Tuesday, October 06, 2009

Misnamed at Birth

LOS ANGELES, October 6, 2009--Halsey Minor used Frank Stronach as batting practice for the high hard ones that would come later from John Brunetti. Men have been called uber-masochists for far less. "I don't think many people have ever tried to deal with both of the most difficult people on the planet," Minor said.

Some of Minor's enemies would rank him fairly high on the same list. "The Baddest Boy in Silicon Valley" was written by a magazine editor groping for a gotcha headline, but several years before that the New York Times pretty much nailed it on Minor: "He's not out to save the world, he's going to conquer it. . . He's either a charismatic and passionate visionary, or an abrasive, egotistical upstart."


That characterization came in 1998, about the time a 34-year-old Minor sold a majority interest in one of his internet spinoffs to NBC for $63 million. A year later, Fortune magazine estimated Minor's wealth at $354 million. The linchpin of his empire had been Cnet, which netted him an estimated $200 million when he left, just before cyberspace took a long walk down a short pier in 2000.

Funny thing, but early on, shortly after Paul Allen gave him a $5-million grubstake to kick-start Cnet, one of Minor's associates at Merrill Lynch said: "He was like a colt in a stable, waiting for the gate to open for the big race."

It's taken a while, but Halsey Minor now wants his own stable and a vise on the industry that trafficks in stables. If only guys like Frank Stronach and John Brunetti wouldn't keep standing in the way.

The litigious Minor has given up on Brunetti's Hialeah track. "You know, even if I had won," he said, "the City of Hialeah would still have been in a position to give the track to whoever they wanted. They could have given it to Magna, even."

Magna = Stronach, the septuagenarian auto-parts maker/track owner/horse breeder who holds most of the voting power in his company, even though as a shareholder he's a piker. The race-track division, which includes Santa Anita, Gulfstream Park and a bevy of other tracks, is under bankruptcy protection. Minor attempted to buy up the tracks' debt, but that offer has been rejected in no uncertain terms. Dennis Mills, CEO of Magna International Developments, the parent company for the race tracks, once hung up on Minor in the middle of a phone conversation, and was a no-show at a scheduled meeting. According to Minor, Mills said this before the disconnect: "We'll look at your next proposal for five minutes. Then we'll send you a letter that will be longer than the last one."

Minor claims that his proposals have been turned down without having been presented to the Magna board of directors. Mills and other Magna executives did not respond to requests for comments about Minor's charges.

"This is not about ego and how one feels they have been unfairly portrayed in the press," Minor wrote to Magna in early September. He appeared to be referring to Stronach. "This is not about a legacy
or anyone's personal desire to see the outcome optimized for that person's personal reputation. It is about business and business alone. But in my opinion I am seeing one business mistake piled upon business mistake. These mistakes have been compounded, going back to the first track purchased (Santa Anita in 1998). . . I simply want to repair the massive damage bestowed on the U.S. racing industry. . . and I am trying to use my business skills to do it--diffusing the mess along the way."

A couple of days later, Richard Crofts, general counsel for Magna Developments, responded. "None of (your) proposals. . . appear economically viable," he wrote. "In light of the manner in which you have conducted yourself with MID, including the venomous nature of your prior communications, MID will no longer consider a business relationship with you and hereby instruct you not to further contact any MID executive."

Minor does not bruise easily. "One man's mean is another man's, er, reasonable," he said. "If I said good things, would they give me a deal? I would have fired an attorney if he wrote a letter like that. Croft is not dumb enough to have written that note without being under duress."

Magna, facing a lawsuit from creditors who claim that Stronach won't give up his premium tracks during the bankruptcy process, recently announced that it is selling Thistledown and Remington Park for a combined $170 million.

Minor questions that Magna will derive that much from the two tracks. "There are too many contingencies in the Thistledown deal," he said. "When all is said and done at Remington, the value of the track will be about $23 million--$5 million for the racing and $18 million for the other gambling."

Minor, 45, is a newcomer to racing. He now has a crop of unraced young horses at his Virginia farm. Trying to buy his way into last year's Kentucky Derby, he paid a reported $3 million for Fierce Wind just before he was injured in the Florida Derby. Fierce Wind has won a couple of minor races this year, but is sidelined again and might not run for at least nine months. At auction, Minor paid $3.3 million for Dream Rush, a multiple Grade 1-winning filly, as a broodmare, but sold her to Jess Jackson before she was bred to A.P. Indy this year. There have been rumors that Minor is being financially squeezed, but he said: "My net worth has doubled since 2007."

Most of Minor's important investments have been in start-ups, companies fueled by new ideas, companies that might offer consumers things they couldn't find anywhere else. Horse racing hardly fits that template. Horse racing is an old shoe, badly in need of a master cobbler. Check the Yellow Pages and you won't find many cobblers. Minor is at the front of a very short line of suitors.

"While Stronach plays with house money, there's no interest in Gulfstream, not an offer of more than a hundred million (dollars) for Santa Anita," Minor said. "I'm not one of these guys who's giddy about slot machines. But Stronach has frozen the market, while the game is fixable but running out of time. I'd like to see racing go from the least to the most innovative sport in the country. It needs to go back to giving the customer what he wants. It will be expensive, and the tracks will take a short-term hit, but it's possible to build a product that's in demand. What we have is an industry that spends a lot of time arguing with itself. The Triple Crown is still very popular. Racing isn't dead. It isn't dead in England, where there's a resurgence, and it's doing all right in Australia as well. What we've got is a lot of tracks with a lot of bad bathrooms. They brought baseball back. It can happen in racing, too."

Comments (23)