-track casinos would be subject to voter approval in the cities or counties in which they are proposed. The racetracks would not require local approval unless they decided to place casinos in other locations.

In California: First Hall of Shame inductee

From the CTBAboardwatch:

This year we have chosen as the first recipient of our Hall of Shame award a person whose inactions place him at the very forefront of failing California leaders. Despite unparalleled opportunities to restructure California racing and breeding, he has failed to introduce and enact any substantive reforms in his 20 years of board-sitting. No other single decision maker in California has accomplished so little over so long a period.

Perhaps more comfortable as a micro-manager than as a proactive visionary, our selection embodies few of the real leadership qualities seen in California's past icons. If his presence on these various governing boards had resulted in successful outcomes we might have been persuaded to tone down our criticism. But it hasn't. As the most oft-quoted and photographed person by the Thoroughbreds media, we only wish his actual accomplishments mirrored his success in garnering publicity.

In our opinion, our inductee also best epitomizes the self-seeking decision maker who undermines the industry from within. And he has proven through his overbearance (sic) of others who serve with him, and who are employed by him, that his primary agenda is personal enhancement.

Unlike many successful leaders, this individual did not accrue his personal fortune from entrepreneurial acumen. He earned it the old fashioned way--through inheritance. We can only speculate that his regrettable lack of foresight and innovative problem solving were spawned from his privileged roots.

But certainly he has wisely put his family resources to work for himself. Eight years ago, one of his trainers was cited by the California Horse Racing Board for the illegal use of the powerful bronchodilator Clenbuterol. During the administrative hearing his trainer admitted that she received the drug from our Hall of Shamer. Stirred into quick action, he wrote a $16,000 check to then Governor Gray Davis' re-election campaign. Within days he was appointed to the CHRB, followed shortly afterward by the addition of Clenbuterol to the list of permissible drugs.

His trainer's 30-day suspension was then quietly dismissed.

Named CHRB chairman two years later, his reign was characterized by insiders as "illicit" and "illegal." At no time in the racing board's history were drug violations handled so slowly and inconsistently. Our award recipient negotiated backroom deals which infuriated horsemen because of their unfairness. Trainers charged with identical infractions were meted out wildly disparate penalties. High profile conditioners often incurred far less wrath than smaller trainers.

During his tenure, the CHRB Executive Director was charged and convicted of one of the most lewd crimes we can imagine--bestiality. Instead of firing or suspending him, our Hall of Shame inductee usurped much of his administrative authority while keeping him in office. The agency's morale was plundered by his power grab. Important issues such as unsafe racing surfaces, expansion of advance wagering programs, and ineffective drug policies were waylaid during his battle for control.

(We are indeed fortunate that his successor, Richard Shapiro, has swiftly moved to repair much of the systemic damage he caused.)

Earlier, as president of the CTBA, our recipient refused to heed legitimate complaints about the once-prestigious Del Mar Select Yearling Sale. For years many seasoned consignors and buyers alike openly criticized the CTBA's inconsistent pedigree and conformation selection process. Independent studies showed an inordinately high number of sales yearlings either owned by our honoree, or sired by stallions at his farm. It wasn't until 2005---one year after the CTBA shut down the 50 year old seaside event---that news of his special bond with the company sales directress became public knowledge.

Thus, his inept stewardship coupled with his personal favoritism resulted in the premature retirement of the unique Del Mar Sale.

As heir to a vast farming and ranching enterprise which spans miles along Interstate 5, our awardee's poor management skills have also proven costly. In 2005 a federal court fined him $1,000,000 for his "retaliatory conduct" against an employee who alleged she was raped and sexually harassed on his property. It seems our man waited more than two years before inviting authorities to investigate the charges, and once they were completed, violated federal laws by refusing to transfer her, or suspend her convicted perpetrator.

"The above evidence is sufficient to show that Defendant acted with reckless disregard to (her) federally protected rights," wrote the court. (2005 WI, 2071741).

This vindictive side of our Hall of Shame winner may come as a shock to our readers but, unfortunately, not to us. Roughly four months after CTBAboardwatch was launched in 2005, this gentleman hired a private detective to "dig up dirt" on one of our four co-founders. His entire divorce file was copied from county records, interviews were conducted on his ex-wife and neighbors, and confidential family counseling reports were somehow obtained in an all out effort to discredit CTBAboardwatch. Each CTBA board member, and some CTBA staff, received copies of the complete report. Additional copies were emailed and faxed by the CTBA to numerous breeders, organizations and the press.

Predictably, most people saw through his Nixonian tactics. "If you can't fight the message, then attack the messenger" was dealt a severe blow later in 2006 when a Superior Court judge ordered him to stop issuing false and defamatory material against CTBAboardwatch and its members. Let us know if you receive anything!

We could go on and on about the foibles of our well-deserved selection for the Hall of Shame. Not the least of these would be his behind-the-scenes puppetry of the CTBA board and staff. In recognition of his skills in this capacity, that board has elected him to its own Hall of Fame---look for lots of photos and quotes in the March edition of California Thoroughbred, his most devoted fan.

To summarize we can only add that when given the opportunity to serve others, he has demurred; when given the chance to promote his own interests, he has spared little effort. An objective review of his achievements on behalf of horse and horsemen shows scant evidence; a descriptive blog on his leadership style would read: "it's my way or the highway."

This Californian never learned that leadership means more than just occupying a seat at the board table. It means using authority wisely and taking responsibility for outcomes. As we survey the remnants of our once vibrant Thoroughbred industry, we hold accountable the single most powerful man for his failure to meet the clear challenges of the last two decades.

With that, we announce our first inductee into the CTBAboardwatch Hall of Shame: Mr. John C. Harris.


Aqueduct: Feb 16

Race 8: Whistlin’