State officials in New York have agreed on one point: that they will not let the New York Racing Association shut down after the Belmont Stakes (gr. I) or for the Saratoga summer meet.
How exactly the racing group, which is running out of money, will stay afloat is still the sticking point.
"That’s not going to happen," Gov. David Paterson said May 18 of a looming NYRA shutdown.
The NYRA board was told two weeks ago it was running out of money as early as June, in part because the New York City Off-Track Betting Corp., which is in bankruptcy protection, has delayed payments to NYRA and other tracks as it deals with its own cash flow problems. NYRA says NYCOTB owes it $17 billion, and NYRA officials have said they could be forced to shut down the day after the Belmont Stakes.
"We have a plan to loan NYRA, in the short term, money to get through Saratoga and we’re working on a long-term plan to help them beyond that," Paterson said.
The new plan, sources said, involves a direct loan by the state of at least $17 million--which could resolve NYRA’s financial problems through the year.
"I think they’ll pass it," Paterson said of lawmakers and the new bailout plan.
But Assembly Speaker Sheldon Silver did not commit to passing the NYRA bill. "I haven’t seen the bill yet," Silver said.
Nor has Assembly Racing Committee chairman Gary Pretlow. But he said he is confident state help for NYRA is on the way. "We’re not going to let Saratoga fail," Pretlow said of the upcoming race meet.
Negotiators are working on an alternative to a $17 million loan plan recently floated by NYRA. That plan failed because, lawyers told NYRA, it would be illegal for bonds to be used for the operating expenses NYRA had planned for the proceeds. Now, a new lending mechanism is being pursued in which the state would still provide a loan to NYRA, which could use the proceeds of this particular lending device for operating expenses.
NYRA officials have said they would not be in the financial trouble now facing the track operator had the state gotten a racino open at Aqueduct. A deal signed by the state several years ago provides that the state will make a good faith effort to help NYRA if it faced financial trouble if the long-delayed Aqueduct casino was not operating by April 2009.
Further, NYRA officials argue that the state--because it now owns NYCOTB--is on the hook for the money owed NYRA by the OTB giant. NYCOTB, in its Chapter 9 bankruptcy filing, acknowledges a $15 million debt to NYRA; officials at NYRA have said that amount has since grown to $17 million.
"NYRA has a good case for the money," Pretlow said. "OTB is the state and OTB owes NYRA, ergo, the state owes NYRA."
State officials said the new borrowing plan envisions the state Empire State Development Corp., a state agency that runs economic development efforts, lend NYRA between $15 million and $25 million. They said the plan would get around state constitutional prohibitions on gifts or loans of credit by terming the loan a “working capital’’ borrowing that NYRA would have to pay back before next March 31, which is the end of the state’s 2010 fiscal year.
If NYRA does not repay the loan, the proceeds would be taken from future revenues NYRA expects from a casino at Aqueduct racetrack. The Paterson administration expects a casino operator to be tapped–in what is now the fourth separate bidding process for the racino–sometime in early August.
The NYRA borrowing plan envisions taking down by as much as $25 million from a $250 million capital program that the state has in place to serve as financing for the future Aqueduct casino.
The Paterson administration has not yet proposed legislation for the NYRA borrowing plan. Officials are hoping for a deal with legislative leaders sometime this week.
Negotiators, however, have been cautious about getting too many of the details about a NYRA loan package out in public, in part, because the state is facing a $9.2 billion deficit, and a whole range of popular programs are facing sharp budget cuts.