The New York Racing Association has filed a Chapter 11 plan in which it plans to surrender a claim of ownership to Thoroughbred tracks in exchange for the right to run the facilities for the next 30 years.
The plan, submitted Oct. 23 to the U.S. Bankruptcy Court in Manhattan, is based on a memorandum of understanding NYRA reached with the state in September. The memorandum, which is subject to the passage of a bill by the state legislature, is aimed at avoiding a long, costly legal battle over who owns Aqueduct, Belmont Park, and Saratoga.
NYRA has held the state franchise since 1955 and has claimed that it owns the tracks.
In 2006, NYRA filed a lawsuit in bankruptcy court against state officials for asserting that the state owned the racetracks and that upon expiration of the franchise Dec. 31, NYRA would lose rights to the tracks. The lawsuit also alleged officials hindered the organization’s finances and drove the association into bankruptcy.
Under the memorandum of understanding and now the Chapter 11 plan, NYRA has agreed to “irrevocably relinquish” its claim that it owns the tracks. In exchange, New York will award the reorganized NYRA a 30-year franchise starting Jan. 1, 2008.
According to the Chapter 11 plan, NYRA will give the state all net revenue it receives annually from racing operations as a franchise fee.
The Chapter 11 plan provides that New York State will choose, in consultation with NYRA, a gaming entity to run video lottery terminals at Aqueduct. With funds received from the gaming entity, the state will provide NYRA up to $75 million it can use to repay creditors.
The state will also forgive debt NYRA now owes, provided the gaming entity is willing to reimburse the state for such forgiven obligations.
The bankruptcy court is scheduled to consider approval of the Chapter 11 plan disclosure statement Nov. 20. The document summarizes the Chapter 11 plan in plain language and must be approved by the court before the plan can be sent to creditors for a vote.