The New York Racing Association, which hopes to get the state's attention on its current fiscal plight, did itself no favors by the way it hired a bankruptcy law firm to represent it in the event of insolvency if the reaction of the head of a new oversight panel is any indication.
Reports surfaced the week of Oct. 31 that NYRA hired a Manhattan law firm, Weil, Gotshal & Manges, should bankruptcy become an option for the racing association that operates Aqueduct, Belmont Park, and Saratoga.
But Carole Stone, head of a new state panel overseeing NYRA finances, sharply rebuked NYRA officials for not coming to the board first for approval. Stone, in a Nov. 3 letter to NYRA president Charles Hayward, said she was "dismayed" to read about the bankruptcy firm's hiring without first being asked by NYRA.
"I wish to remind you that the (New York State Racing and Wagering Board's) statutory review and approval powers compel NYRA to inform the oversight board of any plans to enter into any material financial transactions, and that NYRA must receive the recommendation of the oversight board before entering into such transactions," wrote Stone, the former top budget director for New York Gov. George Pataki.
Stone called on Hayward to "immediately provide detailed information concerning the retention of Weil as bankruptcy counsel, including justification for the retention of bankruptcy counsel, the manner in which these services were procured, and NYRA's plan to pay for these additional legal services."
Hayward said he would only respond to Stone, not reporters, about the letter.
The hiring comes as NYRA continues to press the state to let it sell 80 parcels of land around Aqueduct as a way to raise cash. Hayward in October threatened that insolvency would approach by the end of November unless NYRA found ways to find $20 million to close a cash flow crisis.
Besides the Aqueduct land sale--which has generated much controversy because the state maintains NYRA does not legally own the land--NYRA also plans to auction off equine artwork and has been looking at reducing health benefits for retirees.
Richard Bomze, president of the New York Thoroughbred Horsemen's Association, said NYRA's hiring of a bankruptcy law firm is "good publicity" for NYRA to try to sell the Aqueduct parcels. "Everything I think they're doing right now is to bring up the point that, 'We're in trouble and we've got to sell that land,' " Bomze said.
Bomze said NYRA, after its many run-ins with the state in recent years, should have gotten approval from the oversight board before hiring the new outside counsel.
"Why does everyone hate NYRA? Because they've been playing games like this for 25 years," he said.