NYRA to Hold Belmont, But Money Will Run Out
The head of the New York Racing Association insists he is not threatening cancellation of the Belmont Stakes (gr. I) next year if the state does not quickly award an operator for the long-stalled Aqueduct casino project.
But Charles Hayward, NYRA’s president, would like it to be known that the racing entity risks running out of money by next June — and that the Belmont Stakes is set for June 5.
“There’s not a threat there," Hayward said Dec. 21. Still, if his ratcheting up of talk about NYRA having to shut down forces state leaders to end the stalemate over a video lottery terminal operator at Aqueduct, Hayward is not objecting.
“Sometimes you need to be a little more direct to help people understand what the circumstances are," Hayward said in an interview.
Gov. David Paterson and state legislative leaders have been stuck for months over who to choose from a list of five bidding groups to run the Aqueduct VLT casino, which was first approved in 2001. The state is losing an estimated $400 million a year. And NYRA, along with horsemen and breeders, is losing at least $60 million a year because of the delay.
NYRA’s latest fiscal problem is not a new one. It is facing another cash-flow crisis brought about by dwindling pari-mutuel handle, the unkept promises of VLT revenue-sharing money, and funds owed by other entities, such as $14 million from New York City Off Track Betting Corp.
When NYRA won a new franchise term in 2008 to run Aqueduct, Belmont Park, and Saratoga, it gave up its ownership claims to the three tracks in return for another three decades of operating the tracks along with millions from the state. One of those pots was $30 million from the state to help NYRA bridge its finances until a VLT operator was selected.
But that deal called for a VLT casino to be up and running by last March. If a VLT operator is selected soon, Hayward said NYRA can negotiate with that company to provide financing to NYRA so it's solvent next year. If there are more delays, the NYRA chief did not rule out having to ask state government for another bailout.
The problem, though, is that the state is facing another multibillion-dollar deficit next year and, in an election year, it would be a heavy lift for the governor and lawmakers to provide money to a racetrack operator at a time when they might be cutting funding for public schools and hospitals.
Hayward said NYRA planned on ending the year with $15 million on hand, but — with NYCOTB holding back $4 million in payments — will finish out 2009 with about $11 million. That black ink will turn red by next June at the latest, Hayward estimated — all of which would have been avoided had the state selected a VLT operator.
“It’s not our fault there’s no VLT operator," Hayward said.
The NYRA boss chose not to blame any current state leaders, but said much blame can be pointed to former Gov. George Pataki. Hayward said the Pataki administration’s dislike for NYRA scuttled a deal NYRA had with MGM Mirage that would have, in the end, brought far more money to NYRA and the state than any deal the state might end up with from the current bids on the table.
Hayward said the “day has passed" when NYRA would jump back in and ask the state to let NYRA handle the VLT process. “It seems to me that the political leaders understand that this has to get done," Hayward said.
There are other concerns. The VLT bidding process has been anything but clean. Terms have changed, bidders have been allowed to change offers after supposed deadlines, and there have been stark differences in this bidding process compared with most state contracts.
All that has led to much speculation that the state, no matter who it selects, has opened itself up to litigation from a losing bidder. That, then, could further delay the racino opening.
Hayward said NYRA has no favorite among the bidders. “We have some significant reservation about Aqueduct Entertainment Group, but we won’t comment further on that," Hayward said of the entity whose major partners include Navegante Group of Las Vegas.
How serious is NYRA about no Belmont Stakes next year? Hayward said there have been no contingency plans to deal with possibly canceling the race.
When asked if any ideas have been floated to hold the event at another location, Hayward said: “I don’t think we’d undertake that. I don’t know how we’d do that, to be honest. It’s still our plans to run the Belmont stakes."
Hayward said NYRA will try to further cut costs, but he noted NYRA administration went without raises in 2009 and will not have any next year. He could not rule out the race not being held if the financial issues are not resolved.
“We’re not putting a gun to anybody’s head," Hayward said. "We’re just saying the facts."
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