“We’ve got the cash, we don’t need any financing, we’ve got the money existing in T-bills today,” Wynn said recently in New York City. “And we don’t have any partners or large groups of partners to please with diverse interest. Just us.” Wynn’s emphasizes his attention to detail, 40-year record of development success and existing financial resources. Wynn is on the offensive, his statement, “we’ve got the money” is in reference to previous successful bidder Delaware North, who failed to make their initial payment and the agreement was cancelled. Many of the other current bidders are consortiums.
The Pulse of Las Vegas November 4th Aqueduct update link.
New York State’s Governor David Paterson is apparently close to a decision that could change the face of south Queens, with a decision expected in early September.
In an interview on NY1’s “Road to City Hall” on Friday, Wynn laid out his plan which calls for a racino or a combination casino and race track, but Wynn says he doesn’t like that term.
“I don’t think they’re very pretty. And that’s why I haven’t done them before with my colleagues because they’re not places that people are dying to go to have fun,” Wynn said. “I’m thinking it’s time to reinvent this and to come up something that’s much better. And I figure if you’re going to do it, do it in New York City.” (The population of New York City is 8.1 million, the metropolitan area is 18.7 million people.) At one time Wynn was involved in the bidding for the racing franchise in New York, then held by NYRA (New York Racing Association). The state renewed the contract with NYRA.
Update – Monday October 26, 2009 – Kim Sinatra, General Counsel of Wynn Resorts, Defends Company to Crain’s New York Business
Crain’s New York Business: A Good Track Record – Wynn Resorts has Cash for Aqueduct Project
While Crain’s has a right to its editorial opinion concerning the Aqueduct project (“Best bet for Aqueduct project,” Oct. 12), it is disturbing that it is based on false analysis and inaccurate information.
We take particular issue with the reference to the Beau Rivage Casino in Mississippi having “faltered.” Beau Rivage is the highest-grossing casino in its market, maintains the highest room rate of any hotel along the Gulf Coast, and provides more in tax revenue to the state of Mississippi than any other single casino. In fact, the Beau Rivage currently outpaces the brand-new Hard Rock Casino, built less than a mile away.
Wynn Resorts’ 40-year track record of success in the gaming industry is not based upon “glitz.” Our success is based on attention to detail, keen financial analysis and a deep understanding of local regions. In every market where Wynn Resorts is in competition with the Hard Rock brand, we have outperformed them, producing approximately 10 times more in gaming revenue.
Moreover, Wynn Resorts recently completed an initial public offering of a portion of our Macau operations, generating proceeds of approximately $1.9 billion, giving us free cash for more commitment to New York. Bottom line: We don’t have to shop for credit.
Kim Sinatra
General Counsel
Wynn Resorts
Update – Friday October 23, 2009 – Delaware North says Contract Would be Complex, But They Could be Operational in Seven Months
Based on being a New York State company and their fast track approach Delaware North says they could be open first. The state desperately needs revenue, but would the quick approach provide the best facility? Penn Gaming took the long term approach at Penn National and it has worked (see story below) and Steve Wynn also wants to build a first-class facility, which would take time, currently projected at 20 months.
Thoroughbred Times reports: Delaware North: Aqueduct Casino Could be Operational in Seven Months
Delaware North Companies, whom the state selected for the project last October, said it could have up to 2,000 video lottery terminals operational seven months after signing a memorandum of understanding with the state.
Negotiating that contract, however, would take at least two or three months, once a gaming operator is selected.
“That’s the part that the other bidders skip,” spokesman Glen White said. “They have no idea of the complexities they would encounter.” The company says all 4,500 VLTs would be operational seven months after the first phase comes on line.
The company believes it could open a racino quicker than other bidders because it already has cleared many hurdles involved with last year’s selection process.
“We’ve included with our bid all the contracts, leases, and sub-leases to the state they’re going to need to finalize this,” said Ron Sultemeier, vice president of strategic development. “With already met with the Lottery Division [which oversees VLTs], their consulting engineers, along with the Queens and New York City building departments. Some bidders are out-of-state firms who have no familiarity with New York rules and regulations.
Update – Friday October 23, 2009 – Navagate Receives Endorsement from Minority Business Leadership Council
Update – Wednesday October 14, 2009 – Penn Gaming Operates Four Racinos and their Hollywood Casino at Penn National Gets High Marks
Will their experience and track record help to win the bid? They appear to have made very good decisions at Penn National and the racino is helping the track’s horse racing. Penn has bid $250 million in up-front payment.
Would Penn Gaming prefer to function in the racino environment, where they obviously have experience and success – and if they win the Aqueduct bid, forget about the Fontainebleau?
The New York Post reports: Pennsylvania Casino Blends Horse Racing Thrills with Gambling, Dining and Live Entertainment
Casino owner Penn National Gaming, Inc. took a big risk tearing down the existing structure to build a new one from the ground up, but the end result certainly has a wow factor.
Upon entering the casino you are immediately struck by the 77-footwide serpentine Daktronics board, similar to the one in Times Square, which can show everything from movies to sporting events to messages. Staying true to its theme, a red carpet runs circular around the entire casino floor.
On the racing side, the quality of the horses and riding colony is at an all-time high. In the less than two years it’s been open with slots, their purses have gone from averaging $65,000-70,000 a night to $170,000-175,000. According to the “Thoroughbred Times” it leads North American tracks in average daily purse growth — this year over 30 per cent.
When Penn National Gaming, Inc. chose to tear down the existing facility and rebuild Hollywood Casino at Penn National, it took quite a gamble, since neighboring racinos were already up and running with slots.
“You only have one chance to make a good impression. If people come in and they’re underwhelmed they won’t come back,” said Chris McErlean, Penn’s vice president of racing. “They chose to do it the right way. They did take a risk, but in the end it proved to be the right one.”
It was more than just wanting to look good, however. Penn National Gaming, now the third biggest gaming company in the country, agreed with the Pennsylvania act for slot machines, which talks about the relationship between racing and gaming. “The new building fit the spirit of the legislation,” said McErlean.
Penn National Gaming owns and operates 19 facilities, four of which are racinos, so they have experience. At another track they chose to retrofit the building rather than start fresh, which led to problems. This was not something it was going to repeat. Demolition began in April 2006 and, a few months later, construction began. During that time, horse racing never missed a beat, thanks to a temporary simulcast facility with a restaurant and a bar.
The new facility opened in February 2008, at a cost of $310 million. “People would not expect what they see at Penn National at a place in central Pennsylvania. I think it sets the benchmark for racing operations,” said McErlean.
Update – Wednesday, October 14, 2009 – NYRA says SL Green Best Prepared for Aqueduct Racino
While stopping short of a formal endorsement, New York Racing Association says SL Green Realty is best prepared to open Aqueduct’s racino of any of the firms bidding on the 30-year gaming contract.
“We know exactly what they want to do and we support their plan,” NYRA President Charles Hayward said Tuesday. “They’ve worked very closely with us, made numerous site visits with architects and engineers and gone over their marketing plans. We know how they would use the building, how racing and gaming would be integrated. All that’s been discussed in high-level detail. We really haven’t had those discussions with anybody else.”
“We’re not endorsing anybody, but we feel a high level of comfort with them,” he said.
SL Green, New York City’s largest commercial property landlord, is partnered with Hard Rock Entertainment and high-profile New York developer Jeff Gural in seeking the Aqueduct contract. Gural owns Tioga and Vernon Downs, two upstate New York harness tracks with racinos,
“If Governor [David] Paterson is seeking re-election, he needs to be cutting a ribbon at Aqueduct next spring, not a year from now,” Gural said Tuesday, at the International Simulcasting Conference in Saratoga Springs, New York. “We’ve said all along we could be open in eight months. We’re the only one that can do that because we were part of the first bidding process.”
By statue, the selection rests with Gov. Paterson, Assembly Speaker Sheldon Silver and Senate President Malcolm Smith, (D-Queens). However, Democratic Conference leader John Sampson of Queens is considered the Senate’s true power broker. He has been out of the country in Asia, meaning an announcement about Aqueduct may not happen this week.
“I think they’ll decide next week,” Gural said.
Analysts have generally considered SL Green and Wynn Resorts Limited of Las Vegas as front-runners for the contract.
The New York Post reported Monday that Paterson might be favoring Aqueduct Entertainment Group. Other firms seeking the contract are Penn National Gaming and The Peebles Corp., partnered with MGM Mirage.
Update – Tuesday, October 13, 2009 – Governor Generates Confusion in Aqueduct Bid
Two weeks ago, Governor Patterson said that AEG (Aqueduct Entertainment Group) could not be qualified to be licensed by the NT State Lottery Division because of problems with one of its partners.
Larry Woolf’s Navegante Group is one of the AEG’s partners along with influential Queens minister and former US Rep. Floyd Flake’s Empowerment Development Corp.
Last week the governor told people that AEG could be qualified for Aqueduct by the Lottery Division. There has been no change in the partners, so why the change? Somebody has some juice.
Perhaps someone forgot to tell Paterson that Flake has some high-powered local associates, including his congressional successor, Gregory Meeks, former state Senate Majority Leader Malcolm Smith and others.
There is no conclusive answer, and the NY Post examines the issue: Governor’s Casino Flip Stirs Fears of Rigging
Update – Saturday October 10, 2009 Wynn Resorts sells $500 Million in Bonds
As stated in the quote at the top of this post, Steven Wynn says “We’ve got the cash”. Certainly this acquisition of cash is a public show of strength as the award of the Aqueduct VLT contract reaches the home stretch, although no one knows if the field is at the 3/4 pole or the 7/8 pole.
Originally planned to sell $350 million in debt, this 43 percent increase indicates Wynn is planning for the Aqueduct project, the development of Encore Macau, and possibly a third Macau property.
In a related development, Wynn’s Macau casino company jumped 13 percent in its trading debut on the Hong Kong stock exchange Friday (link below).
“Wynn is amassing cash and liquidity, the show of strength — cash, the ability to raise cash and the valuations now inherent in the equity of its Las Vegas and Macau subsidiaries — make a strong case for what is expected to be a roughly $400 million to $500 million project.”
Earnings at Wynn Resorts have fallen for the past two years as the global economic slowdown hurt travel and spending its Las Vegas casinos and hotels. The company recently sold a 25 percent stake in Wynn Macau Ltd. in a Hong Kong initial public offering.
Wynn’s new notes will likely be rated Ba2 by Moody’s Investors Service and BB+ by Standard & Poor’s, Bloomberg data show. Bank of America Merrill Lynch and Deutsche Bank AG managed the sale.
Related – Wynn Macau Ltd. Shares have Strong Showing on Hong Kong Stock Market
Update – October 8, 2009 – More Details on Aqueduct Racino Bids Emerge
Although no date has been announced, we have to assume a decision on awarding the Aqueduct bid is nearing. The Governor’s office has not released any details on the bids or their terms and conditions, here are updates on the bids from news sources. Your handicapping is encouraged in Comments.
- Aqueduct Entertainment Group has reportedly bid a $251 million up-front payment. However, this bid is based on the state increasing the number of video VLTs to 7,650 from the current 4,500. This would require new legislation. This group includes Turner Construction, casino operator Navegante Group, Reverend Floyd Flake’s Empowerment Development Corp. and Douglaston-based Levine Builders.
Timetable: Phased opening, 1,200 VLTs next spring, full build-out by late 2010.
- SL Green has offered a $275 million up-front payment and an opening-day guarantee, according to spokesperson Rick Matthews. “We’re using plans that had already been developed and approved,” during the aborted 2005 Racino plan between MGM Mirage and the New York Racing Association (NYRA). “We are using the same architect. We have agreement with the building trades. If we don’t have this thing up and running in eight months, we have a ‘self-imposed penalty fee’ of up to $25 million – that’s how confident we are,”
Timetable: 2,000 VLTs within 8 months; remainder 18 months later.
- Aqueduct Casino Group, including MGM in partnership with mega-developer R. Donohue Peebles and others, has declined additional to comment on its bid.
Peebles’ group is promising significant benefit to the community, including the involvement of the Peebles Entrepreneurship Academy for local youth, according to spokesperson Kendall Pryles.
Timetable: 18 months after bid award.
- Steve Wynn entered the late with a $150 million bid but has aggressively doubled it to $300 million. Wynn Resorts says it would take 20 months to build 400,000 square feet of new construction with a racino, new food and entertainment venues.
Although taking longer to open, it says it would “swamp” competitors over the long haul by having a high-profile brand name that attracts both local customers and premium guests from throughout the metro New York region.
Timetable: 20 months after bid award.
- Penn National has confirmed a $250 million up-front payment and promises 1,000 to 2,000 VLTs up and running within eight months in a space inside the grandstand that will become part of the final operation. The balance of the 4,500 machines will be operational within a year after that.”
Timetable: 2,000 VLTs within 8 months; remainder one year later.
- Aqueduct Gaming offered the state a $300 million fee, but only $100 million upfront payment. The group includes Delaware North, the company that had won the deal last year and then stumbled at the finish line, unable to make its upfront payment in April.
Timetable: 1,200-1,500 VLTs within 8 months; remainder 7 months after.
Update – October 6, 2009 – Wynn Agrees to Allow Contract Arbitration
The Albany Times Union reports: Union Deal Aids Wynn Racino Bid –
Mogul Strikes Deal That Removes Obstacle from Getting Aqueduct Pact
As we reported earlier, Wynn would not agree to binding arbitration in union contracts, and the New York unions portrayed Wynn as an undesirable bidder, who would be unable to function in the city’s union environment (see earlier story below).
Also, as reported earlier, New York State is anxious for the revenue, last week Gov. Paterson reported that the budget gap for this year’s current budget has zoomed up to $3 billion from a recent report of $2.1 billion. Next year’s projected budget deficit is $4.62 billion in a base budget of $130 billion.
Steve Wynn’s bid to build and operate a giant racino at Aqueduct Race Track faces one less obstacle after the casino mogul reached labor peace with a hotel workers union.
A deal to allow contract arbitration with any union organizing racino workers was reached last week, according to representatives of the Hotel Trades Council and Wynn.
“There has been an agreement worked out,” said Neal Kwatra, political director for the Hotel Trades Council.
The deal puts Wynn on equal footing with three other bidders that have made labor peace with the unions: Delaware North, Aqueduct Entertainment Group and SL Green. Don Peebles/MGM and Penn National have not met the organization’s terms.
The Trades Council, with 30,000 members, worked on key elections last year, including wins by two New York City Democrats that helped flip control of the Senate. One of them, Sen. Joseph Addabbo, represents the district that includes Aqueduct.
“It’s big,” Addabbo said about the labor deal. ” … It shows in essence they can work with New York City unions and have a cooperative existence.”
The senator noted that Wynn still lacks a minority enterprise component of his bid team, and can’t erect a racino as swiftly as the other five bidders.
“They were trying to rectify both things as we speak,” said Addabbo. “Each bidder in my opinion has their pros and cons; no bidder is perfect.”
Addabbo said he was unsure if a deal will be announced any time soon because some key Senate leaders are traveling to China on Friday. A three-way deal among the Assembly speaker, Senate president and Gov. David Paterson is required on the 30-year Aqueduct contract.
The deal is desired by the state leaders to generate cash from the 4,500 video lottery terminals planned for Aqueduct. Also, bidders propose to give the state cash up front in the deal — as much as $250 million.
A Paterson spokesman could not say when a winning bidder will be announced, although the governor has said that a decision is near.
Update – Thursday September 1, 2009 – Two Current Bidders now in Lawsuit Involving Previous Bid – SL Green and Delaware North were once partners in Empire Racing Associates.
Crain’s New York Business reports: SL Green Gets Go-Ahead on its Aqueduct Suit - Developer Will Face Former Bid Partner Delaware North in Court
Manhattan’s largest landlord, SL Green Realty Corp., received a green light from a New York state court Thursday to sue Delaware North for damages over that company’s 2006 ultimately aborted bid to redevelop Aqueduct Raceway. Both companies are currently vying in a second round of bidding for the right to revive the Ozone Park, Queens racetrack.
In April, SL Green filed a lawsuit against the Buffalo-based company for breach of contract, breach of fiduciary duty and unfair competition during the initial Aqueduct bidding process, which began three years ago and ended in 2007 in a victory for Delaware North. Not long after winning, however, Delaware North backed out of its plans to redevelop Aqueduct claiming it was unable to come up with the cash to pay the state the hefty $370 million upfront fee it promised. On Thursday, the New York State Supreme Court’s commercial division dismissed Delaware North’s effort to have the lawsuit thrown out claiming it had no merit.
News reports indicate that Gov. Patterson and legislators are very close to making a decision. It certainly appears that SL Green is trying to discredit Delaware North? Another reminder of their prior inability to pay the upfront fee? Will this hurt or help SL Green in the current bid process?
In 2006, SL Green and Delaware North worked together as part of Empire Racing Associates, one of several groups that submitted a bid to the state to run Aqueduct and two other racetracks—Belmont and Saratoga—but that contest was stopped when there was a change in gubernatorial administration. At that point the New York Racing Association was given the contract to run Belmont and Saratoga, and companies which had submitted bids for the three tracks were asked to submit new bids for the Aqueduct racetrack. Delaware North severed its ties with Empire Racing, eventually submitted its own bid for Aqueduct and allegedly used information against former partner SL Green to win the bid in 2007.
“DNC unlawfully attempted to withdraw from Empire and submit its own bid,” said Mr. Ressler. In addition, “DNC misappropriated confidential information as a member of Empire.”
The lawsuit also claims that Delaware North used confidential financial information that SL Green shared with the firm as part of Empire to submit is own bid apart from Empire. The judge asked that the parties return next month to set a trial date.
Update – Wednesday September 30, 2009 – Gov. Paterson is holding meetings with legislative leaders in order to make a decision on awarding the VLT bid for Aqueduct. The prospect of a $100 million up-front payment from the selected bidder would help offset the severe budget deficit. The decision is not expected for at least two weeks.
Paterson, Assembly Speaker Sheldon Silver and Senate Conference Leader John Sampson met last week on the issue after a public leaders’ meeting focused on the need to find new revenue and cut spending to address a deficit of at least $2.1 billion.
Business First of Buffalo reports: More Support for Delaware North Aqueduct Bid
Delaware North’s headquarters are in Buffalo, NY.
One of the region’s most powerful union-led construction organizations is throwing its support behind a Delaware North Cos.-led consortium to land the lucrative Aqueduct Race Track development contract.
The Buffalo Building & Construction Trades Council is backing the Aqueduct Gaming LLC bid, primarily because the project’s general contractor, LPCiminelli, would land the construction contract. LPCiminelli is Buffalo’s largest general contractor.
“Based on my years of experience working with LPCiminelli, I can say that the downstate trades unions would be well-served if the company is involved with the construction of the Aqueduct gaming facility as is planned through their relationship with Aqueduct Gaming LLC,” said Paul Brown, Buffalo Building & Construction Trades Council president.
Brown’s letter is the latest from Buffalo area political and business leaders who are lobbying Gov. David Paterson on Aqueduct Gaming’s behalf. In August, Buffalo Mayor Byron Brown and the Buffalo Niagara Partnership began their efforts to help convince Paterson to select Aqueduct Gaming.
Delaware North took out a full-page ad in today’s Buffalo News as Paterson and state Democratic Party leaders gather in Buffalo for their annual convention.
Update – Monday September 28, 2009 Albany Times Union likes SL Green and Wynn – The Albany Times Union – Gaming Receipts Erratic Governor Patterson has not mentioned The Aqueduct racino in his recent public appearances but may announce a decision this week. Also, the newspaper is handicapping the two front runners:
As for the more immediate question of which company will win the right to build and operate the Aqueduct racino, the smart money is on SL Green, which has the operators of the Hard Rock Casino as part of their team, and Steve Wynn.
New York State leaders have expectations of receiving $400 million from the Aqueduct racino. However, as examined in a new report from the Rockefeller Institute, “Trends in State Revenues from Gambling” even in good economic times, the extra money states receive from casinos rarely matches the growth in state spending obligations. Casino, racino and lottery revenues are decreasing nationwide, it’s a short-term solution that doesn’t necessary solve the long-term, and ongoing, problem of state spending.
Rockefeller Institute Report – Trends in State Revenues from Gambling
Update – Monday September 21, 2009 – Fitch Ratings of New York, in a press release at 1:25 PM PDT: Fitch Details Potential Implications for Wynn on Hong Kong IPO & U.S. Debt Issuance
Excerpt:
Rating Outlook – Fitch continues to maintain a cautious outlook regarding potential deleveraging for corporate gaming operators in general and Wynn specifically, which is a factor in the company’s ‘B+’ IDR. While Wynn’s underlying credit profile and solid liquidity supports meaningful debt reduction, attractive growth opportunities, such as developments on the Cotai Strip in Macau or Aqueduct in New York (for which the company is currently a bidder), could restrict near-term credit improvement. That said, if these transactions were completed, Fitch would view them positively.The IDRs of the parent and subsidiaries are currently linked, in part because Fitch believes Wynn currently has adequate flexibility with respect to the flow of funds relative to subsidiary needs.
Fitch currently rates Wynn with a Stable Outlook.
Related – September 21, 2009 Wynn Seeks $1.63 Billion in IPO of Macau Casino Asset
Related Story – September 16, 2009 – Harrah’s Acquires Thistledown Race Track in Cleveland – Possible Racino
Update September 15, 2009 – Wynn or Lose Vegas Superstar Faces Uphill Race at Aqueduct.
Craine’s New York Business interviews Steve Wynn and handicaps all the race entries, with both their strengths and weaknesses.
The article’s author called Wynn a “debonair 67-year-old with a toothy 150-watt smile and a perma-tan.” For his part, Wynn touted the Mobile five-star and Michelin five-star rating earned by his company’s Wynn Las Vegas.
“I make people feel good and special. That is what I do,” Wynn said to Crain’s.
Despite the glowing comments, in Crain’s opinion Wynn has the longest odds of the six bidders because he wouldn’t open his facility until 2011, lacks New York connections, experience and partners and has strained relations with local unions.
Which bid has the best shot, according to Crain’s? The partnership that includes Las Vegas-based Navegante Group, which promises to open the casino by April 1, is touted to be the leading candidate.
Update – Sunday September 6, 2009 – Thoroughbred Times Reports – Aqueduct Gaming Operator to be Named After Labor Day
Excerpt
New York Gov. David Paterson promised Tuesday that an Aqueduct gaming operator would be named shortly after Labor Day.
Paterson said private consultants have advised him which group would make the best choice. However, the decision also requires approval from the state’s legislative leaders, Assembly Speaker Sheldon Silver (D-Manhattan), and Senate president Malcolm Smith (D-Queens).
“What is troubling about this process is that three people have to agree,” Paterson said. “Right after Labor Day I’m going to meet with the two other leaders and see how they reached their decisions and who they prefer.”
“This time we’re going to get this done quickly,” he pledged.
New York City Unions to Have Influence on Bid?
Steve Wynn, unlike his neighbor Sheldon Adelson at Las Vegas Sands Corp., has rarely been accused of being anti-union in Las Vegas. Specifically anti-hotel employee union, many of his Wynn and Encore property employees are represented by the Culinary Union, and Wynn did not oppose the union’s organization efforts. When he opened the Mirage, Treasure Island and Bellagio hotels they all had culinary union representation from day one. However, the Culinary Union is the only union representing employees at Wynn. Along with the Culinary Union, many other Las Vegas properties have agreements with the Teamsters and Operating Engineers unions.
Wynn, like all Las Vegas Casino companies has opposed unions for casino employees. Casino management’s conventional wisdom maintains that dealers need the threat of termination to keep them from cheating the house. The “old school” and ongoing management philosophy is that those employees handle large amounts of money and in order to maintain control management must hold their job “over their head” to keep them honest, and have the ability to fire the employee immediately without recourse.
In May of 2007 Wynn dealers voted for union representation with the New York based Transport Workers Union of America to negotiate a collective bargaining agreement, but have yet to reach a contract with the casino. Obviously, the casino is not in a hurry. On the eve of the election Steve Wynn spoke to a group of dealers, telling them it had been a mistake to implement a controversial change in the tip pooling program, which included some casino managers and supervisors in the employee tip pool that led to the employee unrest. NLRB regulations forbid him from making promises in order to sway votes so he stopped short of telling dealers he would eliminate the tip-pooling program. NLRB regulations forbid him from making promises in order to sway votes so he stopped short of telling dealers he would eliminate the tip-pooling program. Tip pooling, a story unto itself, is still in place, here’s the dealer’s website.
Labor: Wynn Plan Bad Bet
Hotel Unions Fail to get Pact with Las Vegas Gaming Giant Seeking Aqueduct Racino
Now, in a story reported by the Albany Times Union, Wynn is the only Aqueduct bidder to receive a failing grade when evaluated by the New York Hotel Trades Council, as a result of rejecting binding arbitration, a key union objective. The union recommends other bidders if the state wants to avoid strikes and picket lines during both construction and operation of the racino.
The union has reached agreements with AEG, SL Green, and Delaware North. Bidders Penn National and Don Peebles/MGM received “incompletes” after talks with the union leaders.
In a September 2nd interview with Cindy Adams in the New York Post, Wynn talked about his apartment in New York and familiarity with the city (he was born in Utica). In a recent quote from Sen. Joseph Addabbo, “Unfortunately, he’s never done anything in New York and he’s learning the hard way that it’s a union town.”
Excerpt
Union operators recommend the selection of another bidder if the state wants to avoid strikes and pickets at the proposed Queens operation, which is eligible for $250 million in building aid from the state to build the facility.
Wynn was the only bidder of the six contenders to receive a failing grade, said Peter Ward, president of the 30,000 member New York Hotel Trades Council.
“Wynn expressed philosophical opposition to certain core elements of a satisfactory agreement, which are included in the agreements reached with AEG, SL Green, and Delaware North,” Ward said. “It has been almost a week since the Wynn team has contacted us and at this point we do not have a satisfactory agreement in place.”
Neal Kwatra, political director for the council, said unions have been discussing an agreement with Kim Sinatra, Wynn Resorts’ chief lawyer, but she said the company cannot agree to binding arbitration — a provision that helps unions secure contracts.
“That’s the heart and soul of the agreement, the only assurance that there is labor peace,” he said. Sinatra and Wynn’s Albany representatives did not return calls. Paterson’s office had no comment.
It is unclear what impact the labor issue will have on Paterson’s deliberations, because the criteria for choosing the winning bidder has not been revealed.
“One piece certainly is the job factor, union and non-union factor, construction and non-construction,” said Sen. Joseph Addabbo, D-Queens, who has mixed feelings about Wynn’s plans for the track. “Unfortunately, he’s never done anything in New York and he’s learning the hard way that it’s a union town.”
Update – Saturday August 29 - The Albany Times Union reports – Governor Paterson: No Timetable for Aqueduct VLTs
Gov. David Paterson held a news conference at the foot of the clubhouse stairs after Saturday’s 10th race, at which he briefly touched on the long-delayed VLT proposal for Aqueduct. Paterson said all the bids are in and all the financial statements have been reviewed, but that hes still waiting for advice as to which is the best offer.
Update – Thursday August 27 - New Website – R. Donahue Peebles, Nation’s Largest African-American Real Estate Developer, MGM-Mirage Group Website – Aqueduct Casino
Latest News – Monday August 24 - One of the largest players in the casino industry, Harrah’s has now entered the race. The possibility of adding millions of people to it’s Total Rewards program may have led to Harrah’s interest, joining Delaware North and its partners in Aqueduct Gaming. See Delaware North, and link to press release, below.
New York racinos utilize VLT’s (Video Lottery Terminals). Resembling a slot machine VLT’s are connected to a central computer system that determines the outcome. Considered lottery devices under NY State law, the tax is 70 percent on gross gaming revenues.
The New York State Legislature legalized video gambling devices at racetracks in 2001. VLT’s were approved for five locations, including Aqueduct, Finger Lakes Race Track, Monticello Raceway, Vernon Downs, and Yonkers Raceway. The revenue is divided between the racetracks and the state and allows tracks to increase purses and attract better quality horses in races. VLT’s were later permitted at Saratoga Raceway (harness track) in 2004. VLT gamblers lost $123 million during the first 11 months of the 2008-09 state fiscal year, compared to $121 million last year,
4,500 VLT’s are planned at Aqueduct. Yonkers Raceway, north of New York City, has 5,300 VLT’s with daily revenues of at $1.6 million, an average of $300 per machine per day. Aqueduct bidders expect to beat those numbers.
Wynn’s current bid is $300 million, and he contends that with the high gaming tax, only an experienced, efficient operator can make money. Wynn’s plan is for all new construction creating a VLT gaming facility, a small stage for performances, a variety of dining and retail options and the “wow” factor: a beautiful 70 to 80 foot façade for the facility with a lake and other natural features framing the European style of the entryway. Does that sound familiar, see concept image above. The plan includes ample parking garages (estimated that 75% of the customers will drive-in), a 10-bay bus terminal and five entrances. The company said they met with the community board and integrated the board’s requests into their design. Job levels are estimated at 1,700 operational jobs and 1,000 union construction jobs.
Tom Breitling, a Senior Vice-President for Wynn Resorts subsidiary Wynn Las Vegas, said they can get a better bang from the facility because of their success in attracting high end customers, and their experience in design, construction, and marketing. Breitling said the VLT market in this area is estimated to be roughly $1 billion, but Wynn Resorts can bring in $1.5 billion, which would bring more money into the State’s coffers. The Wynn project also calls for a phase two, which includes a hotel, additional entertainment complexes and an expansion of the gaming facilities. “When it comes to credentials, nobody’s a close second to Steve Wynn,” said Breitling.
Wynn Resorts would pay the state $100 million immediately, another $100 million when the deal is closed and another $100 million over 30 years.
Aqueduct raceway, the “Big A”, a thoroughbred track, opened in 1894, was rebuilt in 1959, and saw three later renovations. It is in located the Ozone Park neighborhood in the borough of Queens. It has seen better days but certainly has the attention of numerous racino bidders. The track has been operating in the red by the New York Racing Authority for years, and the state expects the successful bidder to revitalize the entire site.
The bid process has gone through numerous twists and turns, which is not surprising to anyone who has followed the crazy activities of NY State politics, including this years renagade legislature, their ongoing annual budget problems, and the resignation of Gov. Switzer.
On Oct. 10, 2008 Democratic Gov. David Paterson and Assembly Speaker Sheldon Silver recommended that the state award the lottery terminal contract to the Delaware North Company. Senate Republicans announced that they would support the deal. Delaware North beat out two other competitors for the bid.
The contract included a commitment for an up-front payment of $370 million, money that legislators saw as a key tool to help close a big hole in the budget, which Paterson estimated as between $2 billion and $3 billion.
However, the weakened economy and tightened credit market prompted Delaware North to ask Paterson if it could delay the initial payment and make graduated allocations over a determined period of time. Paterson rejected that request.
On Friday August 12, Craines New York Business provided the latest update.
Bidders Up the Ante with Higher Aqueduct Offers
At least four of the six bidders on rights to bring gaming machines to the Queens racetrack increased their offers in a second round.
Four of the six groups bidding to revive the Aqueduct racetrack in Ozone Park, Queens have anted-up their offers to New York state. Bidders had until early this week to change their original proposals and submit them to Gov. David Paterson’s office.
A group led by Manhattan’s largest landlord SL Green boosted its offer to $275 million from $250 million, while the Aqueduct Entertainment Group, which includes prominent New York builder Turner Construction, said it will give the state $100 million on top of its initial $151 million bid if the state boosts the number of video lottery terminals to 7,650 from the proposed 4,500. Casino mogul Steve Wynn doubled his bid to $300 million from an initial proposal in June. And the group led by MGM Mirage and well known developer R. Donahue Peebles has also increased its bid, but the spokeswoman declined to elaborate. The group reportedly put in an initial bid of $150 million.
Mr. Paterson’s office did not return a call for comment, but a decision is expected to be made in a few weeks.
“Our increased offer is not conditional,” said Marc Holliday, SL Green’s chief executive. “We have provided a guarantee that even if there are delays in the opening we will provide the state a revenue stream in spring 2010.”
If AEG is selected, the group claims that it will be able to deliver the first 1,200 VLTs along with some restaurants and bars on April 1, earlier than its competitors.
Meanwhile, another bidder, Aqueduct Gaming, led by Buffalo-based Delaware North Cos., said it will give the state a $300 million licensing fee, including a $100 million upfront payment. The group would not say if this varied from its initial offer.
Rounding out the bids is one by Penn National Gaming for a reported $5 million with a conditional $150 million. Penn National could not be reached for comment.
Delaware North won the rights to redevelop the 210-acre site, but backed out late last year when the recession impacted its ability to come up with the cash to pay a hefty $370 million upfront fee.
“Our belief at the end of the day is the best project for New York state is the one that generates the most revenue over the term of the license,” said Andrew Pascal, president of Wynn Encore, which has proposed to build a glitzy casino-style project. “We are clearly the right choice,” he added, referencing Wynn’s success in Las Vegas and Macau.
So far, none of the bidders have come out as an obvious frontrunner, however, AEG, Wynn, and SL Green, which includes Hard Rock International, have generated the most buzz due to local recognition and their respective brands.
AEG includes The Navegante Group as well as Rev. Floyd Flake’s Empowerment Development Corp. and Queens developer Levine Builders.
“AEG believes we can maximize revenue production from the VLT’s equal to or greater than any of the other applicants,” said Larry Woolf, founder and chief executive of Navegante, in a statement.
Navegante runs the Sahara, three casinos in Elko and Reno’s Grand Sierra. The partnership also includes Siemens AG, a worldwide technology firm; architectural and construction firms; and a green-building strategist.
Delaware North
In December of 1992 not many people had not heard of Buffalo, NY based Delaware North, and they way they first heard of the company was a surprise. The National Park Service awarded the company the contract for hotel, restaurant and other visitor services at Yosemite National Park, the largest and most important concession in the National Park system.
The Curry Company, with a long and history in the park, had a 30-year-contract, which expired in 1993. It provided the park service less than a penny for every dollar spent. Annual sales at the park are about $90 million.
Delaware North’s 15-year agreement, was estimated to increase the annual revenue to the park service to about $20 million from $700,000 and set the standard for all new concession contracts in the system. Under the new contract, the park service will receive 25 cents for every dollar spent in the park by visitors.
In 1992 Delaware North, a Buffalo-based holding company had $1.3 billion in annual sales, operating concession services at professional sports stadiums and arenas and at airports as well as at 11 dog and horse racetracks the company owns and operates.
Today Delaware North positions the company as a global leader in hospitality and food service, with a $2.2 billion gross and 50,000 employees, with operations in sports venues, airports and transportation, hotels and resorts, gaming and racing, parks and attractions, conference and convention centers, and specialty venues.
Delaware North, although they won the initial contract and failed to raise the necessary financing, could be a formidable force in the bid competition, and you can understand why Wynn has specifically targeted them.
Delaware North, a New York State company, is the lead partner in the Aqueduct Gaming consortium that includes Saratoga Gaming and Raceway and McKissack & McKissack — the oldest African-American, woman-owned professional design and construction team in the U.S.
Press Release – August 24, 2009 Aqueduct Gaming Announces the Addition of the Harrah’s Brand to Its Plans for Aqueduct
NEW YORK, Aug. 24 /PRNewswire/ — Aqueduct Gaming LLC announced today that Harrah’s, one of the most respected names in the gaming world, has joined its team. Harrah’s will be involved in the development of the multi-faceted plans to bring a world-class, neighborhood-friendly gaming and entertainment destination to Queens.
With the agreement, Harrah’s Total Rewards(R) player loyalty program will be available to customers of the planned Aqueduct casino. Harrah’s Total Rewards is the largest casino customer loyalty marketing program in the world and includes several million participants who live within 100 miles of Aqueduct.
“We’re very excited to bring Harrah’s brand strength to our team for this project,” said William Bissett, president of Delaware North Companies Gaming & Entertainment, a leader in the coalition of New York companies comprising Aqueduct Gaming.
Bissett said Aqueduct Gaming estimates that adding the Harrah’s brand and Total Rewards program will produce an additional 10 percent in tax revenue for New York State over the previous estimate.
“We’re very excited about the prospect of joining forces with Aqueduct Gaming in aligning the gaming industry’s premier customer-loyalty program with this storied New York racetrack,” said David Norton, Harrah’s senior vice president and chief marketing officer.
“We believe our brands will compliment each other in this dynamic market. This will be one of the first of several efforts to extend Total Rewards into areas beyond our traditional casinos in an effort to provide additional value for our millions of customers in areas such as New York City,” Norton said.
Wynn indicated they met with the community board and generated their design with their feedback. Aqueduct Gaming commissioned a poll by the Siena Research Institute. Reaction from residents of Queens helped shape their development plans. Much of what the group wants to add to the complex is coming directly from the responses it received from the SRI survey.
The hotel will not be constructed without further community input “What the Siena poll says is that Queens residents clearly don’t want overdone Las Vegas-style development that would clash with the neighborhoods around the venue,” said William Bissett, Delaware North Gaming & Entertainment president. “Three out of four residents said so.”
Aqueduct Gaming has promised to maintain top-notch security for the complex’s guests and nearby residents while making a concerted effort to hire as many Queens residents as possible. Aqueduct Gaming has agreed to create a neighborhood foundation, with local residents serving on its board, to make Queens-specific allocations. A day-care center and children’s arcade will be constructed to serve the racetrack’s employees and guests.
“The poll has confirmed our belief that the people of Queens deserve a project that is the right size and will enhance and not detract from their community,” Bissett said.
Aqueduct Concept Delaware North
Related Stories:
Chinese Crime Connection Found for Aqueduct Casino Bidder
New York Daily News Sunday, August 23rd 2009
The Ties That Bind In Aqueduct VLT Parlor
New York Daily News, Thursday August 20, 2009
A law firm hired by the Paterson administration to help with a proposed video slot machine parlor for Aqueduct Race Track has ties to one of the bidders for the project, DN Capitol Bureau Chief Ken Lovett reports.
Paterson’s office recently hired the lobbying/lawn firm Manatt, Phelps & Phillips for legal work dealing with the project. The firm is to be paid up to $600,000.
The firm, which employs 2006 GOP gubernatorial candidate John Faso, has represented Buffalo’s Delaware North Companies, in unrelated matters out of state.
Take The Blinders Off: Aqueduct Deal Must Be Made In Public
New York Daily News Monday, August 3rd 2009
Off To Races On Aqueduct Redo Plans
New York Daily News Thursday, July 23rd 2009
