by Tom Precious
New York City Off-Track Betting Corp. officials Jan. 25 moved another step nearer to shutting down with approval of letters to employees giving them the legally required notice of a March 30 closure.
"I want to be hopeful that it can be done," NYCOTB chairman Meyer "Sandy" Frucher told board members of a move to prevent the shutdown if state officials approve a reorganization plan that includes a controversial change in the formula on how the entity’s revenue is shared with racetracks, the state, and local governments.
NTCOTB filed for Chapter 9 bankruptcy protection in December, citing the same sort of financial complaints about the entity that New York City voiced when it unloaded NYCOTB onto the state in 2008. The corporation wants to reduce its staff and close betting parlors while constructing new entertainment centers in each of the five boroughs.
Its most controversial plan, though, is to change the way its proceeds are distributed from gross revenue to net revenue. Tracks, including the New York Racing Association, have complained that the formula change would result in a sharp drop-off in revenue-sharing.
"For us, gross-to-net is an absolute necessity," Frucher said at the board meeting.
The board approved letters to be distributed to its 1,400 employees – necessary under federal law – informing them of the March 30 closing of all the NYCOTB facilities and layoffs of all workers.
"It’s important for people to know where we are," Frucher said of the update.
New York City Mayor Michael Bloomberg a couple years ago threatened to close the money-losing entity. The state took over the nation’s biggest off-track bet processor in 2008. NYCOTB officials said they cannot borrow money unless the formula by which its revenue is distributed is changed.
Frucher noted that a state panel examining the future of the off-track betting industry in New York is expected to release its report Jan. 25. He noted it does not recommend a change in the NYCOTB distribution formula.
NYCOTB officials said the entity will start to go into a negative cash flow situation by mid-April, if not sooner.
“I was not surprised by NYCOTB’s hollow threat to shut down if its reorganization plan wasn’t approved immediately," New York Thoroughbred Breeders executive director Jeffrey Cannizzo said in a statement. "After all, NYCOTB used the same trick in 2008, the last time they went bankrupt. Unfortunately, if the current plan is approved, a multimillion-dollar industry that employs thousands of horsemen at the tracks and breeders on 400 farms could literally leave the state of New York."
Cannizzo said NYCOTB’s plan would de-value New York races, significantly decreasing purses, and would almost eliminate the New York State Thoroughbred Breeding and Development Fund, which was created by the legislature in 1973 to support and expand the state’s Thoroughbred breeding industry.