BALTIMORE AND LOS ANGELES — Magna Entertainment Corp., the troubled owner of Santa Anita Park in Arcadia and six other major thoroughbred horse racing venues, filed for bankruptcy protection Thursday after defaulting on conditions of a bank loan.
The move puts pressure on the Canadian company to sell its storied racetracks, which also include Pimlico Race Course in Baltimore, home of the Preakness Stakes.
Magna's financial problems are long-standing. Interest in the sport of kings has been dwindling for decades as gamblers turned more to Las Vegas, Indian casinos and other entertainment, and attendance fell. In 2007, Magna said it would explore selling Santa Anita.
Chief Executive Frank Stronach confirmed Thursday that Magna would sell Santa Anita and other parks, "if the price is right." Santa Anita's current racing season ends April 19.
Magna has lost $638 million since 2002. Besides dwindling attendance and gambling, some critics say, mismanagement and bad timing have played a part in Magna's financial struggles.
Stronach, one of the top breeders and owners in thoroughbred racing, built his empire by buying racetracks at top prices and spending hundreds of millions on projects that did not meet expectations.
Magna said its day-to-day operations at its tracks would continue while it sought to sell assets and restructure. It plans to borrow up to $62.5 million from its largest shareholder, MI Developments Inc., to fund operations while in bankruptcy. It also will get $44 million in cash by selling many of its properties to MID, including AmTote International Inc., the company that pioneered electronic bet processing systems.
Magna will be required to hold a bankruptcy court auction for those assets, and other bidders could top MID. But the investor also would cancel much of Magna's debt to it, valuing its bid at $195 million.
The deal with MID does not include Pimlico or Santa Anita, where movie stars once joined the masses to watch such champions as Seabiscuit, Affirmed and Spectacular Bid. Magna paid $126 million for Santa Anita in 1998 and invested millions more in improving the complex.
"Frank Stronach is convinced they are going to come through this, get the company restructured and move forward," said Rick Caruso, a Los Angeles developer who has a joint venture deal with Magna to build a shopping mall adjacent to Santa Anita. "Nothing is changing from our end."
If Santa Anita were to be sold, new owners would have to maintain it as a racetrack even though it's not as prosperous as it used to be, Arcadia City Manger Don Penman said.
The city gets one-third of 1% of the total amount of money customers bet on races. In the late 1980s, Arcadia received about $2.5 million a year, but the total is expected to fall to $1.1 million this year, he said.
Magna listed assets of $1.05 billion and liabilities of $959 million in U.S. Bankruptcy Court in Delaware.