Stronach saw his dream come true; now he has another…any bets?

May 22, 2007 8:30 AM

Don’t mess with the big guy.

Ten years ago auto parts mogul Frank Stronach decided he wanted to own a racetrack. He bought Santa Anita for $220 million or so, then bought 10 more, including Gulfstream in Florida.

He has an idea that world Internet betting is coming, and he wanted tracks in every time zone so he could cover the clock.

His idea of turning racetracks into entertainment complexes has yet to be proved, but he is on his way, with Arcadia — Santa Anita’s home town — giving approval to commercial development of a part of the track’s monster parking lot, now largely unused, and Gulfstream Park’s huge development already under construction.

Stronach is a restless thinker, and he sees opportunities where others shy away.

His latest fancy is to build 300 auto parts factories in Russia.

Why?

Because he believes a huge new middle class is about to rise there, and that one of the first things they will want is to own a car, with Stronach Magna parts in them.

Stronach has found a buddy, a huge entrepreneur like himself, in Russia to build the cars.

The partner is Oleg Deripaska, sort of a Russian Frank Stronach, he has a massive company called Russian Machines, and he has Russian rubles galore.

Deripaska has agreed to buy into Magna for $1.54 billion U.S. dollars, and in return Frank Stronach, who has never let loose of control of any of his many Magna entities, has agreed to give Deripaska six veto-bearing seats on the 14-man Magna International board.

Russian Machine, in turn, will support Magna’s auto parts business in Russia.

These guys are cosmic thinkers. Stronach already has 83,000 employees in 229 plants and 62 product development centers in 23 countries. In Canada alone, it has 21,000 employees in 62 plants and 8 product centers.

It is likely that whatever car you drive, it has Magna-manufactured parts.

Deripaska, for his part, agreed that he cannot sell his new stake in Magna to a third party. It will be him and Frank.

This does not mean that Stronach, at 74, is giving up. If he gives up anything, it will be to his very smart daughter Belinda, who became a member of the Canadian parliament and then dropped out to understudy dad at their Aurora, Ontario, headquarters.

When Stronach was asked if he might sell out, he asked a question in return. To whom? No one has enough money to buy him out, he said. "I don’t think anybody has that, not even the sheiks."

Stronach’s story is familiar, at least in Canada. He dropped out of school in Austria at 14, became an apprentice tool and die maker, and left for the New World with a couple of hundred bucks in his pocket.

He applied for visas, and Canada was the first country to grant him one. So it was Canada, and when he arrived in Toronto in 1955 he had to scuffle to survive.

He chased golf balls and washed dishes, and when he got a few bucks together two years later he and a friend opened a tiny machine shop. He decided auto parts were a commodity in constant demand, and found a sponsor. Then General Motors found him, and gave him an order for 300,000 mounts for sun visors.

By the late 1970s, Stronach was heady with success. He predicted Magna would soon reach a billion dollars a year in sales. "Everyone said I was crazy, so I had enough handicapping," he said.

It took until 1986, but Magna reached the billion dollar mark that year. Ten years later, its sales totaled $5.8 billion. And last year, with the automobile industry in trouble, Magna sold $24.2 billion in auto parts.

Now Frank Stronach, who owns or operates 11 tracks in California, Florida, Maryland, Michigan, Ohio, Oklahoma, Oregon and Texas, and one in Austria, owns 1,000 horses and XpressBet and 50% of HRTV and AmTote that processes totalisator bets, and recently partnered with Churchill Downs to control a vast portion of major track telecasting in the U.S., sees a chance to expand.

"We’ll double or triple in 10 years," he says.

Anyone want to take that action and bet against him?