NYRA Official Warns of Possible Insolvency, Need to Sell Property
Updated: Thursday, October 6, 2005 1:10 PM
Posted: Tuesday, October 4, 2005 11:49 AM
Photo: Associated Press
NYRA president Charles Hayward: "The franchise is in jeopardy."
The New York Racing Association could be insolvent by the third week of November unless several plans to raise money and cut expenses occur, NYRA President Charles Hayward told a state oversight panel today.
Hayward, pitching a plan to sell off about 80 parcels of land at Aqueduct racetrack, did not rule out cutting racing dates and purses if the financial crunch is not eased over the coming weeks. Though last week he told The Blood-Horse
that bankruptcy of NYRA was not going to happen, Hayward also could not rule that option out if conditions don't improve.
Hayward said NYRA is looking at a host of options, including cutting health care benefits for employees and retirees and the sale of equine paintings that have been given to NYRA over the years.
"The franchise is in jeopardy,'' Hayward said.
"You have an immediate cash crisis,'' Carole Stone, chairwoman of a new NYRA oversight panel, told Hayward during an appearance by top NYRA executives.
Officials said NYRA needs between $15 million to $20 million from the Aqueduct land sale to avoid a financial meltdown. But the land sale is causing friction with state officials because it goes to the heart of a long-standing dispute between the government and NYRA over who owns the land. The state has insisted the land where Aqueduct, Belmont and Saratoga tracks are located belongs, ultimately, to the state, while NYRA officials over the years have claimed they pay property taxes on the land and hold the deeds.
NYRA officials claim the 80 parcels at Aqueduct are not used for any racing, and so it is free to proceed without state approval. But besides questioning the "wisdom of the sale,'' considering NYRA's franchise is expiring in two years and it wants to use the proceeds for operating expenses, Stone said she believes NYRA needs to seek approval from her panel, the state Racing and Wagering Board and, ultimately, the Legislature.
The matter was not resolved at the oversight meeting, but Hayward said NYRA will still proceed with planning the sale as it considers whether to seek state approval.
Hayward said the land sale could keep NYRA in fiscal health until after the Belmont meet next spring because the sale envisions getting up-front money from would-be buyers before any of the property closings occur. "We're going to need the land sale to proceed,'' he said.
Hayward painted a picture of declining health at NYRA, brought about by rising expenses, like pension and health costs, as well as an increasing share of betting being done at OTBs and out-of-state facilities. He called again on the state racing board to approve a plan submitted in May to let NYRA and two OTBs offer a rewards program – like a frequent flyer system – to lure bettors.
"Money is not leaking out of New York. Money is pouring out of New York,'' Hayward said.
The dire fiscal picture emerges as NYRA awaits its most lucrative project: video lottery terminals at Aqueduct. Approved in 2001, the casino, with 4,500 VLTs, is now expected to open between next Labor Day and the end of the year, Hayward said.
Hayward told the oversight panel NYRA is hopeful to settle a lawsuit with the New York Off Track Betting Corp., a case over betting revenues in which NYRA claims it is owed $5 million. He said NYRA is also looking to further cut expenses, though he offered few specific details.
Hayward himself raised the possibility of reducing purses or race dates, though he later told reporters there are no concrete plans to do so yet. Hayward warned the oversight board that it should make plans for "how to choose to operate'' NYRA "if and when NYRA does go bust.''
Hayward complained of "inherent structural flaws'' in NYRA's operations that are making fiscal matters worse, such as NYRA's policy to let people retire at age 50 fully vested and with 100% of the health care costs funded.
"You can't keep cutting and survive forever,'' said Patrick Kehoe, NYRA's counsel.
As the fiscal crisis emerged, NYRA officials also asked the oversight board to back two capital projects, including a new $750,000 video surveillance system to buy 150 new cameras to be installed where money is changed hands at the three tracks. The request came as NYRA's security chief, Ken Cook, said a teller last Saturday made $35,000 worth of bets from his cash drawer. The teller, who Hayward said was a temporary hire, was not immediately identified. Hayward said he was arrested.
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