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Saturday, February 07, 2009

No Surprises Here

The revelations about the reasons for the latest delays in the Aqueduct racino are no revelations on this site. We knew it all along. And when I say 'we,' I mean to include everyone, all of the sharp readers who have been commenting throughout on the subject on this site. So nice going you guys, you had it all along.

Our chief suspects are high on the list of reasons articulated to Tom Precious by Delaware North president William Bissett; chief amongst them, the ability of the company to come up with the $370 million upfront fee which no doubt won them the deal in the first place.

Bissett confirmed the lending freeze in the financial markets has caused the company to “restructure’’ its financing package, including seeking new lenders. [Bloodhorse]
In addition, as we speculated, Delaware North is holding out for "market protection" with respect to the inevitable Belmont racino in the form of higher retention rates. And the company cited a lack of finalization of the $250 million bond issue to build the place (a contention that the state disputes).

If the two defeated bidders are still hanging around and paying attention, they must be either furious or delirious with laughter. Who knows if, given the current environment, they'd even be interested in re-entering the picture....or able to if they were? But surely, any indication that the state is renegotiating the terms of a deal which were ostensibly determined by virtue of a fair, competitive bidding process would raise their ire and have them exploring legal options if they were so inclined.

As this reader points out, there was supposedly an extensive review of each of the three bidders' financing prior to the announcement in October, prompted in large part by the financial crisis already well under way at the time. "I find it hard to believe that all of these analysts fumbled on the DelNorth financing commitment?" But maybe it was simply the case that the lure of the upfront jackpot made the various people involved see what they wanted to see, and to conveniently overlook what seemed plainly obvious to those of us who had no access whatsoever to any information, as shielded from the public as the entire process was.

When NYRA emerged from bankruptcy last September, Chairman C. Steven Duncker told the press conference call that, given the $30 million NYRA received for operations, he did not see a drop dead point on the VLT's at this point - and that they can go out 24 months. But it's been five months since then, and a Del North representative recently told the local Queens Community Board that they would need 14 months once documents are signed with the state and architectural work is completed. We've seen far longer periods than the five months that the above math indicates is remaining in that window fly by like a dream. So it's hardly unreasonable to wonder if we will once again reach the point when NYRA is on the brink, and coming back to the state and the taxpayers for help.

16 Comments:

SaratogaSpa said...

What a clusterf.. Wonder what the Success Magazine "Executive of the Month" has to say about this.
http://www.successmagazinesltd.com/

Anonymous said...

Alan you are spot on when you suggest that the readers and posters on this site are on the ball. Lots of folks appear here with knowledge of Albany politics, the bidders, racing, gaming and the NYRA, all hoping for what we were promised from the start of this process; a racing/gaming and entertainment facility meant to benefit NY's horse industry. I hope Audrey Pheffer gets some more answers to her queries. As it looks, the state could disqualify Delaware North and bring the other bidders in for another round of best bids. I do think that the NYRA had a lot to do with choosing Delaware North, so perhaps this next go round, the NYRA doesn't get to pick a favorite partner of theirs. NYRA liked Delaware North back when Spitzer was around, so let's just blame Eliot for the State's poor selection and make sure we don't slip again!

Anonymous said...

Watchful Horseman.

What goes 'round, comes 'around.

Delaware North's original financier, Merrill Lynch, was seen to have a more lenient lending criteria, compared to the JP Morgan Chase's, a major factor seen by many, was their high, company commission/incentive/bonus, structures.

DelNorth, along with a host of other Merrill Lynch clients, have found themselves, right in the firing line. ML's outstanding (non-toxic) loans, are now being, re-appraised & severely re-structured, by M.L's new owners Bank of America, with additional pressure & oversight, from their new, big brother Creditor, the US Government, who has recently injected massive capital infusions, with understandably, strings attached.

Aqueduct may not be the only DelNorth project, going by the wayside.

BoA are in turn, now attracting, the unwanted attention of, New York Attorney General Andrew Cuomo, whose office is reportedly looking into whether federal bailout loans to BoA were used appropriately, and if shareholders of both companies were given all the necessary information about Merrill's finances.
www.reuters.com/article/americasMergersNews/idUSBNG10766620090203
Andrew Cuomo may also demand, the return of $4 billion in bonuses, paid by Merrill Lynch & Co just before it was acquired by BoA, in that it may have violated New York securities laws and warrant the imposition of fines.
www.reuters.com/article/businessNews/idUSTRE50T11420090130

On top of this, Investors filed a proposed class action against BoA in New York, accusing the bank &
its officers of failing to disclose risks in its January 1 takeover of Merrill Lynch Co. http://www.reuters.com/article/businessNews/idUSTRE50K7KI20090121

No, DelNorth, won't be entertaining at the Aqueduct, nor was it ever likely, since they 'seduced', the winning tender, with magic numbers, to glossy eyed pollies

Anonymous said...

Watchful Horseman

Delaware North's money's, are not due, March 31st, as stated by most previous media articles/bloggers - it is legally, 'la fin', the day after, being of course, April 1st.

More Fool You !

Anonymous said...

I am against Del North for many reasons, not the least of which is their corporate reputation of doing things on the cheap.

After all, who do you think would build a more attractive, and therefore successful, venue, Del No. or MGM Grand?

But, putting aside the political shennanigans, IF VLT's are truly coming to (formerly) Beautiful Belmont Park, I think Del No has a fair argument to restructure the deal to reflect this competition.

When you purchase a franchise you are entitled to market protection.

Anonymous said...

Watchful Horseman.

Interesting - possible to explain view, more fully.

Anonymous said...

Remember back in 2007 and 2008 when Albany was full of talk about Aqueduct becoming the "down and dirty" slots in a box, neighborhood parlor and Belmont Park the "Vegas style" entertainment compound with all the bells and whistles? If DelNorth was in on this scheme, it's no wonder they overbid the upfront payment knowing that when Belmont VLT's were announced they would be in the catbird's seat to renegotiate "market protections." I wonder if Delaware North had Albany insider information that the two other bidders did not have in this regard? If Belmont is coming, are Wynn, Fields, Mulrow, Vornado and Related waiting in the wings? What did DelNorth know and when did they know it would be my question.

Anonymous said...

Watchful Horseman.

we're all worn down, over years of NY racing downturns, concerning our livelihood, wife's, family, and yet momentarily surviving, but as a fellow horseman mate, threw down my throat, abit, after a few tired beers recently, 'It's not Delaware's, fault, t'is, the system'..

suppose it is..

Steve Zorn said...

It may be the system, but we (NYRA, the horsemen) are in part responsible for keeping the system as bad as it is. We all play the game of going to Albany to solve all our problems, and so Albany inevitably puts its hand out for a piece of the action every time we want something.

I don't think Delaware North will ever get its act together; in my opinion, Capital Play had a far better concept (without the upfront money that now seems to have vanished from Delaware North's bid); I just hope they're still interested in picking up the pieces, perhaps as part of a two-fer with both Aqueduct and Belmont.

Anonymous said...

Agreed Steve Zorn. If CapPlay still lives, bring them on to the party.

Anonymous said...

Watchful Horseman

Assemblywoman Audrey Pheffer, does more than stand up to be counted,about Aqueduct - she goes 'live' statewide
http://www.ny1.com/Default.aspx?ArID=93599

good on you, Audrey...

Alan, she's bound to talk to u now !

Anonymous said...

Watchful Horseman

Alan we're finally started something - a constructive fan of ours.
http://businessofracing.blogspot.com/2009/02/outlook-for-nyra.html

Tom Precious, although a great journo, that scoops many racing stories, would have got the lead sniff of his Aqueduct/DelNorth article, from reading your blogs, as no-one else was on the scent.

Anonymous said...

So Trump tops the list of racing/gaming contributors to Albany. (per the link to Bennett Liebman's site on last post) Hmmmmm..... The Donald is paying 2to 3 times the next interested party to keep VLT's away from Aqueduct and Belmont. He did make that his goal after he lost out to MGM shortly after the VLT law was passed.

Anonymous said...

Watchful Horseman, 11 Feb '09

Now Skelos is jumpin in - great opportunity for him to go after Paterson's non due-dilgence, decision, of Delaware North.

www.saratogian.com/articles/2009/02/11/news/doc4992435c783e7713697214.txt

He and Paterson traded shots Tuesday (10 Feb'09), over the project’s delay.

In October, Paterson spokesperson Risa Heller accused Skelos of stalling the project by criticizing Paterson’s choice.

“In this time of a financial crisis, every day we delay hurts New York,” she said.

Skelos, who was then Senate majority leader, immediately questioned Paterson’s choice of Delaware North in October

alan said...

>>[Skelos] and Paterson traded shots Tuesday (10 Feb'09), over the project’s delay.

They're both full of it. Skelos caved after a few days after trying to give Serph Maltese some election hype. And when did Paterson ever say it was going to take six months?

Anonymous said...

Watchful Horseman

re; last comment Alan -
never a truer word said -
my 'new' alerts, on recent prev' Skelos & Pheffer articles are today, popping up thus -

www.nypolitics.com/2008/10/27/dean-skelos-paterson-propose-belmont-development

Senate Minority Leader Dean Skelos last week, joined Paterson and Assembly Democratic leaders in endorsing a project to expand gambling at the Aqueduct thoroughbred track in neighboring Queens'....

although, she is very pro-community, liked, Assemblywoman Audrey Pheffer, seems to be on this subject, a 2nd lined mushroom…...maybe not tough/inquisitive, enough.. popup alert today, am.

www.nypolitics.com/2009/01/16/aqueduct-race-track-plans-revealed