SBD/Issue 222/Facilities & Venues

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  • Magna May Sell Controlling Stake In Santa Anita To Offset Debt

    Magna Entertainment May Sell Controlling Stake
    In Santa Anita Park To Help Pay Down Debt
    Magna Entertainment Corp. (MEC) Chair Frank Stronach yesterday said that he is "prepared to pay down debt by selling a controlling stake" in Santa Anita Park, according to Steve Ladurantaye of the GLOBE & MAIL. The track, which Stronach had previously said he would not sell, is worth an estimated $500M (all figures U.S.). Stronach during MEC's Q2 conference call said, "We do have high debt and we may find that we have to sell 50 or 60[%] of Santa Anita." MEC owes $577.8M, and a Santa Anita sale "could appease disgruntled investors, who have suggested a sale would be the easiest way to balance the books." Ladurantaye notes the sale would allow MEC to "focus on its core holdings," including Gulfstream Park and Pimlico Race Course (GLOBE & MAIL, 8/7).

    SEEING RED: In Toronto, Tony Van Alphen reports MEC yesterday revealed that it "won't keep earlier pledges to eliminate its heavy debt load by the end of the year and may never do so." MEC yesterday reported a Q2 loss of $21.3M, an improvement from the $23.4M loss for the year-ago period, but for the first time acknowledged that the "continuing weakness in the U.S. real estate and credit markets will mean it won't meet a deadline for selling assets to wipe out liabilities of more than" $850M. MEC's revenue in the quarter, $166.3M, was down from $167.4M in the year-ago period (TORONTO STAR, 8/7). In Baltimore, Sandra McKee reports while the total Q2 loss "was in line with past performances," MEC's $4.4M quarterly loss in Maryland alone was "unusual because it came in the quarter that includes the Preakness Stakes," which is run at Pimlico. The Maryland losses are being "primarily attributed to a 12[%] loss in handle, a Preakness betting decline of $13.7[M] from 2007 and a loss of $1.7[M] in maintenance contributions from" the Maryland Thoroughbred Horsemen's Association (MTHA). The Maryland Jockey Club (MJC) yesterday also said that it will cut Laurel Park's fall meet by 11 days, following news earlier this week that the MTHA will "not fund the state's six major fall stakes races." The MJC yesterday also confirmed that it is "closing the barn area at Pimlico" effective August 31, pending approval by the Maryland Racing Commission at its August 19 meeting (Baltimore SUN, 8/7). MJC President & COO Tom Chuckas said that Pimlico "would reopen for stabling and training during its spring meet, but horsemen may not be willing to return for just a six-week period" (WASHINGTON POST, 8/7).

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  • Steelers Gain Land Near Heinz Field; Hotel, Venue Planned

    Steelers Gain Land Near Heinz
    Field For Entertainment Development
    The Steelers "won the right Wednesday to buy two prime spots on the North Shore despite objections from North Siders," according to Jeremy Boren of the Pittsburgh TRIBUNE-REVIEW. The Pittsburgh-Allegheny County Stadium Authority twice voted 3-1 to sell its land near PNC Park and Heinz Field to the team, which "plans to turn one plot into a Hyatt Place hotel and the other into a $10[M], 2,600-seat entertainment venue." For the hotel, the Steelers will pay the Authority "$1.32[M] for 3.5 acres of land near PNC Park." Construction on the 178-room Hyatt Place "must begin by the end of the year" and the Steelers "must also give the authority $668,000 in parking revenues." Meanwhile, a "separate, 3.9-acre parcel known as 'Lot 6' will be sold to the Steelers for $1.38[M]." The deal "requires the team to use the site as some type of entertainment venue for at least 10 years, and prohibits it from being sold for the same span of time." If the terms of the sales are violated, the land "automatically reverts back to the Stadium Authority's control" (Pittsburgh TRIBUNE-REVIEW, 8/7). An appraiser hired by the Stadium Authority estimated the value of the North Shore land, "given its intended use and expected revenues, at $1.1[M], slightly less than the sales price." Stadium Authority Chair Debbie Liestitian, the lone dissenter on the votes, said, "Pittsburgh's a distressed city and we're giving away our prime riverfront property" (PITTSBURGH POST-GAZETTE, 8/7).

    MONEY MAN: A source said that Pittsburgh-based Duquesne Capital Management Chair Stanley Druckenmiller "remains optimistic a deal will be worked out where he will gain majority stock control of the Steelers' franchise." The source added that Druckenmiller is "eager and ready to proceed with a purchase plan that is 'simple and uncomplicated' and would greatly benefit the long-term financial health of the franchise." The source added that the plan is "uncomplicated" because Druckenmiller "would buy out the four Rooney brothers in a straight cash deal that would be paid immediately and not over any period of time." The source said that the deal "would allow the Steelers -- if Druckenmiller becomes majority stock owner -- to operate without any debt or interest payments and enable the team to spend the necessary money to remain competitive in the NFL" (PITTSBURGH POST-GAZETTE, 8/7).

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  • Reebok Today Opening Second U.S. Store At Patriot Place

    Reebok Today Opening Store At Patriot Place
    Reebok today is opening a 5,200-square-foot store at Patriot Place, adjacent to Gillette Stadium, featuring the company's "largest assortment of merchandise in its latest attempt to position Reebok as a premium brand for sporting goods," according to Jenn Abelson of the BOSTON GLOBE. The shop, Reebok's second full-priced store in the U.S., will include "more than 500 hats, 300 sneakers, and a wide selection of women's fitness gear, sporting equipment, licensed jerseys, and team collectibles." Reebok is one of "dozens of retailers and restaurants opening shops in the massive complex" being built by Patriots Owners the Kraft family. Abelson notes the retail outlet is an "opportunity for the brand to showcase its expansive collection of merchandise and tap into the big business of New England's die-hard sports fans." On game days, the store's "four flat-screen televisions will feature the Patriots, along with other sports content and advertising." Reebok Head of Global Retail Anderson McNeill: "On game days, this center is going to be wild." The shop will include "hard-to-find items, including limited edition sneakers," and the company "imported sleek fixtures and lights from China so the store would look like other branded shops worldwide" (BOSTON GLOBE, 8/7).

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  • Slasher Flick: RazorGator Promo Sees Tix Sales Fees Cut In Half

    RazorGator beginning today will cut the fees it charges individual ticket sales by half from 15% to 7.5%. The 10-day promotion is designed to bulk up RazorGator’s profile in exchange-based secondary ticketing, as the company’s focus in recent years has veered more toward corporate hospitality for major sporting events and ticket management software. The move will apply only to individual ticket sellers and not brokers who trade on the site. Buyer fees will remain at 10%. “Over time, there will definitely be permanent margin compression in the industry,” said RazorGator CEO Jeff Lapin, echoing recent comments of the same tenor by executives from Live Nation and StubHub. “I’m not sure that time is definitely now, but we’re testing this out and seeing what kind of reaction surfaces, and it’s something we may extend depending on what happens. This is a big segment of the market we really haven’t focused on, one in which we want to have a big role.” The timing of the promotion coincides with one of the secondary ticketing industry’s busiest portions of the year, with new college and pro football inventory hitting the market to join existing trading for baseball, the end of the summer concert season and other major events.

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  • Facility Notes

    Tribune Co. Chair's Real Estate Team Cuts
    Parking Garage For Plans Around Wrigley Field
    In Chicago, Fran Spielman reports, "It looks like the Cubs may never build the 400-space parking garage adjacent to Wrigley Field promised to area residents in exchange for a 1,791-seat bleacher expansion." Cubs Chair Crane Kenney said that the building "planned for a triangular parcel adjacent to the stadium has been 'completely re-designed' by Tribune Co. [Chair] Sam Zell's real estate team to include more retail and office space at the expense of parking." Instead of "topping off the triangle building with a quaint rooftop garden, the top floor would include a revenue-generating stadium club" (CHICAGO SUN-TIMES, 8/7).

    SIGNED, SEALED, DELIVERED: Digital phone service provider Vonage has inked a multi-year deal with the NJSEA to become the first of two planned Legacy Partners of the Izod Center. The deal was coordinated by Nets Sports & Entertainment and includes entitlement rights to the Vonage Concourse and in-arena signage, including on the rotating box office LED (Vonage).

    LAKE LIVING: The Indians and nonprofit Gateway Economic Development Corp., which owns Progressive Field, have reached a deal that will keep the team at the ballpark "until at least 2023." Terms of the deal will be "unchanged." The team pays Gateway for its "share of operating expenses, as well as for capital repairs up to $500,000 each" (Cleveland PLAIN DEALER, 8/7).

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