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Monmouth Park owes $60 million to management firm: tax filing

OCEANPORT - The New Jersey Thoroughbred Horsemen's Association owes nearly $60 million to its management company as the group moves forward with a development plan on property shared with Monmouth Park, according to the organization's Form 990 tax filings reviewed by the Asbury Park Press.

The debt to Darby Development LLC has grown steadily since the NJTHA began leasing the racetrack from the New Jersey Sports and Exposition Authority in 2012, doubling since 2018.

The development project - which needs state approval and could include 350 55-over rental units, a 200-room hotel and pickle ball courts - is seen as potentially helping prop up horse racing at Monmouth Park by funding extra purse money for the races and increasing the number of racing days. But it's unclear how much of the proceeds will go toward paying off the debt to Darby.

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Horses break from the starting gate during second race of day. Opening Day of Racing at Monmouth Park in Oceanport, NJ on May 13, 2023.
Horses break from the starting gate during second race of day. Opening Day of Racing at Monmouth Park in Oceanport, NJ on May 13, 2023.

Money owed to Darby a 'secondary' consideration

The NJTHA is classified as a nonprofit organization and exempt from income taxation. Exempt organizations generally are required to file annual returns of their income and expenses with the Internal Revenue Service and the documents are public records; the report covering the fiscal year ending December 2021 is the most recent for the horsemen's group.

The organization's revenue, minus expenses, was $1.7 million in 2021 and assets were worth $12 million, the tax report shows.

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Red Bank attorney Dennis Drazin, Darby's chairman and CEO, said the money owed to his company is a "secondary consideration."

"My objective is to be able to get purse money out of the cashflow from the (proposed development) to either increase purses or add racing days - figure out something that is good for Monmouth," Drazin said. "The money owed to Darby is secondary.”

Drazin said a new lease for the land between the horsemen's group and the New Jersey Sports and Exposition Authority has been agreed to in principle and would extend the original 35-year lease to 95 years.

Governor Phil Murphy, right, shakes hands with Dennis Drazin, chairman and CEO of Darby Development, after speaking during the All-American Sports Betting Summit at Monmouth Park in Oceanport Tuesday, June 18, 2019.  Bill Pascrell III from the Princeton Public Affairs Group is at left.
Governor Phil Murphy, right, shakes hands with Dennis Drazin, chairman and CEO of Darby Development, after speaking during the All-American Sports Betting Summit at Monmouth Park in Oceanport Tuesday, June 18, 2019. Bill Pascrell III from the Princeton Public Affairs Group is at left.

He said it's possible the new agreement will include a debt paydown plan.

“So if you consider what the likelihood of ever collecting all that money is and say, instead of the horsemen having that obligation, let’s restructure the deal so the horsemen get some and Darby gets some. That would maybe be a more realistic way of doing this,” Drazin said.

"I’m sure if I wanted to renegotiate a deal - do a payment plan over the years instead of the debt you’re seeing, that is certainly a discussion we could have, but the last concern I have is getting paid."

Management deal in place since 2012

Drazin formed Darby in 2012 to operate the track and develop the property, while guaranteeing $9 million in loans from the NJSEA to offset a projected $8 million operating loss for the first year. Drazin's brothers, Ronald and Brian, are also listed as managing members of Darby. The three brothers are partners in the Red Bank law firm of Drazin and Warshaw.

Much of the NJTHA’s debt to Darby, which totaled $59.17 million at the end of 2021, traces to Darby receiving an incentive fee equal to 80 percent of the NJTHA’s net operating profits from account wagering and off-track wagering facilities in Woodbridge and Hillsborough, as stipulated in the operating agreement.

Cyberknife ridden by Florent Geroux wins the TVG.COM Haskell Stakes. 2022 Haskell day at Monmouth Park in Oceanport, NJ on July 23, 2022.
Cyberknife ridden by Florent Geroux wins the TVG.COM Haskell Stakes. 2022 Haskell day at Monmouth Park in Oceanport, NJ on July 23, 2022.

Since then, that money has been put back into the operation while the debt has grown, with the agreement stating no monies could be taken by Darby until the loans from the NJSEA were paid off, which happens in early 2024.

The development plan will be presented publicly for the first time Thursday at the Oceanport Borough Council meeting. The NJTHA is partnering New York real estate magnate and owner of Resorts Casino in Atlantic City, Morris Bailey, a Deal resident.

This article originally appeared on Asbury Park Press: Monmouth Park owes $60 million to Darby Development, Dennis Drazin