Magna devalues eight tracks

Magna Entertainment Corp. announced on Friday that it has taken a non-cash charge of $82 million to account for the declining value of most of the racetracks in its struggling empire, including Gulfstream Park and the Maryland Jockey Club tracks.

The write-down, which will affect the book values of eight of Magna's 13 racetracks, was the second in two years for the company. This year's write-downs were taken in the fourth quarter to comply with new rules requiring companies to re-evaluate their assets at the end of each year in case of significant depreciations in value.

The charge was after taxes, Magna officials said in a release, meaning the write-down actually was larger than $82 million. Analysts had expected Magna to take a significant charge at the beginning of 2004 because of declining business at many of its tracks throughout last year and because of the high prices Magna paid for many of its tracks as it built its business.

"It's not surprising to me at all," said Ryan Worst, an analyst for CL King and Associates who has rated Magna's stock as neutral. "They paid too much for their properties based on the cash flow of the tracks. It's really confirmation of that."

Magna chief executive Jim McAlpine did not return phone calls on Friday.

Magna said the write-down would impact the values of Gulfstream in Florida, Laurel Park and Pimlico Race Course in Maryland, Remington Park in Oklahoma, Thistledown in Ohio, and Portland Meadows and Multnomah Greyhound Park in Oregon. Magna said that Remington, Thistledown, Portland Meadows, and Multnomah all lost money in 2003.

Magna also said that the write-down would impact the value of its racing license at Bay Meadows in northern California. Magna does not own the track, but leases it on a year-to-year basis from Paine Webber, which plans to develop the property in the future.

Magna is scheduled to release its 2003 earnings on Feb. 24. Stock in the company was up 18 cents on Friday, to $5.53, up 3.4 percent.