Despite yet another delay in the anxiously awaited Aqueduct video-lottery terminal project, New York Racing Association officials say the lack of revenue from that facility won't affect its ability to conduct live racing for at least the next 18 months.
The video-lottery project hit a stumbling block Tuesday when officials from Delaware North Companies Gaming and Entertainment informed Gov. David Paterson that it will not be able to secure the financing to pay the state a $370 million licensing fee by a March 31 deadline to operate a 4,500-machine video-lottery project at Aqueduct.
"I think we'll be fine through the third quarter of next year," Charles Hayward, NYRA's president and chief executive officer, said in a phone interview on Wednesday. "We expect to be cash-flow positive by end of the year even in a down market. I don't think there is any risk for New York racing."
Hayward said the only impact the slots delay could have on NYRA is that some capital improvement projects may have to be deferred or postponed. Hayward said NYRA has $26 million of the $30 million it was given by the state as part of the new franchise agreement that went into effect last fall.
In a press release, Bill Bissett, president of Delaware North's gaming and entertainment subsidiary, blamed "a deterioration of the credit and equity financial markets in this recession economy" for its inability to get the proper financing.
Bissett said Delaware North remains committed to doing the project and attempted to restructure its financial offer "that would have allowed us to make the same franchise payment to the state of $370 million on a revised timetable."
The governor's office declined that offer and has said that it now must reopen bidding for the project, but did not give a timetable for when that process would begin. The state fears possible legal ramifications if it did not restart the process.
"In cooperation with the legislature, we will commence a new process for selection of the operator for the video lottery terminal facility at Aqueduct Racetrack," Errol Cockfield Jr., a spokesman for Gov. Paterson, said in a press release.
Cockfield's release further said "the state remains committed to ensuring that Aqueduct is redeveloped."
Delaware North officials say they plan to be part of the new bidding process.
"While we disagree with their conclusion that a re-bid is necessary, we nonetheless remain interested in developing Aqueduct and look forward to continue [to] work with [the] administration to achieve that goal," Bissett said.
Delaware North owns Finger Lakes Gaming and Racetrack in Farmington, N.Y., and runs the casinos at Saratoga Gaming and Raceway and Buffalo Raceway. Last October, the company was selected by Gov. Paterson over bids from a partnership of SL Green, a New York real-estate development company, and Hard Rock Entertainment; and a partnership called Capital Play, which includes Mohegan Sun.
Representatives from both SL Green and Mohegan Sun on Wednesday expressed interest in getting involved in the new bidding process.
"We felt strongly that our original Aqueduct proposal was superior to the others, and we were very surprised that the project was not awarded to us," a spokesman for SL Green said in a press release. "We are still interested in developing the Aqueduct project and we look forward to seeing what the state has in mind if the project is to be rebid."
Jeff Hartmann, the chief operating officer for Mohegan Sun, said in a press release, "We are confident that a Mohegan Sun managed facility will create much needed jobs and revenue for the Queens community, and we can develop Aqueduct as a world-class entertainment destination, generating millions of tax dollars for the State of New York."
Hayward said that NYRA would not look to partner with another company to build the casino.
Slot machines were legalized at Aqueduct and eight other New York tracks in 2001, but the Aqueduct project hit several delays. Construction was halted on Aug. 7, 2003, when MGM Mirage, which initially was retained to construct the slots parlor, had concerns over a federal investigation of NYRA. Later that year, NYRA was indicted on charges of tax fraud, which further delayed the process.
Trainer Nick Zito may have summed up the frustration for all horsemen when he said, "We got to do something. I don't know who's right or who's wrong, but you got to do something. You can't wait another seven years. It's not a Democrat issue, it's not a Republican issue, it's a horse racing issue."