Magna Entertainment, the Canadian firm that owns Golden Gate Fields in Albany, warned this week that its ability to continue in business is in “substantial doubt.”
The warning is contained in the company’s financial report for the first quarter of 2006, which was released Monday during the firm’s annual meeting in Toronto.
The report warns: “[T]he company’s ability to continue as a going concern is in substantial doubt and is dependent on the company generating cash flows that are adequate to sustain the operations of the business and maintain its obligations with respect to secured and unsecured creditors, neither of which is assured.”
The news comes as Albany voters are being asked to sign petitions to place a resolution on the November ballot that could stall a plan by Magna and a Los Angeles developer to bring a posh open air shopping mall to the track’s northwestern parking lot.
But Matt Middlebrook of Caruso Affiliated, the Los Angeles mall development firm, said, “We’ve spoken with Magna, and these are technical issues that will have no impact on our project.”
Magna Entertainment, the creation of Canadian auto parts magnate Frank Stronach, developed into the largest owner of horse racing tracks in North America.
The firm’s public relations arm has yet to return a call from the Daily Planet.
According to their financial report, Magna Entertainment signed a letter of intent in April 2004 with Caruso Affiliates Holdings “to develop certain undeveloped lands surrounding Santa Anita Park and Golden Gate Fields racetracks.”
Los Angeles developer Rick Caruso is perhaps the country’s leading developer of upscale themed malls that combine street level shops and housing above, built around open air plazas and walkways.
According to the financial report, Magna and Caruso have each agreed “to fund 50 percent of approved pre-development costs in accordance with a preliminary business plan for each of these projects, with the goal of entering into Operating Agreements by May 31, 2005, which has been extended by mutual agreement of the parties on several occasions and has been extended to May 15, 2006.”
Middlebrook said the agreement will “assuredly, without question” be extended.
According to Magna report, the Canadian firm’s share of costs of the two California track proposals has totaled approximately $3.3 million, “of which $1.5 million was paid during the three months ended March 31.”
Magna hasn’t signed operating agreements on either of the projects, the report states.
Opponents of the Golden Gate Fields mall project are currently gathering signatures for a measure they hope to place on the November ballot to require a public planning process for all development on the waterfront.
Middlebrook said Magna is currently working with city planning staff as the developers are formulating their proposal. “We’ll be meeting with them again next
week,” he said.
The Magna/Caruso plan would also have to go to the voters under current city law. “Whatever we submit to the city will be subject to a lengthy environmental review,” Middlebrook said. A proposal won’t be ready for voters ’till next year,” he said.
Meanwhile, the troubled Canadian firm is in negotiations with Native American tribes looking for casino sites, who are interested in buying interests in some of the tracks.
Reporter Greg Keenan of the Toronto Globe & Mail wrote Tuesday that Stronach told investors the firm could end up in the black if the sale of key properties go through.
Stronach blamed the current cash crunch in part on delays in the sale of The Meadows, a track near Pittsburgh, Pa., which has been stalled because of regulatory issues..