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Monday, February 14, 2011

A Realistic Look at Keeping the Meadowlands Open

The Record has an article today regarding Jeff Gural's attempt to keep the Meadowlands open.  Much of what the article reports is nothing new.  Perhaps the newest piece of information is Gural's belief that the purse enhancements the NJRC is allowed to give will likely never occur due to the Governor's veto power and the estimate to build the new grandstand now stands at $70 million (about a $20 million increase from what is previously reported).  Add in the reported $30 million for the 4 OTW sites, you are looking at financing $100 million.

Those who have been confident that Gural will reach a deal may be overly optimistic.  The unions realize what is at stake and will work with Gural.  The horsemen will work with Gural.  The question which may sink the whole deal may be where will the $70 million in funding required for a new grandstand come from?  Will Gural be able to get investment banks to provide this type of funding for a facility which will offer no casino gambling in the foreseeable future?  While the industry is willing to work with Gural on sentiment and reputation, Wall Street deals with cold hard facts which means numbers.  To convince the investment banks to provide funding for the Meadowlands, Gural will need to show the Meadowlands can make a profit once again.  As such, I give the possibility of the Meadowlands surviving after April 1 a 50-50 chance; and this may be optimistic assessment.

There has been a small group of people in the industry (primarily horsemen) who have suggested previously the SBOANJ go it alone without Gural and lease the track for the $1 a year.  Oh, if it only would be so simple.  The $1 lease a year for five years would only would give the SBOANJ the right to operate a meet at the Meadowlands, and not cover the expenses it would be liable for and who knows what the lease amount would be after year five?.  It would require the SBOANJ to continue to race with a large cavernous grandstand which besides being grossly underused and starting to run down, is very expensive to maintain and requires more manpower to keep it operating over the term of the lease.  With horsemen organizations' record of having success running horse meets (there are none in recent times), there is a good chance the SBOANJ would never make it through a five year lease; lucky if they completed the first season without filing for bankruptcy. The final nail in the coffin of this idea should be the SBOANJ was getting nowhere with their negotiations with Christie.  They were two days away from the Meadowlands being closed for good.  It took Jeff Gural to keep the doors open for the winter meet.  It will be Jeff Gural if the Meadowlands opens on May 7.

This current Meadowlands meet has wagering down quite a bit due to the poor quality of the racing in the fall.  Could you imagine how much further handle would go down if the SBOANJ attempted to go it alone?  The stanardbred industry would be on hold for the next five years as the Meadowlands attempted to scrape by and come year six we would be in the same situation.  With Jeff Gural, the industry will know pretty much where it stands in the next month or so and will be able to act accordingly.  Inaction for five years will only put the industry in a worse situation.

Like it or not, the key to the survival of the Meadowlands  depends on Jeff Gural.  Anyone who thinks a rescue can take place without Gurl does not understand the situation we are in.  If Gural fails, people will blame him for the end of racing at the Meadowlands, but without him, the Meadowlands would have been DOA in December.  This is the last best chance. 

1 comment:

The_Knight_Sky said...

I am surprised there have been no other offers for The Meadowlands racetrack from people other than Mr. Gural.

Given the vast amount of simulcasting revenue, expanded OTW facilities and the fact that revenues from the racetrack will not be used for purposes other than horse racing, it may be worth hanging on to the life-raft for a few years.

Slots revenue just has to come to The Meadowlands before the end of the decade. Atlantic City Casinos are almost certain not to improve their business in the interim. Every year of delay costs everyone an awful lot of revenue.