Posted on July 19, 2019 by Admin
Magna International founder Frank Stronach leads Luis Contreras aboard Holy Helena, after the Stronach Stables horse won the 158th running of the Queen’s Plate horse race at Woodbine Race Track, in Toronto in July 2017. Stronach fell in love with horses in the early days of building his multi-billion-dollar business. Mark Blinch/The Canadian Press Belinda…
Belinda Stronach has denied the accusations and countersued, claiming her father’s “idiosyncratic and often unprofitable” side ventures, including a sprawling organic beef cattle ranch in Florida, were jeopardizing TSG’s core business, draining the privately held company’s coffers of hundreds of millions of dollars and putting its future at risk. In sum: it is an absolute mess, one the octogenarian seems both bewildered and hurt by, although not so hurt as to be willing to back away from a fight.
“The family — my son, Andrew, and my wife, Elfriede — we are united in this, and so we don’t understand Belinda,” Stronach said. “This could be a one-, two- or three-stage story — and hopefully it is just one stage, but maybe it is two, where things look a little leery and things look quite sad and not quite right — but hopefully there is going to come a day when this ends in a happy way.”
Stronach agreed to have lunch with the Financial Post, not to litigate an ongoing family drama, but to discuss his legacy and, as it turned out during a two-hour interview, practically everything else, including his plan to save horse racing, Donald Trump, God, the Canadian tax code, the General Motors Co. plant in Oshawa, the unrealized potential of an organic vegetable farm in inner city Baltimore and the (allegedly) money-bleeding organic cattle farm his daughter appears to be so upset about.
But first, some food. Stronach’s go-to order is an avocado-and-tomato salad with a vinaigrette dressing, Arctic char done well, frites, asparagus spears and an exquisite glass of Chardonnay, into which he plops a handful of ice cubes, an egregious crime for the discerning wine snob, but common practice for a guy from humble roots who prefers blue jeans to suits, and arrives for a meal in the formal dining room of his posh club in a jacket and white shirt but no tie.
Stronach, mind you, doesn’t play golf. He prefers horses and mucking around in a barn. After opening that tool-and-die shop in the mid-1950s, he worked seven days a week, hand delivering finished goods in a beat-up Chevy. Eventually, he hired an employee, then a few more, and after about five years of working 14-hour days, he had enough money to buy some property — and a horse. He loved cowboy movies and the image of the hero riding off into the sunset.
He was hooked.
“I got really into it,” he said. “I read all the history books about horses. I wanted to know everything. Horses are a very peaceful animal and they have made a great contribution to building civilization.”
It was against this backdrop that Stronach took out a full-page advertisement in the April 21 edition of the Los Angeles Times, inviting horse racing industry people and fans to meet with him at the Embassy Suites hotel near Santa Anita. The meeting was standing room only.
Stronach presented a plan, one he had discussed in passing to racing insiders over the years, but never fully applied his energies to. It called for converting TSG’s racetracks into trusts and turning their management over to the “horsemen.”
Trainers, breeders, owners — the people with the most to lose if the sport disappears — would lease the tracks from TSG for a 20-year term, giving an embattled industry certainty and the ability to plan ahead. In return, the Stronachs would retain the right to develop any lands surrounding the tracks deemed non-essential to racing, and be paid an annual dividend.
The horses, meanwhile, would be protected under a Racing Charter of Rights, entitling them to eight weeks of vacation a year, while a percentage of betting proceeds — TSG’s Xpressbet gambling platform offers bettors access to about 200 tracks worldwide via their smartphones — would be earmarked for a pension fund for the animals, allowing the equine athletes to live happily ever after on a farm upon retirement.
“Look,” Stronach said over lunch. “I don’t want to see my family argue over money. It is such a waste. Basically, in this way, my grandchildren would get a third (of Stronach’s estate), my son would get a third and my daughter would get a third, and we would still own the tracks, but be leasing them. It is a win for the horse community, and a win for the future of the Stronach family.”
Belinda Stronach did not reply directly to queries about her father’s plan, but TSG emailed a statement that the company’s goal is “to modernize the racing and gaming business and drive its future through innovation while being a responsible steward of The Stronach Group assets.”
The statement noted that Frank Stronach has no official role with TSG, and expressed “considerable sadness” that the company founder has “lost touch with the facts” regarding his public comments, adding that TSG felt compelled to “ask those who deal with him to bear in mind his advancing years and remember the man he once was.”
TSG characterized the lawsuit initiated by the family patriarch as “hugely counterproductive,” and cautioned that there can be “no real prospect of a happy ending” as long as Stronach continues to speak out publicly.
However, several influential players within the horse racing industry have been happy to listen to what Stronach has to say regarding the future of the sport.
“It’s like a dream, what Frank is proposing, and you don’t look a gift horse in the mouth,” said Craig Bernick, an influential thoroughbred owner and heir to the Alberto-Culver fortune of Alberto V05 hair care fame.
“The reason the industry should take Frank’s proposal very seriously is because it’s like a guy who has made poor decisions for 30 years suddenly hitting a Powerball in the state lottery. What Frank is proposing would literally solve most of our problems.”
To clarify: the “guy” making the poor decisions has been horse racing, once counted among the marquee sporting attractions in the United States, which has struggled to attract new fans and, pre-rise of the First Nations casino model/state lotteries, frittered away a North American — outside Las Vegas — legal gambling monopoly. Now, along comes Stronach, an industry behemoth, with an ace up his sleeve.
But for all his vision, Stronach doesn’t always speak in straight lines. Conversations with him can veer and twist, soaring off into colourful anecdotes and tangents before eventually returning to a place where he hammers home a point. For example, an idea about reinventing GM’s Oshawa plant by giving employees an ownership stake and dividing the remainder between GM and the Canadian government, can shift into a story about hunger and being a young immigrant.
More than one horse racing industry insider, speaking on condition of anonymity, expressed great hope for Stronach’s plan, but also a wish that he surround himself with a team of trusted lieutenants to help him execute it.
But therein lies the problem: Stronach can surround himself with as many great minds as he pleases, but he won’t be able to accomplish anything without mending fences — or winning a court battle or reaching a settlement — with Belinda first.
“That’s the dilemma, eh?” he said.
It wasn’t always thus. In bygone days when Stronach had an idea, stuff got done, such as opening the Magna Baltimore Technical Training Center a few years after acquiring the city’s Pimlico Race Course in 2002. The historic track is home to the Preakness Stakes and set in one of the most impoverished neighbourhoods in Maryland. Stronach sank millions into the training centre, housing it in an old elementary school and outfitting it with state-of-the-art machinery.
“For people to have hope, you have to create meaningful jobs,” he said.
Several employees of Marlin Steel Wire Products LLC, a Baltimore factory specializing in the manufacture of highly engineered wire baskets and racks, are graduates of the Stronach school, where classes began each day at 5 a.m. and truancy meant expulsion.
“There are hundreds of people whose lives are much better off because of Frank Stronach,” the factory’s owner, Drew Greenblatt, said. “These are people who nobody would give a shot and he gave them a ramp to success. It really is an extraordinary story.”
Magna stopped funding the school in 2014, the same year the company stopped paying its founder. But the Baltimore school isn’t the only example of Stronach’s do-gooder ways. After Hurricane Katrina battered New Orleans, he waded in, purchasing a 900-acre parcel of land in Louisiana and building 49 homes for residents displaced by the August 2005 storm.
His utopian vision for the pop-up community, which came to be known as Canadaville, was for residents to build a new life as organic farmers and fishermen. It was a noble thought, but muddied in ambition because of the deep-seated racial politics afflicting the Deep South — Simmesport, the town adjacent to Canadaville, was overwhelmingly white — and because urban Blacks didn’t want to reinvent themselves as farmers in a Louisiana backwater — they simply wanted to go home.
Stronach’s organic cattle ranch in Florida came from a similarly altruistic impulse. It may indeed be a wacky, money-draining dream, as alleged by his daughter — or, in his view, an investment that will gain value over time no matter what because of the land — but Stronach has always been a dreamer. After all, he is the Stronach who came to Canada with $200 in his pocket and became a billionaire.
“I just thought that if I can produce foods without chemicals and put horse racing into a trust guided by a charter of rights, that would be my legacy,” he said.
Stronach has travelled everywhere, and done almost everything. It is what gets left when he is no longer around that is driving him now. He doesn’t have a bucket list. He has met the Queen — they talked about horses — and Vladimir Putin and Donald Trump.
“Donald may have a funny way,” he said, “but he speaks in a way the average guy can understand.”
When Stronach speaks, he mentions the long hours he has been working, just as he did when he was a younger man. Asked about mortality, he answers with a joke.
“I’ll tell you the formula of how you can live forever,” he said. “Two guys are sitting at the bar drinking, and one says to the other, ‘I sure would like to know the place where I’m going to die.’ And the other guy says, ‘Why would you want to know that? I just wouldn’t go there.’”
As proof of his vigour, Stronach, in jest, flexes his right bicep, inviting his lunch companion to give the muscle a squeeze. He stretches daily, and goes for long walks in the woods on his property near the golf course. The quiet there gives him room to think.
He has been thinking about Belinda a lot.
“Look,” he said, “I love Belinda. I worked for my kids, for my family.”
Stronach won’t say whether his sense of hurt, evident whenever the conversation returns to family, can be healed, or if a family torn apart can be stitched back together. His whole life has been “blessed,” guided by a “question of faith and circumstance,” and underwritten by a spirit of “luck” in being at the right place at the right time with the right ingredients to build a global empire, to get married and have two kids.
Maybe what is happening now, he said, “is just another thing that can happen.”
The phone rings. Lunch has run overtime. Stronach has another meeting to get to, a call to return to a lawyer, a racing empire to repurpose and an organic cattle ranch to revive — if things could just be resolved with Belinda, if he wasn’t on the outside of a family fortune looking in.
“I am driven now by what is the right thing to do,” he said, standing to go. “We constantly have to think about how we can contribute to making a better society. I always said that if growth was the only thing, maybe I could have had the largest company in the world. But it’s not the only thing. When you get a little older, you sit back and you start to think what is the purpose in this life. Really, what is the purpose?”