A dispute over video lottery terminal revenue splits has been resolved by the New York Racing Association and the group that represents horsemen at NYRA-operated racetracks.
"I trust Barry Schwartz," said Richard Bomze, president of the New York Thoroughbred Horsemen's Association. "He's a horsemen. He's a breeder. It's a matter of trust. Barry Schwartz says, 'Trust me,' and we're going to trust him."
At issue was the recent demand by Schwartz that horsemen agree to give up part of their VLT revenue share if a loan NYRA needs to construct a VLT parlor at Aqueduct isn't paid off within five years. NYRA will keep 20.25% of VLT revenue in years one through three of the program; the split slides to 20% until year six, when it drops to 17.5%
Schwartz said NYRA might not be able to pay off its loan, which horsemen said would total $120 million, by the program's sixth year and, therefore, needed horsemen to agree to let NYRA maintain keep 20% to ensure the debt is paid.
Under the deal agreed to May 29, horsemen will relinquish up to 2.5% of their share if the loan is still on the books after the fifth year, Bomze said.
"No one can say the horsemen didn't do their part," Bomze said. "I wish they didn't ask us to do this, but they had to, and I understand it's a business," he said. "I'm satisfied because I think they'll be successful, and so much VLT money will come in over the long run that we'll all be very happy."
"I didn't doubt for a minute it wasn't going to happen. Let's face it. It was this way or no way,'' Schwartz said of the VLT deal.
Schwartz agreed, though not as energetically, with Bomze that the VLT construction loan should be retired within five years. "We'd all like to believe that it's going to happen, but I still had to protect my organization,'' he said.
The NYRA chairman said the deal with the horsemen removes any final obstacles to getting the VLTs up and running by NYRA's targeted date of January 1. He said a series of meetings with MGM Mirage, the Las Vegas company that will be running Aqueduct's VLT program, are scheduled over the next couple of weeks that include picking a final design for the VLT facility.
Bomze said it "doesn't seem possible to me" NYRA won't be able to pay off the loan proceeds within five years because, he believes, the 4,500 machines NYRA is planning for Aqueduct will be a huge success.
"And then this is all a moot point," he said. "They got what they wanted and we got what we wanted."
The dispute began after the state legislature in May adopted a new state budget with changes to the 2001 VLT law that increased the VLT shares to racetracks. No eligible track in New York has installed VLTs because they said the original law would generate losses for them.
Schwartz subsequently told The Blood-Horse
the VLT program at Aqueduct would not begin unless horsemen agreed to lower their split in the later years of the program. The VLT program has been given a 10-year lifespan, though most believe it will be extended.
If NYRA gets the VLTs operational by next March, which Schwartz has said is likely given the agreement with horsemen, NYRA will see its franchise to operate Aqueduct, Belmont Park, and Saratoga automatically extended until 2013.