08/27/2010 3:55PM

New York OTB faces deadline in union talks

Email

New York City Off-Track Betting Corporation is facing a Tuesday deadline to come to an agreement with its union over a bankruptcy reorganization plan that could transfer the company's account-wagering operations to the New York racing industry, the company's president, Greg Rayburn, said Friday.

The deadline involves OTB's ability to participate in an early-retirement program for a portion of the company's workers, Rayburn said, a critical component of what Rayburn called "Plan A" for reorganization. Although members of the company's creditors' committee have agreed to the plan, including the New York Racing Association, Rayburn said, parts of the plan have been blocked by the union representing a majority of the company's 1,300 workers.

The stalemate between New York City OTB and the union underscores the political difficulties of reorganizing the company, which filed for Chapter 9 bankruptcy protection in December owing tens of millions of dollars to the state's racetracks, including NYRA, the operator of Aqueduct, Belmont, and Saratoga. A previous reorganization plan that would have closed more than half the company's parlors and cut half its work force has already been rejected, in part because the racing industry would not support reductions in statutorily mandated payments that OTB makes to tracks.

Under the plan favored by Rayburn, the Standardbred and Thoroughbred industries would receive approximately $32 million less in statutory payments from the OTB compared with the amount received in 2009, Rayburn said, through a cut in the statutory mandates. In addition, New York's racetracks would take over OTB's account-wagering operation to satisfy $65 million in debt owed to the tracks, with shares apportioned according to the amount of debt owed. The majority of that debt is held by NYRA and Yonkers, a harness track that also operates a large slot-machine casino.

NYRA has supported a takeover of the account-wagering operation, which competes with NYRA's Internet and telephone betting platform and the operations of other state OTB companies. If the tracks take over the operation, they will accrue New York City OTB's existing customers.

Officials for NYRA did not return phone calls on Friday.

The unsecured creditors committee, which includes NYRA, released a statement Friday saying that said that despite the cut in statutory payments, the committee supported Rayburn's proposals.

"We believe that these proposed changes will make NYCOTB a more functional and viable concern going forward and are willing to do our part in order to stabilize the state's racing industry," the statement said.

Rayburn said that the OTB valued the account-wagering operation at $20 million.

If the union does not agree to the concessions in the plan by Tuesday, then New York City OTB will void all of its collective bargaining agreements with the union, Rayburn said. Under that plan, the account-wagering operation would be retained by the OTB. Rayburn said that although the account-wagering operation is not now profitable, it could be made profitable if its labor expenses were reduced significantly.

If neither plan can be implemented, Rayburn said the only option left to the company would be complete liquidation. A liquidation would result in the closing of OTB's 60-plus parlors and the account-wagering operation, which in 2010 are expected to take in $750 million in bets on New York racetracks and out-of-state racing signals.

Under either reorganization plan, New York City OTB would close 11 of its parlors.