The state of New York has wired the New York Racing Association $8 million to help ease its immediate fiscal troubles, a funding stream that surprised NYRA officials who earlier in the day had been in court on their first hearing after filing for Chapter 11 bankruptcy protection.
"The money came at 4:30 today,'' said William Nader, a NYRA spokesman. He wasn't sure about any details about why the money came or its funding stream. He did not know if it was part of a $19 million bailout package that state officials had been holding onto pending certain agreements with NYRA.
Nader said the new money will keep NYRA solvent through the end of the year, ensuring an uninterrupted schedule of race dates and no cut in purses. The $8 million loan carries a 4% interest rate. It was not immediately clear when the money must be repaid.
"The money did land,'' Nader said. "At least it's business as usual through 2006 and that was the main goal in seeking Chapter 11 protection for the benefit of our horsemen ... and also our customers and vendors and employees.''
The money will go to basic NYRA operations, he said, and will not be nearly enough to pay off a slew of NYRA debts, including $20 million in local county property taxes and $12 million in pension payments.
The money came less than 24 hours after NYRA said it was seeking bankruptcy protection from its creditors. It blamed the state of New York for not approving a contract between NYRA and MGM Mirage for a long-stalled casino at Aqueduct racetrack; NYRA has said the VLT revenues would have kept it in the black, although a VLT casino would need a year to build.
Scott Reif, a spokesman for Gov. George Pataki's budget division and the panel overseeing NYRA's finances, said the state's bankruptcy lawyer said the new loan for NYRA "was the most prudent course of action to take to protect the state's assets and its taxpayers, and ensure continued racing in new york state."
"We were willing to loan NYRA $19 million to keep them operating through year end. As a result of today's proceeding, they will get a loan of $8 million for the same purpose,'' he added.
The surprise funds from the state on Nov. 3 was the second bit of good news NYRA received from Albany that day. Earlier, state officials said the new bankruptcy filing would not harm NYRA's bid in the process underway to choose a franchise holder to run the three Thoroughbred tracks beginning Jan. 1, 2008. A week ago, the Ad Hoc Committee on the Future of Racing, which is considering the bids, rejected an Australian company for not posting a required bond. There was speculation in the hours after the NYRA bankruptcy filing that the state could try to eliminate NYRA's bid.
"The committee is not considering disqualifying NYRA because bankruptcy law stipulates that filing for bankruptcy cannot be viewed in a negative manner,'' said Scott Reif, a spokesman for the committee.
A federal bankruptcy court judge took no action in the case, according to NYRA officials. A hearing is scheduled for Nov. 8 in New York.