The New York Racing Association, struggling under federal bankruptcy protection, is awarding its non-union employees raises and pension increases, officials said May 31.
The costs of the employee benefit hikes--coupled with an expected legal bill of $10 million this year--will help drive a projected $21-million deficit in 2007, according to a state panel that oversees NYRA finances. The oversight board has asked the NYRA board to block the raises and pension benefit hikes and wants NYRA to reconsider the amount it is spending on legal bills.
Despite the financial problems, oversight board members said NYRA, which already received $23 million in bailout funds from the state this year, is in a position to remain solvent through 2007. NYRA, according to state NYRA oversight board member Joseph Torani, “should have adequate funds to operate through the end of the year.”
The oversight board said NYRA wants to give an average 3% pay hike to all its non-union employees; officials didn’t know how many workers that would cover. The raises will cost NYRA $300,000 this year. In addition, $350,000 will be spent to begin NYRA’s contribution to its employees’ pension benefits.
NYRA’s budget this year will total $183.2 million, officials said.
“I have a problem with administrative officers getting these salary increases,” said oversight board member George Sinot.
The oversight board doesn’t have the legal authority to block the pay raises and pension benefit hike or to force NYRA to cut its legal expenses, according to oversight board chairwoman Carole Stone. Officials said most of the legal costs are associated with NYRA’s bankruptcy filing; Irene Posio, NYRA’s chief financial officer, told the panel NYRA expected its legal bill to total about $10 million this year.
The board also tabled a request by NYRA to permit it to enter into a contract with Sprint to erect a cell phone tower atop the grandstand at Aqueduct. While Sprint officials at the meeting threatened to walk away from the project if the approval was delayed much longer, the oversight board insisted a number of questions about the contract remain unresolved.
Stone said the state panel wants to know how NYRA arrived at the financial arrangements of the deal in which Sprint will pay NYRA $45,000 up front and $1,300 a month with a 3% annual lease hike for the next 30 years.
The board said the state also wants to see some language put into the contract in the event Aqueduct is no longer operating as a racetrack during the 30-year life of the deal. “What if it was leveled and turned into something else?” Torani said.
The board’s concern comes as aides to Gov. Eliot Spitzer are studying an idea in which racing at Aqueduct would end, with part of the facility being possibly turned into a video lottery terminal casino and other parcels at the Queens racetrack sold off.
NYRA’s franchise expires Dec. 31, and Spitzer has not yet said publicly whether he is recommending any of the four bidders vying for a new franchise or if he wants a broader restructuring of Thoroughbred racing in New York that would go beyond a decision just over which operator will take over the tracks.
