Magna's magnate has grand and unnerving designs to change the world
Frank Stronach Empire Builder
Picture this. It is Dec. 26, opening day at Southern California’s Santa Anita Race Track. The weather is fabulous: 70°, as they say in the States, and clear enough to see the purply-brown slopes of the San Gabriel Mountains. Santa Anita, a few minutes east of Pasadena, is famous for more than its scenery; this is one of the oldest—and certainly the classiest—horse-racing tracks in North America, a favourite of Hollywood filmmakers in search of a racetrack setting. It manages to feel both genteel and seedy: a fitting place for the sport of kings and the gambler down to his last buck. It is a place where Frank Stronach feels right at home.
On opening day, Stronach—Canada’s most flamboyant industrialist, the tool-and-die maker who created the $9-billion autoparts colossus Magna International Inc.—walks around like he owns the place. Which he does, having taken possession a few days before Christmas. On Stronach’s instructions, Magna’s sharpest deal-makers snapped Santa Anita out from under the noses of some of the richest men in America. This makes the Canadian multimillionaire one of Santa Anita’s star attractions on Boxing Day. Stronach, a gifted athlete and born performer, does not disappoint the fans. He inspects his new possession like a royal on tour, his impeccably tailored suit bringing out the piercing blue of his eyes as he makes the rounds to shake hands and chat with thoroughbred owners and trainers. Behind him trails an entourage of trusted lieutenants and well-groomed women.
The new owner drops by the press box to announce his plans for the beloved landmark. Everything old and shabby will have to go, he decrees. Stronach intends to scrap the historic hillside turf course, renovate the dreary employee housing, relocate the paddock, raze the gardens, and gut the clubhouse. He envisions a racing theme park, complete with a second turf track, luxury hotel, restaurants and shops, a horse-racing museum and an Imax-style theatre. The north parking lot will be turned into a gated residential community. Magna has earmarked $75 million up front for immediate improvements, Stronach says, but could spend three times that amount by the time it is done transforming sleepy
Santa Anita into a tourist attraction to rival nearby Disneyland.
Somebody pipes up to ask whether Stronach intends to leave anything alone. Of course, he says, and laughs: “The mountains will stay.”
A few words of advice to Southern Californians: don’t bet on it. If there was ever anybody out to rearrange landscapes, it is Frank Stronach.
Through 40 years of business, Stronach, now 66, transformed a single tool-and-die making shop in midtown Toronto into an international auto-parts empire. While still in his 20s, he struck pay dirt by figuring out that big North American automobile companies could be persuaded to buy components from reliable independent suppliers, as long as those suppliers demonstrated they could make the parts better and more cheaply than the car manufacturers themselves. Today, Magna pulls in almost $10 billion a year and employs more than 50,000 people in 18 countries. Stronach’s visionary approach, combined with his engineers’ technological wizardry, have made Aurora, Ont.-based Magna one of the best companies—of any kind—in the world. In January, Magna was singled out as one of 27 corporations on Forbes magazine’s A-plus list of top global businesses. (The only other Canadian company to make the cut was Bombardier Inc. of Montreal.) “When it comes to creating auto-parts plants that are efficient and have the latest technology, there is nobody who can touch him,” says an influential Toronto investment manager. “He’s incredible.”
He is also incredibly restless. Stronach has never been able to live by auto parts alone. As fast as he makes money, the oncepenniless Austrian immigrant (who is now worth more than $250 million) has found ways to spend it. He has plowed his personal fortune into breeding race horses, while diverting tens of millions from Magna into a long list of unusual projects ranging from a defunct four-wheel-drive sports car (remember the Torrero?) to an abandoned scheme to revitalize the Cape Breton economy.
But this time is different. These days, Stronach is out to build a second global empire based on what, next to cars, are his two
great passions: horse racing and European soccer. He wants to save the horse-racing business by turning it into family entertainment. Santa Anita is only the beginning. Stronach plans to buy two or three more racetracks in North America—industry buzz has him eyeing Gulfstream Park near Fort Lauderdale, Fla., and San Francisco’s Bay Meadows—and turn them into racing theme parks. He intends to build the same kind of amusement complexes in Austria, starting with a proposed World of Wonders project outside Vienna that carries a price tag of $800 million.
On the football front, Stronach wants to restructure Austria’s cash-strapped soccer league and make that country a World Cup contender. To date, he has television marketing agreements with six of the Austrian teams and plans to buy the rights to the remaining four. He intends to launch a sports-betting television channel that would expand into a network broadcasting to the United States and Europe. Stronach, who played semi-professional soccer in his youth and is now chairman of the national league, hopes to use profits generated by the betting network to set up a chain of sports academies in Austria and, if that works out, possibly Canada. “I want to get involved in a system that will stimulate and motivate young people to get involved in sports,” he told Maclean’s. “Sports are very important. The social benefits are immeasurable. It’s a compounding thing for the economy. It is,” Stronach says, “very, very good.”
He is prepared to put his money where his mouth is. Stronach recently pledged $100,000 to help a delegation of Canadian athletes establish a lobby group to clean up the Olympic Games. Stronach agreed to underwrite expenses incurred by Olympic winners Mark Tewksbury, Susan Auch and other athletes during their trip to Lausanne, Switzerland, and to provide seed money for a council of athletes that vows to act as a watchdog over the scandal-rocked International Olympic Committee. However, Richard Pound, the Canadian vice-president of the IOC, dismissed Magna’s Olympic gesture as “a belly flop.”
Canadians have always scoffed at Stronach’s ideas. His latest schemes, however, are attracting multinational controversy. Austrians welcome his energy and money, but wonder who he thinks he is to stroll back after 40 years and act as if he owns the
place. In Canada, investment managers refer to Stronach’s sudden U-turns away from his core automotive business as “the Frank Factor”—a phenomenon that scares the pants off shareholders. Three times in 15 months, Stronach’s forays away from auto parts have spooked investors enough that they shaved between $1 billion and $1.7 billion off the value of Magna’s stock.
The fact is, those nervous investors are the source of more than 90 per cent of the company’s equity. And, contrary to what they say publicly, the “factor” drives Magna managers around the bend. But Stronach is the boss: he is chairman of the board and controls 64 per cent of the company through a class of special B shares that carry 500 votes each. When push comes to shove, other executives are left with little choice but to do what Stronach says, or quit. “Frank is the most powerful person in Magna, there’s no question about that,” says vice-chairman James Nicol, a vocal supporter of Stronach’s style and accomplishments who has left the company and
A VISION OF PARKS AND SOCCER
Heiliger Strohsack" proclaims a headline on an Austrian magazine article about Frank Stronach. In English, the equivalent is “Holy Moses” and is a play on Stronach’s original name, Strohsack, which translates as “bag of straw.”
In the past year, the auto-parts magnate has been the target of endless attention from the media in his homeland. A few of his many monikers include: “Capitalism’s Mother Teresa,” “The Forrest Gump of Business” and “Rich Uncle from America.” It seems that if Canadians do not always know what to make of Stronach and his grand schemes, Austrians are no better enlightened. They welcome Stronach’s money and boundless sense of free enterprise, but have grown skeptical of the size and scope of his ambitions—as well as the way in which he gets things done.
Stronach moved back to Austria in the early 1990s. He also owns homes in Aurora, Ont., Switzerland and Colorado, but spends most of his time at his austere 16th-century manor house near the Vienna Woods. Only in
1998, however, did he become a high-profile player on the Austrian business scene— when Magna International Inc. bought SteyrDaimler-Puch AG, the country’s largest auto-parts company. He has also proposed a long list of real estate projects that range from redeveloping Vienna’s landmark Prater amusement park to plunking a massive recreation complex on a resort lake in southern Austria. In February, three days after presiding overa $15,000 boxât the elegant annual Vienna Opera Ball, Stronach was elected chairman of Austria’s inter-regional soccer league. He has promised to pump more than $100 million into the sport and is buying up the teams' television marketing rights with the aim of launching a European sports-betting channel.
News, an Austrian magazine, ranks Stronach 13th among 500 “top Austrians” (up from 45th last year) and almost 80 per cent of the population knows who Stronach is, according to a recent survey. Yet 90 per cent of survey respondents said they would not be interested in betting on his betting chan-
nel, and almost 50 per cent expressed concern that this channel would give Stronach too much power over Austrian soccer.
Indeed, one influential team manager recently accused Stronach of trying to teach “a primary school lesson” in sports administration to people who already know better—to which Stronach replied that the man in question “has behaved brutally, rudely, unbusinesslike, unsporting towards me. He craps on the doorstep. And then he asks for toilet paper. That’s a bad example for the young.” Other Austrians express concern over Magna’s $595-million purchase of Steyr-Daimler-Puch, an auto-parts and tank manufacturing company that many Austrians view as part of their heritage. After promising job security and expansion, Magna infuriated people in January by announcing it would eliminate 140 of 6,000 positions at Steyr-Daimler-Puch. Magna then sold off the tank division because it did not fit with the company’s strategic plans. Residents of the town of Steyr, the site of SDP’s main factory 150 km west of Vienna, overlook the fact that Magna has created more than 1,000 jobs in factories around the city of Graz, where it is expanding the
Is Stronach a genius or a total flake? After 20 years, people still don’t know what makes this guy tick
returned—twice—in the past 10 years. Nicol and other executives say that whatever Stronach’s reputation, current management is able to bang out a consensus on most issues.
Over the past several months, Magna executives have been struggling to come up with a plan that would appease the company’s shareholders while giving Stronach room to explore his new ideas. On March 8, the company unveiled its solution: an independent, selffinancing entity called Ventures, which will control non-automotive projects that are valued at $460 million. The concept will be presented to shareholders at Magna’s annual meeting in May. If it gets the go-ahead, stock in the new company will be distributed to existing shareholders, and additional shares offered for sale when and if outside investors can be persuaded to pump new money into what is essentially a collection of Stronach’s personal obsessions.
So far, however, the signs are not encouraging. Members of the Toronto investment community who shared breakfast with Magna officials after their Ventures announcement were, according to one participant, “annoyed and somewhat unfriendly.” They were particularly put off by a Magna plan to shift $380 million in cash into Ventures by buying back land that was allocated to the new subsidiary. Investors took it out on the stock—Magna’s shares fell $6.65 to $84.85 in a two-day period, coming within a hair’s-breadth of last year’s low of $83, despite a concurrent report that company profit increased 23 per cent in the five months ended Dec. 31.
What it all boils down to is that wherever Stronach goes, trouble
follows. But so do fabulous innovations and astounding amounts of newly created wealth. Nobody seems to know for sure what makes this guy tick. Twenty years after he and Magna came to the attention of the Canadian business scene, people are still asking the same questions. Is Stronach a genius or a total flake? Why does a man risk losing so much—money, reputation and some of the best managers in his industry—by putting his company through such dangerous hoops?
Montreal money manager Roch Bédard, who sold three-quarters of his Magna stock when he heard about Santa Anita, says it’s a symptom of Stronach’s age. “I happen to be 64,” he says. “I understand how easy it is to lose sight of most of your primary objectives and go for the toys.” But the pattern for aging executives in latecareer crisis usually involves shirking responsibility for the pursuit of pleasure. Stronach—who has already spent much of his adult life in the company of fast horses and beautiful women—hardly fits this mould. In fact, he seems to be working harder, travelling more, and laying it all on the line. “Frank sees this as planting a seed,” explains
Belinda Stronach, a Magna executive. Does she, his heir apparent, know what her father really wants? “He wants to build another Magna.”
The story of Stronach’s success in Canada is the classic immigrant’s dream. Only 22, he sailed to Canada from Austria in 1954 with $40 in his pocket. Stronach went home to his town regularly: the first time to show off his good fortune; later in the 1960s to choose a pretty young wife
firm’s automotive division, and that it hopes to make Austrian technology and expertise the cornerstone for a big push into vehicle assembly.
Through its acquisition of Steyr,
Magna has also become one of many global companies charged with using slave labour during the Nazi Holocaust. Stronach says Magna will cooperate with any investigation, but cannot be held responsible for what happened in a dictatorship more than 50 years ago. More troublesome is a lawsuit in which shareholders of Austria’s Creditanstalt AG bank are suing both Magna and the bank, alleging that Steyr was sold for less than it is worth. The media have also raised questions about the close relationship between Stronach and the former Austrian prime minister and Creditanstalt director Franz Vranitsky—who has been a Magna director since 1997.
Magna’s various real estate developments are also meeting with so much local and environmental resistance that, at the moment, only a World of Wonders theme park outside Vienna has much chance of going ahead—
and even that will be despite a report that questions the impact on the region’s drinking water and traffic.
One Austrian magazine even asked a respected philosopher to write an essay—entitled “Austrian Saviour”—to explore the relationship between Stronach’s promises and the national psyche. Konrad Paul Liessmann wrote that “his speeches show a mixture of naked calculation and utopian statement which makes even the most stupid and in-
comprehensible schemes (such as the World of Wonders theme park with its 80-metre globe) appear as a work-creating project worthy of discussion. On top of that comes the irresistible gesture of the saviour who will rescue all that is doomed: soccer, the racetracks and the Opera Ball, should it ever require saving.” Liessmann concludes that Stronach is welcome
1 to do whatever he wants with soc2 cer’s flagging fortunes, but Austri| ans should be wary of his other § ventures.
There are signs that Stronach’s patience is beginning to wear thin in the face of such criticism. He has recently begun grumbling that unless the Austrians start to show more appreciation for Magna’s hard-earned investment dollars, he will yank the theme-park project and move it someplace where people understand the value of entrepreneurial spirit—somewhere in eastern Europe.
KIMBERLEY NOBLE SUE MASTERMAN in Vienna
(Elfriede Sallmutter to whom he’s been married for 35 years); and in recent times as a crusader determined to do in Austria what he failed to manage in Canada—to shake the country’s social and economic underpinnings.
He was born Franz Strohsack in the town of Weiz, not far from the border with Hungary and Yugoslavia. He was the first of three children (and the only son). The Strohsacks weathered the Depression, Nazi dictatorship and subsequent Russian and British occupations. Young Frank learned about politics from his father, a factory worker and avowed Communist, and about enterprise from his mother, the hard-headed business manager of the family. Stronach’s mother was determined her son would learn a trade.
When he turned 14, she marched him down to the town’s biggest factory where he was signed up as a tool-anddie apprentice. He recalls that his introduction to his life’s work was being given a block of solid steel, a metal file and a month in which to make a piece of electrical machinery.
Eight years later, feeling restless in postwar Europe, Stronach turned down the chance to play professional soccer in Switzerland and left for Canada. He changed his name to Stronach and set out to make his fortune. He picked up balls on a Montreal golf course, washed dishes in a Kitchener, Ont., hospital and then landed a tool-making job in an airplane factory. He saved enough money to open his own company—called Accurate Tool and Die—in a garage on Toronto’s Dupont Street. He spent years sleeping on a cot beside the lathe, envying the young people he watched stroll down the street in the evenings, but saving his money for bigger and better things.
The first was a new car. “As soon as he started making some interesting money, he bought a brand new Pontiac convertible and put it on a boat so he could drive it into the town where he grew up,” says Toronto writer Martin O’Malley, who spent five months in 1992 and 1993 working on Stronach’s autobiography. (O’Malley produced 90,000 words before Stronach either lost interest or realized that some of the stories he had told the author might be better published posthumously.) Stronach parked on a hill, O’Malley says, “and sat in the car just staring down at the town. Then he picked up all his friends and drove them around. This was his first taste of the return of the victorious conqueror. It was his first grand vision of himself.”
Stronach always thought big, but he didn’t build his business empire in a day—nor did he do it alone. Magna gained momentum gradually through the 1960s and 1970s: Stronach contributed hard work and innovative thinking, but so did his close partners. Anton Czapka, another tool-and-die maker from Weiz, kept only $12 of his weekly salary so that he could put the rest into the Dupont Street garage. Burton Pabst landed the fledgling company’s first big deal, a $30,000 contract to supply sun visor brackets to General Motors of Canada Ltd. Legendary corporate promoter Jack Warrington, the founder of Magna Electronics Corp. Ltd., gave Stronach’s group its TSE listing and its name. Pabst was named Magna’s first president, while Warrington was the chairman. But it was Stronach, at that point a vicepresident, who had the tenacity required to survive the infighting and attempted coups that characterized Magna’s early years. By the early 1980s, Stronach emerged in firm control of Magna International Inc.
He contributed more than staying power. Stronach’s vision of a fair shake for hourly workers led to the 1984 “Magna Carta,” the legally binding document that sets out the rights of executives and employees to a proportionate share of the corporate spoils—and, as much as any-
The man who sailed to Canada with $40 became a multimillionare
thing else, enabled Magna to undercut the Big Three automakers’ internal parts divisions by keeping the autoworkers unions firmly at bay. Magna pays hourly workers less than unionized labour in big auto plants, but distributes 10 per cent of its pre-tax earnings to employees: 3 per cent in cash and 7 per cent through a deferred profit sharing plan. This has made people on the shop floor grateful and wealthy. “One of the most interesting things about Frank,” says Brian Chesnut, Winnipeg-based auto industry analyst for Levesque Beaubien Geoffrion Inc., “is that he genuinely doesn’t mind if his employees get rich.” Stronach talks about this as if it’s the most natural thing in the world. How else, he asks, could Magna ask workers to give the 100-plus per cent on which its success and profitability depends? “Our strength,” Stronach says, in a soft accent that is often compared to Arnold Schwarzenegger’s, “is the human capital. Our strength is that we motivate employees that they not only work hard, but they also think. That means their hearts have to be in it.”
Yet every 10 years, so consistently that people have come to count on it, the boss himself gets bored with the auto business and makes the jump to hyperspace. “Frank gets a bee in his bonnet,” says a former Magna executive who was at one time responsible for the company’s non-automotive investments, “and off he goes.” In the 1970s, Stronach expanded his racing stables, invested in a downtown Toronto disco and played the silver market alongside the Dallas-based Hunt brothers. Ten years later, he was ready for bigger adventures. In 1986, Magna bid to buy airplane manufacturer Canadair Ltd. from the federal government and lobbied to have Cape Breton declared an auto-parts tax haven. “Frank genuinely believed he could re-colonize Cape Breton,” the former Magna manager says. When those plans fell flat, Stronach opened another restaurant, launched a glossy business magazine, poured $8 million into the sports car project and ran as a Liberal in the 1988 federal election. He lost—and spent the next four years scrambling to hold on to his company.
This was the low point of Stronach’s career. The projects of the late 1980s became a fiasco that coincided with the biggest disaster in Magna’s history—a period of uncontrolled overexpansion and fiscal mismanagement that left the company almost bankrupt and, for a while, at the mercy of creditors who wanted to dump Stronach and sell off the plants. The former chief financial officer once compared the company’s restructuring to “trying to put a parachute back in the bag during a windstorm.” The fact that Magna did it—and went on to greater glory— has made its 1991 turnaround the benchmark against which all
other Canadian corporate salvage jobs are now measured.
Stronach says the financial problems had nothing to do with his non-automotive activities. “People got hold of the wrong story,” he says. “You always find critics. But we live in a free society and that’s what you have.” Maybe. But nobody wants to go through that again. Magna has 10 times the equity and less than half the debt it carried in the late 1980s. Yet ever since word got out a year ago that Magna was investing in real estate, betting channels and theme parks, Magna’s stock price has gone up and down like the roller-coasters Stronach wants to build beside all those racetracks he hopes to buy.
“Three things bother me,” says Montreal investor Bédard. “First, is this Santa Anita racetrack. The land around it is supposed to be valuable, but for what I don’t know. Second, is those theme parks in Vienna being built to the glory of this gentleman. And the third thing,”
he says, in the ominous tone everyone except Stronach seems to adopt when speaking of the possibility that Magna could operate its own airline, “is those flying bedrooms.” Of all the things that send Magna investors running for cover, nothing comes close to Magna Air. It is like one of those cartoon characters that gets squashed flat and then springs back to life. It just won’t die. A year ago, while Magna’s Toronto managers were vehemently denying they were in the process of starting an airline, Stronach was in Austria announcing that the company had lined up two Airbus A319s. All but 30 of the seats would be removed, and the planes outfitted with beds and electronic conveniences for top business travellers. “We will start small,” he told an Austrian newsmagazine. “Magna Air will fill a market niche.” After internal debate, Magna management purchased options to lease the planes—then, after more discussion, let those options lapse. Executives were quick to dismiss Magna Air as one of a number of proposals that did not make the cut. ‘We look at a lot of things, and some things do not proceed because they don’t make economic sense,” says Magna president Donald Walker, a former General Motors manager who was married to Belinda Stronach for eight years. (The couple divorced last summer.) “It’s not that anybody talked Frank out of doing it,” Walker says of the airline. “It’s just that it did not get past conceptual stage.”
Only somebody forgot to tell Frank. At Magna’s annual meeting last December, senior executives nimbly avoided all talk of the airline—Stronach assured shareholders the project had been shelved “for the time being,” but found it impossible to stop at that. We maintain and manage planes for other companies, and we make money. If it could grow by itself, it’s quite feasible. I’d like not to have all the g eggs in one basket, no matter how good the basket.”
I Stronach’s executives tolerate such episodes in I part because they are so well paid. But they also ^ want to be part of his unique environment. “Frank is I a true entrepreneur,” says Walker. “His strength is
THE SHAPE OF CAR PLANTS TO COME
Workers zip by on golf carts and bicycles. Robotic arms that look like George Lucas’s Imperial Walkers swing up and down. Overhead steel chassis pieces destined for General Motors Sierra and Silverado pickup trucks move along a 9.6-kilometre-long conveyor belt. The belt has a threehour inventory capacity in case anything ever goes wrong on the assembly line below.
So far, nothing has. Magna International Inc.’s new Formet Industries chassis plant in St. Thomas, Ont., which began operating last June, is hailed as one of the best automobile frame plants in the world. It is also tangible proof that Magna chairman Frank Stronach is a stickler for making the best car
parts at the best price—and prepared to invest to accomplish his goals.
Magna is still seen as an upstart in the auto-parts business, but is gaining ground fast. The company already makes everything on or in a car except for the tires, the engine and the glass. A division in Troy, Mich., is close to signing a contract to supply preassembled front-end modular systems to U.S. automakers. After that, Magna hopes to move into assembling entire vehicles—work that its Austrian subsidiary does now for Daimler-Chrysler.
But the most important thing at Magna is what is going on at Formet. It’s called hydroforming. In Europe, this technique has been used to make small
auto components. Over the past five years, Magna’s Canadian engineers have employed it in the making of the frame itself. Rather than stamping pieces from sheets of steel, the new technology pumps water, under high pressure, through steel cylinders. The water expands the cylinders outward into moulds—like blowing up a balloon. Chassis components come out stronger, lighter and cheaper for both supplier and customer. “Hydroforming is about to explode,” says Winnipeg-based auto industry analyst Brian Chesnut. “Magna is doing a billion dollars worth of business now, and they could be doing double, triple, quadruple that in the next few years.”
roughly 950 people and 550 robots to produce one truck frame every 11 seconds—is expected to have made 1.2 million frames by the end of its first year of operation. By that time, the plant will have expanded its capacity by 50 per cent. Two additional presses are being installed to make frames for GM’s new Suburban, Yukon and Tahoe trucks, which are scheduled to be unveiled in the 2001 and 2002 model years.
By then, Formet expects its state-of-the-art moulding system to be even better. “We are one, maybe 1V2 years ahead of the competition,” says director of operations Horst Prelog. “And we are going to stay ahead. This is how we work at Magna. Like Mr. Stronach says, we can’t start sleeping now."
his vision.” Former Ontario premier David Peterson, who has known Stronach for 15 years, goes further. “Frank is a genius,” says Peterson, who is now a governor of Stronach’s Magna for Canada Scholarship Fund, which provides bursaries and internships to students. “You can argue the point that all geniuses are eccentric. Sometimes these guys just don’t fit with the establishment.”
It is not just senior officials and friends who defend him. One Magna engineer knew he wanted to work for the company after hearing Stronach speak on CBC Radio. “Frank may be a quirky guy and such, but he sure has a feel for what happens on the shop floor,” the engineer says. “Working for somebody like that is what makes the world exciting. I cannot imagine going back to a conventional corporation.”
Vice-chairman Nicol compares Stronach to Thomas Edison. Edison would apply for 10 patents, and nine of his ideas would be complete duds. The 10th would be the lightbulb. “This is what Frank is like,” Nicol says. “He has an inquisitive mind and tremendous youthful energy. It annoys people at times. But we never know when he’s going to invent another lightbulb.”
Could it be possible he already has? Magna investors may dislike it, but the Santa Anita purchase now looks like a clever deal. Stronach wanted to buy the park two years ago, when the family that built it in the 1930s first put it on the block.
Everybody at Magna, Stronach included, balked at the asking price of $400 million (U.S.). When the buyer, a U.S. conglomerate, got into financial trouble and began liquidating assets, Stronach persuaded his board of directors to take another look.
Magna’s detail men moved fast and bought Santa Anita for only $126 million (U.S.). Business sources claim that Magna has already been offered at least two chances to flip the racetrack for a tidy profit. Nicol, who initially opposed the deal, ended up as its chief negotiator. “I was not enthusiastic at first. Now, I wish I could have bought it myself.”
And, unexpected as it may seem, Stronach’s ultimate success story is his family. While still in his 20s, he decided he wanted to marry and have two children; so he opted for an arranged marriage—unconventional only in that Stronach arranged it himself. On a visit to Weiz, he proposed to young Elfiiede Sallmutter, in the hope that she would grow up to be as pleasant and attractive as her mother, whom Stronach admired. “He chose a wife for her bone structure and breeding possibilities, like choosing a thoroughbred,” O’Malley says. “He will rationalize and defend it He will argue that it makes more sense than relying on the serendipity of falling in love.”
The Stronachs have experienced none of the Dynasty-style theatrics that plague so many wealthy families. In their 35 years together, Frank and Frieda have raised two down-to-earth and hardworking children, Belinda, 32, and Andrew, 30, and the family remains close. Following her divorce, Belinda built a house beside her parents’ mansion on the family compound that overlooks Magna’s Aurora headquarters; Andy is following suit. Belinda—who has two children—says her friends make fun of her for “ending up back on the farm.” She explains that both she and her brother have always been free to go their own ways—but prefer to work for their father because other organizations strike them as hidebound and dull.
Andy is a partner in the family’s Adena Springs thoroughbred operations. Stronach gave him credit for choosing the champion bloodlines that spawned 1998 Breeders’ Cup Classic winner Awesome Again. Belinda, a Magna executive vice-president and director, has her own women’s clothing company. At Magna, she is part of the
executive team that charts the company’s strategic direction, and is viewed as the one being groomed to someday take over as head of the family enterprises.
Not that anyone should assume Stronach’s grand plans include retiring—let alone dying. Quite the opposite. Stronach—an active skier, tennis player and health food afficionado for whom junk food is poison—has made it abundantly clear that he intends to outlast us all. O’Malley says Stronach never drinks anything stronger than a glass of red wine with lunch. Not even a beer. “He seemed to be saying: ‘How
can a man like me die?’ ” O’Malley says of conversations on the subject of health. “He sees no reason why he shouldn’t live 200 years.” Failing that, Stronach will merely revert to the fallback plan—to leave an indelible mark on the world.
Entertainment is the future, he says. This is where the jobs will be.’
That this will happen, the people who have watched Stronach build his corporate empire over the past 30 years, have no doubt. The question at this point is what form his monuments will take, and how much they will end up costing Magna. As one might expect, Stronach has all the answers. “Listen very carefully,” he demands, “I am very precise in what I say.” What he is doing has nothing to do with ambition or fear of death; he is merely fulfilling his obligation to society. “We as managers have to look down the road and we have got to see how the world is unfolding,” he says. “One thing that is clear in my mind—the western world will lose a lot of industrial jobs. Where will people be employed in the future? That is the big question.”
The future, Stronach is convinced, lies in entertainment. “I feel very strongly that special tourism, theme parks, sporting will increase and that this is where the jobs will be.” Walt Disney Co. may have lost a bundle on Euro Disney but, he says: “If old Walt Disney had still been around, he would not have made those mistakes.” Stronach will be there for Magna.
“I am not so presumptuous to speak for all individual people,” says Stronach with what sounds, for a moment, like modesty. The moment passes. “But I think I am so presumptuous to speak for 99.999 per cent of all individual people,” he says, launching into his theory on the hopes and dreams of humankind. He says he must use caution and good economic sense, but is certain that his new ventures will be a success. The alternative is to be satisfied with what one has already accomplished. “If everybody just says, ‘OK, I make good profits and everything, but I’m not going to invest in the future,’ you’ve got a problem.” Standing still is something Stronach cannot imagine—and the one thing his shareholders need never fear. □