You may have noticed amidst all of the Derby hoopla this past weekend that Tom Precious posted a story on Bloodhorse.com regarding the seriousness of NYRA's cash flow situation. In short, the doomsday scenario that was presented to the NYRA board last week is that the association will run out of cash (considered as such when it has less than $5 million on hand) by late June should the state legislature fail to pass a bill, introduced by Governor Paterson, which would provide NYRA with $17 million, to be provided from the $250 bond issue for the racino construction, and to be repaid to the eventual VLT operator. This scenario also assumes that NYC OTB will suspend or defer payments from non-NYRA races (which totaled some $8.8 million to NYRA in 2009) as Sandy Frucher said it would do when he announced OTB's sudden and miraculous recovery from the brink. OTB was to provide the State Racing and Wagering Board with its latest restructuring plan last Friday.
I got an update from Charles Hayward at Belmont on Derby morning, and he pointed out that NYC OTB pays the out-of-state tracks promptly in 30 days by contract. So it's the in-state tracks that OTB has sucked the life out of all these years which will bear the pain. That's a joke to be sure, but NYRA's current status is no joke at all. Hayward expressed confidence that the bill providing the $17 million loan will indeed pass. But it's certainly not very comforting to know that the fate of the state's thoroughbred racing industry is in the hands of the New York State Legislature.
The DC-37 union representing the rank-and-file workers at OTB, which helped kill the OTB bailout bill when the legislature would not approve severance and pay raises promised by management, has informed the legislature that they will oppose any NYRA bill which doesn't address those issues, even though the bill doesn't directly involve OTB. I guess they figure that any leverage they retain is helpful, though this union doesn't seem to consider the downside to their members in the case of their tactics leading only to stalemate. And while the measure was introduced in the Senate by Sen Eric Adams, it has yet to be taken up by the Assembly. "They are awaiting some tax opinions on exactly how the $17 million could be used by NYRA to be certain that the bill works for NYRA. I think that we will have clarification on that in the next few days," Hayward said.
As I've steadily maintained, I just don't believe that the legislature will allow NYRA to cease operations. In the NY State Racing and Wagering Board's 2008 Annual Report, it was estimated that, should NYRA close, close to $40 million paid annually in tax payments to the state directly from NYRA and from all of the OTBs' handle on its races would cease; that in addition to over $45 million in payments to thoroughbred and harness breeders, and to local governments. Add up the numbers; it just doesn't make sense, even in an institution which doesn't have much, and even if OTB wagering on other races would partially compensate, to allow that kind of money to stop. Plus, Saratoga is looming, and that is very much a bipartisan issue.
And besides, and once again because it bears repeating: the state has a written obligation to provide funding as per Section 2.8 of the Franchise Agreement:
New NYRA and the State agree that, in the event that VLT Operations are not scheduled to commence at Aqueduct on or prior to March 31, 2009, the State and New NYRA shall negotiate in good faith to provide New NYRA with payments necessary to support racing operations and satisfaction of New NYRA operating expenses, including, without limitation, the payment of New NYRA's pension plan obligations, until the commencement of VLT Operations at Aqueduct.- Well, looks like I was wrong about the TV ratings for the Derby.
Attendance for the Derby was 155,804, according to Churchill, the fifth-largest crowd of all time, while the overnight television rating for a two-hour broadcast of the Derby on NBC rose 1 percent, to the highest figure since 1992, continuing five years of strong growth in the rating figure. [DRF]