Thirty days after Governor David Paterson suggested that the state’s Lottery Commission and Racing and Wagering Board could pare down the field for the Aqueduct Racino franchise “as soon as tomorrow,” he managed to do it himself – by giving them a week to put down more cash.
On Friday, October 30, the six groups bidding on the right to operate a 4,500 Video Lottery Terminal (VLT) gaming complex in Ozone Park got a letter from the Governor’s office – telling them they had exactly seven days, until November 6, to guarantee a payment of $200 million when they inked the deal, or they were out of the race.
Five days later, international casino mogul Steve Wynn, who had offered $300 million, half in “front money,” bolted.
“We are confident that the State of New York will find a qualified operator to meet its needs at Aqueduct,” Wynn’s organization said in a terse statement. “We would like to thank our associates and community leaders for all their assistance in crafting our proposal.”
Only one bidder, Penn National Gaming, had submitted a proposal by the last bidding “deadline” that included a larger payment – $250 million – guaranteed upon signing the Memorandum of Understanding (MOU) containing the terms of the deal.
Privately, sources with intimate knowledge of the bidding process say that dealing with New York State has been a different experience. “It seems like there’s something new every day,” said one source. “I’ve been involved in several deals involving a government, and I’ve never seen anything like this,” said another.
“People are laughing. It’s as if the State is saying, ‘Hey, we don’t want to give this guy the bid, so everybody match him,’” one of the sources explained.
“I’m not surprised Wynn pulled out,” said another. “He’s got bigger deals going on and a last-minute change like this complicates things. Nobody just writes a $50 million check, not even Wynn.”
In short order, however, other bidders fell into line, announcing their compliance with the Governor’s “suggestion.”
Real estate giant SL Green, a partner with Hard Rock Entertainment, complied according to spokesperson Rick Matthews. “They’re in. They notified the State. And they’ve raised their overall bid from $275 to $300 million.”
Matthews told The Courier, “As we near the end of the process, we feel more confident than ever that the decision will be made on merit and that we will be selected.”
Aqueduct Entertainment Group (AEG) was just as confident. Larry Woolf, CEO of Navegante Group, the gaming operator, said on Friday that they committed to make “an up-front payment of at least $200 million for the license fee, without conditions or caveats, to operate a Video Lottery Terminal Facility at Aqueduct.”
“We look forward to getting started immediately to deliver on our promise to the people of New York,” he said.
William Bissett, president of Delaware North Companies Gaming &
Entertainment, the lead partner in Aqueduct Gaming LLC, announced they had made the $200 million commitment. “We remain confident that we are the best choice for the community and the state, and look forward to a decision in the near future,” he said.
R. Donahue Peebles, speaking for the team that includes MGM Mirage, did not specifically say they had met Governor Paterson’s terms, but said, “We have long believed that our proposal for the redevelopment of Aqueduct Raceway will provide the greatest return to the State, best benefit to the community, and is the most reliable option for all-around success.”
“We know the project details intimately and have demonstrated our ability to collaborate with the local community and its leadership. Our team is prepared to start faster and finish earlier than any other bidder,” Peebles said.
MGM was the company that had the original nod to build at Aqueduct, until an incoming Governor Eliot Spitzer slammed on the breaks in 2007 and started the process over from the beginning.
