To paraphrase: No one is wearing a white hat in this scenario.
At the fourth and final Senate hearing this week before the entire Legislature reconvenes Oct. 22, officials of the New York Racing Association warned that unless both houses approve Gov. Eliot Spitzer’s recommendation to extend NYRA’s franchise for 30 years in exchange for ceding the title of its racetrack properties to the state, thoroughbred racing in New York would shut down upon expiration of the current franchise at midnight, Jan. 1.
At the heart of all this is, of course, is the future installation of Video Lottery Terminals and Aqueduct and possibly Belmont Park. Under the auspices of the New York State Lottery, VLTs at Aqueduct are expected to raise $600 million in revenue in the first year, a projection most experts believe is not too overzealous.
The association believes that a bankruptcy judge would not allow the claims of NYRA’s creditors to be placed in jeopardy due to a loss of control over its revenues and assets. The Republican controlled Senate believes that a state oversight board created two years ago could step in and run the tracks by installing an interim management company.
As far as racing is concerned, such an occurrence would be an unmitigated disaster. It would not only place New York racing in serious jeopardy but has the potential to interrupt a major flow of revenue to New York State.
The logistical problems created by such a temporary solution would be nightmarish, involving all manner of goods and services. Both the front-side and back-side of the racetrack would be effected. So would thousands of people who work in the industry throughout the state, not to mention the economic hardship visited upon owners, trainers and backstretch workers.
While the downstate tracks operate seasonally, Aqueduct and Belmont’s horse population and workforce act interdependently. A smooth transition between the tracks is required for racing to be conducted at all, much less at the level associated with New York’s industry leading status.
The NYRA is absolutely within its rights to shut down racing in the face of what would amount to as a state takeover. The NYRA went into the franchise process ready and willing to play the land-ownership card. It can’t now back away from that tack by allowing interim management overseen by politicians who can’t get out of their own way in Albany, much less pull the strings of a business it clearly doesn’t understand nor has the inclination to learn.
There are no white hats in this process, and that includes NYRA. Remember, we are talking about a company that didn’t pay its taxes and received deferred prosecution after pleading guilty to criminal charges. Those charges were sealed in the report of the state appointed monitor. That monitor, the law firm of Getnick and Getnick, received a no-bid contract, paid for--then and now--by the NYRA.
Of this entire smoking gun scenario and inherent conflict of interest, said Liebman last month, “if you believe NYRA is transparent, you have blinkers on.”
Gov. Spitzer clearly wanted the state to gain secure title to the three tracks without having to suffer through a lengthy and costly litigation process, an argument the state could lose. New York’s leading Democrat said as much in a visit to the Saratoga press box last August.
Resultantly, the terms of the Memorandum of Understanding between the state and NYRA amounted to a windfall for the racing association. The percentages of VLT revenues afforded NYRA are high, especially considering the state is forgiving $130 million in existing debt and fronting them another $75 million for operational costs until the VLTs are up and running. The Senate has proposed to lower NYRA's percentage share of VLT revenues and pass the difference on to the casino operator.
But while New York racing fiddles, Albany burns.
As expected, House Majority Leader Sheldon Silver, a Democrat, backed Spitzer’s plan that included VLTs for Aqueduct but not Nassau County’s Belmont Park, a financial good thing for New York City’s Queens County.
When Spitzer learned that interest in attracting a casino operator would all but evaporate without Belmont Park in the VLT mix, he shifted gears. But not Silver, who said he would oppose “any further extension of gambling in the state.” Belmont Park is located approximately seven miles east of Aqueduct Racetrack.
Meanwhile, the Republican Senate Majority Leader, Joseph Bruno, embroiled in a feud with the Governor whose staffers allegedly assigned state troopers to monitor Bruno’s activities, said that he opposes the Spitzer plan and wanted the organizations involved in the original Request for Proposals process to run the tracks.
It has been well documented that Bruno has close ties to the Empire Racing group that last year lost the franchise bid to Excelsior Racing. Federal authorities currently are investigating pre-existing relationships between Bruno; Tim Smith, Empire investor and former head of Friends of New York Racing, said to be a stalking horse for Empire, and Jeff Perlee, Empire CEO and former Director of the New York Lottery. VLTs operate under auspices of the Lottery commission, whose delaying tactics during the Pataki administration stalled VLT construction at Aqueduct.
The awarding of the franchise to Excelsior Racing last year was considered a major upset. Empire Racing, which had the support of New York horsemen, several Bruno associates, and the financial backing of a consortium of major industry organizations were considered the odds-on favorites.
Empire suffered a major blow when it lost the support of the New York horsemen, followed this week by the withdrawal of Churchill Downs Inc., Magna Entertainment, as well as the financial support of its honorary chairwoman, New York socialite and horse owner Marylou Whitney.
Delaware North, which operates casinos at New York’s Finger Lakes Racetrack and Saratoga Gaming and Raceway, is expected to follow suit. Empire is said to be in negotiations on a merger with rival Capital Play, according to a post on the Bloodhorse web-site.
If VLTs are approved at Belmont Park, Excelsior is the leading candidate to run the casino--fitting since they made the most comprehensive and generous proposal to win the original RFP process (see HRI column archive dated 09.13.07 for details). Without Belmont Park in the mix, Excelsior is out.
Upon being awarded the franchise last year, soon thereafter it was learned that Richard Fields, a major Democratic booster, had extended the use of his private jet to Spitzer for a political fundraiser in Kentucky. Spitzer later paid for the trip but the political harm had been done.
Fields, developer of the highly successful Hard Rock Casino in South Florida, recently purchased a majority interest in Suffolk Downs. Suffolk is considered a likely future site for one of three casino operations in Massachusetts. This week Fields dropped out of the Excelsior group. A political obstacle having been cleared, Excelsior’s chances of again being awarded New York’s VLT franchise improved dramatically despite Bruno’s expected protestations.
But unless Spitzer’s plan, or a facsimile, is approved by year’s end, it won’t be a Happy New Year for New York horseplayers. Worse, it could prove an industry disaster of seismic proportions.
12 Oct 2007 at 02:40 pm | #
How come I’m the only guy in the freakin’ world who doesn’t know a thing about politics in racing??
How did you and Crist and others learn all this crap? When Politics 101 was taught, I was either at OTB or at a Hot Tuna Concert.
Look forward to your BC analysis.
Hot cocoa, please
e
13 Oct 2007 at 07:40 am | #
I find it amazing that the governor, comptroller, state senators and congressmen have never asked why NYRA continually operates in the red, losing millions each and every year. Why should a franchise that is a financial disaster, year-after-year, continue to be allowed to exist without reducing their flagrant spending on six-figure purses, which are mere giveaways. Why should NYRA be subsidized from a portion of slot revenue so that they can further increase purse money?
When a Belmont or Aqueduct meet is over, who won all the purse money? Well, I can tell you: it is the same seven or eight trainers and their wealthy throughbred owners, and the same seven or eight jockeys who shared in the purse money. So, NYRA is being given a 30-year extension, with bundles of new found money, so that a few owners and jockeys can continue to walk away with most of the money.
To continue NYRA in its present form, without stockholders to demand accountability and profit is ridiculous.
13 Oct 2007 at 10:18 am | #
As usual anything NYRA proposes comes as too little,too late. If they had used the tough approach and threatened to shut down racing 15-20 years ago it might have been effective. The current threat if,it comes to fruition will only serve to send more of NYRA’s customers else where. NYRA, with its self serving attitude has already sent most of its big players either off shore or to Vegas.Now, they will lose many of whats left of their customer base if they shut down.
15 Oct 2007 at 04:07 am | #
NYRA shutting down at 12:01 am on 01/01/08 and going out of business, despite the THOUSANDS of dire Cassandra articles printed in the last 3-4 years, can be beneficial.
1) We’ll get rid of NY winter racing, with dozens of horses with minus 9 Beyers getting paid to come in 3rd.
2) The only reason why nothing has been resolved is that nothing has happened YET.
When they padlock the gates, people will finally get serious about fixing the problem.
3) We’ll re-gain our sanity, but that’s something we can start doing TODAY.
From this moment on, unless the headline above the news story states that something actually HAPPENED, ignore it, and all the rest of the articles.
Read a book, instead. Look for an inexpensive edition of Adam Zamoyski’s superb “Moscow 1812” at a used bookstore.
By the time you’re done, Spitzer will be in a straight-jacket (I’m not kidding),and the horses that matter will be arriving at Keeneland for the spring meet.
NY survived the era @ 1911 when everything was shut down. We can do it again.
A shut-down would be no big deal; quite the opposite. It would purge a broken, pathetic, and unprofitable system - the “jobs program” currently in place ("And here’s your check for coming in 4th in a four-horse race, sir."). Customer demand would then be the force behind creating something better.
And if we really screw it up beyond repair, we can all go get lobotomies, move to Yonkers, and play the slots.
More hot cocoa, please.
Don Reed
20 Oct 2007 at 04:11 pm | #
Gentlemen,
Thank you for your time, input and passion.
Ernie: Had to learn this stuff. It’s been THE story in NY the last two years.
William: Increased purses have improved the product, especially at Saratoga this year. And it improved because the competition got tougher. Hopefully that will happen again post-VLTs.
Aaron: You make a great point. Desperate times might shake NYRA out of its lethargy. It will be interesting to see what happens when they return should they shut it down.
Don: Funny you should say that. After the completely self-serving power-driven Bruno Senate proposal, I’m taking a sabbatical from this nonsense. Will check out “Moscow 1812.” Next time I see you and Ernie, the first cocoa’s on me.
John
21 Oct 2007 at 07:17 am | #
John: Excellent. Question: Will today’s Denver football game over/under refer to the number of inches of snow, or the combined points? (Yuk yuk - see what happens when my wife goes to Europe and I’m left on my own?).
Here’s a blind CC for you - sent to NTRA yesterday (10/20/07):
1) Thank you for quickly adding the bio of Francois Parisel to your trainer bio roster.
2) I learned tonight [actually, Friday night 10/19/07] that the New Jersey Account Wagering System is planning on, early next week, on introducing a brand new wagering format on the Internet Wagering Account - only 3-4 days prior to the Breeders Cup itself.
I don’t know if this will affect you, but it is not good news. Introducing any kind of change shortly before a big event is asking for trouble, big time.
In the early 1990’s, NYC OTB abolished their (insane) dual “Number-Letter” wagering system only a few days prior to the Derby. The result was CHAOS.
And I suspect that this wagering system change is going to be a lot more complicated than what OTB implemented.
I realize that NYC OTB - bar none - has been the Harvard of Headaches in the racing industry. Their blunders are usually unsurpassed. But the comparison is valid.
The Wagering Account System this week posted that betting on the Meadows racing was available. When a bet was made, it was rejected - “No Betting At This Track.”
When I called their Tech Support, no one there knew what was going on (and later, no one was particularly concerned that “Belmont” on the “streaming video” menu was located at the bottom of the list, out of alphabetical order).
You should look into this. It may well affect any monies you will receive from bets made through the above system. Confusion leads to lower handles; twelve months of your work can go down the drain, through no fault of your own.
Regards,