UPDATE: State meets obligation to NYRA; Legislature OK's advance

[parsixfarms]

Originally Posted by pointman

I think that you have a misunderstanding as to the Board of Directors role on a not for profit corporation in NY. I am a member on not for profit board in NY and it is not the role of the Board of Directors to financially support the corporation. Rather, the role is to deal with the State in negotiating and obtaining the necessary funds to operate and then to ensure that the funds are being used in a proper fashion. I am pretty sure that if NYRA were running with excess currency they would add the same to purses as they did at Saratoga the last couple of years. Whether the board members are wealthy or not is irrelevant, it is not their role to fund NYRA and it would likely be a conflict on a not for profit board for a member to have a finacial stake in the corporation.

NYRA is doing nothing more than asking the State to live up to the obligations that the State took on when NYRA deeded more than $1 billion of real estate to NY State. As Steve pointed out, the notices are required by NY State law in advance of any layoffs. NYRA is only fulfilling its requirements by reserving action it will be forced to take if the State continues to fail to fulfill it obligations to NYRA.

I also sit on the Board of a non-profit, and there are a whole host of tasks fulfilled by Board members. There is nothing legally prohibiting the Board members from financially propping up such an entity. That's why such boards often have so-called "money seats" on them, albeit as it related to the task of fund-raising for the organization. If there were some concerns about how to structure a loan to the organization (that's not the same as having a financial stake in the organization) without running afoul of potential conflict of interest rules, I'm sure that NYRA could run it past Getnick & Getnick, their high-priced "integrity counsel" (if they are looking at places to cut expenses, there'd be a good place to start).

I completely understand that the WARN notices had to go out just in case they do shut down.

[freddymo]

Originally Posted by parsixfarms

I also sit on the Board of a non-profit, and there are a whole host of tasks fulfilled by Board members. There is nothing legally prohibiting the Board members from financially propping up such an entity. That's why such boards often have so-called "money seats" on them, albeit as it related to the task of fund-raising for the organization. If there were some concerns about how to structure a loan to the organization (that's not the same as having a financial stake in the organization) without running afoul of potential conflict of interest rules, I'm sure that NYRA could run it past Getnick & Getnick, their high-priced "integrity counsel" (if they are looking at places to cut expenses, there'd be a good place to start).

I completely understand that the WARN notices had to go out just in case they do shut down.

You think Dinny could spot them 17 mil till the VLT's come? I bet even 53rd st bank would float tem 20 mil if Phipps co signed..lol

[pointman]

Originally Posted by parsixfarms

I also sit on the Board of a non-profit, and there are a whole host of tasks fulfilled by Board members. There is nothing legally prohibiting the Board members from financially propping up such an entity. That's why such boards often have so-called "money seats" on them, albeit as it related to the task of fund-raising for the organization. If there were some concerns about how to structure a loan to the organization (that's not the same as having a financial stake in the organization) without running afoul of potential conflict of interest rules, I'm sure that NYRA could run it past Getnick & Getnick, their high-priced "integrity counsel" (if they are looking at places to cut expenses, there'd be a good place to start).

I completely understand that the WARN notices had to go out just in case they do shut down.

Why should board members put up their own money when the State is financially obligated to float NYRA until the casino is up and running? And if the State is not living up to their obligation to NYRA, what would lead any board member to believe that their loan is secure?

[parsixfarms]

Originally Posted by pointman

Why should board members put up their own money when the State is financially obligated to float NYRA until the casino is up and running? And if the State is not living up to their obligation to NYRA, what would lead any board member to believe that their loan is secure?

NYRA is no different from any business with cash-flow problems. In this regard, it really isn't relevant who's not paying them. It's really a simple question: either NYRA and its board can be completely dependent upon the State to solve their short-term cash problem, or they can try to address their cash issues through other means. Having fought as hard as they did for the franchise, I can't believe that the only answer to their current situation is to shut it down if the State doesn't come through with the cash.

[pmacdaddy]

Originally Posted by parsixfarms

NYRA is no different from any business with cash-flow problems. In this regard, it really isn't relevant who's not paying them. It's really a simple question: either NYRA and its board can be completely dependent upon the State to solve their short-term cash problem, or they can try to address their cash issues through other means. Having fought as hard as they did for the franchise, I can't believe that the only answer to their current situation is to shut it down if the State doesn't come through with the cash.

I don't know. I would say NYRA is quite different as their business plan (assumption of VLT), ties NYRA's survival directly to the State. The State and OTB are certainly undesirable bedfellows, but the reality is that they are NYRA's business partners. If the State isn't willing to bridge the gap for now, it can't bode well for the future.

I also don't know how "short term" this need really is. If they get this $17M and OTB screws them some more and State delays VLT's another 2 years, what then?

Ultimately, I assume the State will come up with the $17M. Hopefully, getting NYS on the hook a bit motivates them a bit to get OTB/VLT on track.

[pointman]

Originally Posted by parsixfarms

NYRA is no different from any business with cash-flow problems. In this regard, it really isn't relevant who's not paying them. It's really a simple question: either NYRA and its board can be completely dependent upon the State to solve their short-term cash problem, or they can try to address their cash issues through other means. Having fought as hard as they did for the franchise, I can't believe that the only answer to their current situation is to shut it down if the State doesn't come through with the cash.

NYRA is different because they are a State entity. Unlike other businesses, I doubt NYRA can go just to a bank and take out a $17 million loan. And if they did, where in their budget will be the money to pay the interest? When I joined the board of the organization I was on, we were in serious cash flow problems for two reasons, first the County significantly delayed payments forcing the organization to take out loans which created interest which was not in the budget. They had to pay salaries somehow. Second, a creative head of the day to day operations had just been fired who had cleaverly (and legally) pilfered the organization out of money. We got the county to agree to pay the interest in return for a promise of timely payments and were forced to make severe budgetary restrictions including many layoffs that were painful for years until we righted the ship.

If the State does not give NYRA the money, they really have nowhere to get the money from. Hence, their only real option is to shut down. I can assure you owners and trainers will not race their horses with the promise that they will be paid in the next 6 months to 1 year. I fail to see where you think NYRA can drum up the money to continue operating when they are not receiving money they are entitled to from NYC OTB which would float their operations.

[parsixfarms]

Originally Posted by pointman

NYRA is different because they are a State entity. Unlike other businesses, I doubt NYRA can go just to a bank and take out a $17 million loan. And if they did, where in their budget will be the money to pay the interest?

This is not true any more. Before 2008, they were a quasi-state agency. Now, they are a not-for-profit. I do not believe there is any legal impediment to NYRA getting a loan from a private institution (subject, possibly, to any oversight boards). As for how would they pay the interest, I'm sure there are expenses that could be cut (d-barn, off-season training facilities are two that have already been discussed but not implemented).

[pmacdaddy]

Originally Posted by pointman

NYRA is different because they are a State entity. Unlike other businesses, I doubt NYRA can go just to a bank and take out a $17 million loan.

Nick,

I believe NYRA is now a Not-for-Profit organization, no longer a state entity. Accrodingly, they can certianly access working capital given collateral and cash flow. However, the current state of limbo leaves them with much on neither...

[pointman]

Originally Posted by pmacdaddy

Nick,

I believe NYRA is now a Not-for-Profit organization, no longer a state entity. Accrodingly, they can certianly access working capital given collateral and cash flow. However, the current state of limbo leaves them with much on neither...

I am not positive, I believe they are still a municipal not for profit corporation. And yes, when they deeded $1 billion worth of land to NY State they certainly compromised their collateral, not to mention having just come out of bancruptcy does not help either. Regardless, as a not for profit there is no room in the budget for interest. I still don't know where the money to pay that is supposed to come from.

[pmacdaddy]

Originally Posted by pointman

Regardless, as a not for profit there is no room in the budget for interest. I still don't know where the money to pay that is supposed to come from.

This is survival, not a balanced budget excercise. Not to say things are sustainable without VLT's coming to fruition or some other changes to the current situation.

[Cannon Shell]

Originally Posted by pmacdaddy

Nick,

I believe NYRA is now a Not-for-Profit organization, no longer a state entity. Accrodingly, they can certianly access working capital given collateral and cash flow. However, the current state of limbo leaves them with much on neither...

What collateral do they have? The state owns the land. They arent getting paid by NYCOTB (owned by the state) which is chapter 11 and are required by law to continue to send them the signal. There is a big chunk of the cashflow. Who is going to risk any money in this scenario? Sheikh Mo?

[pmacdaddy]

Originally Posted by Cannon Shell

What collateral do they have? The state owns the land. They arent getting paid by NYCOTB (owned by the state) which is chapter 11 and are required by law to continue to send them the signal. There is a big chunk of the cashflow. Who is going to risk any money in this scenario? Sheikh Mo?

That's what I am saying. The current situation leaves them without collateral or cash flow. Even though they are technically "allowed" to borrow as a NFP.

[parsixfarms]

Originally Posted by pointman

If the State does not give NYRA the money, they really have nowhere to get the money from. Hence, their only real option is to shut down. I can assure you owners and trainers will not race their horses with the promise that they will be paid in the next 6 months to 1 year. I fail to see where you think NYRA can drum up the money to continue operating when they are not receiving money they are entitled to from NYC OTB which would float their operations.

I guess I find it hard to believe that shutting down is their only option.

Purse levels are contractually dictated by agreements between NYRA and the horsemen; they are a function of handle and the amount of money that flows from handle into the purse account. Horsemen would not be "running for nothing" unless NYRA were using such funds, as they did about 7-8 years go, to cover operating expenses (and on this point, I believe that there is now complete segregation of accounts because of this prior episode).

As large as NYCOTB is, it still generates only a percentage of NYRA's total handle on a given day, so it's not as if the organization has no revenue coming in.

[Cannon Shell]

Originally Posted by parsixfarms

NYRA is no different from any business with cash-flow problems. In this regard, it really isn't relevant who's not paying them. It's really a simple question: either NYRA and its board can be completely dependent upon the State to solve their short-term cash problem, or they can try to address their cash issues through other means. Having fought as hard as they did for the franchise, I can't believe that the only answer to their current situation is to shut it down if the State doesn't come through with the cash.

NYRA is dependant on the state because the state has not honored its commitment AND the state owned OTB has not lived up to their commitment. It is different than any other business because the same people who owe them the money are the ones that regulate them! Name me another business that could fall into that quandry?

[parsixfarms]

Originally Posted by Cannon Shell

NYRA is dependant on the state because the state has not honored its commitment AND the state owned OTB has not lived up to their commitment. It is different than any other business because the same people who owe them the money are the ones that regulate them! Name me another business that could fall into that quandry?

School districts in NY, for example, are putting out budgets without knowing state aid figures. And health care facilities may see reimbursement rates cut by the state, after budgets have been prepared.

[Cannon Shell]

Originally Posted by parsixfarms

School districts in NY, for example, are putting out budgets without knowing state aid figures. And health care facilities may see reimbursement rates cut by the state, after budgets have been prepared.

Are school districts and health care facilities really comparable to the situation that we are talking about?

[parsixfarms]

Originally Posted by Cannon Shell

Are school districts and health care facilities really comparable to the situation that we are talking about?

You asked for entities that get money from the state while the state simultaneously regulates them. Hospitals certainly fall into that category (get Medicaid $$ while regulated by DOH); schools, subject to audit by the Comptroller, are probably a less perfect analogy.

[freddymo]

Originally Posted by pointman

Why should board members put up their own money when the State is financially obligated to float NYRA until the casino is up and running? And if the State is not living up to their obligation to NYRA, what would lead any board member to believe that their loan is secure?

You right but you make it sound like the State is holding up there obligation in every other arena. They aren't! schools are failing people are losing there jobs and basic things are being washed away. Because NYRA has a piece of paper that saying the State is obligated to fund them is different then basic implied financial obligations of State government.. Come on cops schools and teachers have to go behind NYRA because they have a piece of paper.

[pointman]

Originally Posted by freddymo

You right but you make it sound like the State is holding up there obligation in every other arena. They aren't! schools are failing people are losing there jobs and basic things are being washed away. Because NYRA has a piece of paper that saying the State is obligated to fund them is different then basic implied financial obligations of State government.. Come on cops schools and teachers have to go behind NYRA because they have a piece of paper.

Unlike some of schools and cops, NYRA has been paying a vig to the State for years just for the privilege of operating which is why they are entitled to help from the State. Even the dumb idiots NY State has elected know they cannot let NYRA fail. Don't think for a second that the State hasn't gotten its cut of the betting action for a long time.

Further, cops and schools have created much of their problems through their unions which refuse to let go of unproductive employees and refuse to renegotiate ridiculous benefits which they do not deserve in this economy.

[freddymo]

Originally Posted by pointman

Unlike some of schools and cops, NYRA has been paying a vig to the State for years just for the privilege of operating which is why they are entitled to help from the State. Even the dumb idiots NY State has elected know they cannot let NYRA fail. Don't think for a second that the State hasn't gotten its cut of the betting action for a long time.

Further, cops and schools have created much of their problems through their unions which refuse to let go of unproductive employees and refuse to renegotiate ridiculous benefits which they do not deserve in this economy.

Are the toll collectors on highways much different then NYRA when it comes to giving money to the State. Isn't NYRA a business designed by the state to collect revenue for the State. I am all for NYRA succeeding because I love racing but effectively they are wards of racing appointed by the state to manifest the industry while taking a rake. I never understood NYRA's claim that they owned the land because they paid (or short paid) the property tax for years. Wasn't that the point of the A in NYRA? Wasnt it an assc. chartered to create revenue not its bottom line? How the heck did that become we own the land because we paid the tax?