04/27/2008 11:00PM

NYRA plan to reorganize approved

Email

A U.S. bankruptcy judge on Monday approved a reorganization plan developed by the New York Racing Association that would lift it out of the protection of the court by June 30, NYRA officials said.

The reorganization plan is contingent on several ongoing negotiations with the state of New York over issues related to a 25-year franchise extension granted to NYRA in legislation passed in February. The negotiations include talks over how legally to transfer the deeds of NYRA's three tracks to the state, the incorporation of provisions of the legislation into legally binding agreements, and the lease of the tracks back to NYRA, according to Charles Hayward, the chief executive of the association.

"All the documents needs to be consistent with the reorganization plan and the legislation passed in February, and when they are, we think we can be out of bankruptcy by June 30," Hayward said.

NYRA is currently operating on a short-term franchise extension with the state that is scheduled to expire on July 13. The association filed for bankruptcy in November 2006.

The February legislation would require the state to forgive more than a $100 million in debt that NYRA owes to the state and would also require the state to provide $75 million to NYRA to pay off creditors. In exchange, the state will take title to Aqueduct, Belmont, and Saratoga, the three tracks that NYRA has operated since 1955. The three tracks are conservatively valued at $1 billion, though the estimate can vary widely depending on the use of the property beneath the tracks.

The legislation allows the state to recoup the $75 million payment to NYRA through proceeds from a planned slot-machine casino at Aqueduct. Slot machines were legalized at Aqueduct and eight other New York racetracks in late 2001, but the Aqueduct project has been persistently delayed by the political and economic circumstances surrounding NYRA and its franchise.

On Friday, three companies submitted proposals to the state to operate the Aqueduct casino, according to the office of Gov. David Paterson, which will oversee the award of the contract. As is the case with all of the state's racetrack casinos, the machines will be owned and operated by the state lottery, though the casino management company is allowed to retain a large share of the proceeds.

The three companies are partnerships: Capital Play with Extell Development, Mohegan Sun and Plainfield Asset Management; Delaware North Companies with Saratoga Harness; and SL Green Realty with Hard Rock Casino.

Morgan Hook, a spokesman for Paterson, said the governor would consult with Joseph Bruno, the senate majority leader, and Sheldon Silver, the leader of the assembly, on the selection of one of the three companies. By law, Paterson, Bruno, and Silver are required to sign off on the selection.

Hook said that Paterson was hoping to make the selection within the next two weeks. It is likely that construction on the casino will take at least a year.