Company exits bankruptcy with closer relationship to state, and offers plans for future
by James M. Odato
ALBANY — The New York Racing Association emerged from bankruptcy court Friday after completing a deal with the state and turning over the deeds to more than 900 acres of prime track real estate.
Taxpayers now clearly own the Saratoga, Aqueduct and Belmont tracks, which NYRA had valued at well over $1 billion. The state also assumed responsibility for all real estate payments to the taxing authorities of Saratoga, Queens and Nassau counties. NYRA now has a 25-year extension to operate the three tracks.
The state gave NYRA $105 million and forgave at least $95 million in debts, state officials said. NYRA will pay all other creditors a total of $75 million and use $30 million toward operations.
"This is going to enormously enhance thoroughbred racing in this state, which impacts this country and internationally," said Steve Duncker, NYRA’s chairman.
He described NYRA as a restructured corporation and not the same business that has had the exclusive rights to run the tracks since 1955.
The "new NYRA," he said, will have fewer board members overall and more of them will be government appointees, part of an increased oversight priority of Gov. David Paterson and the Legislature.
Also, the new NYRA will be a not-for-profit as opposed to a nonprofit, the former entity. That will allow it to borrow, for instance. It could also align with other companies, although Duncker said no plans exist currently.
The association will also have to run any proposed major financial moves past a state oversight board. That board met Friday for the first time and approved NYRA’s new organization.
"It’s a whole new dynamic now," said Saratoga resident and horse owner John Hendrickson, an incoming member of NYRA’s board, representing the Senate majority. "All of New York has a stake in New York’s future. We owe it to the industry and to taxpayers to make it work."
Horse owner Jack Knowlton, whose stable is in Saratoga County, said: "I think it’s obviously good for racing in New York to have this settled. It’s been hanging over everybody’s head for five or six years. It puts an end to a very difficult chapter; nobody likes uncertainty."
Knowlton was a member of the Ad Hoc Committee on the Future of Racing, which in 2007 chose a different bidder after a year of review of competitors seeking to run racing and video lottery terminals at the three tracks. The selection, coming in the first open competition for the racing franchise, was not accepted by then-Gov. Eliot Spitzer, who struck the deal with NYRA that was consummated Friday.
"I have no question in my mind that NYRA will do a fine job," Knowlton said.
NYRA survived numerous criticisms by state leaders and a federal indictment in 2003. It had been considered a long shot to ever do business with the state again after it slid into bankruptcy in November 2006, blaming former Gov. George Pataki and his administration for its poor financial health.
"A new standard of excellence will be required," said Gov. David Paterson. He said he will demand accountability and transparency.
Duncker said his organization will be as open as possible, but did not promise public meetings, sharing of business records or revealing salaries.
John Sabini, chairman of the Racing & Wagering Committee, said change will come. "I don’t think you will see any difference in the facilities today. Certainly in the long term, we want to see the plant and equipment used better and marketed better."
He said more attention is particularly needed on the downstate tracks.
NYRA officials said they hope to invest in backstretch improvements incrementally until more revenues become available from VLTs. James Heffernan, a trustee, said NYRA hopes to invest $60 million for dorms for the workers but that won’t happen until gambling machines are operating.
Paterson is still mulling who to award the rights to build and operate a 4,500-machine VLT casino at Aqueduct. A decision may be weeks away, said spokesman Morgan Hook.