by Paul Post

New York Racing Association could run out of cash in September if the state does not name an Aqueduct gaming operator soon, NYRA President and Chief Executive Officer Charles Hayward said Thursday.

The naming of an operator for the proposed video lottery terminal facility is a step needed for NYRA to emerge from bankruptcy.

In previous reports, Hayward said that NYRA would run out of money this summer, if bankruptcy was not resolved. But this year’s Aqueduct and spring Belmont meets have produced higher-than-anticipated revenues.

However, NYRA will be hit with several big bills in September that would quickly use up any profits from the upcoming Saratoga Race Course meet that opens July 23, Hayward said.

“We’ll be good through the end of Saratoga,” he said, while leading a media tour of improvements at the historic track. “But we have some big real estate taxes to pay. We have a big semi-annual pension payment to make. So we will not be able to go very deep into September. The state is either going to have to do another DIP [debtor-in-possession] loan or hopefully get this thing worked out.”

A state Non-Profit Racing Association Oversight Board, which monitors NYRA’s business practices, is expected to approve the sixth in a series of temporary extensions for NYRA to keep operating, on Friday. NYRA's current extension expires Saturday.

One of the requirements for NYRA to get out of bankruptcy is a lease agreement with the state. On February 13, the legislature approved giving NYRA a new 25-year franchise to operate Saratoga, Aqueduct, and Belmont Park. The state will assume ownership of the tracks, and NYRA will lease them from the state.

The Aqueduct lease is more complicated because it involves a third party—whoever gets the contract to run gaming there. Three firms have submitted bids and each one has a different plan. Until the state makes a selection, the Aqueduct lease agreement cannot be worked out, and NYRA cannot emerge from Chapter 11 protection.

The state and NYRA must also agree to a franchise contract that mirrors the February 13 racing legislation, and reach a settlement agreement that resolves NYRA's outstanding lawsuit against the state.

“The franchise, settlement, and lease agreements really all have to happen simultaneously for this thing to work,” Hayward said.

If the contracts are worked out and the state takes over ownership of the tracks, NYRA will not be responsible for making any more property tax payments. The state will pay taxes to municipalities where the tracks are located.

Hayward said he is confident that things will come together quickly as soon as a gaming operator is named.

“We have had and the state has had real estate lawyers who have been looking at these issues for two or three months,” he said. “And the state has talked to the various VLT bidders. Once we know who the operator is, and what the specifics of the plan are, it’s very easy, then, to design a lease around that. Until you know which one it is, you really can’t do it.”

Fans will notice several new features at Saratoga this summer including an enclosed, air-conditioned area for preferred customers near the finish line and winner’s circle. Also, older-style “At the Rail” and “Paddock” tents have been replaced by newer models with glass-enclosed sides that will allow for air-conditioning. A fifth luxury suite will be added to the clubhouse turn and another tent for casual dining will be located at the top of the stretch.

Paul Post is a New York-based Thoroughbred Times correspondent