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Tuesday, November 30, 2010


The New York State Senate didn't address the OTB bill....nor the deficit.
The Senate declined to even consider the OTB plan; with no support expected from the Republicans and its own conference ambivalent, it had no chance. There's a report that the Assembly may take it up regardless, but, without the Senate, it would just be for show.

As usual, we heard the 'b' word bandied about. Crying bailout seems to be a convenient way to summarily dismiss complex matters regarding the horse racing industry that people either can't, or won't, take the time to try and comprehend. Clearly there were aspects of the bill that reeked of special interest or were unfair to certain segments of the industry. But it surely involved no money to bail out anyone. Once again whipping out my slightly outdated 2007 report by the Senate Racing, Gaming, and Wagering Committee, in 2006, NYC OTB paid nearly $15 million to the state in taxes and fees. We can presume those numbers are lower now. But however much less they may be, it's still that much more than zero, which is what the state will receive if Greg Rayburn is true to his word to shut down.

And, NYC OTB paid out over $100,000,000 to the "racing industry" that year. That number, already surely less, was to be slashed as part of the reorganization. Still, there's a lot of money that would cease to be. I guess that's why OTB is throwing around numbers like 40,000 to 70,000 in predicting how many jobs may be lost, despite the fact that they themselves would be laying off "only" around 1,000.

Sure, some of the lost business will be recovered through on-track wagering (if people can still find the tracks) and, NYRA sure hopes, the NYRA Rewards ADW platform. But NYRA will be competing for customers with out-of-state competitors, and is hamstrung in that endeavor by the state's archaic laws which prohibit it from streaming live racing signals online. The blame always comes back to Albany.

Still, NYRA will be in far better shape than Yonkers, which has no ADW of their own. The harness guys preferred to see NYCOTB defunct then see the plan pass as it was, and it remains to be seen if they let their emotions over the obvious inequities in the plan triumph over swallowing hard, eating the losses, and settling for less, as the thoroughbred horsemen (not facing a loss of racing dates) were willing to do. They figured they weren't getting paid now anyway, but they would have been paid something had OTB been permitted to reorganize. Whether business gained through alternate outlets and any wagering platform they are able to establish (not to mention from the possible demise of the sport in NJ) is enough to compensate remains to be seen.

- You'll be happy to know that the Senate Democrats did however manage to re-elect Senator John Sampson as their conference leader. I guess that the Inspector General's report on the AEG selection isn't on the reading lists of NY Senate Democrats. Maybe if he's indicted, someone will notice? And they wonder why they apparently lost their majority status in the election. Presumably, the Republican majority will see to it that appropriate hearings on the matter are convened.


Figless said...

Reading the article it seems NOT doing anything is the true bailout, if NYCOTB closes NYS taxpayers are responsible for $100 Million due creditors and $500 Million in pension obligations (the latter being an absurd number when you think about it).

This may be why the other tracks opposed, they will presumably be made whole on the debt owed them by the State, a bird in the hand after all, and they assume the business will ultimately continue in some form.

As a breeder owed about $20k by NYCOTB I would rather get that money now rather than hope the new entity will pay me later.

Anonymous said...

Why wouldn't the bankruptcy judge or US trustee convert the case to a Chapter 7 liquidation of assets and see if TVG, Stronach, NYRA, Churchill or some other consortium want in the game in NYC? Can a chapter 9 convert to a chapter 7 would be the question I suppose. Perhaps the alleged $500 million obligation prevents that?

jk said...

Albany punted (again), no surprise there. There is talk of one more legislative session by year end, maybe something gets done then.

The point of bankruptcy is to reduce or eliminate debt where there is too much. The strategy here of debt "preservation" is comical. Lottsa luck.

jk said...

DRF reports OTB will shut down for good on Friday unless legislature takes action.

FDR said...

The ELEPHANT in the swimming pool is the reason NYCOTB is doomed. And that elephant is the $500 million of unfunded benefit obligations to workers. It will end NYCOTB as it might end NY States economy.
Why would ANYONE buy OTB with that ridiculous attachment. Let them eat bread.