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by Paul Post
New York Racing Association is expected to emerge from bankruptcy on Friday, signaling a new start for the entity that has run Saratoga Race Course, Belmont Park, and Aqueduct since 1955.
The state Racing and Wagering Board is expected to approve a new certificate of incorporation for NYRA on Friday during a meeting at the board’s Schenectady, New York, headquarters.
NYRA filed for Chapter 11 protection on November 2, 2006, which turned out to be a critical maneuver in its effort to retain New York’s racing franchise. At the time, three other groups were challenging NYRA for the next contract and NYRA appeared to be a longshot, at best.
Bankruptcy, among other things, might have led to a court ruling about who owns New York’s racetracks. State officials claimed the tracks belonged to the state. NYRA, which has paid property taxes for 50-plus years, said it owned the tracks.
Fearing a negative ruling, former Governor Eliot Spitzer in September 2007 reached a non-binding memorandum of understanding with NYRA to keep it in place for another 30 years.
This past February 13, following months of negotiations, the state Legislature awarded NYRA a new 25-year franchise. But legal details surrounding bankruptcy and an actual franchise contract have taken months to iron out.
In addition, NYRA sued the state in late 2006, charging that various officials deliberately caused NYRA’s financial predicament with a goal of wresting control of the tracks.
NYRA’s last permanent contract expired on December 31, 2007. Since then, it has been operating with a series of temporary extensions. The seventh and latest is scheduled to expire September 28.
The permanent, new franchise should already be in place by then, however.
State officials said two weeks ago that NYRA was expected to emerge from bankruptcy by September 15.
“We need to get out of bankruptcy,” NYRA President Charles Hayward said recently. “It’s costing us $80,000 a day in interest fees and bankruptcy [legal] charges. We have some financial payments we have to make in September so we really have to get this done.”
NYRA spokesman John Lee replied in the affirmative when asked if NYRA's bankruptcy was expected to conclude Friday.
The new franchise calls for the state to assume ownership of the tracks. By doing so, the state—not NYRA—will be liable for a series of upcoming property tax payments totaling several million dollars for Belmont, Aqueduct, and Saratoga.
Also, the state will forgive more than $130-million in old loans and interest payments.
