05/15/2010 12:00AM

Magna International voids Oak Tree lease

Email

Magna International Developments, the parent company of Santa Anita's owner Magna Entertainment, has voided its lease agreement with the Oak Tree Racing Association, which hosts an annual fall race meeting at Santa Anita, executives with both organizations said on Friday.

Sherwood Chillingworth, the executive vice-president of Oak Tree, said MID officials informed Oak Tree that the lease had been voided on Wednesday. The announcement came two weeks after a bankruptcy court in Delaware approved the ongoing lease between the two parties as part of the settlement between Magna Entertainment and MID. The plan would transfer Magna Entertainment's assets - including its racetracks - to MID in exchange for wiping out the debt Magna Entertainment owes MID.

Chillingworth and Dennis Mills, chief executive officer of MID, said on Friday the two sides will discuss new lease terms in coming weeks. Mills said that MID chairman Frank Stronach, also a prominent owner and breeder, would be in Southern California in June to talk to racing officials about the lease and other issues.

Chillingworth said he was not sure what terms MID would seek in a new lease.

"They've talked about coming out in June and renegotiating a new lease," Chillingworth said. "They are telling us it will be very equitable but until we see it we don't know."

Chillingworth said MID's decision to void the contract surprised him, especially after it was approved by the bankruptcy court last month. "They approved the plan that Magna provided them," Chillingworth said.

Mills declined to state what terms MID was looking for in a new contract.

"It's totally inappropriate to talk about those things at this period of time," he said. "I'm sure they've got ideas on their own. We're not going to talk about specifics at this moment because we think it's important for all of us to come up with a comprehensive plan that is doable and we hope that we can accomplish that by the middle of June.

"This is not personal with Oak Tree. The whole model needs review. Let's start with a clean slate and figure out how to make things work."

Chillingworth expressed confidence that no other organization would apply to race in Oak Tree's slot Southern California in the fall.

"We have the dates," he said.

The racing dates for the fall at Santa Anita were awarded to Oak Tree by the California Horse Racing Board last year. Oak Tree has leased Santa Anita for a race meeting since 1969 and the lease that was voided was set to proceed through 2016. The meeting is run on a not-for-profit status with proceeds dedicated to racing-related charities. Oak Tree is scheduled to race from Sept. 29 through Oct. 31.

Chillingworth said Saturday that officials with Hollywood Park and Del Mar have offered their racetracks as host venues in the event that MID and Oak Tree are unable to reach an agreement. Hollywood Park president Jack Liebau said Hollywood Park has made a rent-free offer to Oak Tree and would ask them to pay the costs of operating the meeting.

However, Chillingworth said Oak Tree would prefer to conduct its meeting at Santa Anita.

"I think my board's preference is to stay where they are," he said.

Oak Tree hosted the Breeders' Cup in 2008 and 2009 and has sought future runnings of the prestigious event, even entering into discussions about becoming a permanent host. Chillingworth said he has been in contact with Breeders' Cup officials in recent days. Oak Tree would like to host the Breeders' Cup in 2011, but Chillingworth said on Friday, "This certainly could affect that in some way."