12/31/2004 12:00AM

Magna to rivals: Let's work together

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Frank Stronach

Frank Stronach is not only one of racing's most accomplished owners and breeders, but his Magna Entertainment Corp. has also become North America's biggest racetrack company. Among Magna's prized possessions is Gulfstream Park, Florida's top winter track, which opens Monday. Earlier this year, Gulfstream, which is in Hallandale Beach, embarked on an ambitious renovation project that has already seen the demolition of the grandstand, the rebuilding and enlargement of the main track and turf course, and the construction of nine state-of-the-art barns and new dormitories for backstretch employees.

The grandstand and clubhouse will not be ready until the end of the two-year project, in time for the 2006 meeting. As a result, the 2005 meeting will be run in country fair-like conditions that will likely test the patience of employees and fans alike.

On the eve of the opening, Stronach, 72, sat down with Mike Welsch of Daily Racing Form at Magna's Palm Meadows training facility in Boynton Beach, Fla., to discuss the challenges that lay ahead for Gulfstream and the entire racing industry in south Florida.

Daily Racing Form: Since the conclusion of the 2004 meeting, you have torn down the grandstand, replaced both racecourses, and basically started over from scratch at Gulfstream Park, when it would have been easier and less expensive to renovate the old building. Why such an ambitious and costly undertaking?

Frank Stronach: It would have been cheaper to renovate the old building. But not better. We, and by "we" I mean the horse industry, have to create a show which can stand on its own feet. Years ago, when all the tracks were built, there was no competition. Nothing was done to improve the facilities since then. But it's a different environment now. You have an enormous amount of entertainment. We have to compete with all the other entertainment available in this area. I've always said Vegas wouldn't be around if they only stayed with gambling. Vegas is entertainment, and like Vegas, we need to put on great entertainment. And at Gulfstream Park, I'm convinced we'll prove it can be done.

Our main act is the horses. In order to run a successful horse operation, you need horsemen with horses, trainers with their help, and you need customers. So what we tried to do is have a great environment for horses, and that begins with the racetracks. Most racetracks don't put in a proper base. Gulfstream Park is basically swampland. There really wasn't a base in there. So we lifted the thing up three feet. That takes a lot of work and money. But we believe we now have a very safe and very great racecourse. The idea was also to widen the turf course to a mile. How many races can you run on a seven-eighths turf course like we had? Now we'll be able to run the stakes at a mile and some of the claimers on the seven-eighths path and can offer more and safer grass racing than ever before.

Obviously there will be some inconveniences for the live racing public during the upcoming meeting, which is going to be held under tents and generally in fair-like conditions. How will it affect business this year and in the future?

There's no question there will be some inconveniences. But it had to be done sometime because the buildings were obsolete and the racetracks weren't good enough and had to be expanded. But I think people will have a fun time. It will be more like a fair meet. I don't think business will be down much, if any. And I'm very optimistic when we have the new facilities ready next year at this time that we'll have huge gains in attendance and in handle because we're going to be able to put on such a great show.

Last year, some simulcast players were upset when Magna restricted the sale of the Gulfstream and Santa Anita signals. Recently, Magna made a deal with Youbet.com to carry the signals. With limited live attendance at Gulfstream this year, what are your plans for offering the signals to other betting companies?

What people have to understand is that people are setting up a shop with a few computers and want to slice off the cream. We put up a huge investment - hundreds of millions of dollars - and have to be protective of that. If the money is not coming back into the tracks, how can you pay for purses along with the upkeep?

I've been preaching for the longest time, there should be one betting company in America which is like a service company and no tracks should be excluded and you get your pro rata out of what people bet on your tracks. We - having the most investment in this - cannot be subject to someone controlling the signal. Let the industry control the signal. I don't know if it will ever happen, but I hope so. There is $900 billion gambled in America on a yearly basis, and the horse industry gets less than 3 percent. I'm saying, let's see what we can do together. I think we can get 20 percent. It's a big difference if we can work together.

There will be many changes coming up yet in the industry regarding simulcast signals. We'll assess it from time to time and will do what we think we have to do to keep horse racing alive.

What's different about the new Gulfstream, how will it attract more racing fans, and how much were you personally involved in planning the track?

I'm very much involved. I designed all the barns. I started out small, did my own haying. I've done foaling, blacksmithing, and built barns. I know about the safety of the horse and what the horsemen need. For me, this is a business of love. I understand it. I have racing managers and good people to take care of those particular aspects of the business. I'm into the basics and totally involved in making sure the barns, the track, and the buildings are constructed properly.

Considering the investment being made in Gulfstream, what does this mean for your future racing schedule, specifically the expansion of racing dates and the possibility of competing head to head with Calder Race Course?

Calder or Churchill Downs [which owns Calder] should see we have this huge pie. Let's work together. We say, let's interchange simulcast signals. We want to be open when they're running, and vice versa. There are only so many horses. Let's exchange the signals rather than fight with each other over racing dates. We'd like to sit down with Churchill and explore what we can do so both tracks can have increases and accomplish things that will help the industry. If we both have simulcast centers, you don't necessarily have to race every day to be successful. There's enough business to go around for both of us. Everybody says that kind of thinking makes sense, but then everybody turns around and blames us for coming in here and trying to create problems. What did I do? I only invested. Since I'm here, the racing industry at least has some movement in town now. Everybody has to admit that. And I'm setting standards.

You've changed the Florida Derby date this year from its traditional spot in mid-March to the first Saturday in April. What was the thinking behind the change, and is this permanent?

I wasn't involved with this decision. I don't interfere with any of the inner workings regarding the racing schedule. I have nothing to do with it. I'm so busy I don't get into all those details. We have got a lot of racing managers who handle that kind of stuff.

How much did the possibility of getting slot machines at Gulfstream - possibly as early as the 2006 meet - go into the plans for rebuilding the track? Where would the machines go?

When putting up a new building, you always have to think about how you might expand, although I would have rebuilt the building anyway because the old one was obsolete. We also have our own new [betting] machines called Horse Wizards, which are like slot machines [and] that I think will be very popular.

Naturally, we planned for the possibility of getting the slots and have set a spot aside for them on the south side of the building. They will be in an area adjacent to both the racetrack and the shopping mall that will be built once construction on the grandstand is completed.

Considering that Gulfstream purses have fallen behind some winter tracks, what plans do you have to increase purse money for this meet and in the future?

Of course we'll take slots, but slots are not the answer. What the state gives to you, they can take away. The biggest problem we're facing - "we" meaning both tracks and horsemen - are all the people who have come in and started siphoning off monies that should be coming directly to the tracks - monies that now are going to the islands [offshore betting companies] while the people who make the major investments and put on the show don't get anything back. We have to sit down with the horsemen and decide what we can do to prevent that situation. We're all in this together. Early in the new year, I'd like to call some summit meetings, try to make everybody understand the magnitude of the problem, and point out that if we all don't work together we're not going to make any headway toward increasing purse revenues.

What are your plans for the Palm Meadows training facility, and do you envision applying for racing dates there at any time?

We'd like to demonstrate to the local community at Gulfstream Park that the new racetrack we're building will be a great asset to the community. And eventually when they see that up here in Boynton Beach, the local people might say, "We'd like to have the same thing they have down at Gulfstream Park." I think someday there would be room for a circuit in this area, with live racing at Gulfstream, Palm Meadows, and Calder. So long as we can all work together and don't lock each other out when the other track is racing.

What are the chances of bringing the Breeders' Cup back to south Florida?

I believe with the new turf track, the Europeans would like to come to Gulfstream Park for Breeders' Cup - don't you think? That's certainly one asset of widening the turf course and the main track, too. Even though the grandstand will be smaller, there's room enough at Gulfstream Park to handle a big event. We designed the place with that in mind. I think the Breeders' Cup is good for horse racing, and it should be moved around to different parts of the country from time to time. It would also be good for south Florida, too. It would be a shame not to have it down here again.

Now that Magna Entertainment Corp. and Churchill Downs Inc. have joined forces to offer wagering on their tracks to European audiences, are there any other joint projects in the works?

We're willing to sit down with Churchill any time. Our relationship with them is on very good terms at the moment. My guys sit down with [Churchill chairman] Tom Meeker constantly. We would love to find ways in which we could have one betting company, but at the moment they've made a commitment to TVG. Hopefully that problem and others we both face, like the situation we have here in south Florida with Calder, can be worked out to the advantage of all the parties.