Tuesday, June 15, 2010
Frank Stronach’s Unprepared Remarks
LOS ANGELES, June 15, 2010--A former Magna employee has leaked to me a rough draft of Frank Stronach's opening statement at a meeting of the California Horse Racing Board at Hollywood Park on June 22. Since the leakee does not want to see the leaker wind up hip-high in bilgewater, I had better say that my source was not Lou Raffetto, Joe De Francis, Jim McAlpine, Chris McCarron, Ron Charles, Doug Donn, Rick Cowan, Cliff Goodrich, Corey Johnson, Brant Latta, Jack Liebau, John Perrotta, Lonny Powell, David Romanik, Scott Savin, Donald Amos, Michael Neuman, Thomas Hodgson, Mark Feldman, Jerry Campbell or Ken Dunn. My apologies to the few I have missed.
If the rough draft holds up, Stronach will say something like this:
"Good morning, ladies and gentlemen, distinguished members of the California Horse Racing Board, friends of California racing, horsemen. . .
"And my good friend Chilly.
"I am honored and indebted to members of the racing board for giving me this opportunity to speak about free enterprise.
"Over the years, whenever I have attempted to talk about free enterprise, I have looked around the room and noticed a yawn or two.
"But it is free enterprise that was the bedrock of California racing decades ago, when Doc Strub at Santa Anita, Bing Crosby at Del Mar and Mervyn LeRoy at Hollywood Park were the pioneers who put the great game on the map, and it will be free enterprise that will pull this great game up by the bootstraps during these dire times.
"I have been asked many times what I mean by free enterprise, and I think the best answer is to look to the United States Constitution, which spells it out.
"Free enterprise, by my definition, in a nutshell, is the ability of a businessman to open his store at times when he has the most customers.
"Without free enterprise, racing will not survive in California.
"There have been some of you who have been critical in recent weeks of my company's announcement that Oak Tree is unlikely to run its fall dates at Santa Anita anymore.
"Nothing is forever. All good things must eventually come to an end. It's always darkest before the dawn. Santa Anita will survive without Oak Tree and Oak Tree will survive without Santa Anita. I promise you this.
"I met at breakfast this morning with Sherwood Chillingworth of Oak Tree--I like to call him Chilly--and we broke bread like two men with common goals ought to do. I had a plain bagel, with a schmeer of cream cheese, Chilly had a prune Danish, and we shared a pot of decaf. We both had tasters in the room who sampled all of this before we dug in, but I digress.
"I told Chilly that Oak Tree leaving Santa Anita was not the end of the world, and as I recall he then suggested a physical impossibility before picking up what was left of his Danish and asking for the check. Right?
"This was only a preliminary conversation. The wheels of free enterprise sometimes grind very slowly. Right?
"I believe Chilly understands that Magna will need time to install a new surface at Santa Anita, and that would preclude Oak Tree from running its traditional dates at our place. We were unable to begin work on the new surface after our meet ended in April because we needed time to conduct more studies about what is safe for the horse and what will be fair for the horsemen and the bettors of California.
"Racing surfaces are like ice cream. Some of us like chocolate, some of us like vanilla, and some like strawberry. But that doesn't mean that Neopolitan works for everybody. Racing surfaces can also be a lot like soup. You need so much salt, so much of this, so much of that. But it's the right flavor that's important. If you will allow me, I will tell a joke I heard the other day about soup. The man says to a waiter, 'Is there a fly in my soup?' And the waiter says, 'Quite possibly, sir, our cook used to be a tailor.' Sorry, ladies.
"We live in a free society, but that doesn't mean we shouldn't eliminate the entrepreneurs. They are an obstacle to the free market. Life goes on, but it's nip and tuck. I'm working on perfecting an electric automobile, and you don't have to be a scientist to know that that's what drivers all over the world need. It's a lot like racing. Electricity is what makes the mare go.
"Some have called me an entrepreneur, but I say foo. I'm just an average guy who worked hard for a long time. I'm still not quite sure what I want to do when I grow up.
"I'm sure many of you have questions, but before that I want to announce some exciting news that is guaranteed to revitalize racing in California. Mr. Arnold Schwarzenegger will be joining the Magna organization soon. Arnold and I talk the same language, we're from the same part of the same country, he's going to be out of work soon, and my team at Magna is confident that he will be a perfect fit. You may not know this, but Arnold knows as much about running a racing organization as I do. He feels that this will be just one more way that he can uplift the state of California.
"Now, if there are any questions. . . Yes, I think I see Chilly over there, raising his hand. . . "
Written by Bill Christine
Tuesday, May 25, 2010
There's no such thing as free trade. Did you ever play
marbles in the schoolyard? I played once against this
big guy and won the marbles and he said, "Don't you know
the latest rules?" I was a smart kid and I gave the marbles
back. That's how free trade works. The biggest guy wins.
I prefer fair trade.
--Frank Stronach, in Belinda: The Political and Private Life of Belinda Stronach
LOS ANGELES, May 25, 2010--Dennis Mills, leaving the recent meeting of the California Horse Racing Board, was heard saying to a colleague, "I thought that went pretty well."
From what I've heard about that meeting, I wonder what Mills would have said after Little Bighorn. Something like, "I thought that went pretty well, as long as you're not Custer."
Prior to the racing board meeting, there was an erroneous report that Mills, CEO of Magna International Developments, would be a no-show. "Something about not being able to find a good fit in a suit of armor," one wag said. Other than Frank Stronach, Mills is the biggest face on the company that has short-circuited the Oak Tree Racing Association, the charity-minded not-for-profit that's been running a race meet, including the hosting of five Breeders' Cups, since 1969. Smug Ph.D. candidates at the Wharton School for business might have said, "Well done, Frank," after Magna took advantage of a bankruptcy loophole, but it can be safely said that in a California popularity poll of Austrian nationals, even Arnold Schwarzenegger would finish higher.
If I didn't know better, I would suggest that the Mills before the racing board was really Stronach in a rubber mask. Mills reiterated the Stronach claptrap about the California racing model being broken, before Keith Brackpool, the no-nonsense board chairman, reminded the Magna henchman that "none of the things (Stronach) talked about (at Santa Anita) ever happened." David Israel, another of the commissioners, cut to the quick when he said: "There are a lot of things about California racing that need fixing, but Oak Tree isn't one of them."
A few days before the board meeting, I spoke with Sherwood Chillingworth, the normally upbeat vice president of Oak Tree. "I always thought we were the good guys," he said solemnly. "There's something wrong with a system that allows a business (Magna) to fail in so many areas, ruin so much of its equity, and then still wind up with Santa Anita, Gulfstream Park and the Preakness and Pimlico at the end."
Chillingworth has too much class to really unload on Stronach, and besides there's always the last-gasp chance that Oak Tree might re-emerge under a new lease with Magna. The racing board re-established Oak Tree's fall dates, and said it could run them wherever in California it could make a reasonable deal. What the board really said was that if Stronach didn't make peace with Chillingworth, there would be no fall racing under anybody's auspices at Santa Anita.
Under the cancelled lease, which was to run until 2016, Oak Tree turned over 75% of its profits to Santa Anita, a figure that amounted to $4 million in many years. Oak Tree also contributed $3 million to Santa Anita's synthetic-track kitty, then watched one failed experiment after another run up a bill that cost Stronach about $25 million. To stay at Santa Anita, Oak Tree was asked to loan $10 million to MID, mostly for yet another new surface, and MID wouldn't have to pay on the principal for two years. Other new wrinkles would have required Oak Tree to pay heavily for capital improvements (such as those rat-infested barns that Stronach kept promising to replace), and sacrifice revenue of approximately $1 million if it hosted the Breeders' Cup again. In other words, Stronach gave Chillingingworth an offer that he couldn't approve.
A few days before the racing board meeting, Ron Charles, the president of Santa Anita, flew to Toronto to tell Stronach that he had had enough. In Don Martin's book about Stronach's daughter Belinda, he quoted a former Stronach executive who said, "If you last two to five years, you've done well. Surviving is like dog years, it's seven for every one for humans." The five years Charles lasted must have seemed like 35.
May may have gone out like a lion in California, and June is expected to come in the same way. Early in the month, Mills said, his side and Oak Tree will talk again about a lease, but even without Oak Tree, Stronach's Santa Anita and Golden Gate Fields account for more than half the thoroughbred dates in the state, and that spells leverage. I can't really see the racing board revisiting the rule that says the same company can't run two tracks. If it does, Stronach just might close down Golden Gate, which could have been part of his grand plan all along. The next racing board meeting is June 24, at Hollywood Park. Stronach is expected to be there. Tickets go on sale soon.
Written by Bill Christine
Monday, May 17, 2010
Place Your Bets
LOS ANGELES, May 18, 2010--It's time to bet the future book on the Oak Tree Sweepstakes, also known as the Magna Handicap or The Great Chillingworth-Stronach Match Race. I called Tijuana to get the odds:
THAT Oak Tree, recently evicted at Santa Anita by its Frank Stronach-led landlord, MI Developments, will move its fall meet to Hollywood Park, and the Breeders' Cup will run its 2011 races there. 20-1
THAT Santa Anita and Stronach will seize Oak Tree's dates and become the host for the 2011 Breeders' Cup. 25-1
THAT Oak Tree will move its dates to Del Mar, and the Breeders' Cup, needing a wider turf course than Del Mar's, will announce that its 2011 races will be run at Belmont Park. 30-1
THAT Belmont Park will run out of money before the 2011 Breeders' Cup rolls around. 35-1
THAT Oak Tree will move its dates to Del Mar, and the Breeders' Cup, saying for the first time that it can live with a narrow grass course, will announce that its 2011 races look mighty fine where the turf meets the surf. 40-1
THAT the California Horse Racing Board will refuse Stronach and Santa Anita the fall dates that have traditionally belonged to Oak Tree. 50-1
THAT Stronach will tell the racing board that "my lawyers will see your lawyers." 75-1
THAT the racing board, reminded that Stronach tracks run more than half of the racing dates in California, will elect Stronach chairman. (Stronach changes the job title to "grand poobah.") 100-1
THAT Stonach will change his mind and say to Oak Tree, "Boy, have I got a new lease for you." 200-1
THAT Sherwood Chillingworth of Oak Tree will look at the new lease and say, "Say, Frank, what's this part where we give you $10 million so you can go back to dirt?" 250-1
THAT Oak Tree will go out of business without a fight. 300-1
THAT the Breeders' Cup will abandon its idea to hold its races at a "permanent site." 400-1
THAT the racing board will lock Stronach and Chillingworth in a padded room with no windows, and check every third day to see how things are going. 500-1
THAT the racing board, Stronach and Chillingworth will agree on an arbitrator: John Brunetti of Hialeah. 1,000-1
Don't wait to bet. These odds are expected to fluctuate wildly.
Written by Bill Christine