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Tuesday, November 10, 2009

The People First

Crain's New York Business reported on Monday that the Big A sweepstakes is now a 2-horse race between Penn National and SL Green; that according to a "source close to the process." Not sure how any such conclusions can be drawn at this particular time considering that the bidders were invited encouraged to submit revised financial proposals, with the deadline passing just last Friday. Especially since, according to Crain's, all five groups agreed to the governor's latest request for a $200 million up-front payment.

The article discusses reservations about each of those presumed frontrunners. Penn National is said to have "checkered dealings with organized labor."

State officials are likely to be concerned by Penn's cozy relationship with the Seafarers Entertainment and Allied Trades Union. Labor insiders charge that Penn and the Seafarers agree to substandard contracts in order to boost the company's reputation as a responsible employer and keep other unions at bay. Penn denies this.
And SL Green is said to be susceptible to a "continued deterioration in the commercial office market."
“There's a little bit of trepidation about why it makes sense for an office-focused landlord to get into a racino development deal,” says Michael Knott, a senior analyst at Green Street Advisors. “It's a little bit of a head-scratcher.”
Meanwhile, Governor Paterson addressed a rare joint session of the Legislature to implore lawmakers to make the necessary spending cuts to address a looming budget deficit of some $3-$4 billion, depending on who you believe. The governor told lawmakers that, without taking action the state will "have challenges to our State’s finances and to our cash flow in 4 1/2 weeks....Frankly, we are running out of money."
"I will mortgage my political career on this plan, but I will not mortgage the state of New York." [Capitol Confidential]
Good line. Not to minimize the severity of the crisis, but the governor was also no doubt continuing his determined drive to revive his political fortunes. Now, Paterson has hired veteran Clintonite Harold Ickes, who gives his campaign credibility and who, according to Ben Smith of Politico, has deep roots in labor and his role will be to keep them on board.

Not only does Paterson continue to raise campaign cash, but he's spending it too. Have you seen his campaign ads?

I'm telling you man, this guy is too much, I'm totally on board. This is one of two TV ads which are part of a “substantial, extended and statewide” ad run featuring the slogan “Governor Paterson: The People First.” The White House may have done better to let sleeping dogs lie.

Senate Democrats, feeling Republican footsteps in the wake of that party's showing in two county executive races last week, will be reluctant to agree during today's extraordinary legislative session to the education and healthcare cuts that the governor and his staff insist are necessary at this time. Senate Finance Committee chairman Carl Kruger, who recently suggested that the governor was exaggerating the deficit to benefit himself politically, is offering an alternative plan of one-shot type savings, plus a proposed expansion of hours at the state's racinos. Paterson's budget director Robert Megna met with legislative leaders on Monday and declared: “I didn’t think it was possible....but I’m more depressed than when I walked in.” He should check out those campaign ads, that should cheer him up.


Anonymous said...

Penn Nat would be subject to similar concerns regarding downturn in gambling revenues, would they not.

I am still hoping they select based on the best plan for long term success, and the SLG towers over the P Nat proposed slots in a box warehouse.

As gambling options expand it is going to be very difficult for these little boring VLT parlors to competer, need something more to draw a crowd.

Anonymous said...

Penn National is throwing all types of crap against the wall to see what sticks. Some already has like the $175 million casino partnership in Kansas, $100 million for Cecil County, Maryland, a minimum of $600 million for (2) casinos in Ohio, and a proposed $300 million purchase of the Fontainbleau in Las Vegas with another $1.5 billion required to complete this bankrupt project. I know this company got that huge break-up fee when the investment bankers and private equity groups backed out of the purchase of the company, but how far can the company really extend its cash without buying themselves to financial ruin?

Perhaps this group is doing no more than serving as NY state's own "stalking horse" bidder at Aqueduct, keeping all other bidders honestly priced for the project? There may be some other target Penn National has in mind in Ny, maybe the Catskills as a casino partner of an Indian tribe, or some developer in need of a cash infusion?

Penn National spent $38 million in Ohio just to get what it wanted from the legislature in terms of a preferred tax rate of 33% and a voter referendum question that included only the option they supported. So, I guess they could be throwing whatever spare cash it is they have at Albany politicians, as there are plenty of hands out up there.

Anonymous said...

if SL Green & Hard Rock Seminole Indians were not put forth as the winner as the underbidder when Delaware North defaulted on its bid this past spring, then what makes people think they have a shot to win this go round? Me thinks if they were going to win the prize it would have happened this past March/April, not now.

I'd be looking at others on the list of candidates that put up the minimum.

Anonymous said...

I bet there is NO decision made on Aqueduct in the near term. Look for some sort of an Aqueduct/Belmont combined deal, more fully utilizing the state's now unencumbered real estate.

The percentages to the horse industry and the NYRA could be substantially reduced as well. What's the NYRA going to do with $35 million in additional operating subsidy once Aqueduct is fully operational anyhow? i can see the capital repairs and project money being kept in as it will go to the upkeep/improvement of the state's real property assets.

maybe the NYCOTB somehow becomes a part of the bigger picture racing/gaming/real estate development solution as well? Bloomberg may have one upped Governor Paterson by passing that losing operation up to Albany!

Factor in the potential for the Shinnecocks recognition, and a full casino gaming pact with them and other NY tribes, and suddenly the Catskills and a site like Belmont Park make some sense.

Or, prove me wrong and simply put a shovel in the ground at the Big A!! Governor David Paterson, Speaker Sheldon Silver & Senate Majority Leader John Sampson, the balls in your court, so don't be afraid to shoot.

Anonymous said...

What still seems to be getting lost in all this shuffling is the clearly demonstrated commitment and follow through to benefit the horsemen and horses. If anyone has a scintilla of doubt about what Penn National would actually do for racing and the backsides in NY, go take a look at the eponymous race track backside in Grantville and the deplorable conditions that exist TODAY, despite all the racino money that has poured in. It's a disgrace. These guys don't give a rat's keister about preserving/improving racing, believe me.

jk said...

NY State will need the $300 mil slot fee to pay for the OTB bailout...

You bet OTB is hurting

Two-thirds to close
By DAVID SEIFMAN, City Hall Bureau Chief

Last Updated: 4:54 AM, November 10, 2009

Posted: 3:20 AM, November 10, 2009

The city's teetering Off-Track Betting Corp. will seek permission to close as many as two-thirds of its 68 branches when it files a bankruptcy reorganization plan, The Post has learned.

Sources said the plan also calls for eliminating half of the remaining 1,100 betting clerks, through attrition or buyouts, and for OTB to float $250 million in bonds to meet its obligations.

One source said the bonds would have to be backed by the state, which faces its own monumental budget woes.

"Who in their right mind is going to buy OTB bonds?" asked the source. "The only way it works is with a state guarantee."

Another insider questioned whether Albany would be willing to place such a large bet on OTB.

"I think the bonds will have to stand on their own," the insider said.

Anonymous said...

Interested Horseman.

Connected Indians, are coming to Queens, after politically powering, through Florida.

Last week -

The Florida Seminole tribe, which is part of a team making a play to run the video lottery casino at Aqueduct, is enmeshed in a controversy in its own state, with some pols claiming they're illegally allowing gambling. Last week, Florida House
…Speaker Larry Cretul sent a letter to federal gambling regulators, noting that the Seminoles are allowing banked card games and slot machines in its tribal-land casinos, saying federal law "clearly prohibits the conduct of [such games] .


But what are they going to bring to Queens community & NY Horseman within their hidden baggage ?…a whole new tribal interpretation, of the words, 'NY State Law', that's what.

Seminole are very aggressive and are scaring other states, with their potential power - they even have Fla state, dormant horse, dog tracks and dormant jai-alai frontons with racing permits so that they can reopen them.

NY must, curb their coming invasion, like the plague, or they will, along with other Indian Tribes, waiting in the wings, control the whole region.
NY Legislature must keep both eyes open and hopefully, NY Supreme Court, also, as
Governor Paterson, has recently given his green light, to 3 new Indian gaming licenses in the
Catskills for votes.

But fortunately they have, Charlie Hayward's & NYRA's solid support, so Charlie now has a choice between a hard rock & a hard place, in his coming Court appearance.

Anonymous said...

NYC OTB should be allowed to fail, completely, with the track then allowed to open brand spanking new locations.

Only reason the state does not just close the doors are the unions.

As we know, do not underestimate the union power, so chances are it will survive in some form, still run by the govt as a competitive parasite of racing instead of as a partner.

Sunny Jim said...

Reading these comment sections when Alan's blog turns political always makes me ask: Who the hell are you people anyway? Do you come running down all those steps of the capitol building in Albany every day? It reminds me of the guy with the throaty voice that talked to Woodward and Bernstein at night in the parking garage. The info makes great reading, though.

But as usual we are left with just as many questions and convoluted money trails as when we started. Here are a few I have:

What are the details of this 'cozy relationship' and 'substandard contract' between Penn and its unions? These days whose word can you believe in these matters anyway? That of the union leaders? The corporate spokespeople?

Doesn't Penn National have a bunch of ex-Jersey racing execs who bailed from Soprano-land and are masters at greasing all kinds of political wheels? What are their salaries and perks, and what political contributions have they made in return for whose promises?

Is Penn National awash in cash because they treat their workers about as good as Wal-Mart treats theirs, i.e. like shit? Would they bring a thousand new Burger King jobs to Queens?

What does a backstretch worker at Penn National get paid? Are there benefits? Fair treatment? How about their casino workers?

Then again, could an Aqueduct situation start to resemble the ever-nosediving OTB? What then? How many OTB tellers are the underworked, overpaid brothers-in-law of some fat political hack?

What can you believe anymore and who is really minding the store anyway? There are mind-boggling sums at stake, with people controlling purse strings in an industry - gambling - like no other in that most of the customers bring pockets full of cash with no expectation of returning home with any real consumer good or service to speak of, other than the entertainment value of their "gaming experience". If you build it they will come.

So, I might as well keep checking in with Mr. Deep Throat Posting On Alan's Blog. Hell, he's way more fun than the New York Post any day.


Anonymous said...

The guy with the throaty voice was highly considered and spot on in that Nixon era parking garage. Wonder what thoughful insight the Albany analyst is really providing to our current "Aqueductgate?"

Anonymous said...

From the government can't run anything department.

"The man who headed the switch from dirt to synthetics, former CHRB chairman Richard Shapiro, says now, "I feel clearly I was sold a bill of goods. In 20-20 hindsight, if it was today, I wouldn't have pushed toward the mandate. Am I disappointed? Absolutely."

Anonymous said...

Hey Alan - why don't the libs just raise the tax rates on millionaires to 90% to solve New York's money problems? If that doesn't raise enough money they could raise the taxes on all business in New York. Maybe a 25% surcharge will do the trick.
You deserve Patterson. Blind and stupid.