12/30/2005 12:00AM

NYRA, state reach deal for bailout

Email

OZONE PARK, N.Y. - The New York Racing Association reached an agreement with the state on Friday for a $30 million bailout to keep racing going through 2006 which not only allows the association to avoid bankruptcy, but will also expedite two projects that NYRA management deems key to the future success of New York racing.

First, NYRA received final approval on Friday from the New York State Division of the Lottery to restart its video lottery terminal project at Aqueduct along with its partner, MGM-Mirage. Construction on the casino - which was halted on Aug. 7, 2003 - is expected to resume in early February, and NYRA officials are hopeful the casino could open by Jan. 1, 2007.

Second, the state will agree to pass a rewards program for bettors that NYRA has sought since May, provided NYRA raises the takeout on win, place, and show bets by 1 percent. The takeout on those wagers will go from 14 to 15 percent, likely beginning on April 1.

After several days of negotiations, NYRA and the state reached agreement Friday on a $30 million package that will enable NYRA to conduct business as usual at Aqueduct, Belmont, and Saratoga for the next 12 months. The package includes a $1 million advance from the Port Authority of New York and New Jersey for purchase of a piece of "unspecified property" at Aqueduct. Another $4 million would be forthcoming from the Port Authority if and when there is a closing on that property.

The deal also includes a $5 million loan from the Empire State Development Corp., a state agency that issues bonds to finance the construction of special projects for the state. The remaining $20 million in loans would come as a result of legislation that Gov. George Pataki will propose when the State Legislature reconvenes next week.

NYRA negotiated the deal late into Thursday night with officials from the offices of Pataki, Senate Majority Leader Joseph Bruno, and Assembly Speaker Sheldon Silver.

"We particularly appreciate the efforts of the governor and his staff in working with NYRA to complete this package under tight time constraints," NYRA president and CEO Charles Hayward said. "Moreover, we appreciate the efforts of the governor, Sen. Bruno, and Assembly Speaker Silver in rallying to the support of the New York racing industry during this critical period."

NYRA received a $1 million payment from the Port Authority on Friday, and will soon get $5 million from the development fund. For the remaining money, NYRA will submit a monthly budget to the state, and once that budget is approved the Department of Budget will release the necessary funds to NYRA, Hayward said.

If NYRA had not gotten this financial assistance, it would have filed for bankruptcy, Hayward said. NYRA said that the $30 million would enable it to pay purses and meet payroll and utilities for 2006, but nothing more.

NYRA will have to pay back the loans from it share of revenue from the VLT project. NYRA plans to install 4,500 VLT's in the second floor of Aqueduct, and officials have estimated they could provide $400 million in revenue to the state annually.

As for the rewards program, although NYRA would have to raise takeout, Hayward said the program "would allow any serious bettor to significantly make back more than the 1 percent that they'd be giving away."

Though details are not final, Hayward said bettors who wager $2,000 a month on NYRA races through NYRA One, the association's account-wagering service, would receive 1 percent rebates on all wagers. At the high end, those who wager $500,000 a month on NYRA races through NYRA One accounts would be entitled to 3 percent rebates on win, place, or show bets, 4 percent on two-horse bets, and 7 percent on exotic bets.

Hayward said he was hopeful the rewards program could begin sometime in late January.

The state has also asked NYRA to look into raising the rate it charges for its simulcast signal, though NYRA has not committed to that.

"All the language states it's at NYRA's discretion," Hayward said. "What we've agreed to do is work with them collaboratively."

Bruno, whose constituency includes Saratoga County, where Saratoga Race Course is located, called this deal "an important first step to bring stability to racing in New York and to protect the thousands of people working in the Thoroughbred racing industry."

Bruno added that the Committee on the Future of Racing in New York State will hold hearings in January as part of the process to select a franchise operator for the industry. NYRA's franchise to operate Aqueduct, Belmont, and Saratoga expires on Dec. 31, 2007.