Las Vegas entrepreneur adds Maine track to stable

August 06, 2002 9:25 AM
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Las Vegas entrepreneur Shawn Scott has expanded his Northeast perspective by acquiring Bangor Raceway at Bass Park in Bangor, Maine, a harness racing facility that attracts slightly more than 1,000 patrons nightly during its spring/summer racing season.

The purchase includes a large parcel of land that is being eyed as the site of a $30 million civic center and auditorium. A spokesman for Scott said Capital One LLC, the purchaser, would seek an operator’s license from the Maine Harness Racing Commission on Aug. 15 and would hopefully meet with city officials to discuss the parcel redevelopment.

Although a purchase/sales figure was not given, Fred Nichols, raceway manager for the Bangor Historic Track, Inc., said the amount was in seven figures. President of the operating company is Ival "Bud" Cianchette, a prominent businessman and a long-time supporter of the harness racing sport.

Not mentioned at the time of the sale announcement was the effort being made by gambling proponents who hope to have several communities vote in November on whether they would support a casino in their towns and cities. It would not be surprising to politicians that a movement in Scarborough to gain approval for slot machines at racetracks would spread to include all tracks in the state.

Two months ago, Scott, who gained national celebrity when he bought Delta Downs in Vinton, La., for $10 million and later sold it for more than $131 million to Boyd Gaming Corporation (BYD), purchased Vernon Downs in Vernon, N.Y., a track that will soon benefit from the legislation passed by the N.Y. legislature that will permit slots at racetracks.

Promises, promises

Like a kid in a candy store who can’t wait to gorge himself on all the goodies he just bought, Frank Stronach saw his Magna Entertainment Corp. (MIEC) regurgitate all over Wall Street last week following a poor quarterly financial report.

The announcement of Magna’s purchase of two Maryland racetracks had barely dried on the nation’s financial pages when Magna reported a 50% drop in net income for the period ended on March 31.Net income totaled $1.1 million or $0.01 per share compared to $2.2 million or $0.02 a share in the comparable period of a year earlier.

But, that didn’t stop Stronach from running off at the mouth, a complaint that many in the industry feel has cost the Canadian industrialist credibility. His first comments regarding the Maryland purchase dealt with the complete destruction of Pimlico Race Course, home of the Preakness Stakes.

"I think the whole track needs to be torn down," Stronach was quoted as saying. "Pimlico must remain; there’s too much tradition involved. But it would be totally rebuilt from scratch. We would flatten it completely."

Previous statements regarding improvements to be made at other Magna purchases such as Santa Anita Park, Gulfstream Park and others, have failed to materialize.

Magna has spent $350 million to acquire 10 racetracks in a period of about three years and analysts were looking for positive results. There weren’t any. So, Wall Street reacted negatively. By Friday’s closing, MIEC had fallen to $4.01 from a 52-week high of $10.25. The decline continued on Monday with the share price closing at $3.45, down $0.56 on the sale of $1,367,527 shares.

Time-share project

Lakes Entertainment Inc. (LACO), the surviving company from the former Grand Casinos Inc., has formed a joint venture with Diamond Resorts LLC, a privately-held Nevada company, to develop the Shark Club parcel into an upscale time-share project.

The Shark Club, currently owned by Lakes Entertainment, is located in the area of Harmon Road and Las Vegas Boulevard in Las Vegas. The site of approximately 3.5 acres will developed in a $240 million 33-story, four-tower, 850-unit complex with construction to begin in 2004 and completed of the first tower expected in 2005.

Lyle Berman, chairman and CEO of Lakes Entertainment, said his company would contribute the Shark Club parcel, valued at $16 million, while Diamond would obtain the necessary financing.

IPOs of interest

Two Las Vegas casino companies seeking to initiate IPOs with the help of Wall Street investors have decided to take different routes.

Steve Wynn, whose Wynn Resorts hopes to build a new casino resort on the site of the former Desert Inn as well as developing a casino resort in Macau, plans to begin a "road show" (meetings with investment brokers to explain the company’s business plan) during the week of September 3. He hopes to raise $355-$408 million in a stock offering and another $350 million in second mortgage notes.

Michael Gaughan, CEO of Coast Resorts, who had filed for an IPO to raise $200 million, has put the equity offering on hold, noting, however, that the delay would not in any way impact the company’s $65 million expansion of the Suncoast Hotel/Casino.

The Insider

New Jersey gaming revenues increased by 1.3% during the month of July.

Gaming analysts were active last week. Jason Ader of Bear, Stearns & Co. raised his rating on Argosy Gaming Co. (AGY) to "buy" from "attractive." Todd Jordan of Dresdner Kleinwort Wasserstein raised Station Casinos Inc. (STN) and International game Technology (IGT) to "buy" ratings and downgraded Aztar Corp. (AZR) to "hold." Also Bill Schmitt of CIBC World Markets raised Park Place Entertainment Inc. (PPE) to "strong buy."

Harrah’s Entertainment Inc. (HET) will acquire all remaining shares of JCC Holding Co. (JCHC) to become sole owner of Harrah’s New Orleans Casino.

Aristocrat Technologies Inc. is partnering with comedian Jeff Foxworthy for a new line of slot machines.

Acres Gaming Inc. (AGAM) has received a $2.4 million order form the Sahara Hotel and casino.

Park Place Entertainment will join MGM MIRAGE Inc. and four other large Nevada companies in terminating their arrangements to buy electric power from Nevada Power Co.

International Lottery & Totalizator Systems (ITSY) reported net income for 2002 at $1.3 million or $0.10 a share compared to the previous year when net income totaled $2.6 million or $0.20 a share.