The New York Racing Association could run out of cash before July 1 under a doomsday scenario provided to its board of directors.
Sources say NYRA faces a cash flow deficit by the end of June if the state does not approve a $17 million loan now being considered, and if the New York City Off-Track Betting Corp. pays no money on out-of-state simulcasting.
Legislation to provide NYRA with a loan against future casino revenue-sharing proceeds recently died as part of a broader plan to bail out NYCOTB’s fiscal concerns. The OTB giant is now coming up with its own financial recovery plan, which in the near-term includes delaying certain payments to racetracks, including NYRA. NYCOTB already owes NYRA at least $15 million in back payments.
The NYRA board met April 30 to hear a number of possible financial outcomes. Earlier this week, there had been talk that NYRA might take some initial steps – such as sending out various legal letters – as part of a shut-down plan. But some state officials and sources close to NYRA acknowledged the racing group might have had to overcome some believability issues so soon after NYCOTB threatened, and then backed away, from shuttering its operations.
NYRA has been warning of a looming financial crisis for months. At first, there were threats it might not be able to hold the Belmont Stakes (gr. I), but officials quickly backed off those suggestions. And in Saratoga Springs, N.Y., officials there have been warning that NYRA’s summer meet, a money-making period for both the track and the community, could face financial problems.
Sources say the NYRA board made no significant decisions April 30, but was told about various dates for NYRA’s fiscal future based on reactions by the state and NYCOTB.
NYRA president Charles Hayward was not immediately available for comment.
Besides the worst-case scenario of running out of cash by the end of June, the board was told NYRA could deplete its cash by sometime in November if NYRA gets the $17 million loan but NYCOTB provides zero dollars in revenue-sharing proceeds from out-of-state simulcasting proceeds.
If NYRA gets the $17 million and NYCOTB payments to NYRA are reduced by 15%, the racing entity – which runs Aqueduct, Belmont and Saratoga – would have enough money to stay afloat well into 2011.
The administration of Gov. David Paterson this week proposed legislation to provide NYRA with a $17 million loan, which NYRA would pay back out of its revenue-sharing proceeds when, or if, a casino at Aqueduct opens. The legislation was introduced in the state Senate, but officials in the Assembly have said they want to first see what kind of financial plan NYCOTB devises for its own future, which might, or might not, help resolve some of NYRA's issues.
NYRA is also counting on the state to pick an operator for the long-delayed casino at Aqueduct. The Paterson administration and the Legislature are still negotiating the final terms of a request for proposal for what would be the fourth bidding process under three different governors since Aqueduct was approved for a casino in 2001.
Officials in the administration say once an RFP is issued, a final decision could be made within 12 weeks. Paterson, who wants a new procurement process for Aqueduct after the last one recently fell apart and is now being looked at by federal prosecutors and the state inspector general’s office, this week said an operator could be picked by the end of June. But officials say, more realistically, the earliest would be the end of July.
Most groups interested in the casino development have said it would take about a year to open a VLT facility from the day a contract with the state is signed, though some have signaled interest in opening a temporary or partial facility earlier. The casino has been approved for 4,500 slot machines.
Barry Ostrager, president of the New York Thoroughbred Breeders Association and a NYRA board member, declined to comment on the specifics of the April 30 board meeting. But, he said NYRA and the breeding industry will not survive if there is not a swift resolution to the NYCOTB revenue-sharing matter, the Aqueduct casino issue and the state-backed loan.
"The financial information in the public domain is sufficient to put the three branches of state government on notice that absent a change in the status quo ... NYRA will not able able to open for the Saratoga meet and will cease operations before the Saratoga meet.''
Of the New York breeders, he said, they, too, "will be out of business.''