NYRA Seeks State Loan; NYOTB Cuts Staff

The New York Racing Association would obtain a $17 million state loan to help erase its cash flow problems for the rest of the year under legislation proposed by Gov. David Paterson.

The bill was introduced in the Senate by racing committee chairman Eric Adams.

The lending plan for NYRA had been piggybacked onto a larger bill to bail out the operations of the New York City Off-Track Betting Corp., which had been threatening to shut down without approval of the legislation.

But while the bill died, NYCOTB’s board of directors last weekend adopted a plan, which includes delaying payments to tracks and others and installation of new, unstaffed betting kiosks, to keep the money-losing operation open while it works its way through Chapter 9 bankruptcy reorganization.

NYRA officials were left scrambling to get their own bill after the NYCOTB measure was scuttled. The governor quietly proposed the new NYRA loan bill April 22.

The measure would let NYRA borrow $17 million from a $250 million lending program the state had previously approved for construction work of a casino at Aqueduct racetrack. The state has yet to select a casino vendor; the fourth procurement process since 2001 is set to begin soon, and Paterson has been saying he expects an operator to be selected by the end of June.

NYRA would re-pay the money from proceeds that a future casino operator at Aqueduct is slated to provide NYRA in the form of revenue-sharing payments. The borrowing would have to be approved by a state panel that oversees NYRA’s finances and the governor’s budget director.

The governor’s bill would let NYRA use the money for “capital or purposes” at Aqueduct, Belmont, and Saratoga racetracks.

NYRA officials had previously said the $17 million would be enough to get the racing group through the first quarter of 2011. NYRA has been threatening a variety of fiscal nightmare scenarios this year, including crashing into money-flow problems during its summer Saratoga meet.

“It would be premature to comment on any program bill that as yet has not been introduced," NYRA President Charles Hayward said.

Meanwhile, NYCOTB on April 23 said it let go 35 non-union employees to help save $2 million in payroll expenses in the coming year. A week ago, NYCOTB said it expects to cut its staff of 1,300 in half over the coming year as it re-tools its operations and tries to negotiate deals that it hopes will lead to lower revenue sharing payments to tracks and others.

The OTB declined to provide names of people let go, but a spokesman said they included various administrative managers and executive directors of different units. They also declined to provide a list of the specific salaries of those losing their jobs.

The OTB envisions a severance package for those losing their jobs, which privately did not go over well among representatives of some racetracks, who are going to see revenue-sharing payment delays from the OTB in the coming weeks and months.

The OTB this week was pushing a plan at the Legislature to provide incentives to a large share of its unionized staff to retire early. A spokesman said the severance effort would also include the 35 non-union workers let go April 23. The state Legislature would have to approve any such severance plan for the state-owned OTB.

The OTB notified John Sabini, chairman of the state Racing and Wagering Board, of the layoffs. NYCOTB Chairman Meyer Frucher also said he will turn over to Sabini before April 30 cash flow statements and operational plans for the OTB.

In a letter back to Sabini, the state’s top racing regulator called on the OTB to keep him better informed of events taking place at NYCOTB. He said the racing board should have been notified in advance of the layoffs.

“We recognize changes need to be made quickly. However, the Racing and Wagering Board, given its regulatory role, needs to be made aware of every action before they occur," Sabini wrote. He also said he wants “explicit" information about what constitutes the OTB’s budget and operating plan, and noted the regulator agency has yet to receive the specifics of any plans being contemplated by the OTB.

“Transparency and cooperation are essential as critical issues wil have to be addressed in a timely and expedited fashion," Sabini wrote Frucher.

Sabini also noted how he agreed with Frucher on the need for industry-wide cooperation to deal with the problems confronting tracks and OTBs, but called it “unfortunate’’ that Frucher did not “take that opportunity" to testify with other stakeholders before a gubernatorial task force on the future of the OTB industry in New York.

Sabini noted that actions the OTB takes will go beyond its own operations to “also have significant consequences on the entire racing industry." NYCOTB is the nation’s largest OTB, and has handled nearly $1 billion in bets annually.

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