Stepping Out [with updates]

- Here's some excerpts from NYRA's press release on their emergence from bankruptcy:

The New York Racing Association, Inc. (NYRA) announced today that it has emerged from Chapter 11 bankruptcy and has filed Articles of Incorporation with the Secretary of State of New York effectively creating the new New York Racing Association as of 12:00 Noon, Friday, September 12. The new NYRA was selected by the State to continue operating racing pursuant to State legislation enacted on February 13, 2008 which awarded NYRA a 25-year franchise to run Saratoga Race Course, Belmont Park , and Aqueduct Racetrack, which NYRA has operated since 1955.

“Today’s birth of the newly constituted, not-for-profit NYRA is the culmination of complex negotiations that will secure and enhance the interests of Thoroughbred racing in New York for the next 25 years,” said NYRA Chairman C. Steven Duncker. “We appreciate the dedication and perseverance of Governor Paterson and his staff and Assembly Speaker Sheldon Silver and Majority Leader Dean Skelos and their staffs who have invested long hours collaborating with our franchise working group of trustees which included Michael DelGiudice, James Heffernan, and Stuart Subotnick, along with senior management. I also want to thank our outgoing Board of Trustees for their steadfast resolve since we set out to retain the franchise in 2005. We all share in NYRA’s success and reaffirm our commitment to our stakeholders and fans to produce the highest quality Thoroughbred racing in North America .”
.......
“I extend enormous thanks to all of our NYRA employees and the owners, trainers, jockeys, and backstretch workers who have diligently produced the best racing in the country throughout this difficult and protracted process,” said NYRA President and CEO Charles E. Hayward. “With the franchise process behind us, NYRA can now resume its leadership role and focus directly on the many issues that face the Thoroughbred racing and breeding industry nationwide.”

Hmmm, no thank you's to Joe Bruno or Eliot Spitzer?

1:57 PM - I'm on hold awaiting the teleconference. Don't know how this is going to go, and if I just leave off in mid-sentence, it means that I got caught goofing off at work. Nice pleasant classical music on hold, anyway..

1:58 - The scheduled participants are Chairman C. Steven Duncker, Charlie Hayward, Vice Chairman James Heffernan, and attorney Brian Rosen. I suppose it's just the circumstance that the announcement is coming on a Friday afternoon, a time when companies - and politicians - would generally seek to bury bad news. Ok, here we go...

2:02 - It's Mr. Duncker. Same deal we've written and heard about for the last six months. Finalized and signed just today. This will enormously enhance thoroughbred racing in NY State. Thanking Gov Paterson, Speaker Silver, and Senate Majority Leader Skelos. Tough complex deal.....no kidding!!

2:04 - Tremendous outcome, not for NYRA, but for thoroughbred racing in this state. Asserts that not-for-profit is the best model for the state. Questions, already? That's it?

2:05 - Question about naming the new board. NYRA board members will be announced early next week. Paterson has named five of their members, and the Senate their two. Ah, Speaker Silver has named one. Reporter pressing for names of Paterson's appointees. Someone whispering to Duncker that it's not appropriate for them to name them.

2:06 - 4% of gross gaming revenue to go to capital expenditures. Money received today that they can spend on cap ex at their discretion, but large sums will come from VLT's. They got $105 million today - $75 to creditors, $30 to NYRA for ongoing operations.

2:07 - Matt Hegarty has a couple of questions....wants more detailed breakdown on where $75 million goes. Heffernan says: $24 million to pension guaranty benefit corporation, which gets them close to an adequate funding level. After that, real estate, interest on taxes. That will completely satisfy back taxes. $30 million? Not broken down yet. Substantial period between now and when VLT operator will be up and running. No kidding!!

2:09 - Jerry Bossert asking about the VLT operator. "We'd love to be able to answer that, but we do not have insight, sorry." they had meetings with Paterson's staff on Wednesday - know it's a priority, they're working very hard on it. Bossert asks how long the $30 million can hold them out until the VLT's. NYRA feels the $30 million will get them through, even if the VLT's are delayed. Yeah, they're delayed alright.

2:10 - Duncker does not see a drop dead point on the VLT's at this point - thinks they can go out 24 months.

2:11 - Don't know who this reporter is, but he wants to know if we'll see anything tangible in terms of cap ex in the next few months. Here's Hayward.... getting a plan in November on short and long term issues. Dorms in the backstretch will have to wait for VLT's. New track surfaces too. Need to make Aqueduct compatible with what the VLT operator would like. "You won't see any significant expensive improvements, but we should have money to do some things."

2:13 - Duncker talking about the improvements thus far - no new tv's outside, restaurant row....."Hayward ate there 34 of 34 36 days." - hospitality center. Look for more improvements at Belmont next May in the backyard.

2:14 - Tom Precious is saying that NYRA had sent signals that the VLT situation needed to be made clearer before coming out of bankruptcy. Duncker says they feel they can run for a substantial amount of time without VLT's. I wish I could think of something good to ask so they could say my name.

2:15 - The racetrack deeds have actually been handed over to the state. Rosen says there are a few "purely administrative" matters still before the bankrutpcy court. NYRA has withdrawn the adversarial proceedings between NYRA and the state.

2:17 - "What the new NYRA going to look like?" Duncker points out that they've been able to attract some of the top people in the industry - Hal Handel - despite the problems. No more real estate taxes, no 18% interest on past due taxes. No interest and penalties on pension obligations - were 14 million a year, now will be half of that.

2:20 - The legislation calls for the state of NY to pay all real estate taxes going forward.

2:21 - Nick Kling - Can you now concentrate on racing issues? Takeout, drug testing, rules changes. Hayward met with Sabini - gave him a list. Steroid testing by the time the Gotham rolls around next spring (first graded race of year). Strong interest from Paterson's office in racing issues. Issues like uncoupled entries has moved "front and center." Complete rollback of 1% out of state takeout? Postponed until March 1. "our goal would be to try and find a better solution for what that was intended to do in terms of racing revenue."

2:23 - Liz Bishop wants to know how the deal really enhances racing? Duncker: in longer run, when VLT's are up, not just cap ex improvements, but purses will go up (7 1/2% of revenue to purses). Big deal for people to race and breed in the state. That's where the big win-win is for the state. It will "turbo-charge" what is already the best racing in the country.

2:25 - Ah Liz Bishop asks about the oversight board, which will be keeping a "very close eye on NYRA." Most significant thing is that the original franchise legislation called for the oversight board have NYRA work with state OTB's. With Paterson taking over NYC OTb - over 50% of otb business - NYRA and the OTB's working together is a "big priority" for the governor.

2:28 - Old NYRA was "non profit." New NYRA is "not for profit type C corporation." I'll have to look that up.

2:31 - NYRA submitted a detailed project by project five year capital plan which has been approved by the Oversight Board. Anything beyond that plan would require further approval.

2:31 - Paul Post asking about the terms of the lease from the state. How much are they paying? It's $1 a year. Man, I knew the real estate market was bad!!

2:32 - Post wants to know why they have to wait for VLT money to improve lives on the backstretch? Hayward says that there have been "significant enhancments." Renovated medical center at Belmont. But dormitories require substantial investment. They will make incremental improvements, but substantial projects have to wait. $30 million for a single dorm. A sizeable one...at either Saratoga or Belmont. Talking about $60 million for both tracks.

2:34 - Hegarty is back. Wants exact breakdown of forgiven debt. Duncker objects to that characterization, pointing out that this was a complex financial transaction in which NYRA gave up the land in return for waiving debt. Not a forgiveness of debt, but a waiver of obligations. A global package of consideration they received in exchange for the deeds and other assets.

No further questions.... Duncker: "A great end to an incredible process. Thank you very much, and we'll see you the track."