When I was a kid, I played Little League baseball. I wasn’t very good, but I played and I enjoyed playing it a lot. In no way do I think that Little League baseball is a bad thing; it is a good thing. Nevertheless, there is one aspect of Little League baseball that has gone around the bend.
There are far too many Little League baseball games on television. I have no problem with televising the Championship Game; you could even talk me into having ESPN televise the “Little League Final Four Games”. But now we have regional games on television in regional cable areas and ESPN televising what seems to be about 4 dozen games. And, that is not good.
Obviously, it is too late to put this toothpaste back into the tube, but is it really a step forward for Western Civilization when more than the Little League Championship Game is televised? All too often you hear mournful cries of empathic pain for the poor and exploited NCAA football or basketball players who toil to enrich the universities that refuse to compensate them. Do not forget that these players do get scholarships, which they could use for personal advantage if they chose to do so. Feel far sorrier for the Little League player who toils to make the few folks who run “Little League Inc.” rich. If you want to cite examples of the economic exploitation of children, do not forget to include Little League baseball in with the “shoemaking sweatshops” and the NCAA scholar-athletes.
I have described the sorry state of horseracing in North America several times in the past. Recently, Magna Entertainment Corp – owner of a whole passel of North American racetracks most of which are heading to financial oblivion – filed its quarterly report with the Securities and Exchange Commission. Obviously, there is more than ample precedent for such reports to contain fanciful information rather than purely factual information – - hello, Enron. However, I would like to assume that Magna is in such bad shape that it could not either:
A. make itself out to be in worse shape than it is or
B. fudge the financial numbers and still come out looking as bad as the numbers did.
I am not an accountant or an auditor; Warren Buffet does not call me to pick my brains because of my financial acumen. However, looking at some of these numbers makes me think that Magna Entertainment might just be in a corporate death spiral.
For the most recent quarter, Magna lost “only” $21.3M.
Their losses for the first half of 2008 were $66.7M.
Since 2005, Magna is in the red to the tune of more than $550M.
Magna has loans coming due between now and June 2009 totaling more than $220M.
To avoid being kicked off the NASDAQ, Magna Entertainment did a reverse split. For every 20 “old” shares you owned, you got 1 “new share”. That keeps the stock price over $1.00 per share. Even with that reverse split, the shares closed yesterday at $7.60 a share on the “new shares” meaning the “old shares” would have been worth 38 cents.
Magna has been trying to sell off some of its land holdings and some of its smaller racetracks with little success. Given the real estate market in 2008, I cannot see how that will get any easier anytime in the next 12 months. [On the other hand, if you would like to own a racetrack in Oklahoma (Remington Park) or Oregon (Portland Meadows), this might be the time to make Magna a low-ball offer…] Magna also owns Gulfstream Park in Florida and Santa Anita (site of the next two Breeders’ Cup races) and even those properties might become available.
Magna Entertainment Corp entered the racing business with great fanfare and with grand plans. It made plenty of enemies along the way and those enemies are smiling today. Magna committed a humongous corporate sin; it embarked on a vast undertaking with “half-vast” plans. If it is pushed into bankruptcy and the courts take control of whatever assets remain, this will not be a good thing for racing in North America because far too many properties will be on the market in bad economic times. I do not have to consult with Alan Greenspan to know that is not a good situation.
Horse racing is a form of legal gambling in the US and so is dog racing. Under bizarre circumstances, the NFL and the dog racing industry might come into juxtaposition thanks to Steelers’ owner Dan Rooney.
Dan Rooney is in the process of trying to buy out his brothers’ interest in the team such that he will have a majority interest. Meanwhile his brothers are seriously considering a much higher offer for their shares than Dan Rooney can or is willing to pay – - or maybe both. In such a case, the Steelers would have a new owner/helmsman. And that might just pose a problem for the NFL because there is an NFL rule that forbids owners from having interests in the gambling industry. Dan Rooney and his sons have interests in dog racing, which is exempted from those NFL bans; but the dog racing industry and the Rooney’s dog racing operations rely on slot machines to stay afloat.
Currently, Dan Rooney’s stewardship of the Steelers and his standing as a senior member of the league seem to have gotten the NFL to avert its eyes from the apparent rules violation. However, if he were to become a small minority owner – say less than 30% of the team – how could the league continue to ignore the ties to those “racinos” in the dog racing industry?
Finally, here is a comment from Greg Cote in the Miami Herald regarding the Little League World Series on television:
“Instant replay will be used at this year’s Little League World Series. Here is a better idea: Use instant replay to double-check birth certificates.”
But don’t get me wrong, I love sports…