Archives for November 2010

 
All-Cash Offer Maximizes Shareholder Value and Sets Stage for Revolution in Thoroughbred Horse Racing

SAN FRANCISCO (Nov. 9, 2010) – Minor Racing LLC today offered to purchase substantially all of the horse racing assets of MI Developments Inc. – including some of the nation’s best-known racetracks – with the intent of leveraging technology to transform American thoroughbred racing into one of the world’s most innovative sports.

In a letter to the Special Committee of MI Developments’ Board of Directors, Minor Racing made an all-cash offer, subject to customary due diligence, of $150 million to $170 million for Santa Anita Park, Golden Gate Fields, Portland Meadows, Maryland Jockey Club, Amtote, XpressBet and HRTV. Additionally, Minor Racing offered to acquire Gulfstream Park, Palm Meadows and all other Florida-based racing assets for an additional $150 million.

In its letter, Minor Racing stated that the inclusion of non-core racing assets in MI Development’s portfolio has been significantly detrimental to the interests of the Company’s shareholders. “We further believe that selling the racing assets at a fair price would enable the Board of Directors, should it determine that sale of the Company is in the best interests of its shareholders, to achieve a significantly better price than the current offer,” wrote Halsey Minor, Minor Racing’s principal.

“I have started several successful media and technology companies, and each time success came by tirelessly driving innovation,” said Mr. Minor. “Modern horse racing is one of the least innovative sports. I believe by making significant digital advancements, horse racing can become one of the most innovative sports and capture the attention and imagination of a whole new generation.

“Horse racing is the world’s most exciting and elegant sport; soon it will also become its most innovative,” said Mr. Minor, who founded or co-founded such successful technology companies as CNET, Salesforce.com and the firm that became Google Voice. “If I could coax 100 million people to learn about computers, I can certainly do the same with horse racing.  Man’s special relationship with horses and horse racing is primal. It’s practically encoded in our DNA.”

Mr. Minor said Minor Racing has a three-step plan for reversing the decline of the past 60 years in thoroughbred racing. The plan calls for Minor Racing to:

§    Purchase and/or lease existing venues;
§    Add innovative new technologies and improve overall quality of service and experience;
§    Build new experience and place-based venues that transform thoroughbred racing into the world’s most entertaining and innovative sport.

Minor Racing is uniquely positioned to turn around horse racing by building on its deep experience developing transformative technologies. Minor Racing has a fully integrated technology plan that incorporates new experiences for the track, off-site viewing audiences and home or mobile users.

Just as CNET pioneered technology for the web, Minor Racing will pioneer technology for thoroughbred racing. For example, Minor Racing has already proven the ability to deliver 4K2K video of races at the track or to off-site viewing locations. 4K2K video is 10 times as crisp as High Definition. Minor Racing can capture close finishes at over 1,200 frames per second – allowing audiences to cheer those dramatic last few seconds as they play out over 30 seconds in slow motion.

Minor Racing is the only known organization in the world that can take two stereo cameras and create as many as 25 views in 3D so viewers can literally walk around the image of a live race on the screen – without glasses of any kind. Most importantly, Minor Racing does this in real time, unlike other efforts that have a two-hour delay.

By the end of 2011, Minor Racing anticipates being able to place cameras around any track and let the user sit in any position or move with the horses on a 3D display.  This kind of 3D technology is revolutionary for any sport and has been in development for more than a year with the horse race track experience in mind.

Mr. Minor said these innovations and others provide a strong foundation for success. In addition, the value of MI Developments has been substantially depressed by the company’s non-core horse racing assets. The bankruptcy of Magna Entertainment, followed by the unexpected absorption of non-core racing assets into MI Developments, has impaired the value of the company, Mr. Minor said.

“MI Developments could be worth substantially more than it is today if the Special Committee and the Board accept Minor Racing’s offer to purchase the non-core, poorly performing horse racing assets that just six months ago were operated into bankruptcy,” Mr. Minor said. “Horse racing assets were never purchased based on any announced strategic plan by MI Developments. Quite the opposite. They were added because of their diminished value after the lengthy and disruptive bankruptcy of the former Magna Entertainment.”

About Minor Racing

Minor Racing is part of a consortium controlled by Mr. Minor that also includes Minor Ventures and Minor Studios. Minor Ventures has started, built and successfully sold numerous companies such as Grandcentral, now known as the fast-growing Google Voice service.  Minor Studios develops online virtual experiences. The first game atmosphir.com launches this month with an experience that allows users to build their own online games to share with others. In the short time atmosphir.com has been available for testing, more than 70,000 games have been built and shared.

The debate over Horse of the Year is already underway with the connections and fans of both Blame and Zenyatta starting to make their cases. This is a rerun of last year when there was so much argumentation over Rachel Alexandra and Zenyatta.

The voters from the three organizations that determine HOTY will soon have to render their collective decision. From my perspective, this at first glance is a seemingly difficult decision because the proponents of both Blame and Zenyatta have some logical and telling points on their side. For instance, Zenyatta in 2010 ran in six Grade I races and won five of these and was second in a photo-finish to Blame in the Breeders’ Cup Classic. On the other hand, Blame won three Grade I races in 2010 and was second in another Grade I, but bested—if only barely– Zenyatta in their sole meeting.

The HOTY voters all come to the task with their individual preferences and biases. A few even said how they would vote (for Zenyatta) before the Breeders’ Cup Classic was run. Really, there are no quantified criteria in place for determining HOTY (though there should be), so the process is highly subjective. Logic and sentimentality go into the voting and out comes a winner.

The Heisman Memorial Trophy Award, or informally the Heisman Trophy, annually goes to the outstanding player in collegiate football, as voted upon by sports journalists, ESPN sports commentators, fans, and former Heisman winners. Like the HOTY award, it is something of a popularity contest combined with the supposed objectivity of experts. Oftentimes, the Heisman Trophy winner proves to be a bust in professional football, calling into question whether he was really the best college player.

In 1997, the Heisman Trophy winner was defensive back Charles Woodson of Michigan, who is still enjoying a fine career with the Green Bay Packers. In fact, he is the only primarily defensive player ever to win the Heisman. Woodson beat out the celebrated Peyton Manning, then a renowned quarterback for the University of Tennessee and now a certain future Hall of Fame inductee as a Super-Bowl winning quarterback for the Indianapolis Colts. The selection of Woodson over Manning in the Heisman Trophy race was widely criticized at the time, as Manning was considered to be one of the premier college quarterbacks in history. His record in the National Football League bears out this assessment. Whereas Woodson was and is an exceptional player, Manning was and is a great player.

Forty or fifty years from now, Peyton Manning will be remembered as storied players are remembered today, such as Jim Brown (who also did not win the Heisman Trophy), Gale Sayers, and Johnny Unitas. Charles Woodson has been an All-Pro but he will not go down in the annals of football the way Manning will. Where will Manning rank compared to Woodson on the best college and NFL players of their era? It won’t be close. Manning, in 1997 and now, was the obvious selection for the Heisman Trophy.

Returning to the issue of whether Blame or Zenyatta should be the 2010 HOTY, voters need to apply the Peyton Manning test. Forty or fifty years from now, which equine athlete will be most remembered? Blame will first and foremost be recalled as the horse that provided the great Zenyatta with her only loss, just as Upset was immortalized because he, well, upset Man ‘o War in Big Red’s only defeat. These names, Upset and Blame, seem almost eerily preordained.

Some of the leading Thoroughbred trainers commented in the wake of Blame’s Breeders’ Cup Classic win that the head-to-head competition between Blame and Zenyatta should weigh heavily in Blame’s favor in the HOTY voting. Seriously, guys, would you have argued in 1973 that either Onion or Prove Out, rather than Secretariat, should have been awarded HOTY because Onion bested Secretariat by a length in the Whitney and Prove Out beat him by 4 1/2 lengths in the Woodward?

Where will Blame be placed on the best racehorses of the 21st century as compared to Zenyatta?

Answer these kinds of big-picture questions HOTY voters and your choice will be as evident as Manning is a superior football player to Woodson.

The 2010 Breeders’ Cup Classic has a close parallel to the 1953 Kentucky Derby in which Native Dancer put on a furious drive down the very same Churchill Downs’ stretch that Zenyatta  roared down Saturday. Like Zenyatta, the immortal “gray ghost” came up a head short (to Dark Star) and thereby lost his first and only race and his chance at the Triple Crown. Native Dancer was wisely acclaimed HOTY.

Copyright © 2010 Horse Racing Business

By the time that Sunday Silence and Easy Goer entered the starting gate for the 1989 Breeders’ Cup Classic, darkness was descending on Gulfstream Park in southeastern Florida.  This race would decide Horse of the Year and how these talented and gallant colts would rank in history.  One announcer described the atmosphere as being similar to a world’s heavyweight title fight and another said afterwards that it was the “race of the decade.”  In my view, it is the most thrilling Breeders’ Cup Classic ever run.

Easy Goer–owned by Ogden Phipps and trained by Claude “Shug” McGaughey III—was reigning 2-year-old colt of the year.  Sunday Silence—owned by Arthur Hancock III, trainer Charlie Whittingham and Dr. Ernest Galliard—had won the Kentucky Derby by 2 ½ lengths and the Preakness Stakes by a nose, with the favored Easy Goer finishing second in both races.  Pat Day, Easy Goer’s jockey, had been roundly criticized for his rides in both races.  In the Belmont Stakes, Easy Goer turned the tables by beating second-placed Sunday Silence by eight lengths and ruining his Triple Crown effort.  Whittingham  commented that 1 ½ miles might be beyond Sunday Silence’s range.

The 1 ¼ mile Breeders’ Cup Classic would be the fourth and last meeting between the two colts.  If Easy Goer prevailed, he would be 2-2 against Sunday Silence and most likely judged to be the better runner in that he would have won the Belmont and Breeders’ Cup Classic.  On the other hand, if Sunday Silence won, he would be 3-1 against Easy Goer and Horse of the Year. 

Sunday Silence’s regular jockey, Pat Valuenzuela, had been suspended for substance abuse shortly before the Breeders’ Cup Classic and  replaced by Chris McCarron.  Although McCarron was a top rider, he had never been up on Sunday Silence in a race and this was a complicating factor in handicapping the outcome.

Two of the four races between Easy Goer and Sunday Silence stand out in the annals of racing—the Preakness and the Breeders’ Cup Classic.  The Preakness is one of the best stretch duels ever and the Breeders’ Cup Classic is memorable for how Sunday Silence held on at the wire by what announcer Tom Durkin called “a desperate neck.”  The Daily Racing Form listed it as a nose.

Sunday Silence was born sickle-hocked, a fault that racehorse buyers disdain.  In fact, it worried Charlie Whittingham so much that he sold part of his ownership interest in the colt to Dr. Galliard.  As a yearling, Sunday Silence was rejected for inclusion in the Keeneland July Select Sale and was relegated to a sale of supposedly lesser quality horses.  At the Keeneland non-select sale, Sunday Silence received the third lowest bid of the day of $17,000 and Hancock bought him back.  Then, while traveling in a van from California to Kentucky, the truck driver had a heart attack and wrecked, leaving Sunday Silence with bruises and cuts.  Finally, Hancock was unsuccessful at selling the colt at a 2-year-old sale in California.

Sunday Silence and Easy Goer are inductees in the National Museum of Racing & Hall of Fame.   Sunday Silence is number 31 on the Blood-Horse list of the best racehorses of the 20^th century and Easy Goer is number 34.  Easy Goer died at age eight and Sunday Silence lived to be 16.   Sunday Silence had an esteemed record as a sire in Japan.

I’ll forever remember the confrontations between these two great racehorses, especially in the Preakness and Breeders’ Cup Classic.  Thanks for the memories.

Copyright © 2010 Horse Racing Business

Click here to see the 1989 Preakness Stakes

Click here to see the 1989 Breeders’ Cup Classic