And so New York Stateís new Democratic governor, Eliot Spitzer, made a recommendation to have a reconstituted New York Racing Association run racing for the next 30 years.
In exchange, the NYRA would irrevocably relinquish any present and future rights to the ownership of the land upon which Aqueduct, Belmont and Saratoga stands.
As franchise agreements go, 30 years is a lifetime. But before any of that happens, of course, NYRA must clear Chapter 11 bankruptcy so it can pass on clear title of the tracks to the state.
The process, for as long and convoluted as it was and for all the speculation it engendered, ran right to the past performances. The result could not have been any more formful.
In an open letter to Gov. Spitzer on HorseRaceInsider.com June 22, it was stated that ďyour own past performances indicate you believe in reforming troubled industries through changes in operational procedures and management, and by rewriting bylaws and reconstituting boards.Ē
All these elements were major considerations in a non-binding Memorandum of Understanding between the governorís office and the New York Racing Association, Sept. 4.
NYRAís Board of Directors will be reduced from 28 members to 19, 13 existing or new board members plus two appointed by the governor, one each by the leaders of the Assembly and Senate, and one by groups representing horsemen and breeders.
Streamlining and concentration of power isnít usually a bad idea.
For NYRA going forward, the elements contained in the MOU is a sweet deal, certainly not bad for an organization that was hanging on by a thread, but one which got a flood of late money that drove a 50-1 shot down to even money in the final flashes.
No matter how an emotional Charlie Hayward spun the Sept. 4 announcement, this was a big win for NYRA, power politics, and for racing in New York State and beyond.
Provincialism notwithstanding, the thoroughbred market needs a thriving New York the way the NBA needs the Knicks, the NHL the Rangers, and MLB the Yankees and Mets.
In exchange for dropping its suit against a state that suddenly feared it could lose its de jure land claims to a de facto property tax payer of $440 million since 1955 that has physical possession of the deeds.
NYRA played its hand beautifully and made out like a bandit. In itís bankruptcy filings, NYRA argued that the state could not take the properties without compensation in violation of the state constitution. Despite earlier protestations to the contrary, the governor acknowledged he feared that in litigation anything was possible.
The terms are that NYRA would receive 4% of the VLT revenue to pay for upgrades and maintenance, 3% for ďracing operationsĒ and up to 6.5% for purses. Projections would be approximately $25 million over present purse levels.
Thatís not all. The state would provide NYRA, from projected casino revenue at Aqueduct, up to $75 million to clear Chapter 11 bankruptcy protection and until that revenue flows, that it, or the future casino operator, would provide ďreasonable and necessary fundsĒ to meet operating expenses. The state would also forgive NYRA $130 million in debts.
Predictably, Spitzerís plan met with affirmation and opposition, not coincidentally rooted in partisan politics.
Assembly Speaker Sheldon Silver (D-Manhattan) said he was pleased the agreement clarifies the land issue, calls for continued racing at Aqueduct, and a separate franchisee for VLT operations. Assembly Majority Leader Ron Canestrari (D-Cohoes) said he favored separation because Saratoga would be preserved and that the tracks would not be sacrificed for other gambling initiatives.
On the other side of the aisle, Senate Majority Leader Joseph Bruno (R-Brunswick) said the recommendation had a questionable finish after several false starts and promised that the Senate committee on racing would take a very good look at the recommendation at a scheduled meeting Sept 12. Assembly Minority Leader James Tedisco (R-Schenectady) said the governor came up with a half solution to a whole problem and that separating racing from gaming creates competition between the two. And so it goes.
The perceived one-sidedness of the governorís recommendation was not lost on the other bidders.
Empire Associates, of which Bruno has known friends and associates as investors, said the recommendation to retain the status quo was bad for horse racing and taxpayers.
Capital Play Ltd. said it would continue trying to convince state leaders it had the best racing and gaming proposal.
Excelsior Associates, the group that won the original Request For Proposals recommended by the Ad Hoc Committee on Racing (appointed by the Pataki administration but whose findings were reconsidered by the sitting governor) had no comment.
The Excelsior group has always taken a low profile approach to the entire process, and now might be regretting it because theyíve allowed their political rivals to define who they are.
Excelsiorís silence yesterday was deafening. Unless, of course, thereís another unknown component. The same sources that were whispering to us months ago and reported on HorseRaceInsider.com believed then that NYRA would get the franchise and Excelsior would be their gaming partner.
One down, one to go?
Timing is everything. It was widely reported last week how would-be franchisees made political contributions to the Spitzer campaign and how much each spent. There also was reiteration of how Spitzer had the use of Richard Fieldís private jet, an Excelsior member, to transport him to fundraisers in Kentucky. And how Spitzer later paid for those services.
Given that the governor stated he will recommend in 60 days, with NYRAís input, the gaming franchisee, expect the political in-fighting to begin again in earnest following the Sept. 12 meeting.
Even before it was learned that members of Spitzerís staff used State Troopers to find potentially embarrassing information, or worse, on Bruno, the governor found out how difficult it is to get things done in Albany. Last February, Spitzerís efforts to appoint a state comptroller went nowhere. Spitzerís steamroller never get out of first gear.
And there were other important measures that the governor and legislature failed to agree on. Remaining on the docket are unrelated issues such as changes in campaign finance laws, building projects estimated at $1 billion, and property tax rebates to seniors of $200 million.
Aside from the VLT money earmarked to maintain New York racingís continued preeminence under NYRAís auspices, the bulk of the VLT money goes to the State Lottery and its obligation to a school system in dire need of funding.
It would be good if an accord were reached on all these issues without holding racing hostage, that Senator Bruno means what he says about the whole thing being about New York racingís preeminence and the 40,000 industry jobs within the state.
Otherwise, Townsend might be inclined to sing a different tune to lawmakers from the people of the State of New York: ďWeíre not gonna take it. Never did and never will. We donít have to take it. Gonna break it! Gonna shake it! Letís forget it better still!Ē