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Thursday, December 03, 2009

Chapter 9 (Updated)

This is the press release about this morning's announcement regarding NYC OTB's Chapter 9 bankruptcy filing. Here's a key portion regarding OTB's strategy for getting back on its feet. And notice that it's the racing industry, and not the state or the city, which figures to take it hit if their plan is approved.

The business plan will call for a dramatic overhaul of the NYC OTB business model. New technologies are expected to enhance customer service while increasing efficiency and cutting costs. A new bricks and mortar strategy is intended to reinvent old storefront locations while creating new, modern flagship attractions in select city locations.

Most importantly, the business plan will ask for changes to the racing laws, including a modification of the current legislative distribution scheme, which at present require NYC OTB to calculate and pay the State, the City and the horse racing industry a percentage of gross wagers placed with NYC OTB. The business plan will propose instead that NYC OTB make calculations and payments to the horse racing industry based on Wagering Commission revenue it actually receives after allowance for costs of NYC OTB's functions have been met. NYC OTB will not be asking for any changes to the legislation as it relates to payments to the City and State. Without this change, NYC OTB may be forced to cease operations, which would cause the City, the State and horse racing industry to lose all revenues that could be provided by NYC OTB.
UPDATE - NYRA responds that they have no response.
In response to today's announcement from the New York City Off-Track Betting Corporation (NYC OTB) that it intends to file a petition for adjustment of its debts under Chapter 9 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York, The New York Racing Association, Inc. (NYRA) expects to be one of the largest creditors to the NYC OTB bankruptcy action and therefore it would not be prudent for NYRA to comment on the filing outside of the court proceedings.


Steve Zorn said...

If NY horsemen had the same veto right over distribution of the simulcast signal that horsemen in every other state do -- NYRA is exempted because Ogden Phipps and pals got the exemption written into the federal Interstate Horseracing Act many years ago -- OTB wouldn't even be thinking of stiffiong the folks who put on the show from which they (fail to) profit. Of course, if Phipps et al had done the right thing all those years ago, there wouldn't be any NYC OTB; it'd be part of a larger and more profitable NYRA. But, oh no, the grandees of the Jockey Club, who then ran NY racing, didn't want people to think they were in the same social class as bookmakers. Morons.

El Angelo said...

This sounds like a death spiral for NYCOTB. What percentage of their patrons are older people who actually go to their branches, 80%? People like me will just close their internet accounts and go to NYRA.

Anonymous said...

No deadline to pick an Aqueduct VLT firm - Addabbo slams lack of progress on slot machines at Aqueduct track

By Howard Koplowitz
Thursday, December 3, 2009 11:12 AM EST
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Gov. David Paterson’s office says there is no timeline to get a deal done on the video lottery terminals for Aqueduct Race Track.

With the state in a budget crunch and losing $1 million in education money for every day the video lottery terminals at Aqueduct Race Track are not up and running, a spokesman for Gov. David Paterson said there is no deadline for selecting a firm to run the machines at the Ozone Park track.

“There’s no timeline. We never had a timeline on it,” said spokesman Morgan Hook.

Hook said the administration was “hopeful” to have an agreement soon.

Five firms — Aqueduct Entertainment Group, SL Green, the Peebles Corp., Penn National Gaming and Delaware North — are in the running for the VLT contract.

While The New York Times reported Paterson was favoring either SL Green or Delaware North to win the contract, Hook said the administration has not publicly said which team it would like for the contract.

The Times also reported the state Senate prefers Aqueduct Entertainment Group, but this could not be independently verified.

A group led by Las Vegas casino mogul Steve Wynn dropped out of the bidding after Paterson demanded a $200 million upfront payment from the winning bidder.

That $200 million figure is now part of Paterson’s deficit reduction plan for the budget even though the state does not have that money yet from the successful bidder.

Buffalo-based Delaware North was initially selected as the winning bidder among three contenders in October 2007, but was unable to come up with the $370 million upfront payment it promised the state.

State Sen. Joseph Addabbo (D-Howard Beach) expressed frustration over the months of delays in selecting a winning bid.

“By now, this decision should have been made, shovels should be in the ground and money should be flowing into the coffers of the state. In this economy and with the Legislature meeting in special session over the budget shortfall, our people need jobs now,” he said in a statement.

“The communities and people that surround Aqueduct can certainly use the local economic benefit that comes with starting the project,” Addabbo said. “For months the governor’s office has had the information needed from the same six bidders in order to make a decision and I believe a decision must be made as soon as possible.”

Anonymous said...

I am sure the State will force a merger of the OTB's (starting with NYCOTB) and NYRA. While this is exactly what should happen, and as pointed out by Steve above, should have happened 30 years ago, the main issue will be whether there is a depth of management in either organization to make this a success.

jk said...

I am guessing this is all about the payments OTB has to make to Yonkers and the harness tracks so OTB can show flat racing at night. This was a poorly conceived deal and was the final straw to convince Mayor Bloomberg to get rid of NYCOTB.

Anonymous said...

NY Post has an article on Aqueduct today:

Anonymous said...

Jk, you are probably correct that this is OTB's goal, and you are definately correct that this was a poorly constructed deal in the first place, BUT it was a deal negotiated by NYCOTB.

If they dont like it they can return to the former model at any time. They have no inherant right to simulcast out of town signals, which without doubt hurts harness tracks. They need to operate within their mean and mandate, which they refuse to do, as opposed to competing with other NY State businesses.

That written, while I agree with the concept of merging the tracks and OTB's, I dread the concept of NYRA running NYCOTB.

If my experience on my last trip to the Big A is any indication of what they have in store for the NYCOTB outlets there will be no improvement whatsoever, you can barely tell the difference.

Anonymous said...

El Angelo,

I too continue to play through my NYCOTB account simply for convenience sake.

Does anyone know if NYRA has made it simpler to deposit and withdraw (yeah right!) money from the NYRA ONE account, without visiting the track that happens to be open or paying a fee or sending a check that does not clear for ten days?

When I have tried to figure this out online I have failed and the customer "service" agents are never really sure, so I gave up about a year ago.

What I am seeking to accomplish is funding my account within an hour, as I currently do by running to my local OTB, without paying a fee.

I would prefer to give my business to NYRA, but only if convenient.

Anonymous said...

The title of the Blog should be changed to "New York Politics with an occasional comment on horse racing."

jk said...

With a NYRA account, you can instantly deposit $500 from a checking account to your NYRA account at any time.

I will have to try an account withdrawal one of these days!

Anonymous said...

New York racing and politics are totally intertwined. Unfortunate but a reality nonetheless.

Anonymous said...

Yes GOD help us if the current management at NYRA ends up running OTB

Anonymous said...

Those interested in horse racing in this State will be concerned about the impending bankruptcy of New York City OTB which was announced yesterday. The company is intending to restructure in bankruptcy including raising new investment funds of $250 million.

Governor Paterson encouraged NYC OTB to seek bankruptcy and he should be thanked and applauded for his leadership in this matter. Finally there is an opportunity to put the OTB on a firm footing for the future.

The racing industry has been going through difficult times over the past few years. The New York Racing Association (NYRA) which runs racing at Saratoga, Belmont and Aqueduct recently emerged from bankruptcy.

NYRA and NYC OTB should merge creating vertical integration and substantial savings. However I doubt very much whether there is a depth of management in either organization to make a success of the merged business.

The management and the majority of the Board of NYRA did not change after the Spitzer Administration forgave its substantial debts which enabled it to emerge from bankruptcy in 2008. Essentially The Spitzer Administration rewarded INCOMPETENCE. This cannot and should not happen if NYRA and NYC OTB were to merge. The racing industry and the citizens of New York deserve better.

While all this restructuring is going on, the saving grace for thoroughbred racing and its thousands of supporters (not to mention all the jobs its creates) in this state will be the VLT Franchise at Aqueduct.

This NYC OTB bankruptcy makes it even more crucial that Governor Paterson, Speaker Shelly Silver and Senator Sampson choose the best operator for the Aqueduct Casino.

NYRAs choice is SL Green and the Seminole Indian Tribe of Florida. Given NYRA's history their recommendation should be ignored.

Delaware North had the VLT Franchise before and failed to deliver for the citizens of New York. It also failed to pay the $370 million it promised the State over a year ago. Imagine what Governor Paterson could do with that money in today's difficult economic environment.

The remaining bidders are MGM, formerly a partner of NYRA before its bankruptcy and facing its own financial woes, Penn National Gaming and Aqueduct Entertainment Group also known as AEG.

Penn National Gaming and AEG are clearly the stars of this group.

Governor Paterson has shown fantastic leadership over these past few months. The thoroughbred racing community needs his leadership again and urges him to reward EXCELLENCE when choosing the VLT operator for the Aqueduct Casino.

Ever hopeful NY Horseman (and Citizen).

dirtyshirt said...

Hunch play in today's 6th at Hollywood.


Took on a whole other meaning...

Anonymous said...

Not looking good for Joe Bruno:

TImes Union:

Latest ‘read back:’ former Senate lawyer Gluchowski
December 4, 2009 at 3:18 pm by Mike Goodwin

The jury deciding whether to convicted ex-Senate Majority Leader Joseph L. Bruno has just asked to hear the testimony of Francis Gluchowski, a senate lawyer who served under the Brunswick Republican.

Gluchowski testified that when he issued an advisory opinion about Bruno’s work for McGinn Smith & Co., he was unaware the former senator would be doing business with unions that had business before the Legislature.

He also revealed that following a 2006 conversation with Bruno he began keeping a file of records of their interactions in case any of the topics they discussed in case ever “became an issue.”

Anonymous said...

jk, thanks I will give it a try, I presume this is without fee (from NYRA or the bank) similar to an electronic payment of a bill.

jk said...

No fee from NYRA or the bank. The money is posted in your NYRA account before the money is withdrawn from the bank.

Anonymous said...

A hung jury in the Joe Bruno trial?

An acquittal?

Either of these outcomes look more likely than a conviction at this stage.

Anonymous said...


1 dead, 1 missing, 50-60 horses killed in Lebanon Raceway fire

A fire leveled horse barn 16 at the Warren County Fairgrounds early Saturday morning, Dec. 5, 2009, killing at least 50 to 60 horses.

By Chris Magan, Staff Writer Updated 9:51 AM Saturday, December 5, 2009

LEBANON — One person is dead and another remains missing in a barn fire Saturday morning, Dec. 5, at the Warren County Fairgrounds. The fire also killed 50 to 60 horses and destroyed the barn.

The dead person has not been identified, according to Doyle Burke, chief investigator for the Warren County Coroner’s office.
According to Krista Wyatt, a Lebanon Fire Department captain, the fire was called in at 4:50 a.m., and when firefighters arrived, the roof had already collapsed and the barn was fully involved.
he two people unaccounted for are Ronnie Williams and his co-worker, a man known as Turtle, according to Lamar Moody, lead trainer at Lebanon Raceway, which is at the fairgrounds. Donna Williams, Ronnie’s sister, said horses have been an important part of their family for years. Their father, George Williams, was one of the first black drivers to race at Lebanon Raceway, she said.

Up to 80 horses could have been in the barn, but none of them were scheduled to participate in two horse-drawn carriage parades in Lebanon Saturday. The parades draw thousands of spectators to downtown Lebanon each year, according to Mikki Caston of the Lebanon Area Chamber of Commerce, which organizes the parades.
Warren County Commissioner Pat South said the parades will go on as scheduled at 1 p.m. and 7 p.m. Saturday.

The barn is a 24/7 operation, Wyatt said, noting that race horses require care around the clock and that it is not unusual for caregivers to be there at all hours.

The Ohio State Fire Marshal on scene and going through the rubble of the football-field length barn.
Horse owner Natalie Kauffman was at the scene and said she is waiting to find out the fate of 10 of her horses.

Check later for updates on this developing story.

Staff Writer Ron Alvey contributed to this story.