Saturday, October 11, 2008

Governor Picks Delaware North already running Gideon Putnam Hotel and Racino for Aqueduct Race Track slots

Racino contract awarded
By PAUL POST , The Saratogian

SARATOGA SPRINGS - Gov. David Paterson has chosen Delaware North Companies and its partner - Saratoga Harness Racing Inc., which owns Saratoga Gaming & Raceway - to open and run a racino at Aqueduct Race Track.


It's a long-awaited decision that will mean millions to Saratoga Race Course, because the summertime thoroughbred track is slated to receive a cut of the money generated by the downstate racino.

However, one of the people whose approval is required - Senate Majority Leader Dean Skelos, R-Rockville Center - isn't happy with the choice, saying it doesn't address economic development and job creation surrounding Aqueduct. So the selection may not be a done deal.

"It is shocking that Sen. Skelos, who claims to understand the importance of this revenue stream and who has repeatedly and publicly called on the governor to award this contract, has now decided to stall a significant economic development project," Paterson spokeswoman Rita Heller said in a press statement. "Delaware North presents the strongest financial proposal with an upfront payment of $370 million."

Delaware North's New York roots apparently weighed heavily with Paterson. The Buffalo-based firm runs Saratoga Gaming & Raceway's video lottery terminals and manages the Gideon Putnam Hotel at the Saratoga Spa State Park in Saratoga Springs. In addition, it owns and runs Finger Lakes Race Track, a thoroughbred venue near Rochester, and operates Fairgounds Gaming at Buffalo Raceway.

"They have a proven successful track record in New York state," said Sisa Moyo, a spokeswoman for Assembly Speaker Sheldon Silver, D-Manhattan, the other person whose approval is required. "The governor selected them and we're comfortable with that decision."

Delaware North/Saratoga Harness is one of three entities that bid for the contract to run a 4,500-machine VLT facility at Aqueduct.

Construction is expected to take 15 to 18 months, meaning it would likely start up in early or mid-2010, generating a projected $450 million per year that would boost purses at each of the state's three main thoroughbred tracks - Saratoga Race Course, Aqueduct Race Track and Belmont Park.

Delaware North President William Bissett issued a one-paragraph statement Friday saying the company looks forward to bringing "a new and exciting Aqueduct to the Queens community and much needed economic stimulus to the state of New York."

Skelos and the competing bidders were quick to denounce the governor's choice.

"It appears that Gov. Paterson is supporting a bid that only includes plans for a racino and does not include any proposal to generate needed economic development," Skelos said. "It appears that in an effort to close the budget deficit, Gov. Paterson has made a choice that may not be in the best longterm interests of the state or for the communities that surround Aqueduct. It is our belief that unless we made Aqueduct a true destination venue, this project will not generate the largest possible benefit."

Skelos, however, isn't saying which firm he prefers.

Aqueduct is bordered by John F. Kennedy International Airport - one of the world's busiest airports - a New York subway line, residential neighborhoods and Rockaway Boulevard, a heavily-traveled commercial strip.

The best proposal would provide for job creation in that area, which Delaware North hasn't, said Skelos spokesman Mark Hansen. But he didn't specify the type of development Skelos envisions.

Delaware North/Saratoga Harness offered the state the largest upfront payment - $370 million. Competitor SL Green/Hard Rock Entertainment offered $250 million, and Capital Play/Mohegan Sun offered $100 million. Both of the latter proposals included plans for large-scale entertainment-retail complexes beyond the VLTs.

Mohegan Sun's proposal includes a hotel. President and CEO Mitchell Etess said his firm would generate $6 billion more than other entities over the life of the 30-year contract.

"This would be a very bad mistake," he said of the governor's selection. "Our longterm revenue far exceeds any of the competitors. If the state is willing to accept far less money in the long run, there's nothing we can do about it. It's very shortsighted."

The gaming selection process was decided by the governor, Senate and Assembly leaders earlier this year, a political insider said. There are no clear-cut rules as to whether the state's top three leaders just need to agree, or whether the decision requires a full legislative vote, he said.

Robert Bellafiore, a spokesman for SL Green, said, "The governor can't give this contract out. The governor's office makes a recommendation."

The New York Racing Association has been anxious for Aqueduct's gaming to get started because of the added revenue it will produce. President and CEO Charles Hayward said he felt confident that any of the three bidders would run a "first-class racino."

"We're going to be motivated to work with these guys, to make them a bigger success, because we get 7 percent of the net win - 4 percent for capital expenses, 3 percent for operating expenses," he said. "I've seen Delaware North in action at Finger Lakes and Saratoga so we're very comfortable with them."

NYRA has no official voice in the selection, but has made its wishes known to the state. Previously, Hayward said he didn't want Capital Play (Mohegan Sun), which challenged NYRA for the latest racing contract. This year NYRA was granted a |25-year contract to continue as operator of Saratoga Race Course, Belmont Park and Aqueduct Race Track.

Mohegan Sun runs what is generally considered the Northeast's most successful casino, in Connecticut, which left some doubting how actively it would market Aqueduct.

Etess, however, said, "We had planned to turn Aqueduct into a premier destination."

Mohegan Sun has an extensive customer database, and Etess said it planned to promote Aqueduct much more heavily than Connecticut to the New York City market.

Etess said he's unsure why Paterson made the choice he did. "I would not want to speculate," he said. "I'm sure he'll have to explain it to the people."

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