At yesterday's meeting of the NJSEA, the lease for the Meadowlands was formally adopted. The lease is for 31 years with the annual rent for the track; $1 for the first five years at which point Gural has an escape clause. Should the clause not be exercised, the rent will be a minimum of $500,000 a year. If casino gambling comes to the racetrack, New Meadowlands LLC gets the right to operate the slot machines. But what if gambling comes to the Meadowlands, but not at the track? Gural gets to walk away and recoup 110% of the cost of capital improvements which will include the construction of a new grandstand, parking area and other improvements made. The NJSEA will spend $6 million on remediation costs in the backstrech area, to make the area environmentally safe. Jeff Gural is also required to complete an OTW facility in Bayonne, NJ which is not a problem as construction has already been underway.
The state will be New Meadowlands LLC, $5.5 million for expenses through the end of 2012 with the amount to be repaid to the state over a period of five years starting in 2013. What expenses that addresses is unknown. Perhaps it can be used for purses. This $5.5 million does not represent the environmental remediation costs.
As previously reported, the NJTHA has the right to participate in a six day mixed meet in the spring at the Meadowlands and the option to hold a fifteen day turf meeting in the fall-early winter period.
As for Monmouth, the situation is a little more dicey. The NJSEA will run the meet at Monmouth for one more year but without guaranteeing purses. At the assistance of the NJTHA they will run a 141 day meet which means horsemen will be taking a serious cut in purses of roughly 63%. The NJSEA is to start the rebidding process next month to get Monmouth leased with purses being guaranteed at $500,000 a day for a seventy-one day meet. The presumption is if a lease is not completed in 2013, the venerable track by the shore would be shuttered.
By the time you read this, the Meadowlands is now being operated by New Meadowlands LLC. According to John Brennan, reporter extraordinaire for The Record, an agreement with the teller's union has been completed with a few minor contracts to be resolved next week.
Make no mistake, if (read that when) casino gambling comes to the Meadowlands, it will be part of the racetrack facility, especially if it comes while Governor Christie is in office. Make no mistake, the Governor will not be looking forward to paying $110 million (and possibly more) as called for by the lease agreement.
8 comments:
The 110 percent of capital improvements does not equal $110 million UNLESS $100 million is ACTUALLY spent on capital improvements. To date that money hasn't been raised.
Why?
My guess is because no one knew if the deal was going through. My guess is if people are thinking slots are coming to the Meadowlands eventually, Wall Street will be handing the money over soon enough.
Pacingguy,
Wouldn't you think that the risk of putting out $100 million with at most a 10 percent return on investment over 5 years may not excite the large investor?
This agreement DOES NOT guarantee machines at the racetrack. It only guarantees a return on investment of 10 percent should slots come to the Meadowlands and not the racetrack. Don't you think if the casinos were capable of supplementing harness racing with no gains for the last five years, that they'll have no problem paying off 10 percent above the investment so that they DONT have to compete directly with racetrack slots?
The 110 percent is a slippery slope. If money is raised and not spent, a return is not guaranteed. My guess is that no construction on a new faciity will begin until talks speed up in Trenton towards the inevitable casinos in East Rutherford.
You have to believe any prospective investor was aware of what the deal was going to look like. There's a Catch-22 in the language. The 110 percent is based on money already spent. Not just money raised. To effectively get a return on investment this money is going to have to be spent BEFORE casinos are legalized at the Meadowlands. Thus the Catch!
Gural is on record he thought the deal could have broken down as late as last Monday until the thoroughbred interests compromised.
If he thought that, would an investment bank lend him money for a project which may not happen?
Slots are coming to the Meadowlands; it is a question of when. With NY looking to add table games to their racinos, what reason would Northern NJ residents, the most dense part of the state have to go to Atlanic City? There will be no differentiation between Yonkers and Harrah's.
It is not a question of if, but when. I will grant you, it may be a case of scaling back the new grandstand building it with the anticipation of expansion when slots come to the Meadowlands.
One last thing, do you think Christie would put the state at risk of having to pay 110% if he didn't think casinos at the racetrack was inevitable?
I would not expect the state to pay any of the money. Remember they have to legalize gambling at the Meadowlands or anywhere else in NJ outside of Atlantic City. All that needs to be done is to pass on the additional expense to the Casino interests. If two or three casinos are approved for the site, the winners of the bid to build and operate simply pay off Gural and company to "Not Compete" with them. The problem, as I've stated, is that the sum of that money is based on "actual" capital improvements and not projected. Meaning it could end up being a very small amount of money that is required.
And please let us not forget that NONE of this necessarily would guarantee enough money to provide for a return to the brand of racing the Big M enjoyed in the 80s and 90s.
Now that the State has provided a private entity a lease to manage and operate, what are the responsibilities of each under this lease, and what protection does the tourist or standard consumer have with respect to liability while on premises. How and who protects us in case of injury ?
Post a Comment