THE NEW YORK RACING ASSOCIATION, INC. 2010 UPDATE Prepared for: The Saratogian Monday, July 19, 2010NYRA 2010 UPDATE ML MM. Vi. VIL Vill. TABLE OF CONTENTS: Franchise Agreement Franchise Transactions Payments to State Video Lottery Terminals (VLTs) Revenues Significant Revenue Opportunities for NYRA Racing Summary 2009 Saratoga 2010 Other Significant Issues Questions & Answersand I. FRANCHISE AGREEMENT Gai Negotiations With passage of legislation in February 2008, negotiations initiated for creation of franchise documents including the Franchise Agreement, leases, omnibus agreements, and settlement agreements, Negotiations included representatives from offices of the Governor, Attomey General, ESDC, DOB, OGS, Racing & Wagering Board, NY Lottery, NYS Assembly, NYS Senate & NYRA, and were finalized in September 2008 Franchise Agreement: Section 2.8 “Operational Support Payments, New NYRA and the Stale agree that, in the event that VLT Operations are not scheduled to commence at Aqueduct on or prior to March 31, 2008, the State and New NYRA shall negotiate in good faith to provide New NYRA with payments necessary to support racing operations and salisfaction of New NYRA operating expenses, including, without limitation, the payment of New NYRA's pension plan obligations, until the commencement of VLT- Operations at Aqueduct.” Franchise Agreement: Section 2.9 ‘Capital Expenditures. New NYRA and the State agree that, in the event that VT Operations are not scheduled to ‘commence at Aqueduct on or por to March 31, 2009, the State and New NYRA shall negotiate in good faith to provide New NYRA with payments necessary to support New NYRA's capital expenditures In maintaining and upgrading the Racetracks.ll, FRANCHISE TRANSACTIONS Franchise Agreement Paragraph I: NYRA irrevocably relinquished and conveyed Properties, all improvements thereon and all physical assets appurtenant thereto, including, without din the Deeds ‘consideration for and in reliance upon the following tunderlying the Racetracks, each as descil State of New York NYRA Cash & Non-Cash Consideration of Old NYRA's right, title and collectively, the &h to and under the ()) Racetrack ion, the land “Transferred Property") to the People of the NYRA Assets Transferred to State (emions) (ir mitons) 1) Franchise Sttamant ash Conldaaton $1050 Aquatic Racoack s aes 2) Noneash Consideration Botmort Pan si20 | Thocoughbed Capa IvesentFurd CO} : CChaper 1 Debior i Possession Loan (DIP) a0 Sarsoga 059 LUrtan Develpmert Corp Loan (UDC) uo Iv Stateotley Loan 62 ola Assets Transferred. “EHSTH Outstanding Tickts 27 Facng & Wagotng Board Tae 02 ‘ube Noone Cansieaton oT 3) Now Yor Slate's bigaon to nego o provide operating seo mpmase Netws real mveeiment funsng IVT Foe Fi) PIR st tes at ay nti 36h ist opened by Ap, 2000" (vam oot on 2 nt eras fence Asana Pgs? Seton: mtn) gore ow ‘ivan Torres par poate eet Now open peace thar Eat pape ot is pan tr aa) et penis ara Po Se {rp tt ety Ta a Pvt ‘5 torn i Rag Law od oS oon You Taro todo ‘gota nf noe armamentIl, FRANCHISE TRANSACTIONS NEW YORK STATE & NYRA SETTLEMENT TERMS NYRA Chapter 11 Payments to Creditors (ie mitons) Franchise Settlement Cash Consideration $ 105.0 Chaptor 11 Reorganization Payments: Nassau County Real Estate Taxes 26.2 Pension & Other Retiree 25.0 Accounts Payable (Trade) 119 MGM Note / Aqueduct VLT Pro-construction Work (2003), 70 New York City Real Estate Taxes ...... : 47 Legal & Restructuring Fees 27 Port Authority Note 14 US. Treasury 10 Mutuels Contract Settlement 06 ‘Sub-total Reorganization Payments 30.1 Not Cash to Fund NYRA Operations roemae I. FRANCHISE TRANSACTIONS wy NYRA FINANCIAL OVERVIEW NYRA Operating Cash Flow Gemitons) 2008; 2008 2010, Not Cash from Franehive Setlement 29 (Gach Transferred from Old NYRA 186 Cash at Beginning of Period Bais su19 S164 Revenue oor 2646 2522 ash Operating Expenses 14 2645 2601 Cash rom Operations a Oe capex 22 83 104 NYO OTB Non-payment 00 72 100 Change in Gash 3 SS ‘Gash at End of Period sea Had NYRA not received the $25 millon loan from Now York State, NYRA was projected to run out of cash (defined as less than $5 milion on hand) in the June/July timeframe,Ill PAYMENTS TO STATE NYRA PAYMENTS TO NEW YORK STATE 2000 - 2009 Statutory Payments Total Pari-mutuel Taxes ........ 75, 787,982.03 Breeders Fund 30,226,613.86 Regulatory Fees 13,401,029.19 Uncashed Tickets 13,726,425.95 133,142,051.63 aah IV. VIDEO LOTTERY TERMINAL (VLTs) REVENUES ANNUAL VLT REVENUES TO NYRA AND NY THOROUGHBRED INDUSTRY Based on Statutory and Contractual Splits* NYRA Capital Funds - 4%. $18,067,500 Operating Funds - 3% $13,550,625 Total Annual Funds $31,618,125 Thoroughbred Industry Purses - 6.5% ...... $29,359,687 Breeders Funds - 1.0% ....... $4,516,875 Total Annual Funds ‘$33,876,562IV. VIDEO LOTTERY TERMINAL (VLTs) REVENUES VLT RACINO OPERATOR COMMISSIONS 2005 - 2011 ‘The commissions paid to the private operators of the harness tracks / Finger Lakes VLT facities over the past 5 years and current year-to-date are as follows (State Fiscal Year = April March) Year 2005-06 $97,800,329 2006-07 $160,889,992 2007-08 $255,950,424 2008-09 $338,574,180 2009-10 $363,047,626 2010-11 (YTD) $93,984,771 Total $7,310,247,322. ‘Source: New York Lottery &h&h V. SIGNIFICANT REVENUE OPPORTUNITIES FOR NYRA Capital Investments. + Build out Brooklyn Waterworks at Aqueduct - 20,000 square foot Sports BariSimulcast Center + Open year-round consistent with the Racino + Cost = $4 milion renovation + Revenue = $5 million annual net revenue Regulatory Change ‘+ Uncoupled Entries in races — New York was the only major racing jurisdiction where horses trained by the same. trainer with different owners ran coupled (1-1a) as an entry + Net revenue annual benefit to NYRA = $7 milion / Net revenue benefit to purses = $5 milion + NYRA\s request for Uncoupled Entries was approved by the NYS Racing & Wagering Board in July 2010 lative Change When the Intemet wagering law was passed in 2006, NYRA launched an internet wagering site but we cannot video stream NYRA races live on the NYRA website. NYRA is socking new legisition to correct this. The annual revenue increase estimated at $3 milion Reform the NY State OTB System — Tremendous duplicative and direct competition + Six individual phone wagering systems + Four different internet wagering systems + Separate tote contracts + Statewide television and marketing strategies NYRA receives less money from the NY State OTB System than any other rac “10-aie: VI. RACING SUMMARY 2009 BEST YEAR-ROUND THOROUGHBRED RACING IN THE UNITED STATES + In 2009, wagers on NYRA races totaled $2.2 billion or 18% of the total wagers made on thoroughbred races in the United States. + The Graded Stakes are the highest quality races in the country. In 2009, NYRA ran 113 Graded Stakes or 23% of all Graded Stakes run in the United States. * Average daily purse distribution is the best indication of the quality of a race meeting. In 2009, Saratoga Race Course led the country with an average daily purse distribution of $729,100. Belmont Park was 4" at $556,546 behind Keeneland spring and fall meetings. + NYRA is a strong supporter of the New York Thoroughbred breeding program. Approximately 30% of all NYRA races are for NY Breds with $30 million in purses. --VIL. SARATOGA 2010 Ay SARATOGA 2010 SEASON: Friday, July 23 - Monday, September 6 + Reserved Seats & Admission Prices ~ No Price Increase * Live Thoroughbred Racing for 7 Weekends * Open House: Sunday, July 18" * Opening Day: Friday, July 23 + Stakes Races Adjustments & Purse Levels * Budgeted 5% Decline in Handle for the Season * Dining Reservation Policy * Danny Meyer ~ Shake Shack/Blue Smoke -12- &hVill. OTHER SIGNIFICANT ISSUES OTHER SIGNIFICANT ISSUES: + New York Breeders & Breeders Fund * Monmouth Racing Plan + NYC Off-Track Betting Corporation * VLT Vendor Selection -13- &hIX, QUESTIONS & ANSWERS QUESTIONS & ANSWERS cae ah