The six bidding groups vying for the Aqueduct casino rights have been asked to submit their "final" offers — again — to the state of New York, along with a new promise for a large and quick payment.
In a process filled with delays and missed deadlines, officials from Gov. David Paterson’s office sent letters requesting more information to the bidders late in the evening on Oct. 30. It gave a Nov. 6 deadline for the responses.
The letter includes an important caveat: details on how the bidders would be able to pay the state $200 million within 30 days of signing a deal.
The new demand would, on the surface, knock some of the bidding groups out of contention because their offers do not include such quick payments to the state. But the letter from the governor’s counsel, Peter Kiernan, was being interpreted by bidders as a final chance to reconfigure their previous offers to ensure the big upfront payment can be made.
Moreover, the letter from Kiernan said bidders, by Nov. 6, must provide "conclusive evidence" how they can ensure payment of "$200 million or more" to the state within 30 days of signing a memorandum of understanding for the casino project.
Some of the bidders have long thought they had already presented their final offers to the state for the lucrative and exclusive rights to develop New York City’s only legal casino and one of the few in the world with its own subway stop.
Sources said the new letter is seeking "last and final financial offers" from the bidders, which include an array of parties, including gambling, construction, and financial companies stretching from Steve Wynn and Hard Rock Entertainment to Penn National Gaming and Delaware North.
Paterson and legislative leaders are searching for as much cash as possible to help close a $3.2 billion deficit in the current fiscal year that ends March 31, 2010. The governor is proposing some controversial cuts to education and health care, while lawmakers are looking for other revenues to help avoid those politically sensitive reductions. In a recent plan to close the gap in the coming months, Paterson included $200 million he said would be a minimum the state can expect to receive from whichever entity wins the Aqueduct contract.
Kiernan, in his letter, talked of the "unprecedented crisis" facing the state’s finances.
The offers to the state run the gamut in amount and when the money — an upfront franchise fee payment for the rights to run the casino for the next 30 years — would be paid. At $250 million, Penn National has offered the most in upfront money to the state.
Behind the scenes, Paterson and legislative leaders have been stuck in attempts to settle on a winner. Some Senate Democrats are pushing Aqueduct Entertainment Group, whose partners include Las Vegas-based Navegante Group but also entities tied to Rev. Floyd Flake, a politically wired former Democratic congressman from Queens who is tight with Senate President Malcolm Smith, also from Queens.
Also being pushed by some aides to Paterson is a partnership that includes real estate developer SL Green and Hard Rock Entertainment, a company owned by the Seminole Tribe of Florida, which is involved in a dispute with some Florida officials who recently asked the federal government to halt gambling on its reservations there in the latest spate over compact talks.
Wynn is also among the finalists, though officials in New York became concerned about comments the Las Vegas casino mogul made in a conference call with investors last week about this being a bad time for new investments in the nation’s casino industry. People close to Wynn, however, say his comments had nothing to do with the Aqueduct bid, to which Wynn is fully committed.
While it has offered the most upfront money, Penn National, which has avoided adding numerous partners like much of its competition, does not have the political ties of its competitors. Delaware North, a Buffalo company, is also among the finalists, sources say.
Penn National did, however, announce a deal Nov. 2 with hip-hop pioneer Russell Simmons’ Rush Communications to serve as a “community relations adviser," providing assistance to the company in local community outreach in Queens. Simmons, who grew up in Queens, praised Penn National as “an exemplary corporate citizen" and said the Aqueduct development will provide an economic shot to the community. Penn National also backed a deal with the New York Hotel & Motel Trades Council of the AFL-CIO to ensure union workers are hired for future Aqueduct jobs.
