NEWS
Interview: Frank Stronach; Independence personified
Posted: Saturday, December 02, 2000
Frank Stronach talks about criticism aimed at him over the NTRA and about his plans for the future
From the time he was a young teenager in his homeland of Austria, Frank Stronach always has possessed a clear idea of what he wanted to do.
As World War II raged and he lived on cornmeal, Stronach knew he wanted to "end school as soon as possible" to "earn a little money and buy my own bike," he once told the Toronto Sun.
Then known as Franz Strohsack, the son of a dedicated local Communist Party leader, he bought his bike, and before turning 14, he began apprenticing in the tool-and-die trade, laying the groundwork for capitalist history once he immigrated to Canada in 1954.
Frank Stronach
Birthdate: September 6, 1932
Birthplace: Weiz, Austria
Family: Frieda (wife), Andy (son), Belinda (daughter)
Residences: Canada, Florida, Colorado, Kentucky, Switzerland, Austria
Horse farms: Adena Springs (divisions in Kentucky; Florida; Ontario, Canada)
Businesses: Magna International Inc., Magna Entertainment Corp. (a spinoff of main company, Magna International), Frank Stronach & Co.
Company-owned racetracks: Santa Anita Park, Gulfstream Park, Thistledown, Remington Park, Golden Gate Fields, Great Lakes Downs, and racing license for Bay Meadows
Awards: Sovereign Award outstanding breeder (1984, 1997-'99), Sovereign Award outstanding owner (1993-'95, '97, '98, '99); Eclipse Award as outstanding owner (1998-'99), Ontario Lifetime Achievement Award
Grade 1 winners and/or champions: Alwuhush, Awesome Again, Basqueian, Canadian Factor, Collect the Cash, Glorious Song (in partnership with Nelson Bunker Hunt), Golden Missile, Hero's Love, Honky Tonk Tune, King Ruckus, Macho Uno, Mi Selecto, Perfect Sting, Red Bullet, Sintrillium, Tap to Music, Touch Gold (in partnership with Stonerside Stable), Wild Rush
After enduring hunger and unemployment that forced him to take a job washing dishes in a hospital kitchen, Stronach created a tool-and-die business in a Toronto garage, where he worked 15 hours a day and slept on a cot in a corner. From there, his intense drive for success led to the establishment of what is today Magna International Inc., the world's largest automotive-parts conglomerate, which employs about 60,000 people in 16 nations.
Stronach's rise to an unparalleled position of prominence in the Thoroughbred racing industry has been just as meteoric. From the time he bought a riding horse in 1962 and a $700 claimer at about the same time, he has poured his energy and wealth into the sport. He now operates divisions of his Adena Springs farms in Kentucky, Florida, and Ontario, and he has earned Eclipse and Sovereign Awards in the United States and Canada for the exploits of his racing stable.
In the past six months, his triumphs have included the Preakness Stakes (G1) with Red Bullet and the Breeders' Cup wins of probable champions Perfect Sting and Macho Uno.
In late 1998, he bought Santa Anita Park. Since then, Stronach, 68, has spun off Magna Entertainment Corp. from Magna International, and the new company owns six racetracks, the racing license of Bay Meadows Race Course, and is pursuing the purchase of several other tracks.
Despite his power, or perhaps because of it, Stronach now looms as the most controversial figure in racing. Blamed by many associated with the National Thoroughbred Racing Association (NTRA) for the announced defection of 22 of its racetrack members, including his seven tracks, Stronach is steadfast on his suggestion that the organization elect its board of directors based on democratic principles, develop a mandate for specific goals, and commit to free enterprise in racing.
Although the NTRA and its merger partner, Breeders' Cup Ltd., have threatened to punish nonmember tracks and forbid them from hosting the championship event, Stronach has said he is "ready to do my own thing." However, he stresses that he hopes an agreement can be reached. (After this interview was conducted, Stronach developed more detailed proposals-see page 24.)
In the meantime, he is actively planning for the future, which will include Magna establishing "super tracks" with entertainment centers.
Already, Magna has trademarked the name "Cirque de Cheval," which will be a Las Vegas-style show with horses that Magna plans to introduce at its major facilities such as Santa Anita and Gulfstream Park. The company also has filed for a trademark for "NASTRACK," designating a circuit among its largest North American tracks.
Saying his relationship with the NTRA has "been too distorted" by the news media, Stronach met with Thoroughbred Times Executive News Editor Michele MacDonald on November 8 to talk about the NTRA, his philosophies, and his future plans.
Thoroughbred Times: Why do you think you are you being blamed for the membership crisis within the NTRA?
Frank Stronach: "I've been always, I guess, somewhat outspoken. When I speak, I don't want to annoy anyone, but I have strong beliefs and, fortunately, I'm very independent and say what I feel. I love this industry, and I think I can make a great contribution, but I resent it when people say I'm turning my back on it. How can I turn my back if I invest more and more?"
TT: Did you have discussions with some of the Mid-Atlantic track owners and others regarding membership renewal in the NTRA?
Stronach: "Not really. Like we were annoyed, they were annoyed. I just said if the basic principles are not sound, I cannot be part of something. There was very little interfacing. They expressed themselves that they were very unhappy for different reasons. Of course, for me it isn't a question of whether you're happy-I can't be part of something if the ground rules are not okay.
"I stated very clearly that I think the ground rules are that any service organization's board of directors should be elected by its stakeholders, by democratic principles. Of course, we've got to talk about that-how the elections should be held. You've got to break it down so that different areas would elect a director-the breeders, or the owners, or the racetracks. That we can talk about. But in the final analysis, the directors must be elected."
TT: Do you feel as though you have not been listened to enough or that you do not have enough input as the board stands now?
Stronach: "It seems that, whatever I say, it's distorted. I think I speak very clearly, and have for the last two years. I can't be more clear.
"I said early in the fall last year, when we had the same go-round (over membership), that, as a sign of good faith, I would pay for another year of membership. But nothing happened. I'd be very happy if those things I've requested are addressed and if there are serious talks, to come back in at a later stage.
"We don't want to control; we just want to search for common ground-what can we do to foster and better the horse industry."
TT: Where do you think the NTRA has failed?
Stronach: "The NTRA has failed because perhaps it hasn't listened to its constituencies. It is run somewhat on a club-like basis. I think it is fine if you have a golf club or a tennis club. If you don't like one, you join another one until you find a club that you like. But this is a national organization, and there are so many aspects to it. The board must be elected.
"I've stated over and over I would like to be part of a national organization, but if the ground rules are not right, then I can't be."
TT: What do you mean when you say the NTRA should commit itself to free enterprise in racing?
Stronach: "When you analyze things, might it be your private life, or might it be the business you are involved in, when things don't function, you should know you have a problem. If you're too fat or you don't feel good, you know you have a problem. And problems won't just go away. Problems are like cancer-if you don't attend to them, they grow.
"When I look at racing, I think its greatest problem is that there is no free enterprise. I would love to build a new racetrack in New York or here in Kentucky. Look, if you only had one shirt factory, you wouldn't be able to get good shirts, right? I think competition is the essence of what made America. I think racing is the only business which hasn't got free enterprise.
"I'm fully aware that governments have a role to play, to protect the public and the integrity of the horse industry. Create the rules, whatever they are, but if you meet those rules, then let everybody build a racetrack. I think that would be very healthy, that would be very competitive, and I think we would get really good racing."
TT: What could the NTRA do if it makes such a commitment? Should it work on a national level to change laws?
Stronach: "On a national level, on a state level, all the way around. I think it is even unconstitutional as it is now, because if you meet all the rules, why would you not be allowed to conduct a business? Let the market decide, let the people decide what you should have open. Naturally, if a municipality announces it doesn't want it, fine, you've got to respect a local (government). But assuming a town would say, 'We'd love to have a racetrack,' then fine; let it be.
"If somebody makes a commitment or if somebody is committed to put on great racing, they should not be hindered."
TT: You also want the NTRA to devise a specific mandate. What do you think should be in that mandate?
Stronach: "The directors should create the business plan. The mandate has to be defined, but a good board of directors will define the mandate. For instance, a service organization should not compete with its customers or its stakeholders, which I think is the case somewhat with the NTRA at this point. That's why the Eastern tracks are very unhappy-they feel (the NTRA) is competing with their business."
TT: Do you think the NTRA's and Breeders' Cup's merger plans as well as their relationships with Television Games Network (TVG) go against the grain of this idea of not competing against their members as well as against free enterprise?
Stronach: "Well, I'm kind of sad about all this. I think it isn't right when they say, 'Look, unless you pay NTRA as a member track, you couldn't hold a Breeders' Cup,' because the Breeders' Cup got together because of the breeders. The breeders paid into it.
"You can't in midstream all of a sudden change and put on different rules. I think that isn't right. You wonder what is next. Those are the things about which I'm worried because, again, the Breeders' Cup is somewhat of a club. I think it is not right that some people would say, 'I want you on the board.' Just arbitrarily. Might you have blue eyes or black hair or whatever it is, you can be on the board. I think, in the long run, any organization which operates like that could not compete in free enterprise."
TT: Do you think that the punitive rule of a non-NTRA track being prohibited from hosting a Breeders' Cup was created just for you?
Stronach: "All those things make me wonder what's next. Do they tell you what color the program should be or what food you should serve? The next time, they'll say, 'Look, you've got to buy the beer from us,' or whatever. Those are the things I'm worried about."
TT: Has the NTRA made any conciliatory efforts to try to work things out with you?
Stronach: "There has never been a case where they said, 'Look, let's sit down and work on a democratic framework,' like with the board of directors. I've never had a clear message that, yes, they are committed to elect the board of directors by democratic principles. If people are of good will, if they're really interested in having a democratic framework, we could come up with something. The main thing is that you haven't got that."
TT: Do you ever worry that perhaps you are too much of a rebel or too independent to be effective?
Stronach: "No, no. First of all, I've always been independent. I don't need anything from anyone. I'm used to competition. The automotive industry is the most competitive in the world. It's a global industry. I could be the cousin of Henry Ford and it won't help me if the price and the quality aren't right. I like that kind of a business, and I want to get the same thing in the horse business. Either you're good or you're not good. Let the customers decide; let the public decide."
TT: Do you view TVG as a competitor for Magna's plans for a television simulcasting and interactive wagering system?
Stronach: "First of all, we haven't got a satellite television station yet, but it's a question of time before we will have one. I think it's good there's competition."
TT: Are you still talking to The Racing Network or TVG about a possible merger?
Stronach: "We talk about it, and we will analyze it. If we can make a deal, maybe with TVG or The Racing Network, fine. If not, we will do our own thing."
TT: How far away are you from launching a television and interactive wagering network?
Stronach: "We're not in a great hurry. It may be half a year; it could be a year. One way or another, it will come."
TT: You have indicated an interest in acquiring more racetracks, including Monmouth Park, Pimlico Race Course, Retama Park and its proposed Austin, Texas, affiliate, Emerald Downs, Suffolk Downs, and Fairmount Park. Where do your negotiations stand?
Stronach: "We're talking to some tracks, but it would be too early to reveal what might be for the simple reason that we are a public company. We have to be very careful. Unless you have got really clear-cut agreements, you shouldn't talk about them.
"I could not say if they will come from that group, but I am very optimistic that within the next two or three months, we will have a few more racetracks. I think we are reasonably close."
TT: How many tracks does Magna plan to own and operate?
Stronach: "I believe there are about 60 to 70 tracks altogether (in North America). I think if we have maybe 12 or 15 tracks, that would be fine."
TT: What about other tracks around the world? Are you looking at global expansion?
Stronach: "Yes, we keep the global picture in mind. I am exploring a number of things, but it's a bit too early to talk about it."
TT: As you have pursued rapid expansion with Magna Entertainment, many of your executives have departed. Why is there so much turmoil and does it hurt your business?
Stronach: "No. I think the turmoil is created by the press. The fact is, (Magna Entertainment) is a new company. But when you take a look at Magna International, we have hardly any turnover. The executives have been there 15, 20, or 30 years. I moved in some people from Magna (International to Magna Entertainment) because of their substance and the stability.
"The chief operating officer (Don Amos) has been with Magna for 20 years; he is a horse owner and breeder and he understands the business. In a new venture, it takes awhile until you have stability.
"The size we are, we have to hire more executives, we have to fine-tune it. Anyway, it's a free country. If somebody wants to join us, fine. And if we think a person doesn't fit, that's our privilege, right?
"In the final analysis, we know that in order to attract good people, we've got to show some stability. And that has been my strength. You take the farm people here. (Adena Springs Kentucky manager) Dan Hall was very young when I saw him-he was a yearling manager. He's been with me now for 15 years or so. They've all been with me for a long time. Again, the media have distorted that. They've painted a totally different picture than what I am."
TT: Some describe you as a difficult person to work for, very demanding.
Stronach: "No. Look, we laugh the whole day. Nobody works for me; we are associates. They work with me. I teach them. I say you shouldn't be working with me because you need the job, you should be working with me because you really like it. I have encouraged them to get horses. I've said you won't get rich working for somebody. Think about it. I give people the opportunity (to get rich). I've created maybe 100 millionaires-and I'm happy about that.
"As long as you show good will, a good attitude, you will do well with me. But you may be shifted sideways if you're not quite up to the job or you've got to learn a little more. We have to cater to the public; we have to cater to the horsemen; so it's a demanding job and it's got to be done right."
TT: What is your vision for the "super tracks?"
Stronach: "We've just got to learn from Las Vegas. Vegas wouldn't be around if it would have stayed purely with gambling. Vegas is the greatest entertainment center in the world. So, we own racetracks, and racetracks own huge parking lots. The whole thing is empty most of the time-it doesn't make sense. We have to be innovative.
"Nowadays, people have such a great choice in entertainment, and it's so important to create (something new) to get them. I really want to stress always that we must be very careful that we don't lose live racing and have empty racetracks. Yes, simulcasting is important. The Internet is important; cable (television) and all that is important. But live racing is very important, and I'm always comparing it to a football stadium. If there are no spectators there, the media would lose interest very quickly.
"Usually when we go someplace for a new track, I ask the community, 'What are your needs?' With Santa Anita, (the officials in) Arcadia said we've got no arena, no auditorium for high school graduations. So, I started to think, can I create a, win-win-win situation? Can I create something which is good for the community and still makes good business sense? And I think in that case it does, because we can use a new arena for simulcasting and have all kinds of shows, get new people there, and expose them to the wonderful world of horses.
"We have to simplify racetracks and simulcast centers. We have to be innovative. We should be able to compete and do better than slot machines with horse racing, but we've got to simplify it. ... We've got to create innovative betting machines but still with pari-mutuel wagering.
"We have lots of prototypes we are testing. I think we will change racing for the better-get that excitement back in."
TT: How much time do you spend each week on Magna Entertainment business and your racing and breeding operations versus what you spend on Magna International?
Stronach: "First of all, I have really good management (in all the businesses). The people are first-class; they're great. They pretty well handle the day-to-day business. We have a few sessions, like at the Kentucky sales, where I spend a few days here, but then I won't be down here again for a few months. They run the show.
"With Magna Entertainment, I put in a fair amount for the simple reason it is a new business. It's a separate public company, but Magna International still owns 80%; so I've got to make sure that the 80% is going to be worth it for the Magna shareholders' benefit. So, I spend a lot time because it's new, it has a lot of facets to it, and I understand all the facets of racing. I'm trying to groom new management and add new management."
TT: How did you become a leading owner and breeder in the United States and Canada?
Stronach: "I just enjoy it, and when I enjoy something, then I get into it, I really want to understand it, and it just grows naturally. I don't set out to be the richest man or the best. Whatever I want to do, I just want to do it great.
"I think I'm just at the beginning (of success in racing and breeding). But you need luck. Take the Breeders' Cup this year. A very good horse will win providing it's got no bad luck. A good horse will win providing it's got some good luck.
"People don't realize we put a lot of money in-we've got training facilities, we pay very high wages, and we take meticulous care of the horses. The fact still is that Golden Missile got totally hammered on the first turn and got cut up in the Classic (G1). So, that's bad luck, right? There was more bad luck when Bobby Frankel scratched Euchre. People don't realize that Euchre was coming to Tiznow in their last race-with a little longer, Euchre would have run by (Tiznow). Either Golden Missile or Euchre could have won the (Classic); so that's bad luck.
"We had bad luck two days before the races when our filly (Top of the League) had a small fracture. But this business is not for the faint-hearted. Fate averages things out-if you have some bad luck, you also will have some good luck, or vice versa.
"Even if I had only won one Breeders' Cup race, I would have counted my blessings. It was a great day. But we also had bad luck, which people don't realize."
TT: What is your secret to success?
Stronach: "The problem with most people is that they make it too complicated. I simplify things. I'm philosophical. I don't get angry, I don't look back. I teach a lot in universities, and usually I tell the kids that the success of life can only be measured in the degree of happiness that you reach. But at the same time, I tell them that, from my experience, it's a lot easier to be happy if you get some money.
"And the smart kids will ask, 'How can we make some money?' So, usually I tell them, when you're in your early 20s, you don't really know yourself. Experiment a bit. You must do something you like, which you enjoy. If you do something you like, you're going to be good in it. If you show some extra effort, you could be one of the best in whatever field that might be, and if you're one of the best, money is a byproduct.
"Of course, everybody likes to buy a better shirt, a better car-well, fine. But money hasn't been (my focus); I enjoy what I do. I really enjoy the horse business-it's a business of love. Of course, I would love to create the fastest, healthiest horse in the world. If I do that, the stallion's potential would be enormous, but that's secondary. First, I really want to achieve and create something great."
TT: You're becoming something of a cult figure. Fans at Churchill Downs on Breeders' Cup day and at the Kentucky farm managers' meeting were seeking your autograph, calling you by your first name, telling you how important you are to the game. How do you feel about that?
Stronach: "I think it's humbling. I'm one of the people. I don't think I've changed since I was 18. Of course, I'm a little wiser, but I haven't changed. You know I've done everything-I've mucked stalls, I've done hotwalking. I think people identify with me because I'm one of them."
TT: Which one of your successes has given you the most pleasure?
Stronach: "One of the greatest was when I had the Eclipse (Award-winning) filly Glorious Song. I had a young business, and when I sold the filly because I had to put the money into the business, I shed some tears, which ran down inside (of me). That was joy; that also was great sorrow. Obviously, the greatest pleasure was Awesome Again (winning the Breeders' Cup Classic in 1998), and that was incredible. Anytime I win a Grade 1 or a Breeders' Cup, that's a real great high."
TT: What do you find is the most frustrating part of the Thoroughbred business?
Stronach: "To me, there is nothing frustrating. To me, that is negative energy and I want to avoid that. You have to be philosophical. For instance, we had a beautiful Storm Cat colt out of Primal Force, a half brother to Awesome Again, but he got kicked in the field and died. Those are the things that are heartbreaking, but you shouldn't be frustrated. If something frustrates you, get out of it. Don't be involved. Life's too short."
TT: Is that a philosophy that applies to the NTRA situation?
Stronach: "No, I'm not frustrated by it. I want to be constructive. I say in a very quiet, clear-cut, common-sense way: 'For God's sake, please, think about it, for the sake of the industry.' I'm not frustrated-that's negative energy."
TT: Where do you foresee Magna Entertainment being in five years and what are your goals?
Stronach: You've heard of General Motors, right? You've heard of DirectTV? DirectTV is owned by General Motors. But DirectTV is worth more now than General Motors. It's amazing. The electronic multimedia has a great bearing on our lives. If you find the right niche, there is no limit on it.
"Magna Entertainment is an electronic multimedia corporation, or will be. We'll reach the whole world. I consider racing like a soft casino, and I want to get that soft casino in every living room in the world. It's mind-boggling where it could lead."
TT: Do you think you can accomplish much of that in five years?
Stronach: "I believe so. Very much so. I think I can build it from scratch. I built Magna International-it's now recognized as number one in the automotive area-within a relatively short period of time into a world leader under the most competitive circumstances. And I really know this (racing) industry, and I'm very convinced we will build a world-class corporation, and always with the horse on the center stage."
TT: Do you think the NTRA is still going to be around in 2005?
Stronach: "I hope so. I hope that we can have input and that it will be around. The perception is that I don't want to have it around. All I'm saying is there's a few principles we should incorporate for the benefit of everyone.
"I love the industry and I want to see that we create a solid base. This is rather childish, what has been going on right now. I was at one Breeders' Cup meeting and someone told me that was the first time they ever heard somebody question something. I question things. If I think something isn't right, I'm never happy with the status quo."
TT: It seems the status quo resents the questions.
Stronach: "Always when people are used to something for so many years, then they don't quite understand or they are fearful of change. Naturally, they might think do I get too much power in racing. That could be (a concern in the racing establishment now). But I think it's very important that we sit down and discuss it.
"Have you heard of the 'Golden Rule?' The 'Golden Rule' is that the man with the gold makes the rules. But I don't want to be ruled by anyone. And if I feel that strongly, then I should not rule anyone, either. ...
"So really what we're talking about is to dismantle the chains of domination. That's why we need some democratic principles so there is no domination. ... I'm prepared to establish rules that would make it clearly evident that I do not want to dominate, but I don't want to be dominated, either."
