Hayward: NYRA Will Go Broke Without Cash Advances
Updated: Thursday, September 14, 2006 7:25 PM
Posted: Wednesday, September 13, 2006 11:21 AM
The New York Racing Association is facing the same financial crisis as it did a year ago unless the state opens its wallet with cash advances that have already been approved by the state legislature.
NYRA president Charles Hayward told state regulators Sept. 12 the non-profit association will run out of money by the end of the year unless it is permitted to tap into $19 million in aid.
"We will be insolvent" by the end of the year, Hayward told the Non-Profit Racing Association Oversight Board at a meeting in Saratoga Springs, N.Y. If insolvency occurs and bankruptcy is declared, that could throw the current bidding process for a new franchise-holder into chaos, NYRA and state officials have said privately.
Hayward said the state Lottery Division and the oversight board has failed to approve two agreements that will give the green light for MGM Mirage, NYRA's video lottery terminals partner, to begin construction on a casino at Aqueduct. From VLT proceeds, NYRA would pay back $30 million in bailout money approved by the legislature; $11 million has already been advanced. Hayward said the rest is needed to pay expenses, including property taxes and $12 million in pension payments.
But oversight board chairwoman Carole Stone raised red flags over whether NYRA should tap into any more money until MGM Mirage commits to the VLT project. Hayward insisted the casino company already has, but needs final approvals from the state--putting its repayment for fronting NYRA $180 million for the casino ahead of other debts and getting a final contract approval from the state.
"I'm not prepared to say today that, if there are not VLTs there is not more money, but I am saying it's hard for me to envision a plan that could legitimately repay VLT advances without VLT revenue," Stone said.
Stone said the oversight board has no authority over the Lottery Division, which needs to approve a contract before MGM Mirage can proceed. Hayward said the documents that need approval from the oversight panel have been submitted.
"They're prepared and ready to go," Hayward said of MGM Mirage's desire to begin construction on the long-delayed VLT casino.
The debate over the VLT project comes at a time when NYRA is facing off against three other groups vying to win the franchise to operate Aqueduct, Belmont Park, and Saratoga. The franchise, held by NYRA since 1955, expires at the end of 2007.
State officials have voiced concern over NYRA's insistence that it owns the land and may be considering a lawsuit to keep the land if the state gives the franchise to another party. It is uncertain how much that concern may be delaying action on the two final approvals needed for the VLT project to proceed.
NYRA got a boost from one oversight board member, Joseph Torani, who said NYRA is not to blame," Torani said at the meeting. "I'm convinced that it's not MGM. It's not NYRA. MGM is prepared to go forward. NYRA has submitted all their documentation for the license.
"Mr. Hayward is right on the money. If they don't get the approval for the (VLT) license, we're not going to give them any more money. We're back to where we were a year ago December."
If the cash doesn't come, Torani said, NYRA "will not be able to operate in a solvent manner."
Torani urged the Lottery Division to approve the VLT contract.
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