The New York Racing Association reported a one-month operating loss of $7.1 million in December, one of its worst periods ever during a traditionally slow racing month for the financially ailing racetrack operator. The loss was recently reported by NYRA to a federal bankruptcy court in Manhattan, where NYRA’s Chapter 11 bankruptcy case is being considered.
NYRA’s continuing fiscal woes come as Assembly Speaker Sheldon Silver, a Manhattan Democrat, told a New York City newspaper that there might need to be a new “vetting process” to re-do the bidding for NYRA’s franchise to operate Aqueduct, Belmont Park, and Saratoga. Silver told the New York Sun he believes the new governor, Eliot Spitzer, “will have to create a new process” for the franchise, which a panel dominated by appointees of the former governor, George Pataki, late last year recommended be awarded to Excelsior Racing Associates.
Spitzer has yet to telegraph his desires for the franchise, though last year he raised warnings about the process by which the integrity of the bidders was determined.
The NYRA franchise expires at the end of the year; NYRA and Empire Racing Associates lost out in a recent non-binding recommendation made by a government panel. Excelsior includes partners Steve Swindal, a partner with the New York Yankees, and casino developer Richard Fields. The group’s financial adviser, William Mulrow, is a friend of the new governor; Mulrow on Jan. 25 was tapped by a panel as one of the finalists to become the next state comptroller.
Mulrow told state lawmakers he would resign his affiliation with Excelsior if he becomes comptroller, and would recuse himself from any racing matters that came before the comptroller’s office if the legislature backs his candidacy to fill a vacancy in the chief fiscal watchdog’s post.
The red ink experienced by NYRA in December is nothing new. Typically, the racing group loses between $5 million-$6 million during most Decembers. This year, though, NYRA reported an additional $1 million in expenses due to its bankruptcy reorganization efforts. NYRA chief operating officer Bill Nader said those costs involved payments to bankruptcy lawyers, accountants, and the creditor’s committee NYRA must fund.
“December is always a tough month for us,” Nader said. “From a cash-flow standpoint, it is not a good month. That’s where we depend on the summer months to carry us through.”
Nadar said NYRA conducts only 18 days of racing during December. He acould not immediately say how much NYRA lost during all of 2006.
The losses come as NYRA is trying to convince the new governor to approve a contract between NYRA and MGM Mirage that would let construction begin on a new video lottery terminal casino at Aqueduct. The project has been stalled for years; the previous Pataki administration blocked the efforts, in part, because of concerns NYRA was claiming ownership of the three racetracks. The state maintains it owns the tracks.
The land-claims issue is a major argument in bankruptcy court. The sides are due back in court in early February for a hearing on whether NYRA should be able to access $50 million in funding. The state, meanwhile, has a hearing before the judge in a month to try to get the bankruptcy case dismissed on the grounds that NYRA is a quasi-governmental agency not permitted to bankruptcy protection.
In its December court filing, NYRA estimates the three racetracks are valued in excess of $1 billion.