03/11/2011 12:22PM

MI Developments posts $52 million loss for 2010


Dragged down by a $76.7 million loss from its racing operations, MI Developments, the parent company of Santa Anita Park, Gulfstream Park, and other racing assets, lost $52 million in 2010, according to financial statements released by the company late on Thursday.

The 2010 result maintains a string of staggering losses for the racing properties, which were deeded to MI Developments on April 30, 2010, as a result of the dissolution of its subsidiary, Magna Entertainment Corp. Prior to declaring bankruptcy in early 2009, Magna Entertainment lost hundreds of millions of dollars on the properties.

According to the financial statements, revenue from the racing and gambling properties was $183.9 million during the eight months in which the assets were on the books, while revenue from the company’s real-estate business was $174.5 million. The real-estate business had a net profit of $24.7 million for the year.

Shareholders of MI Developments will vote on March 29 on a proposal by the company’s controlling shareholder and chairman, Frank Stronach, to swap his super-voting shares for the racing and gambling properties. Major minority shareholder groups have already indicated that they will approve the proposal, and the assets are expected to be spun-off into a private company controlled by Stronach as a result.

Stronach, who last year sold his supervoting shares in an auto-parts company he founded, Magna International, for $300 million in cash and another $550 million in common stock, is estimated to be worth at least $1 billion. Last week, MI Developments announced that Greg Avioli, the former chief executive of Breeders’ Cup Ltd., had been appointed chief executive of the company’s racing operations, a position he is expected to hold at the company formed by Stronach if the shareholders approve the stock swap.

In statements accompanying the financial documents, MI Developments said that the losses by its racing operations would have been mitigated to some degree if the assets were on the books during the first quarter, when both Santa Anita and Gulfstream hold live race meets.

“Our racing operations historically operate at a loss in the second half of the year with the first quarter of the year being the most profitable,” the statement said.

According to financial statements released last year, the racing operations of MI Developments lost $6.2 million in the second quarter of 2010.

During the fourth quarter of this year, MI Developments wrote down the value of its some of its racing assets by $23.6 million, according to the statements, including a $20.2 million write-down of Laurel Park and Pimlico Race Course in Maryland and a $2.9 million write-down of its share of a retail mall at Gulfstream Park. The company also reduced the value of its XpressBet account-wagering operation by an additional $3.5 million.

Late last year, Dennis Mills, the company’s chief executive officer, resigned. According to the financial statements, Mills was awarded $2.2 million in additional compensation as a “termination cost.”