A deal to provide a $20-million bailout to the New York Racing Association received Senate approval March 1 and heads to Gov. George Pataki for his signature.
The state Assembly approved the measure the evening of Feb. 28.
"This agreement is important to help bring stability to racing in New York and to protect the thousands of people employed in the Thoroughbred racing industry," Senate Majority Leader Joseph Bruno said.
The previously announced deal calls for NYRA to get $20 million from the state Lottery Division as an advance against future revenues expected from its planned video lottery terminal casino at Aqueduct Racetrack. The casino project is awaiting final state approvals; NYRA officials have predicted the facility could open early next year.
NYRA will pay back the $20 million at 4% interest by the time its franchise to run Aqueduct, Belmont Park, and Saratoga expires Dec. 31, 2007.
In all, the state is stepping in with $30 million for NYRA, which includes $5 million from the sale of some parcels of land around Aqueduct to the Port Authority of New York and New Jersey.
The money from the state came after NYRA officials last year said bankruptcy was looming because of a severe cash-flow crisis. NYRA has been plagued by legal and financial troubles for years, and a growing number of entities are said to be lining up to bid as a replacement when the new franchise is awarded.
The $20-million bailout calls for NYRA to submit a cash management plan to a state panel created last year to oversee NYRA's finances.
The NYRA loan package was met with stiff resistance from Democrats in the Senate. Going through a litany of NYRA financial and legal problems, Democratic Sen. John Sabini, who sits on the Senate racing committee, told colleagues during a debate on the bill that the state needs to stop giving NYRA money and instead pick a replacement to run the franchise.
Likening the loan to letting a gambler at a track borrow money, Sabini said: "This is a bad investment. NYRA has taken what was the jewel location of Thoroughbred racing in America--Saratoga, Belmont, and Aqueduct--that is so important to the economy of this state and squandered the good will of the betting public and squandered the good will of this legislature. I believe we can't keep pouring money down this hole."
Senate Democrats said NYRA already has undercut payments to the state for its franchise fee and owes millions in back taxes. "We don't want to see the business fold up," Sabatini said. "We just think someone else could do it better because the people doing it now aren't doing the job properly."
"We're throwing good money after bad money," said Sen. Ada Smith, whose district borders Aqueduct.
But Bruno said defeat of the bill would force NYRA into bankruptcy. "Then let them operate under the federal courts," he said. "Let the federal judge dictate what happens in the lives of 40,000 people who are grooms, growing crops, walking horses making $7, $8, $9 an hour. It's a very poor option."
Bruno said the money is needed to help NYRA get its VLT operation running at Aqueduct. He said the state has lost $1.5 billion in revenue sharing from the nearly three years of delay by NYRA in getting the VLT casino open.
"Is it a bailout? No," Bruno said. "It's an investment in NYRA and horse racing, and it will be paid back."