The New York Racing Association is proposing to keep 17.5 acres of land adjacent to Aqueduct after it gives up it land claims to the state of New York, according to amendments filed to its Chapter 11 bankruptcy reorganization.
NYRA would then sell the land to unknown developers for a projected $15 million, according to the court papers filed this week with a federal bankruptcy judge in Manhattan. The documents do not say if NYRA has identified a possible purchaser nor the intended use of the “ancillary property’’ at the track.
The court papers also show NYRA continuing to bleed red ink and needing the state for bailouts. In addition to $75 million Gov. Eliot Spitzer has already proposed to give NYRA to settle the land claims and award it another 30 year franchise extension, NYRA said the state will need to loan it $30 million until a planned VLT casino at Aqueduct can be opened. NYRA said $20 million should come immediately if it is awarded the franchise again, with the remaining $10 million before next June 30.
If the VLT casino is delayed beyond a projected January 1, 2009 opening, NYRA says the state will continue to need to loan it $2.5 million a month “in order to continue operating its racing business without interruption,’’ according to the court papers.
NYRA also proposes to pay the Internal Revenue Service up to $25 million – far short of the $1.6 billion the IRS claims NYRA owes in back taxes. A hearing on that matter, and other proposals within the amending bankruptcy filed, is scheduled for December 2.
The future of the franchise is still very much in doubt. The Spitzer administration has recommended NYRA continue racing at Aqueduct, Belmont and Saratoga, while the Republican-led Senate has so far publicly said it will not back that idea, and instead believes more industry players should be involved in running Thoroughbred racing in New York.
NYRA's competitors in the franchise process claim the racing entity is a bad financial deal for the state and point to its bankruptcy case as among the chief pieces of evidence.
The current NYRA franchise expires December 31. NYRA again reiterated with the court that there is no guarantee racing will continue in January if the franchise issue is resolved. NYRA has floated the idea of continuing with its land claims if it loses the franchise process with the state, throwing into question whether racing could continue in the short term.
In the court filing, NYRA projects its total handle to grow by 1.5 percent annually between 2006 and 2012. It is projecting a $30 million in purses increases in the first year of the VLT operation at Aqueduct. It anticipates the 4,500 VLT machines will have an average win per machine of $275 in 2009 growing to $503 by 2012.
Meanwhile, a U.S. Bankruptcy Court judge Nov. 20 dismissed a petition by a creditor of the New York Racing Association, allowing the association to pursue an amended reorganization plan, attorneys for the creditor and NYRA said.
Judge James Peck of the U.S. Bankruptcy Court for the Southern District of New York dismissed the claim one week after the creditor, Plainfield Special Situations Master Fund Limited, a company that purchased a debt held by one of NYRA’s original creditors, argued NYRA’s reorganization plan was “illusory,” and that other creditors such as itself should be able to submit reorganization plans.
On Nov. 20, NYRA presented an amended reorganization plan to address concerns from creditors, the Internal Revenue Service, and the Pension Benefit Guaranty Corporation. According to Brian Rosen, the attorney for NYRA, the judge continued the hearing on the amended plan until Dec. 2.
