A state oversight panel is recommending the New York Racing Association boost takeout, defer dues to the National Thoroughbred Racing Association, and get a cash advance from its casino partner in order to cope with NYRA's worsening fiscal picture.
The oversight board estimates NYRA's operating expenses will exceed its revenues by up to $7 million by next April, which it blamed on "the extraordinary costs related to NYRA's legal difficulties and resultant fees and fines." In a Nov. 17 letter to NYRA president Charles Hayward, Carole Stone, head of the panel, said as a result, NYRA's fiscal solutions should be done "without diminishing the value of the franchise or shifting the burden of any solution to the state taxpayers or other elements of the industry.''
The state government oversight board, in Stone's letter, made no mention of two of NYRA's current cash-raising plans--selling off 80 parcels of land in and around Aqueduct and auctioning 19 pieces of artwork. The board has already said it believes NYRA does not have the legal authority to sell the land or paintings without state approval.
Stone said NYRA should sell or syndicate its interest in Equibase, with an option to re-acquire the interest at a pre-established price at some time in the future. She also recommended NYRA "intensify efforts" to resolve existing lawsuits "in order to achieve a timely cash settlement."
Officials did not elaborate on precisely which lawsuits NYRA should settle, except to say that NYRA believes it has a good chance of winning several lawsuits in which it is the plaintiff.
The oversight board, established this year by Gov. George Pataki and state lawmakers to monitor NYRA's finances as the state begins the process of bidding out the NYRA franchise, also recommended NYRA get a cash advance from MGM Mirage, its video lottery terminal gambling partner. The VLT deal is still awaiting final state action, but Stone said the advance could be made against future expected VLT revenues.
Stone said the NTRA dues should be deferred for one year. Officials said deferring the NTRA dues would save $3.3 million over the next 13 months.
Stone also called for a higher takeout on NYRA's bets, a move NYRA officials have insisted they would not do because it would dissuade bettors from gambling on NYRA's races. But Stone said NYRA's takeout, which varies depending on the type of bet made, is one of the lowest in the nation and should be raised January 1 to help with NYRA's cash flow crisis.
Additionally, she said NYRA should re-negotiate current simulcasting contracts "to reflect the value of New York racing to these broadcasts.
"New York racing represents a significant portion of the product presented by various simulcasting entities while the current financial return to NYRA is inadequate to cover the cost of producing that product," Stone wrote in a copy of the letter obtained by The Blood-Horse
Stone said she wants a response to her ideas from NYRA by Nov. 28. "The board recognizes that substantial efforts will be required to effectuate the above actions in a timely manner and we are prepared to work with you to that end,'' she wrote to Hayward.
NYRA officials declined to comment. "It is becoming a bit of a circus and we're not going to respond to a letter sent to Charlie Hayward from the oversight board. We're not going to play this out in the media,'' said Bill Nader, a NYRA spokesman.
Nader also declined to share the response by NYRA to the state Racing and Wagering Board. A day earlier, the racing board's chairman, Michael Hoblock, threatened NYRA with legal action if it went ahead with plans to sell 19 paintings at a Manhattan auction next month. NYRA claims the paintings are its property and that it has never gone to the state before to sell things like trucks or machinery. The state insists it must approve any sale of assets.
Hoblock had demanded a response from NYRA to his letter by Nov. 17. Nader, who a day earlier had insisted the state's approval is not needed, said the response was sent, but he declined to provide a copy. A spokesman for the state racing board said no letter from NYRA had yet been received.
The oversight board said NYRA could also "monetize'' the cash flow that will result from NYRA's new long term contract with ABC/ESPN for broadcast rights to the Belmont Stakes. Officials said that would mean cashing out its revenue stream by going to an investor and receiving back a portion of the value.