Updated on 09/16/2011 7:53AM

Gulf widens between Magna and race fans


WASHINGTON - When the Magna Entertainment Corp. announced its intention to buy Laurel Park and Pimlico racetracks, company leaders might have expected to be hailed as the saviors of Maryland racing. They were promising an infusion of money and new ideas into an industry that has been stagnating for years.

But Magna has been greeted with considerable skepticism by horsemen, racing commissioners, and others, largely because of one stigma that has altered the company's image: the 2002 racing season at Gulfstream Park.

As Magna has gone on a racetrack-buying binge over the last four years, it proclaims that it will improve tracks' business by upgrading their facilities, transforming them into multi-purpose "entertainment centers" and including them in a national simulcast network. It is premature to judge this overall plan, but so far only one of the Magna tracks has had a dramatic turnaround. It occurred at Gulfstream, one of the nation's most popular and successful racing operations, where the turnaround went in the wrong direction. From January through March, betting on Gulfstream's races plummeted by $1 million a day compared with the previous year's figures, and the drop was accompanied by bitter complaints from ontrack and simulcast bettors about the quality of the product.

Although many factors contributed to the decline, the events in Hallandale, Fla., underscore possible flaws in Magna's approach to the racing business.

Jim McAlpine, Magna's president, said in a recent interview that "every idiot who criticizes us seems to forget Florida was hugely dependent on the travel market," which was devastated in the aftermath of the Sept. 11 terrorist attacks. Gulfstream's ontrack betting was down by 17 percent, but simulcast wagering - which has nothing do with the travel market - also dropped sharply, by 13 percent. Bettors across the country were turning away from Gulfstream because the quality of the product had deteriorated.

The closing of Hialeah Park's stable area hurt Gulfstream, reducing the available horse population and shrinking the size of the fields. Bettors have always loved the track because it cards wide-open 12-horse fields that regularly produce giant parimutuel payoffs, but this year's Gulfstream cards bore little resemblance to those of the past. Almost from the outset, the track's business declined sharply.

The horse shortage presumably will remedied by next season with the construction of a new training center. But in 2002 Gulfstream made no visible effort to shore up the quality of its product - which could have been done by running fewer races. Maybe this was the fault of Gulfstream's management, but the quality of the racing product does not seem to be a Magna priority. In a recent critique of Magna and its stock, the Wall Street firm Dresdner Kleinwort Wasserstein gave the company poor marks, saying, "The quality of MEC's tracks is very mixed. . . . having what we see as questionable quality and limited simulcast potential."

When Magna made its deal to acquire the Maryland tracks, everybody involved talked about future improvements in the physical facilities at Laurel and Pimlico, but there was little discussion of the day-to-day racing. Yet anyone who has taken a look at the fare at Laurel lately would be reminded that racing quality is a critical issue in the state. Magna can build a replica of the Taj Mahal at Laurel and Pimlico, but that would not make the racing cards any more attractive. The Laurel summer meeting began with a five-horse race for cheap 2-year-old maidens, none of whom had ever finished in the money.

Magna is focused on fulfilling the vision of its chairman, Frank Stronach, who wants to turn racetracks into entertainment centers. And this was the issue that roiled the Gulfstream meeting.

Gulfstream for years has offered weekend concerts during the races in an effort to attract a broader audience. But this year it seemed more concerned about the concerts than the racing - an emphasis that was made clear on the day of the Florida Derby. Harlan's Holiday and Booklet, the main contenders, had waged scintillating duels in two prep races, and their rematch in the $1 million event figured to be another thriller. Yet not a single ad for the Florida Derby on radio, television, billboards, or in-house television mentioned Harlan's Holiday and Booklet. All of the promotion for Florida Derby concentrated on Loverboy and Styx, the two rock groups who were entertaining at the track that day.

The concerts created a perceptible backlash from Gulfstream's regulars, many of whom were dissuaded from going to the track by traffic jams, many of whom felt (with justification) that the track had forgotten its loyal customers in its preoccupation with enticing new people to the track. The experience suggests that Stronach's grand idea of offering diverse attractions at racetracks may have a significant drawback because it alienates the existing fan. (Stronach refused requests for an interview for this column.)

It is certainly premature to judge Magna's overall strategy because it has not yet turned any of its tracks into a full-fledged "entertainment center," nor has it launched a television network showcasing its tracks. Maybe it can achieve dramatic turnarounds at Laurel, Pimlico, and other tracks. But the evidence at Gulfstream suggests that the company had better not repeat the mistake of ignoring the racing product and the racing fan.