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Friday, November 03, 2006

NYRA Bankruptcy Filing Mars Big Weekend

- The skies over Louisville are still sunny, and are expected to remain so as the sport moves into its second biggest weekend of the year. Any figurative dark clouds that gather are courtesy of NYRA's filing for bankruptcy on Thursday. It must be a bizarre feeling for those New York regulars who are in Kentucky now. The filing comes one year after NYRA itself hosted the Breeders Cup, and just a few days after the association rejected a loan offer that they termed a double cross and backtrack by the state.

The filing showed that NYRA's financial obligations go far beyond the $19 million they've been bickering over.

The state is owed nearly $100 million from loans and interest, including $13.5 million from Empire Development Corp. and $6 million from the Lottery Division loaned since last year and $76 million the association borrowed over many years from the state Thoroughbred Racing Capital Investment Fund. State taxes of more than $600,000 are owed.

Other big creditors are Nassau County, owed $17 million, and the U.S. Pension Benefit Guaranty Corp., owed $12.3 million. [Albany Times Union]
But the most significant part of the filing could very well be the one in which NYRA claimed that they own the land that the tracks sit on, and could sell it for $1 billion.
The filing should get a federal judge to rule on the controversial issue of who owns the tracks the state or NYRA, said NYRA's lawyer Brian Rosen. If the court rules the tracks belong to NYRA, it could borrow against the property or sell it.
Already, Rosen said, a real estate company and a financing firm have partnered as SB Kimco to immediately provide $15 million to NYRA, with another $35 million loan promised as long as the bankruptcy judge allows it.
Besides gaining protection from its creditors, it's also well worth noting that, as the Times-Union piece reports, bankruptcy protects NYRA from being stripped of the franchise before it expires at the end of next year. So much for an early takeover, as some at Empire Racing have hoped for.

NYRA chairman Steve Duncker called the delays in approving the management agreement with MGM "inexplicable."
"It is all the more mystifying given the fact that VLT's have been put in operation at eight non-NYRA tracks around the state." [Daily Racing Form]
The Lottery Division has had the agreement with MGM since June and has failed to approve it. It seems inconceivable that the governor of this state would allow the situation to reach this point. Perhaps they are so confident of a favorable ruling on the land issue that they allowed the situation to proceed to court. If they're wrong, the franchise could be tied up in court for years. For NYRA, this is truly their last stand.

- I'm working today on some Breeders Cup race previews for Sean and Joe Clancy's Breeders Cup Special, so posting here will be light at best for a few more hours at least. I think I've said enough about these races anyway; we all have at this point. Let's get to the action already. But in reviewing the races again, I've of course come up with some additional insights.....and likely with far too much information. So I will be back a bit later with some second thoughts, and my final picks.


Anonymous said...

I seem to remember that there is some dispute about money "owed" to the Capital Investment Fund. If I remember correctly, the money in that fund comes from NYRA and the idea was that NYRA would "borrow" their own profits to make capital improvements. A normal business would not have this debt, if it really can be called that. It would be free to use its own profits to improve its infrastructure.

Anonymous said...

Weeg, I believe you are correct. Some portion of past profits were set aside and NYRA was allowed to borrow against. NYRA has long disputed these "loans".