NEWS
Stronach goes public again with unique partnership
Posted: Wednesday, January 04, 2012 6:12 PM
FRANK STRONACH
Bill Denver/EquiPhoto
by Tim Nichols
Racetrack magnate and leading owner and breeder Frank Stronach of Adena Springs will go back to the public for the first time since heading Magna Entertainment Corp. with a unique racing partnership aimed at bringing new fans into the ownership game in an inexpensive way.
Stronach filed S-1 registration statements on December 28 with the U.S. Securities and Exchange Commission to establish six companies, each bearing the name of successful horses owned by Stronach—Awesome Again, Ghostzapper, Ginger Punch, Macho Uno, Perfect String, and Red Bullet.
Each proposed corporation will offer 405,000 shares priced at $10 each for a total value of $4.05-million. The company will own 10% of 20 Thoroughbreds which will be three-year-olds in 2013. The horses will race until November of 2013, at which time the horses will be sold and any net proceeds of the liquidation will be distributed to the stockholders.
The hook of this business plan is the hope that some of the 20-horse roster develop into stakes, or classic, contending athletes, which would then, in turn, drive up the auction price.
In the statement, however, it is acknowledged that this venture is not geared toward those looking to become millionaires. The statement also acknowledges the negative trend of horse racing in North America, citing falling race dates and wagering.
“The business of training and racing Thoroughbred racehorses is a high-risk venture and most racehorse ownership is not profitable,” the statement said. “In particular, studies in the U.S. market have concluded that financial returns from owning racehorses are negative in the aggregate. This is no assurance that any of our horses will generate positive returns or that we will not lose a portion or all of the capital we invest and that investors will not lose a portion or all of the capital they invest.”
However, for a $10 share, the thrill of owning a horse, even minutely, is the drive of this corporation.
While it will be a publicly invested corporation, Stronach’s imprint will be on virtually all aspects of the six companies.
The horses were acquired by Alpen House, which features Frank Stronach’s son, Andrew, as president. Golden Pegasus, which currently serves as sole stockholder and determined the allocation of horses to the companies, features Mike Rogers as chief executive officer and Mark Roberts as president. Rogers is Adena Springs’ racing manager and Roberts serves as manager of Adena Springs South.
Golden Pegasus was formed specifically for the racing companies and, the report states, investors probably will not have any recourse for claims within the business relationship between the two organizations.
“This overlapping ownership, management, and contractual structure may have given rise and may in the future give rise to a number of significant conflicts of interest,” the report said.
One of the most visible of potential conflicts of interest will be on the track should some of the horses develop into legitimate contenders on the Triple Crown trail. The report states that preferences will be given to Gulfstream Park on the East Coast and Santa Anita Park on the West Coast, both of which are owned by Stronach. This leaves out Fair Grounds and Oaklawn Park, two courses not owned by Stronach but major venues for key Kentucky Derby Presented by Yum! Brands (G1) prep races such as the Louisiana Derby (G1) and Arkansas Derby (G1), respectively.
The major Derby preps at Gulfstream and Santa Anita include the Florida Derby (G1) and Santa Anita Derby (G1), respectively.
According to the report, the preference to run at a Stronach-controlled track likely will supersede any preference held by the trainer or shareholders.
“Our preference for racing at Gulfstream Park and Santa Anita Park and the logistics that follow from that policy may conflict with the desires of our trainers and may operate to limit revenue opportunities to racing activities,” the report said. “We may similarly favor other racetracks owned by the Stronach Group.”
At such an inexpensive price, though, the share allows potential owners the thrill of having a tiny piece of a horse during one of the most exciting times of the season.
To read the Awesome Again S-1 registration statement, click here.
To read the Ghostzapper S-1 documents, click here.
To read the Ginger Punch S-1 documents, click here.
To read the Macho Uno S-1 documents, click here.
To read the Perfect Sting S-1 documents, click here.
To read the Red Bullet S-1 documents, click here.
Tim Nichols is internet content editor of Thoroughbred Times
READER COMMENTS
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Posted by: Dogs UP, Syracuse, NY on April 10, 2012 at 01:06 PM
Lighten UP! This is just like owning a share of the Green Bay Packers NFL team or some Triple A team in one's home town. A ton of psychic income and enjoyment. How many people spend tons of dollars on being a Star Trek Trekie, or golf fanatic or whatever booster or just spend their money on what they usually enjoy and pleases them as a rule.
I am definitely interested in buying some of this enjoyment, excitement for the cost of a couple of pizzas. Surely they will have a load of paperwork that speaks to the risk for the record and legality of it all. By the way, the GB Packers - owner/fans even know that there is no substantial ownership.
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Posted by: Bill, Evansville, IN on January 28, 2012 at 11:28 AM
Yeh, Where does one go to buy a share?
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Posted by: Steve, NY, NY on January 05, 2012 at 09:33 PM
Anyone trying to capitalize horses at a rate of $2 million each, when he bought them for as little as $4k, ought to be in jail. Anyone seriously tempted by this scam would be better off responding to the next email they get from a Nigerian prince.
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Posted by: Timmie, Hollywood , FL on January 05, 2012 at 10:41 AM
Now there's a great idea, buy stock from a character that already has bankrupted his main venture in Thoroughbred Racing - MEC - and wrung every bit of class out of a former Racing prize - GULFSTREAM PARK.
This sounds like more STRUFLEX to me, but he has to keep his useless son Andrew busy! Where's Bernie Madoff when you need him?
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Posted by: BRET, noblesville, IN on January 05, 2012 at 09:41 AM
BEWARE!!!!!!! LOOK WHAT FRANK DID TO MECA. HOW MANY MILLIONS WERE LOST TO POOR SUSPECTING SHAREHOLDERS? DID FRANK PURPOSELY MISMANAGE TO GET CONTROL? PASS ON THIS AND DEAL WITH HONEST TRAINERS
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