Swindal Leaves Excelsior as N.Y. Franchise Bids Aired
by Tom Precious
Date Posted: 4/5/2007 8:40:36 PM
Last Updated: 4/6/2007 6:14:02 PM

Steve Swindal, the New York Yankees executive embroiled in divorce proceedings with the daughter of George Steinbrenner, has dropped out of Excelsior Racing Associates, one of four groups vying to win the New York Thoroughbred franchise.

The withdrawal of Swindal, coming days after Steinbrenner family members also walked away from Excelsior, came to light when his name was not included in documents the group submitted to the state outlining its plan for New York racing.

Katie Burke, an Excelsior spokeswoman, confirmed Swindal has withdrawn for “personal reasons.’’ She said more about the Excelsior team would be announced in the coming days. Swindal had been the public face of the franchise hopeful, and just a week ago officials were insisting that, despite his troubles with the Steinbrenner family, he was remaining a part of Excelsior.

The Excelsior package was one of four franchise proposals made public April 5 by the New York State Racing and Wagering board as the fiercely competitive process to take over the potentially lucrative Thoroughbred franchise moved to its next phase.

While each went out of its way to boast of its plans, the New York Racing Association added a different tactic - questioning the process by which the state is trying to award the new franchise.

NYRA, in bankruptcy court with a claim that includes its insistence that it owns the three racetracks no matter who wins the franchise, began its submission to the new Spitzer administration with a declaration that its proposal is not an admission “that the state of New York has any current or prospective ownership right with respect to the racetracks or any other property owned or claimed by NYRA.’’

It remains to be seen how the legal argument by NYRA will sit with Gov. Eliot Spitzer, who has battled often in the past with the racing entity during its legal troubles several years ago. Spitzer and the Legislature will pick the next franchise winner, and officials say they expect that to happen before the Legislature ends its session in late June.

The other bids, meanwhile, lavished praise on the process as they pumped up their various ideas to restore racing.

Excelsior, which won the non-binding recommendation of a state screening panel last year, proposed a $1.875 billion package. Of that, $850 million would be paid as a franchise fee to the state over the 20-year life of the proposed franchise.

Besides Swindal and the Steinbrenner family, Excelsior also recently lost Tishman-Speyer, a major New York development company. It is left with two of its original partners, casino developer Richard Fields and the Johnston racing family out of Chicago. A new equity partner is William Mulrow, a Westchester County investment banker who has been friends with Spitzer. He said last year his role with the group was limited to being a financial advisor.

Excelsior also added new “integrity’’ components, including a compliance group headed by Howard Safir, the former New York City police commissioner whose firm has been used by NYRA since its legal troubles. Excelsior also added a former head of the Illinois Gaming Board and former top compliance executives from several casinos to its team. It vowed to spend $300 million on track improvements in the first five years, and to spend $450 million on a VLT casino and hotel at Belmont.

Spitzer recently said he would not consider the earlier recommendation that Excelsior be awarded the franchise binding. He began a new public process to consider bids again.

Empire Racing Associates, composed of New York horsemen, Magna Entertainment, Churchill Downs, and others, said it had created an “unprecedented alliance’’ of industry leaders as New York faces a “once-in-a-generation opportunity to correct the course of New York racing.’’

While it embraced a dramatic expansion of VLT gambling, it also warned the state not to consider VLTs as “a golden goose’’ for racing. “Racing itself needs to be reformed to profitability,’’ it said in its submission.

Empire put its bid at either $1.325 billion or $1.957 billion – depending on which business model the state embraces for the future franchise holder. Industry officials have long said the business model created in 1955 for NYRA no longer works. Empire also proposed $100 to $200 million in up-front fees for the state, and said the state could get up to $20 million in revenues under one Empire plan over the next 20 years, mostly from VLT revenues.

Empire also sought to highlight its ties with racing groups outside New York. It talked of having the “power to grow’’ the Triple Crown through alliances with Magna and Churchill, and creating a “Road to the Derby’’ wagering and marketing campaign. It said it would have an exclusive ability to coordinate track starting times around the country.

NYRA, meanwhile, said it has more than $300 million in liabilities that would have to be assumed by the next holder of the franchise to operate Aqueduct, Belmont, and Saratoga racetracks. NYRA also highlighted its integrity component, noting it has been cleared by the Justice Department following a rash of legal problems over the years.

Capital Play, an Australian company, also presented the state with several different options depending on which business model is chosen. It said under one plan it could guarantee the state it would make $1.8 billion investment in the franchise. It said it could pay the state $50 million a year in lease payments over 20 years. It plans $500 million in track improvements and $200 million on VLT plans. Like Excelsior and Empire, it said it would pay off NYRA’s pension costs; Capital Play put that at $110 million while Empire and Excelsior listed a $55 million level.

Capital called for 9,000 VLT slot machines at Aqueduct and Belmont. “Capital Play’s strategy to bring the world’s best racing to the state of New York is the best model to maximize returns to the state and its residents,’’ Capital Play said in its submission. Capital Play also said it has already lined up $250 million from an international private equity fund.


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