Saturday, March 07, 2009

Did I hear Bankruptcy?

More on the Village at Gulfstream Park

Read in The Miami Herald – March 6, 2009, by Michael Vasquez and Jim Freer

Gulfstream Park's owner seeks Chapter 11 bankruptcy

Magna Entertainment, which owns Gulfstream Park in Hallandale Beach and other premier racetracks, asked for protection from its creditors and said it would sell some assets.

Magna Entertainment, the nation's largest horse track operator -- and owner of South Florida's Gulfstream Park -- has filed for Chapter 11 bankruptcy protection and will sell Gulfstream as part of a deal to keep its racetracks open.

The Ontario-based company, which has lost hundreds of millions in recent years, said it plans to continue operating while it restructures.

Magna has struggled with massive debt. It was supposed to make a $40 million payment to the Bank of Montreal on Thursday.

In addition to horse racing, Gulfstream -- which last month celebrated its 70th birthday -- also offers slot machines and live poker.

''One hundred percent business as usual,'' said Steve Calabro, vice president of gaming at Gulfstream Park. ``Both on the casino side and the racing side.''

Nevertheless, Magna's bankruptcy filing does raise questions about Gulfstream's future. To keep its racetracks open, the company arranged a six-month, $62.5 million financing package through a subsidiary of MI Developments, Magna's largest shareholder.

That deal also calls for Magna to sell Gulfstream and other properties to either MI Developments or a third party that may emerge during the Chapter 11 process in Delaware.

Though South Florida's housing market is in a slump, Gulfstream's Hallandale Beach property is highly valuable, which could prompt interest from developers.

''The industry in Florida is going to be very, very concerned about losing Gulfstream, and they're obviously going to try to find solutions,'' said Timothy Capps, a University of Louisville equine-industry instructor who previously worked for Magna in Maryland.

Gulfstream's slots casino, Capps said, could help save racing at the park, as it makes the property more attractive to gaming interests than if it was just a racetrack alone. Any buyer could operate the slot machines only so long as racing continues, under Florida parimutuel guidelines.

After a bumpy introduction in late 2006, Gulfstream's slots have rebounded. In January, Gulfstream was the only one of Broward's three ''racinos'' to boast higher monthly slots revenues versus a year ago. This year's racing season also has been strong; through last Sunday, average daily wagering is up 3.6 percent over 2008.

Gulfstream has 420 year-round employees and 480 seasonal employees. None will be laid off because of Magna's bankruptcy, said Mike Mullaney, the track's media relations director.

The Village at Gulfstream Park, a $1.2 billion shopping and entertainment complex being built next to the racetrack, is still going forward. Target opening date: early 2010. The complex will bring in home retailers including Pottery Barn, West Elm and The Container Store. Restaurants will include Texas de Brazil, Brio Tuscan Grille and Ola Cuba by Chef Douglas Rodriguez. So far, the project is only 50 percent leased. Ultimately it will have 70 stores covering more than 410,000 square feet of retail and entertainment space, plus 80,000 square feet of office space. Magna partnered with Forest City Commercial Group on The Village. Brian Ratner, who heads Forest City's East Coast development team, said of Magna, ``They've honored their obligations and we expect them to continue to do that.'' Magna's other U.S. racetracks include Santa Anita Park in southern California and Baltimore's Pimlico Race Course, home of The Preakness Stakes.

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