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Tuesday, March 02, 2010

Late Payment

Governor Paterson said on Monday that the deficit for the new fiscal year which begins on April 1 has "probably" grown from $8.2 billion to $9 billion because several expected payments will be late or not materialize..

His list included a $300 million payment from a slots machine vendor for Aqueduct Racetrack and $200 million from the Battery Park City Authority. [Reuters]
Perhaps Paterson is just being realistic given that Assembly Speaker Sheldon Silver (the subject of a scathing attack by Senator Eric Adams on Monday) has said that he won't sign off until the Inspector General is done with his probe, which certainly won't be concluded by April 1.

Indeed, Tom Precious reports on
Sources, however, said negotiations with the state over a memorandum of understanding for the casino agreement are proceeding. One source said talks were scheduled for March 1 with state officials to try to reach a final deal on various aspects of the AEG contract for the VLT operation. [Bloodhorse]
However, Precious adds, ominously:
There has been growing chatter.....that some state negotiators might be interested in putting off the Aqueduct project until after January, when a new governor takes office.
Oh, man! We could surely kiss our beloved Big A goodbye should that happen. A new governor could very well turn his/her attention to a grander project at Belmont rather that starting this process over again.

That doesn't make sense to me though. I think that this project can still happen with AEG (if they come up with the payment!) - the state really has no incentive to kill it and have to deal with a bankrupt NYRA and a $300 million hole to fill. I also think that this probe by the Inspector General is just bullshit; he's not going to find anything illegal. Dicey, probably, and the Senate Democrats will come out looking the worst (Paterson has no reason to pull any punches in his testimony, does he?); but what concrete evidence of what is he going to find that will kill the deal? A written quid pro quo with Floyd Flake? And I surmise that the feds may become less interested in the matter now that the governor has bowed out of the race. The community is fine with it, as are the local representatives. So this thing should still happen (which of course doesn't mean that it will).

- This piece by James Odato on Capitol Confidential is certainly worth reading. It concerns a "huge, long-term bid award, papered in controversy.....and it did not involve a racino at Aqueduct Race Track." A lot of this sure sounds familiar - a winning bidder being accused of not meeting "vendor responsibility, experience or financial standards;" not to mention having Joe Bruno as its CEO.

- Frank Stronach now says he won't replace the Pro-Ride surface at Santa Anita. Not because it's gonna get any better of course. Frank won't spend the money (which the bankrupt Magna doesn't have anyway) until the state backs off and allows "free enterprise."
"Let us open up our store when we think we get the most customers.....Let the market decide . . . whoever is going to put on a better show will get the greatest market."
"So what?" Stronach said. "We're saying, you can race when you want to race. Are you afraid to compete?" [Daily Racing Form]
Hmmm, sounds like Frank's been smoking some of those tea party leaves. Aren't you glad he's still around?


Anonymous said...

Vendor responsibility is a joke started by Alan Hevesi so that people would have to pay his favorite lobbyist to get state contracts approved. He did the same thing with "placement" agents for the pension fund.

CMA is great company that has some of the largest software installs in the state - including the time and attendance system. Joe Bruno may work there, but compare CMA to accenture, unisys, IBM, Oracle etc., and you will find that CMA products actually work.

Anonymous said...

is there any way the media can let Albany delay the Big A project yet again?

Really, in this financial environment how could they turn a blind eye to any politician costing the taxpayers millions of dollars, except of course for the fact that they are all philosophically opposed to legalized gambling of any kind.

I have been the biggest skeptic of The Big A ever seeing a casino arising from the rubble, but at this point even the lure of a grand palace at beautiful Belmont Park will be difficult to justify by the media.

I say it goes forward, unless of course AEG really can not find the cash.

As Alan wrote, AEG needs to show us the money now, announce the world that they have obtained a $300M letter of credit or just put the cash in escrow to make their point.

Anonymous said...

Probe may delay Aqueduct Racino deal
BY VICTOR G. MIMONI - Tuesday, March 2, 2010 4:48 PM EST

With subpoenas expected from the state’s Inspector General and daily calls for his resignation, Governor David Paterson is hedging his bets on the $300 million down payment Aqueduct Racino deal for this year’s budget.

Thanks to Assembly Speaker Sheldon Silver’s decision to withhold his final signature until the state’s Inspector General completes an investigation into winning bidder Aqueduct Entertainment Group (AEG), Paterson made the admission on Monday, March 1.

Reverend Floyd Flake and “rap mogul” Jay-Z (a.k.a. Shawn Carter) who both have involvement in non-gaming aspects of AEG, as well as rap music industry powerhouse Russell Simmons were to be subpoenaed, according to published reports.

Simmons was to serve in a similar capacity to Flake or Carter, providing non-gaming services for losing bidder Penn National Gaming.

Since the January 29 announcement that AEG would get the franchise to operate a 4,500 Video Lottery Terminal (VLT) gaming facility with a 300 room hotel, entertainment venues, restaurants and shops, there has been a firestorm of criticism, much of it originating from losing bidders.

AEG documents reveal that Carter and partners Steven Acevedo and David Rosenberg collectively own 7 percent of AEG as a “passive investor” and will be involved in “entertainment, design of non-gaming amenities [and] community outreach marketing.”

Simmons reportedly said he “received $500,000 to run a philanthropic, social responsible program on behalf of Penn National. We have already funded a pilot program to promote non-violence in my old neighborhood of Hollis and South Jamaica, Queens as well as East New York, Brooklyn.”

Published reports say that Rosenberg is also involved in a collection agency among several being investigated by the Federal Trade Commission. Reports also say that both Acevedo and Carter have pleaded guilty to crimes within the 15-year crime-free timeframe demanded by Silver.

Much of the other criticism of AEG focuses on Flake’s association with Senate President Malcolm Smith, Paterson and other political leaders – and that their bid changed over time.

AEG spokesperson Andrew Frank bristles at suggestions of impropriety.

“Nobody says this process is perfect, but this is same process that resulted in NYRA (the New York Racing Association) keeping the franchise to run the tracks. Did anyone call for an investigation? No. This is the same process that resulted in Delaware North winning a year ago. Did anyone call for an investigation? No,” he said pointedly.

“This wasn’t a regular process – if it was, Delaware North wouldn’t have been allowed to participate after reneging on their offer last year,” Frank asserted. “But this has never been a regular process,” he said.

Frank pointed out that not just AEG but all the participants changed their proposals. “Penn National started at $5 million and wound up at $300 million,” he pointed out.

“When we were all asked to review our numbers we increased our revenue projections per machine because the numbers were going up at Yonkers and other locations,” he said. The weekly figures for all eight VLT gaming facilities in New York are available on the Lottery web site.

“One could assume that the others were reading the same numbers and might do the same,” he suggested.

“It was they who kept looking for more from us,” Frank said of Paterson and the leaders of the Senate and Assembly. “It was Silver who said ‘Match Penn National’s cash offer and I’ll approve your proposal’ and we did,” he added.