As New York State extends its latest streak of late budgets to four consecutive years, the New York Racing Authority (NYRA) and the former New York City Off Track Betting Corporation (NYC OTB) spiral down to insolvency, while state leaders cast about for a means of naming an operator for the Racino at Aqueduct.
The 2011 budget year begins on April 1 – in the midst of a governmental recess for the observance of Easter and Passover lasting until Wednesday, April 7.
NYC OTB is proceeding with its Chapter 9 bankruptcy, having issued lay-off notices to all 1,350 employees on Friday, March 26, pending the shutdown of its 66 betting parlors on Sunday, April 11.
Shortly after issuing the pink slips, OTB announced it was stopping payment of $4.5 million to consultants and attorneys – about $3 million of which was for its bankruptcy lawyers.
Under the terms of Chapter 9, which applies to municipalities, the court can’t touch the debtor’s assets, nor approve legal fees.
OTB has blamed the state for changing its operating agreement, resulting in millions in structural losses in the last few years and has said it can’t go on unless its payouts to the state, NYRA and the industry are reduced.
“We cannot reach a three-way agreement on it to keep them afloat,” Assembly Speaker Sheldon Silver has reportedly said, referring to talks with Governor David Paterson and Senate Majority Leader John Sampson.
According to bankruptcy documents, OTB owes its 20 largest creditors a total of $65,824,783.95. Of that amount, just over $40 million is due to NYRA and various race tracks; over $11.7 million is owed to the state and city in taxes, pensions and Medicare withholding and over $2.5 million is owed to breeders and the industry.
Five lawsuits for negligence or discrimination that total over $11.5 million round out the top 20 list – which does not include OTB’s lawyers or consultants.
In the meantime, NYRA – owed $15 million by OTB – which was expecting $30 million in operating capital from the rejected Aqueduct Entertainment Group (AEG) $300 million Racino down payment, has dumped a dozen executives, reducing their payroll by $1.4 million, according to reports.
NYRA has said that racing at Belmont, Saratoga and Aqueduct could end by June 1, eliminating the Belmont Stakes – and racing’s “Triple Crown” – unless it gets the money it has been promised since last October, when the state took over NYC OTB and began another ultimately fruitless quest for an Aqueduct Racino operator.
On that front, Governor Paterson continues to call for a new bidding process under modified procurement guidelines yet to be determined, which reportedly might lead to an award before he leaves office on December 31.
Brooklyn State Senator Marty Golden has introduced a bill outlining a procedure for selecting an operator from the last set of bidders. Under the terms of the bill, all proposals previously submitted would be viable – except AEG’s. The upfront payment to the state would be a minimum of $300 million.
A major accounting firm would review the bids and make a recommendation to Paterson, Silver and Sampson. A joint Senate-Assembly public hearing would be held within 10 days and the three leaders would make the final selection within 15 days after the hearing.
As of yet, there is no companion bill in the Assembly.
Federal and state investigations continue in which the Aqueduct selection process is a subject of attention.
Although Sampson has indicated that Senate documents are forthcoming, attorneys for the body have called for closing court hearings in which they are challenging the jurisdiction of the state’s Inspector General, an officer of the Executive branch, to demand certain documents, citing co-equality and precedence.
