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Thursday, February 22, 2007

Notes - Feb 22

- CapitalPlay Ltd is not included in the Ad Hoc Committee's report due to a missed deadline, but its CEO Karl O'Farrell told the NY Times: “There’s every indication now that our bid will be considered fully with the other bidders.”

- Both Empire and Excelsior issued the expected press releases following the report release. Excelsior called themselves the "clear winner." Empire, keeping in character, took the opportunity to take one last backhand swipe at the Committee, calling it "the last remaining committee of the Pataki administration," their way of letting us all know that the panel that selected their rival is a relic that is no longer relevant to the decision.

- The Committee had some recommendations of their own other than who should run the franchise. In addition to seemingly weightier issues such as the structure of OTB and the matter of a general regulatory review, it zeroed in on a more practical problem that Big A patrons are well familiar with. In a section titled Parking at Aqueduct, the Committee wrote:

"The State needs to examine the future parking needs of patrons at the Aqueduct Racetrack, post-video lottery gaming implementation. Reduction in parking availability through 1994 land sales to The Home Depot and the Port Authority...could prove problematic. Resolution of these parking concerns could be critical to the success of the video lottery gaming operation. It is critical to address the future parking needs of patrons before the vacant land is assigned use by its owners and development occurs."
Amen to that.

- The presence of giant corporations on Empire's board seemed to cut both ways. In a discussion of complaints of "the historic privacy regarding the present operation of the State racing franchise," the Committee noted that "several members thought the structure of Empire, with several publicly-traded partners, might lend itself to better transparency." But in the category of Financial Viability, which went to Excelsior on the basis of their higher guarantees for capital improvements and programs, the Committee expressed concern that should there be "unallocated revenue" resulting from higher than projected earnings, Empire "could be tempted to make distributions to their partners."

- NYRA's date in court to apply for financing from GE Capital has been postponed again, this time to Feb 28. Matt Hegarty reports in the Form that the association has petitioned the court for permission to spend $50,000 on an appraisal of the land, which it says is a prerequisite for the loan.
NYRA said in the petition that the appraisal would seek to determine "the most probable price which the properties should bring in a competitive and open market under all conditions requisite to a fair sale."


Anonymous said...

Here's a quote from today's Saratogian:

One of the major complaints lodged against Excelsior Racing Associates is an apparent lack of experience.
The firm placed last in that category in voting conducted by an ad hoc committee that recommended Excelsior as the firm best suited to run Saratoga Race Course, Belmont Park and Aqueduct.
But, the committee said, Excelsior had the best business plan and could overcome its experience shortcoming if current New York Racing Association leaders are kept in place.
"Those are good people there at NYRA," committee member Ed Swyer said Wednesday. "There's
many issues, but as far as experience and management, they do a very good job."

I had to read it several times. Is Swyer (and the Committee) saying they want Excelsior's money backing the same old guard at NYRA? The same crack management team that has continued to stiff the horsemen, bettors, employees and the public?

Geez, Louise.

Anonymous said...

Well, I think they're just saying that there are some good management people at NYRA that Excelsior could cherry pick in order to provde some experience that they currently lack.

What I found interesting about the Experience category is that Empire, though they were the "winner," didn't really do a very good job of making their case. The report said that they only listed four senior personnel, none of them with experience running a racetrack; and that they "did not substantially address the gaming side.." The Committee actually took the ball here for Empire, noting that partners such as Churchill, Magna, etc., could provide assistance in running the track, and Delaware North in running the racino. Talk about Jeez Louise! I get the feeling that Empire did a somewhat sloppy and incomplete job with their proposal, even in this, a category in which they had a clear advantage over Excelsior. And that with everything on the line in their bid. What does that say about their competence to conduct day-to-day operations?

Anonymous said...

I too find it difficult to believe that Empire mentioned only their four corporate officers and didn't say anything about Churchill, Del. No., et al.

I'm more concerned with where Excelsior thinks it's going to get the funds to support all the things they said they wanted to do. Granted, Excelsior did have some good ideas but the bottom line seems to be that they just threw out big numbers to make their bid look more attractive. They used a VLT machine win per day of $519 which is very unrealistic, considering Yonkers which is just as close to NYC and the best venue for comparison, is doing in the low $200/day range. Excelsior used a high number, therefore had more money to "guarantee" to specific programs, which is what seems to have won it for them. When those numbers actually come in much lower than $519 I don't think their "guarantee" will be so guaranteed. The real threat lies in what will then happen to NY racing. Where do they begin to cut?

Alan Mann said...

The Committee did question that $519 number, and the report said that Excelsior came back with some consultant that vouched for it. But I agree with you - that seems extremely optimistic.

Green Mtn Punter said...

Empire glossed over CD Inc and MEC's management experience because (1)It doesn't take a management genius to succeed with the KY Derby when you have all of that free media working for you; and (2) MEC has been losing lots of money for the past few years, and screwed up Gulfstream on top of that, so what's to recommend about their management abilities?
An Excelsior-NYRA JV is clearly the way to go given the situation we now have.

Anonymous said...

The Report lists Empire's major partners, other shareholders and senior staff. It did not indicate who, if anyone, from the partners or shareholders would be involved in operations. (I own Disney stock, but I don't help run the place). The Senior Staff listed is thin, Empire only included biographical information on four employees ...

1. Jeff Perlee hasn't operated a racetrack.

2. Dennis Brida was a trainer, but closed his stable and took a job operating a indistry trade group. Running NYRA is not running the New York Thoroughbred Breeders, Inc. At least he was in the game.

3. Robin Malatino has no racing operations experience. Maybe she owns horses ...

4. Justin McDonald has no operational experience, but I hear he is really the brains behind Empire. He was a protege of Tim Smith at the NTRA and Friends of New York Racing, Inc. and I have heard he is bright.