Downs Lease Could Mean Millions… to Someone Else

Is the Downs of Albuquerque racino reconstruction project really going to happen?  Maybe there is something else going on that New Mexico taxpayers should know.

The state (as in Governor Martinez and her people) handed a potentially lucrative 25-year lease deal to the Downs at Albuquerque. 

Internal emails between the Downs folks, their attorney Pat Rogers, Martinez’s right-hand manJay McCleskey, and members of the highest levels of the Martinez administration, leave little doubt that the awarding of the lease was rigged from the start.

Since acquiring the lease, the Downs folks haven’t done a whole lot.  Rather than bring in competent management, they brought in Darren White. White’s only qualifications for the job seem to be close friend of Jay McCleskey and appearing in a campaign commercial for his buddy on behalf of Susana Martinez in 2010.

The construction at the Downs is way behind schedule and barely proceeding in a piece by piece process. This is not surprising, since the Downs’ “winning” bid did not include construction funding. They filled that gap with a letter from a bank committing to consider entertaining a loan application.  Somehow, this was acceptable. 

If they didn’t have a loan to build the project, why did they get the lease?

The answer might be found in Article 18.2 of the lease entitled “Tenant’s Right to Assign or Sublet.” Basically, this means that the Downs does not have to actually build the project, but can turn around and sell all or part of the lease including the racetrack, casino, or liquor business to the highest bidder.

The lease does call for the buyer to be an “experienced and financially sound operator of casino, race tracks and pari-mutuel wagering”. 

The state has little if any say in the sale of the lease. The buyer only has to be “reasonably acceptable” to the state. If the new buyers have “substantially the same ownership and management” the state essentially already consents to the transfer of ownership.

The State Board of Finance may have to approve the sale, but only if it is shown that the sale “adversely affects the State Fair’s interest”.  And who is to say the governor won’t try to rig the outcome again?

What does this all mean for the Downs folks?  It’s easy math. Take a look at Zia Park, the racino in Hobbs, New Mexico. Zia Park was built from the ground up in 2004 for $43,000,000. It sold to Penn International Gaming in 2007 for $200,000,000.

The Downs is in pretty poor shape these days.  Then again, the folks over there haven’t put very much into making it any better.  Maybe they never really intended to do anything but get the lease. They sure stand to see a hefty profit from selling it to some national gaming outfit.

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