MGM Mirage Withdraws From NYRA VLT Deal
After months of intense negotiations, MGM Mirage has ended its deal with the New York Racing Association to build and operate a video lottery terminal casino at Aqueduct.
The surprising announcement by the Las Vegas-based company will add further questions to the future of the racing franchise since MGM was, by law, in line to run the Aqueduct VLT facility no matter which entity wins the expiring NYRA franchise.
The decision came as NYRA officials were predicting the sides were close to reaching a final deal with the state on a long-awaited agreement to let the Aqueduct project begin.
“We have worked closely with NYRA and the state of New York for almost four years on this project,” MGM Mirage chairman and chief executive officer Terry Lanni said in a statement. “It has been fraught with obstacles, ranging from NYRA's legal difficulties, its Chapter 11 filing, uncertainties concerning the grant of the racing franchise upon the expiration of NYRA's current franchise at the end of 2007, disputes between NYRA and the state, as well as escalating costs for the project.
“While we came close to reaching an agreement with the state and NYRA, certain unresolved issues have caused us to withdraw from this opportunity. We expended a lot of resources, time, and effort on the project, and regret that it did not come to fruition.”
NYRA chairman Steven Duncker called the situation disappointing. "Certainly, we had a very long road with them and I wish that they hadn’t come to this decision, but certainly we have some avenues," he said.
Duncker, who has been closely involved in the talks involving NYRA, MGM, and the administration of New York Gov. Eliot Spitzer, said NYRA is now looking to enlist other VLT partners for Aqueduct “or other means of borrowing the money."
The project had grown to $215 million, which MGM was funding. “We will certainly keep trying to get this built," Duncker said, despite the fact NYRA has only eight months left on its Thoroughbred franchise to operate Aqueduct, Belmont Park, and Saratoga. NYRA is among the bidders for the next franchise.
Duncker said NYRA already has a contract with a construction company in place to begin the project. “If we get the funding, we can start anytime," he said. "Regardless of how the franchise plays out, we’d want to get started on building the VLT facility as quickly as possible because it brings revenues to the state as well as the horsemen."
When asked how much MGM’s pullout hurts NYRA, which is already losing money each month while it is in bankruptcy court, Duncker said: “It isn’t as if we were building it with them and not as if they started funding this and then pulled out. Depending on how quickly we can put another partner or financing in place, it could hurt anywhere from a little to a lot."
But Duncker, who praised the Spitzer administration for its handling of the talks with MGM, said he did not think it would hurt NYRA’s ability to hold onto its franchise. NYRA is competing with three other entities for the racing franchise and maintains it owns the land upon which the three racetracks sit.
As it looks to other partners, it is unlikely NYRA will turn to private entities it is competing against for the franchise. “That won’t be the first avenue we go down," Duncker said.
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