http://www.crainsnewyork.com/article...FREE/911029992
Aqueduct bidders told to ante up even more money
November 2, 2009
The bidding to redevelop Aqueduct racetrack into a “racino” has entered yet another round: Gov. David Paterson sent a letter late Friday to the six bidders asking each to provide proof it can pay the state $200 million upfront within 30 days of being selected.
The request would mean a revision of most of the bidders' original plans to revive the rundown racetrack by installing video slot machines at the site in Ozone Park, Queens.
Only one of the half dozen bidders—Penn National Gaming—had proposed to pay the state $200 million upfront. Other bidder groups, such as one headed by Manhattan's largest landlord, SL Green, and another by casino magnate Steve Wynn, ponied up $125 million and $100 million upfront, respectively, with more money as the project progressed.
Sources say the latest request—the second change in the rules in less than three months—will likely winnow down the list of potential bidders in the race.
Bidders have until Friday, Nov. 6 to reply to the letter. Mr. Paterson's office did not comment immediately.
So far, only two bidders say they will reaffirm their bids this week. A group led by MGM Mirage and developer R. Donahue Peebles said it has already provided the state evidence that it has the money to develop the racino and called the letter a positive step in the process.
In addition, Christopher McErlean, vice president of gaming at Penn National, confirmed: “We did receive a letter. We are comfortable with our bid and will be reinforcing our commitment.”
The bidding process has been relatively closed to the public since the state started accepting proposals in July. But since then, the bidders have willingly shared much of their plans to revive the 210-acre site.
Bidders were allowed to up their bids in August, an opportunity that several took advantage of. And just last month, Mr. Paterson mentioned in a speech that there were issues with gaming licenses and the financial soundness of some of the bidders. Mr. Paterson, along with Assembly Speaker Sheldon Silver and the Senate president, selects the winner.
The latest wrinkle suggests the state may be trying to avoid a repeat of last year's experience with the original Aqueduct winner, Delaware North. The group, which is currently bidding on the project again, initially won the right to redevelop Aqueduct but backed out late last year when it could not come up with the cash to pay the $370 million upfront fee it had promised the state.
Collecting $200 million from the winning Aqueduct bidder this year is also part of Mr. Paterson's two-year, $5 billion deficit-reduction plan, which the governor unveiled last month.
While Mr. Wynn offered the largest overall payment to the state of $300 million, he offered only a third of that money upfront. Similarly, SL Green, whose partners include Hard Rock International, offered a total of $275 million with just $125 million upfront.
Sources say both bidders have the financial means to meet the new requirement. The question is whether they will want to amend their plans yet again. SL Green and Mr. Wynn did not comment.
The remaining bidders, Aqueduct Entertainment Group (which includes Turner Construction and the Navegante Group) and Delaware North, also did not comment.
In its bid, AEG said it will give the state $100 million on top of its initial $151 million if the state allows it to boost the number of video lottery terminals to 7,650 from 4,500.
Delaware North offered an upfront fee of $100 million and $200 million within 27 months of opening the permanent facility.