Stronach dumps Maryland’s top exec; jeopardizes slots for Laurel

Dec 4, 2007 5:10 AM

Frank "You’re Fired" Stronach, whose Magna Entertainment Corp. (MECA) has lost more executives in the past five years than most companies lose in a lifetime, has struck again.

Given the heave-ho was highly-respected gaming executive Lou Raffetto, who has been leading the efforts of the Maryland Jockey Club since the re-assignment of former owner Joe De Francis.

The ax fell despite Raffeto’s ability to guide the Maryland tracks through a turbulent year, as well as helping lobby recent legislation that will permit voters to decide whether to permit slot machines at the company’s Laurel track.

The decision was described by Alan Foreman of the Maryland Thoroughbred Horsemen’s Association as "the biggest mistake involving Maryland racing since I’ve been in the industry here."

John Franzone of the Maryland Racing Commission said the move jeopardizes Laurel’s chances of getting slots even if the electorate approves.

In comments attributed to Stronach, the reason behind the executive’s firing was financial. Also fired was Tony Cobuzzi, the senior vice president of finance.

Stepping into the role of president and chief operation officer for the MJC is former Raffeto underling Chris Dragone, whose late father formerly headed the New York Racing Association. Dragone, a Magna Entertainment employee for several years, has been in charge of company racetracks in Michigan and Oregon.

Following the announcement, Dragone said, "Hopefully, over time, I can earn their (the horsemen’s) respect the way Lou did by being honest and doing the right thing."

And for that, Raffeto felt the wrath of the Christmas Grinch.

Trump’s Wonderland

Having failed to make a deal for his Atlantic City casinos, Donald Trump has headed north to Massachusetts in search of a partner in a bid for one of the state’s three casino licenses.

According to the Boston Globe newspaper, Trump last week talked with the operators of a trotting track in Plainridge and visited sites in Fall River, New Bedford and Warren.

But his main pitch, it appears, is with Charlie Sarkis and the latter’s rundown dog track, Wonderland in Revere. A partnership here would place Trump directly in competition with his business nemesis, Richard Fields, principal owner of Suffolk Downs, the thoroughbred track that sits about two miles from Wonderland.

In this matchup, say observers, Fields is odds-on to finish in front of Trump. Both are involved in a Florida lawsuit over a lucrative partnership with the Seminole Tribe.

More inaction

Chicago residents appear to be coming more apprehensive about the transportation problems the city faces come Jan. 1 when money for the systems run out. There was hope that the lawmakers would resolve the situation during a special session but the elected officials went home without doing anything.

Gaming supporters had hoped that a Chicago casino would provide the necessary funds to revamp the transportation system while nearby casino operators such as Ameristar Casinos Inc. (ASCA) and Penn National Gaming Inc. (PENN) feared the competition.

Without action, and with time running short, Chicago transit users face cutbacks in service and fare increases.

Shares rise

James Packer’s plan to spinoff the gambling division of Publishing and Broadcasting Ltd., the media giant created by his late father Kerry Packer, found favor with investors last week.

Shares in Crown Ltd. rose as much as 8.3% when they debuted on the Australian Stock Exchange.

According to the plan, PBL shareholders will receive up to $3 for each share, as their portion of the split.

While PBL retains all media outlets, Crown will own the Melbourne’s Crown Casino, Australia’s largest, as well as Perth’s Burswood Casino and 38% of Melco PBL Entertainment Ltd. (MPEL), operator of a Macau casino.

Under attack

The Wall Street Journal continued its attack on casinos doing business in Macau last week with a second article suggesting that the Chinese enclave’s "supply glut" of hotel rooms and gaming opportunities will "compress margins."

And, just as in the previous article, printed a week earlier, investors acted accordingly, selling off the shares of MGM MIRAGE Inc. (MGM), scheduled to open its jointly owned facility with Pansy Ho later this month; Las Vegas Sands Corp. (LVS), the first gaming license holder to open a Macau casino, and the hardest hit, Wynn Resorts Ltd. (WYNN).

One analyst said the previous high margins made possible by the limited amount of gambling available to mainland Chinese visitors would not continue, thus causing investors to rethink their positions.

THE INSIDER: Looking to increase the number of Macau visitors to his casino, LVS Chairman and CEO Sheldon Adelson has established a new ferry service to run from Hong Kong to his property on the Cotai Strip.

Bill Paulson and Bill Wortman’s Pennsylvania racino, The Meadows Racetrack & Casino, has opened a high-limit slots room with 78 high-limit slot machines ranging from $1 to $25.