03/08/2005 12:00AM

Magna replaces its CEO

Email

Jim McAlpine, the chief executive officer of Magna Entertainment for the past four years, has been replaced by Thomas Hodgson, a board member of Magna's parent company, the company announced on Tuesday.

McAlpine has been reassigned as vice chairman of corporate development at Magna and will also serve on Magna's executive management committee, which Hodgson chaired. McAlpine will continue to play a role in developing strategy for racetracks, said Dennis Mills, a member of Magna's executive management committee and the executive vice chairman of the company.

McAlpine, a former executive at the auto-parts company founded by Magna's chairman, Frank Stronach, presided over four tumultuous years at Magna. On his watch, the company launched a television network and account-wagering company, demolished Gulfstream Park, built a $95 million training center north of Miami, and lobbied extensively for slot machines in the states where Magna owns and operates racetracks. Along the way, Magna lost hundreds of millions of dollars, including $95.1 million in 2004, while taking on more than $250 million in debt and watching its cash-flow position deteriorate. In 2004, the company had negative cash-flow of $39.1 million.

Mills said that Magna's board made the decision on Tuesday afternoon to install Hodgson so that Magna could focus on repairing its financial condition and getting slots legislation passed.

"We've got some challenges, but the reality is that the challenges are all manageable if you devote a singular focus and vision to managing those challenges," Mills said. He declined to be specific about any changes that were planned for the company.

Hodgson was appointed to the board of Magna's parent company, MI Developments, in September 2004. According to a statement from the company, Hodgson has been working as a consultant to Magna Entertainment for the past several months while chairing the executive management committee.

MI Developments, a real-estate holding company, was spun off from Magna International, the auto-parts company. MI Developments holds real estate and collects lease payments from the users of the real estate, including Magna Entertainment and Magna International.

Magna made the announcement on the same day that Florida voters in Broward County - where Gulfstream Park is located - and Dade County went to the polls to decide on whether to approve slot machines at parimutuel facilities. The measures were widely expected to pass.

McAlpine earned the distinction of being one of the longest-serving executives to work at the company. McAlpine was appointed chief executive in January 2001, becoming the company's fourth person to hold the position within a year. Since then, Magna's lower management has gone through multiple overhauls.

Both Magna Entertainment and its parent company, MI Developments, have been under intense pressure from shareholders. Critics of Magna Entertainment have grown frustrated with the company's inability to turn a profit and fix its cash-flow problem. Separately, some influential shareholders have pressured MI Developments to cut its relationship with Magna Entertainment, calling the racetrack company a drain on MI Development's performance.