SBD/May 1, 2012/Facilities

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  • Two NYRA Execs Placed On Unpaid Leave Amid Reports Of False Takeout Rates At Tracks

    E-mails show Hayward knew of the overcharging back in August '11

    The New York Racing Association BOD yesterday announced the Exec Committee has placed President & CEO Charles Hayward and Senior VP & General Counsel Patrick Kehoe on administrative leave without pay, pending further review. The decision follows the April 29 release of the New York State Racing & Wagering Board’s interim report into the matter of incorrect takeout rates at the tracks (NYRA). The DAILY RACING FORM’s Matt Hegarty wrote the suspensions come “after the release of a state report challenging claims by the association that it was unaware late last year that it had been incorrectly applying a higher takeout rate to its trifecta and superfecta bets.” The decision by NYRA “underscores the seriousness with which the allegations in the report are being viewed.” NYRA Chair Steven Duncker said that the association “will issue a response” to a letter from New York Gov. Andrew Cuomo’s office, and to the allegations in the report by May 4. The report “called into question a statement by Hayward that the association had made an ‘inadvertent error’ when it applied the wrong takeout rate" (DRF.com, 4/30).

    ON THIN ICE: Cuomo yesterday called the findings of the racing board “shocking” and said, “If the facts are correct, they’re very troubling, to say the least.” Asked about Hayward’s future at NYRA, Cuomo said, “Let’s get the facts first. But if the facts are correct, it’s a problem” (BLOODHORSE.com, 4/30). In Albany, James Odato notes Hayward was “already on thin ice with state authorities for a series of missteps in dealing with government leaders,” and again he now “finds himself in serious trouble.” E-mails collected by the racing board's investigators show that Hayward “had known about the overcharging since at least August 2011” (Albany TIMES UNION, 5/1). The AP’s Michael Gormley noted NYRA is one of the state's “most enduring political powers, holding the racing franchise since 1955.” The state in ‘08 awarded “another 25-year franchise to NYRA, even though it was in bankruptcy proceedings at the time.” NYRA in exchange “dropped its claim to the land on which the tracks are located and collected $105 million from the state to avoid bankruptcy” (AP, 4/30).

    TAKING ACTION: The N.Y. TIMES’ Drape & Bogdanich report the New York State Racing & Wagering Board yesterday “limited the size of the purses offered in races involving cheaper horses.” It acknowledged that “fattened purses, many of them being offered at racetracks where casinos had been opened in recent years, had created a dangerous incentive to push sore or unfit horses onto the track.” The board said that racetracks “could not offer purses greater than twice the assigned value of the horses running in any claiming races.” Drape & Bogdanich note the board “made its announcement on the same day that The New York Times published an investigation that showed how richer purses had created an incentive for trainers to run unsound horses.” Revenue from the recently opened Resorts World Casino at Aqueduct “had increased purses by about $130,000 a day” at NYRA’s tracks, including Belmont Park, Aqueduct and Saratoga (N.Y. TIMES, 5/1).

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  • Heat Still Not Paying Rent At AmericanAirlines Arena Despite LeBron's Boost To Revenue

    AmericanAirlines Arena operator has a cumulative gain of $13M since James' arrival

    Despite a surge in revenue at AmericanAirlines Arena since the arrival of Heat F LeBron James, Miami-Dade County “has yet to collect rent on the county-owned facility," according to Douglas Hanks of the MIAMI HERALD. Three key clauses in a '97 profit-sharing arrangement agreement with the Heat have kept the county from “recouping any dollars directly from the arena.” The first clause allows the arena to "accumulate losses for years when expenses exceed revenue from ticket and concession sales, arena sponsorships, concerts and retail rent.” Those losses "accumulate interest, and the overall tab peaked" in '05 at $46M. The second clause allows the Heat to “pay itself back for the construction cost" of the $213M arena each year before sharing profits with the county. The paydown schedule “now amounts to about” $14M per year. Third, the arena may keep the first $14M of profits "before sharing” with the county. James’ arrival has helped generate “enough ticket sales to move Miami-Dade closer to recouping some" of the $70M it has paid the arena in subsidies since '00. County documents and figures from the Heat show the team’s sister company, Basketball Properties Limited, which runs the arena, “posted a cumulative loss" of $22M from '00-10. Since '11, it has "recorded a gain" of $13M. The Heat also pay the arena 5% of the revenue "collected through regular-ticket sales minus various fees charged” in selling to fans, which allows for a “pretty precise calculation of how much money” the team makes selling tickets during a good season. But slower seasons "are another matter, since the Heat shares at least $1.5 million with the arena each year, no matter what."

    MORE LEBRON IMPACT: Hanks noted James' arrival has "unleashed an explosion in beer sales and ticket revenue, and triggered a huge increase in sponsorship dollars" at the venue. Sales from food and drink are up 78% since the '10-11 season, while revenue from premium seats is up 53%. Because of how Heat Owner Micky Arison “divided up the business as part of the negotiations” with the county, the arena “essentially shares profits on only the premium seats.” The Heat have also jumped from the 15th-best attendance in the NBA to fourth-best this past season. Sponsorship dollars at the arena this season are “budgeted to surge a stunning 80 percent in the course of three years” after reaching a low of $4.2M in '09 (MIAMI HERALD, 4/28).

    Print | Tags: Facilities, Miami Heat, NBA
  • Sign O' The Times: NFL Cardinals Want To Build Digital Billboards Around Stadium

    The NFL Cardinals "want to erect digital billboards around the University of Phoenix Stadium in Glendale,” according to Mike Sunnucks of the PHOENIX BUSINESS JOURNAL. The team owns the parking lots and property around the stadium and has "long-term plans to develop garages and commercial buildings there.” Those prospecitve buildings have “existing approvals for large signage and billboards.” Cardinals President Michael Bidwill and other team reps “didn’t say how much might be spent on the new billboards.” The signage would add the Cardinals to the “competitive and lucrative local digital billboard marketplace,” which includes the Suns and D'Backs. The Cardinals’ billboard play comes “as the team has threatened to sue the city of Glendale over parking space" at the stadium and Westgate City Center. The location of the billboards “could run into state and local restrictions on electronic billboards adjacent to freeways," as Glendale city planners “have turned down some previous electronic billboard proposals” near Univ. of Phoenix Stadium. The signs “could be an issue in the Cardinals’ negotiations and potential legal dispute with Glendale officials over parking for football games.” A contract among Glendale, the Cardinals and the Arizona Sports & Tourism Authority states that the city "must provide 6,000 spaces at Westgate that also can be used for Phoenix Coyotes and Cards games.” The Cardinals "recently threatened to sue the city after Glendale allowed 3,700 Westgate parking spots to be demolished for Tanger Outlets’ construction of a 328,000-square-foot mall” (PHOENIX BUSINESS JOURNAL, 4/27 issue).

    Print | Tags: Facilities, Arizona Cardinals
  • Angel Stadium Taps Into Demand For Local Products By Introducing Craft Beer

    The fans at Angel Stadium are "getting a taste of the Inland Empire with the introduction of Hangar 24 beers into the concession lineup," according to Tiffany Ray of the Riverside PRESS-ENTERPRISE. The brewery based in Redlands, Calif., is "one of two local companies that were invited into the stadium this year to join the list of premium beers." The move "taps into booming consumer demand for locally sourced products and services, and for high-quality craft beer." Aramark-Angel Stadium Premium Services Division Manager Jeff Grupe said, "The craft industry as a whole is really starting to grab on. That’s what people are asking for." Hangar 24 is "on tap in the stadium’s private Diamond Club and the Knothole Club, which is open to the public." It also is "available at the Draft Pick brewing concession near Gate 2 and in sections that offer in-seat service." It is "being sold by the bottle in stadium suites." Grupe said that the craft brewers "already are rivaling stadium sales of Blue Moon and Stella Artois." He added that he is "considering adding portable sales sites around the stadium at midseason." Ray notes Angel Stadium "isn’t the only sports venue clueing in to the craft-brew trend." San Diego area brewer Stone Brewing Co. brands are sold at Petco Park, and a "selection of craft beers from the Frederick, Md.-based Flying Dog Brewery is offered at Oriole Park at Camden Yards." Also, Indianapolis-based Sun King Brewing Co. this year "was named the official craft beer" of the Triple-A Int'l League Indianapolis Indians (Riverside PRESS-ENTERPRISE, 5/1).

    Print | Tags: Los Angeles Angels, Facilities
  • Facility Notes

    SMG protesting JPA's decision to negotiate with AEG for arena contracts

    In San Jose, Angela Woodall notes SMG “issued a 10-page complaint protesting the decision” by the Joint Power Authority to negotiate with AEG for the O.co Coliseum and Oracle Arena management contract. SMG’s lawyers “cited ‘substantial irregularities’ during the April 20 board meeting, when JPA commissioners voted 4-3 ... to choose AEG.” SMG in the complaint asks the JPA to “withdraw their decision and select a bidder for the five-year contract in a ‘legal, transparent and educated manner.’” The board has 30 days to act, and if it refuses, SMG could “ask a judge to decide” (SAN JOSE MERCURY NEWS, 5/1).

    NO HORSEPLAY: In New Jersey, John Brennan notes Hialeah Park Owner John Brunetti yesterday “withdrew his legal protest of the state's decision to turn over operations of Monmouth Park to the Thoroughbred Horsemen’s Association." The truce comes less than two weeks before the resumption of racing at Monmouth Park, which the state has run since the mid-1980s, “but in recent years had lost millions annually in on-track operations.” Brunetti had been proposing a “thoroughbred racing joint meet” between Monmouth Park and Hialeah Park (BERGEN RECORD, 5/1).

    MOVING FORWARD: In Ottawa, Dan Reevely reported the Ontario Court of Appeals yesterday ruled unanimously that the city “legally entered a partnership” with Ottawa Sports & Entertainment Group for the redevelopment of Lansdowne Park. The three-judge panel's unanimity means Friends of Lansdowne, which filed the complaint, doesn’t have an “automatic right to an appeal to the Supreme Court of Canada.” Friends of Lansdowne President June Creelman said that the group “hasn’t made a quick decision about an appeal, but hopes to decide in the next few days” (OTTAWA CITIZEN, 5/1).

    WHAT’S ON YOUR MIND?: In Canada, Terrence McEachern notes the Regina City Council yesterday “approved a much anticipated status update” on the estimated C$1B inner-city revitalization and new stadium project. Unfinished aspects of the project are “the cost and design concept for a new stadium, gaining final approval from council on the proposed P3 funding model for the project, hiring a developer to complete the work and determining a plan for operating the new stadium.” Construction on the new stadium is “expected to begin in 2013 and completed in three years” (Regina LEADER POST, 5/1).

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