01/01/2010 12:00AM

Bankruptcy issues hang over Gulfstream meet


HALLANDALE BEACH, Fla. - Clouds of dust enveloped the entrance to the Gulfstream Park racing office one recent afternoon as heavy construction equipment readied this particular north-end area of the 250-acre property for its conversion into additional parking spots.

It was just one more mini-project among the massive renovation that has been going on at an estimated cost of $1.2 billion for more than 5 1/2 years at Gulfstream, where clouds of uncertainty loom over the 2010 meet opening Sunday.

A bankruptcy lawsuit trial involving the owner of Gulfstream, Magna Entertainment Corp., and its parent company, MI Developments, is set to begin Jan. 11 in Delaware. All that potentially hangs in the balance is the long-term future of Gulfstream and the other Magna racing properties, including Santa Anita, Golden Gate Fields, Laurel, and Pimlico, that currently are in limbo.

Frank Stronach, chairman of MEC, is scheduled to give a deposition in the suit Tuesday in nearby Aventura. The crux of the suit, which was brought by an unsecured creditors' committee of Magna, concerns how the company plans to make restitution to creditors as it emerges from bankruptcy. Magna owes its creditors about $800 million, including about $435 million in mostly secured debt to MI Developments. Published reports say Stronach is intent on retaining ownership of Gulfstream and Santa Anita, although bids from outside parties on any of the Magna properties are due Feb. 10, with an auction tentatively scheduled for Feb. 25.

This tangled legal and financial web is the most important variable in the exceedingly complex equation of modern Gulfstream (the old facility was torn down starting in June 2004). There also is the evolution of the retail complex, known as The Village at Gulfstream Park, which now dominates the west side of the landscape and is "about 85 percent complete, at least in terms of the allotment and leasing of retail space," according to Bernie Hettel, racing manager for the track. A grand opening of the retail facilities has been tentatively scheduled for the weekend of Feb. 7, when the Super Bowl will be played in Miami, Hettel said.

Because the Gulfstream property is being so heavily utilized, parking on major racing Saturdays, such as those of Sunshine Millions, Fountain of Youth, and Florida Derby, could be problematic for racing fans and shoppers, although a five-story parking garage adjacent to U.S. 1 is now finished and could alleviate some congestion.

"Those days could be very challenging, but we are going to be up for it," Hettel said.

Hettel, a former longtime racing official in Kentucky, is one of the key employees who stayed on during yet another sweeping Magna personnel shift that involved the November hiring of Ken Dunn as president and general manager. Dunn, whose 40 years of experience in the sport includes a lengthy tenure at rival Calder, replaced Bill Murphy, who had helped nurse a variety of major projects to fruition and was very popular with horsemen.

Among Dunn's areas of oversight is the slots operation, which started in November 2006 as a key component in the multi-faceted entertainment concept. The track currently has 850 machines and 20 poker tables.

Partly because the south Florida market has become so saturated with gambling opportunities, the slots operation has met with largely disappointing results during the first three-plus years, although business picked up in 2009, according to Susan Hunt, the marketing director whose primary focus is the track's casino operation.

"Our slot operations were up 8.1 percent this year over 2008, while the overall market was down about the same," Hunt said. "We continue to be a leader in bringing new machines and games to our customers."