A New York state panel approved a deal Tuesday to have the state's obligations owed by the New York Racing Association take a back seat to the $170 million MGM Mirage will be lending to NYRA to build its video lottery terminal casino at Aqueduct racetrack.
The deal was already approved over a year ago by the state legislature, but MGM officials wanted a state government panel formed last year to oversee NYRA's finances to also put the loan subordination agreement in writing. The state committee is in charge of the bidding process that will result in a new franchise holder of the franchise owned by NYRA since 1955 to run Aqueduct, Belmont, and Saratoga racetracks.
Scott Reif, a spokesman for the state panel, said NYRA owes a state economic development agency $8.5 million and another $74.5 million to the now-defunct Thoroughbred Capital Investment Fund. The deal approved March 7 subordinates that debt so that MGM is basically first in line to get its money re-paid first. State officials have been concerned that MGM would not go forward without the subordination arrangement, keeping the long-delayed VLT project on the back burner even longer.
NYRA officials for more than a year have been saying they expect the VLT project to take about 12 months to complete. Though some demolition work has been done, the construction has not yet started, meaning it will be next spring at the earliest before the VLT casino is open. The state government, in its 2006 spending plan, does not forecast receiving any revenue proceeds from NYRA's VLT casino in the coming year; the state expects to receive $400 million annually when the Aqueduct VLT casino opens.
The state committee also advanced NYRA $6 million as part of a $20 million loan package that was recently approved for NYRA. The money must be re-paid from future VLT revenues by the time its franchise expires. Of the $6 million, $1.7 million will go to overdue pari-mutuel and racing regulatory fees, another $3 million will allow NYRA to pay its overdue county property tax bill, $1 million is earmarked for various past liabilities, and $300,000 will serve as working capital, Reif said.