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Tuesday, May 13, 2014

Casino Minimum Capital Requirements Are Minimal

I wrote about the win by Palace Malice at Belmont on Sunday, and a bit about the Preakness, over at the TimeformUS blog.

 - The state announced the minimum capital requirements for casino developers.  Considering the numbers that have already been thrown around - for example, the $750 million proposal for the Adelaar casino at the Concord - these are not likely to dissuade anyone.  Especially in Orange County, with its proximity to NYC.

 “I think it shows that they are rushing through this and that this has clearly not been thought out,” said Mitchell Grossinger Etess, the chief executive of the Mohegan Tribal Gaming Authority, which wants to rejuvenate his family’s famed Grossinger’s resort in Liberty, N.Y. “The premium spot, and they are only asking $350 million? It doesn’t speak to creating economic development.” [NY Times]
There had been calls from some in the Catskills for requirements as high as $1 billion for Orange County, and these numbers obviously fall far short of that.

Not quite satisfied with the minimum set at only $85 million for his hoped-for casino at Tioga Downs, Jeff Gural expressed hope that he can apply the $45 million that he's already spent on renovations towards the requirement!
“I thought they did what they said,” Gural said of the commission. “They want to get as many bidders as possible and let the free market set what everybody plans to spend.” [Pressconnects]
That's one way of putting it.  A cynic might say that keeping more bidders in the game is a good way to keep the campaign contributions and lobbying expenditures flowing.  But I guess that's being way too cynical. Right?

The bidders now have five business days to request a refund of their initial $1 million fee.  But I don't expect them to be lining up at the door.

Granted, these minimums do not include all of the expenses that will go into constructing these things.
The board also said that casino projects would entail up to hundreds of millions of dollars in additional costs that it did not include in the capital requirements — things like land acquisition, legal work and marketing. Those expenses could swell the investment in a hypothetical Orange County project, for example, to nearly $500 million, it said. [NYT]
But still, we're hardly talking about prohibitive amounts here.  I would surmise that Genting would be willing to spend up to twice that amount to have a casino just 40 miles from Manhattan.

Expenses related to convincing local communities to vote in favor of a casino - a requirement by the Gaming Commission - would presumably not count towards the minimums.  According to a report on the Capital NY website, a loophole in the law means that companies hoping to build in communities with populations of less than 50,000 would not even have to disclose their lobbying expenses there.
 And all but one of the known locations where the 22 different casino bidders have said they plan to build casinos are in towns, hamlets and villages with populations under the 50,000 population threshold, leaving it unclear how much, if anything, the casino bidders have spent to cultivate community support. [Capital New York]
 Gotta love loopholes, eh?

Speaking of disclosure, the details of NYRA CEO Chris Kay's contract have been released.  James Odato, writing in the Albany Times Union, claimed it was a FOIL request by his paper that led to the release.  But blogger Tom Noonan spilled the beans on the contract last week, claiming that it was his FOIL request that was responsible.  We'll have to give the nod to Noonan here, who revealed the generous severance clauses contained in Kay's contract on his blog well before Odato did.

Nonetheless, NYRA released the information after initially opposing it.
"Disclosure of the requested records would constitute an unwarranted invasion of Mr. Kay's personal privacy under Public Officers Law," NYRA wrote last summer. "Mr. Kay is not a public employee. He, therefore, has a significant privacy interest in avoiding disclosure of the requested records. [Albany Times Union]
I have to say that I fully agree with that.  NYRA is presently not supported by taxpayers, so I don't really see where the details of the contract is anybody's business.  I mean, by the same logic, then wouldn't we be entitled to know what Tom Durkin or Andy Serling makes?

And I say good for Chris Kay that he was able to obtain some financial protection given the uncertain circumstances under which he took this job - a temporary state takeover and talk, at the time, of selling the enterprise off -  and the relatively paltry, for a Chief Executive Officer of a business like the New York Racing Association, base salary that he agreed to take.  I don't particularly care about his automobile allowance and his stipend for living in Saratoga over the summer.  Don't understand why that is even news.  Let's move on to some important stuff.


Steve Zorn said...

Re Chris Kay contract: While it's true that NYRA doesn't get any tax dollars from the rest of us -- quite the contrary, it's a net taxpayer -- it's still an institution controlled by the state and, as such, accountable to us as citizens. I have no problem with the world knowing what I make working for a state institution (CUNY Law School), and I'd dearly love to know how much Andy Serling gets from NYRA.

When I was in the Teaching Assistants union at the University of Wisconsin, we posted the salaries of administrators and professors on departmental bulletin boards, headed "Are They Worth It?" Seemed to be a very salutary exercise.

Figless said...

A commenter on Noonan's blog pointed out that CD COO and CFO both had compensations exceeding $10M last year alone. Granted they are public, for profit, companies but NYRA's revenue was about half of CD total revenue so Kay's compensation package is quite reasonable.

As Noonan pointed out in his reply, he wasn't complaining about the compensation package, but rather disclosing that NYRA's board flat out lied (my words) about that package.

As someone who defended Heyward's compensation at the time I have no problem with his contract, but they should have been more transparent.

kyle said...

What do you think about Jimmy Feathers partnering with The Evil Empire?

August Song said...

And how does Kay's salary match up with Cuomo's opinion that Hayward's $470,000 was way too much as CEO? Right, it was only too high until his appointees realized it was "chump change" compared to what it would take to attract someone qualified enough to accept the position. So, they managed to attract a Cuomo lackey, who claimed he loved thoroughbred horseracing so much from the first time he went, but didn't consider the absurdity --- that Kay loved the sport so much, that he hadn't returned over the following 35 years. And, who can forget, after Kay was appointed, his commending Ramon Dominguez on "his matches." Idiocy has no boundaries when it comes to Kay and horseracing. Or, how about the announcement Kay made concerning the NYRA scratch policy (in an effort to increase field size, huh?), that the horse scratches didn't need to be submitted to veterinarian committee first to be evaluated. Yep, Kay was quoted on the announcement. Then, 2 days later, a general announcement (yep, no mention of, and by, Kay), proclaimed the previous manner, of scratches being submitted to the veterinarian committee, would still apply.