Negotiators on February 11 failed again to broker a new Thoroughbred franchise deal in New York, raising the chances that Aqueduct could go dark later this week.
With state officials engaged in closed-door talks and some public finger-pointing, the New York Racing Association was casting doubts on the progress of the talks.
NYRA sources say that there are a whole host of specific objections to what is on the negotiating table, but say they are worried the overall framework deal will not provide the economics to make the franchise financially viable in the future and may not be enough to satisfy its creditors in a federal bankruptcy court proceeding.
NYRA officials on February 11 reviewed some of the provisions worked out over the weekend by state officials. “Unfortunately, this review process indicated that the franchise discussions are going backward, not forward,” Steven Duncker, the NYRA chairman, said in a statement.
Also at issue is the composition of a new NYRA board. Duncker said NYRA agrees the new board should be streamlined, but said the plans on the table now would “politicize the board and endanger the very reforms that have been accomplished to date.”
“We find the current state of negotiation to be pointing irrevocably towards a cessation of racing this week,” the NYRA leader said.
NYRA's current authorization to run racing on a temporary basis -- its franchise expired on December 31 -- expires in two days (Feb. 13). While the state could approve another temporary extension, NYRA officials are threatening to close Aqueduct and take the dispute back to a federal bankruptcy court judge to decide the major issue as to whether NYRA or the state owns the racetracks..
There are a host of issues still being grappled over by state negotiators and NYRA. One provision calls for NYRA to end its corporate existence at the end of a proposed 25-year extension; NYRA officials are objecting to that.
There are also questions about what role the state comptroller will have in auditing NYRA’s finances. A state oversight board will retain jurisdiction to monitor NYRA’s finances. Also, switching from its current status as a non-profit entity to a not-for-profit company will bring it under the eye of the state Attorney General’s office. Negotiators are discussing whether the comptroller will continue to have a financial oversight role.
There is also a fight behind the scenes between NYRA and the horsemen over interest on a purse account. The horsemen want the interest from the account which pays out winnings to owners to go to the horsemen.
Another major stumbling point is over NYRA’s simulcasting signal. Presently, off-track betting corporations must use NYRA’s signal if they are also simulcasting out-of-state races. The New York City Off-Track Betting Corp. pays over $8 million to NYRA for simulcasting into homes. The OTBs want more flexibility in taking the NYRA signal, in part so they can negotiate a better deal with NYRA for the simulcasting rights.
Also still unresolved are benchmarks the state wants to impose on NYRA to meet certain criteria, such as attendance and on-track handle performance goals. But NYRA is telling officials, according to sources, that the benchmarks are unrealistic that no other track in the country could meet. Failure to abide by the benchmarks could result in NYRA losing its franchise during reviews that would take place every four years.
The NYRA board composition continues to be a major problem. NYRA has told negotiators it is not interested in a deal that gives it just one additional person on the board than the state. Under one plan, NYRA would appoint 11 members and the state would appoint 10. But NYRA believes the plan is unworkable.
Senate Majority Leader Joseph Bruno, a Republican who represents Saratoga, said the NYRA board needs to be “reconstituted.” He did not specifically say how that should be done, but said it would be “wrong for the taxpayers” if there are not changes in the structure of the next franchise holder.
“We’re ready to close. It’s not ideal, but it’s a deal,” Bruno said. He blamed Gov. Eliot Spitzer for not helping to resolve the NYRA dispute.