10/03/2005 11:00PM

NYRA needs cash badly, Hayward tells state panel


Charles Hayward, the chief executive officer of the New York Racing Association, told a state oversight panel Tuesday that the association is in desperate need of cash that could be provided by a disputed sale of property adjacent to Aqueduct racetrack.

Hayward, speaking after he appeared before the panel, said that NYRA will likely run out of cash by the beginning of next year unless the association sells the land. NYRA is seeking brokers to sell 80 undeveloped parcels of land south of the subway tracks adjacent to Aqueduct. The sale is expected to raise as much as $20 million. Some state regulators have raised objections to the sale, contending that NYRA needs the approval of the New York State Racing and Wagering Board.

The state oversight panel was formed late this summer to monitor NYRA through the end of its franchise in 2007. The panel has the power to review NYRA's financial statements, issue recommendations on business practices, and approve budgets and spending.

Carole Stone, the chairwoman of the panel, contended at the meeting that NYRA should not go forward with the sale without approvals from the racing board and the state legislature, according to Scott Reif, a spokesman for the state budget division, which is assisting the oversight panel. Reif said that Stone hopes to discuss NYRA's position with the other four members of the oversight panel in the coming months.

Hayward said NYRA would continue to pursue the sale without state approval but would not conclude the sale until the issues surrounding it become clearer. NYRA operates Aqueduct, Belmont Park, and Saratoga Race Course, but there is disagreement whether NYRA or the state owns the land on which the tracks are situated.

"We're going to continue to proceed, right up to pulling the trigger," Hayward said. "We've got a [request for proposals] out there for brokers right now, and we'll keep going forward until we know more about what the government's appetite is."

Hayward said that without the sale, NYRA might need to cut racing dates or purses at the three tracks, which combine to operate at least five days a week with very few breaks.

NYRA is also pursuing settlements with both the New York City Off-Track Betting Corporation and Finger Lakes racetrack in separate lawsuits that contend the two companies owe NYRA millions of dollars in simulcasting fees, Hayward said. The association also may look into cutting pension benefits for its employees, according to Hayward.

Hayward said NYRA has a negative cash flow for most of the year, with a positive cash flow only during the summer and fall meets at Saratoga and Belmont. In the 2004 financial statements that NYRA released earlier this year, NYRA's auditor, Deloitte and Touche, cautioned that NYRA's cash flow was insufficient to sustain the company into the future. But that is standard audit language for any company that has negative cash flow.

NYRA's cash-flow problems will be short-lived, according to Hayward, if the association's plan to open a slot-machine casino at Aqueduct proceeds. The casino, which will hold 4,500 slot machines, is expected to take in $1 billion in revenue annually after it opens in late 2006, with about 30 percent of the revenue retained by NYRA, its horsemen, and its casino partner, MGM Grand.

Hayward said that without the land sale, NYRA might not make it to the casino opening without declaring bankruptcy.

"All I wanted to do was communicate NYRA's financial framework so that everyone can understand the situation we're in if we don't get this land sale," Hayward said. "They're going to be faced with the prospect of an insolvent NYRA."