With construction set to start on a video lottery terminal casino at Aqueduct in late January, racetrack, the New York Racing Association is pushing the state of New York to provide an additional $20-million bailout before spring.
On the day the state wired NYRA the proceeds from a $5-million loan, NYRA president Charles Hayward said the infusion of cash would only keep NYRA solvent until about March. State officials have been looking to make their offer for an additional $20-million loan part of the state budget; however, the state budget process won't be concluded at the earliest until April 1, and possibly, given New York's history, months later.
"The $5 million will not last us until the summer," Hayward said of the loan NYRA received from a state economic development agency the week of Jan. 9 as part of a $30-million bailout plan recently agreed to in December between the state and NYRA.
Hayward said the $5 million, plus an additional $1-million advance NYRA recently received from another state agency as part of a pending real estate deal involving parcels of land around Aqueduct, would keep NYRA operations funded through at least the end of February.
Hayward said NYRA still owes about $12 million for 2005 employee pension payments and another $8 million in local property taxes. He said some of the $20 million NYRA expects to receive would go to help pay down some of those late bills.
The $5-million loan came with no strings attached, except that it be used for working capital. The $20-million loan at some point in the future would be under the control of a new state oversight panel created last year to monitor NYRA finances. To get the money, NYRA also has agreed to submit a financial plan to the oversight board.
The $20 million, as well as the $5 million NYRA obtained from the state Jan. 11, will be paid back from proceeds NYRA expects to receive from a VLT casino at Aqueduct. The state has granted final approval to NYRA's contract with MGM Mirage to run the casino.
Hayward said construction on the $170-million parlor is expected to begin in late January.
Hayward said the $6 million NYRA has received from the state the past couple weeks is going to cover NYRA's cash-flow problems. He said NYRA traditionally has a negative cash flow from December until May. The next $20 million will help cover expenses until the VLT operations begin, which he said will be from 10 to 14 months after construction starts.
When the casino opens, Hayward said "then you've got VLT revenue, which clearly would make this franchise more attractive to whoever will be bidding on it and will also ensure the quality of racing."
NYRA's franchise to operate Aqueduct, Belmont Park, and Saratoga expires at the end of 2007, and the state is in the beginning phases of a process to find a new franchise holder as well as to possibly change the not-for-profit business model under which NYRA has operated since 1955.