Game On? (NYRA thinking outside the box)

[PaceAdvantage]

It's good to see NYRA at least floating a few ideas on how to tackle the franchise renewel process from their precarious position. I'm not sure how much of a chance this has of happening, but at least the interesting ideas are starting to flow......

NYRA considering public offering (http://www.thoroughbredtimes.com/todaysnews/newsview.asp?recno=54811&subsec=1)
The New York Racing Association is considering converting to a publicly traded company as a means of raising hundreds of millions of dollars to be competitive in a potential bidding war when the association’s current franchise agreement with the state of New York expires at the end of 2007. Thoroughbred Times (http://www.thoroughbredtimes.com/todaysnews/newsview.asp?recno=54811&subsec=1)

[Tom]

Don't you have to OWN something before you sell stock in it?
Isn't NYRA more of a stewardship than an ownership? :confused:

[PaceAdvantage]

As far as NYRA is concerned, they own all three racetracks -- the physical properties....

[Suff]

It's good to see NYRA at least floating a few ideas on how to tackle the franchise renewel process from their precarious position. [/color][/url][/font]

Funding Racetracks through the Liquid market isn't that "outside the box". If anything it's well within the box. Those currently trading have postitive slot impact built into the price.

The situation at Penn National proves they're down to the bone.

The business plan underestimated the legislative hurdles.

NYRA may benefit from the timing. By the time they do an IPO, Slot impact will have a more realistic or conservative tone. In other words, a good strategy based on the expensive experience's of the competition.

[Tom]

Then if they own them, what is franchised?:confused:

[PaceAdvantage]

What is franchised? I would guess the rights to run a thoroughbred racing meet...

[Tom]

OK, humor me one more post....if they own the plants but not the licenses, what are they worried about? If they lose the franchise, they still own the racks and can refurse to let anyone else have them? So Magna could get the franchise and have nowhere to run races?

Or am I missing something ( it won't be the first time!:D )

[PaceAdvantage]

You're not missing anything. There is some debate as to whether or not NYRA actually owns the racetracks. They say that they do. Others say they don't.

They say they have the deeds and pay property taxes. Sounds like they own them to me.....

Thus, as far as NYRA is concerned, your scenario of "losing the franchise and keeping the plants dark" is a valid one, at least for now...

[aaron]

If the NYRA owns the rights and the track,how come they cannot operate the track as the please?They have to answer admission and parking priveledges to the state.If they are monitored by the state, and allowed the illegal activities they have been accused of they certainly should have been indicted.If they own the track why can't they hire competent help or negoiate contracts without arbitrators.
This Saturday there were no tellers on the 3rd floor grandstand.If they own the track,why don't they just throw out the tellers who participated in the sick out and hire people who want to work ?
They way they operate raises a lot of questions.
Why are some so called "juicers"allowed stall space while others are not?
Why are incompetent stewards never replaced?Why were they allowed to give away the rights to their signal for pennies on the dollar? If they were a business they would have been out of business years ago.

[Tom]

They say they have the deeds and pay property taxes. Sounds like they own them to me.....



This one's a no-brainer to establish ownership, then....STOP paying property taxes and see what happens! :eek:

But whatever it takes to keep Franky OUT of NY is fine with me. He is a cancer and must be stopped.

[Tom]

Thiis a favorite union ploy - screw other people to get thier way. Can't blame NYRA for union scum spoiling the party - it happens everywhere you have the unions.

[garyoz]

I have some experience in deal structuring involving Mergers and Acquisitions. My initial thoughts are that it would not be difficult to incorporate a business for the purposes of holding the NYRA licenses and operating the franchises. I am certain that if the Friends of New York Racing put together a consortium to bid on the franchises that is the structure they would establish, probably a holding company with one or more operating subsidiaries which are wholly owned and fully recourse to the holding company. (In an unrelated note, I think Delaware North--a really well run company that also happens to own Finger Lakes--up in Tom's neck of the woods--is a dark horse in the whole Friends of New York Racing group).

The problem I see with floating equity to finance the fees to the state and funding capital requirements is the timing. I don't see the State of New York selling NYRA contingent upon the successful completion of an equity offering. Nor do I see equity investors buying the common stock unless they are assured of the franchise, so you have a chicken/egg problem. I an also uncertain if you could generate the necessary cash only through a stock offering.

I think a better approach would be a private placement of High Yield Debt securities with common stock warrants. There could be some type of fund escrow tied to the successful transfer of ownership to NYRA from the current non-profit NYRA & approval by the State. The racing handle and VLT's provide predictable cash flow, so the debt could be serviced. The underlying real estate is very valuable (similarities between Hollywood and Aqueduct for example) so there should be good asset coverage of any debt securities. You are dealing with sophisticated institutional investors and if the deal makes sense and is structured well you could do it with a minimum of investors.

Within several months the securities could be registered with the SEC and the warrants publicly traded. Then you could undertake an IPO if you want.

This is simplistic, but I think something like this could work. IMO the major problem will be those bloodsuckers in Albany.