by Tom Precious and Karen M. Johnson
A tentative deal is within reach to give the New York Racing Association a 25-year franchise to run Aqueduct, Belmont Park, and Saratoga, legislative sources said Feb. 6, the same day NYRA indicated live racing at Aqueduct could end Feb. 14. The second temporary extension for NYRA ends Feb. 13.
Officials, who spoke on condition of anonymity, said a framework deal includes a newly composed NYRA board, though NYRA would retain voting-majority control of the new board. It also imposes 10 benchmarks NYRA would have to meet over a four-year period, involving such things as attendance, fiscal performance, and backstretch conditions; failure to meet the benchmarks could result in revocation of the franchise.
The components of the proposal are contained in a 189-page draft that is circulating among the negotiators.
“From our standpoint, these details aren’t going to change," a legislative source said. Negotiators for Gov. Eliot Spitzer, Assembly Speaker Sheldon Silver, and Senate Majority Joseph Bruno were set to meet later the evening of Feb. 6.
Though legislative sources indicated a deal is imminent, the Spitzer administration was cautious. "Meetings are scheduled (for Feb. 6)," said Christine Anderson, a Spitzer spokeswoman. "We are making progress, and believe we will reach agreement by the Feb. 13 deadline."
But the sides have not reached a conclusion on a series of issues, including an operator to run a proposed video lottery terminal casino at Aqueduct, whether a VLT casino will be allowed at Belmont, whether local “host” communities will be entitled to a share of casino revenue, and whether off-track betting corporations will be a part of an omnibus racing bill that includes the franchise resolution.
A legislative source suggested those issues could be resolved later in the legislative session, but that it’s important to strike a deal involving the racing side of the franchise.
Jennifer Givner, another Spitzer spokeswoman, declined comment except to say that “negotiations are ongoing.”
The components of what legislative sources called a tentative deal also include a new 21-member board, with 11 appointed by NYRA, three by the governor, one each by horsemen, breeders, and labor groups, and two each by the Senate and Assembly majorities.
The framework provisions also call for a term limit on future NYRA board chairs. Current NYRA chairman Steven Duncker would remain on board for four years; after that, future NYRA chairs would be barred from serving more than two four-year terms, an official said.
The state’s oversight panel that now monitors and approves NYRA finances would remain in place. However, its control would be turned over to Spitzer, who would get to appoint three members, with Bruno and Silver each getting one appointee. The board is now run by holdovers from former Gov. George Pataki and Bruno.
A final deal also would include more than $100 million in state funding to help NYRA emerge from its Chapter 11 bankruptcy protection.
One negotiator urged caution about reporting a tentative deal and suggested legislators, especially Bruno, want to portray talks as closer than they actually are at this point. Bruno has come under mounting pressure from some community leaders to strike a deal; a prominent Saratoga Springs, N.Y., banker, Charles Wait, recently said Senate Republicans were at fault for the unresolved franchise matter.
Meanwhile, the likelihood of racing ceasing at Aqueduct Feb. 14, followed by the closure of training one week later, became evident Feb. 6 when NYRA chief executive Charles Hayward addressed members of the media after discussing the situation with horsemen.
The NYRA franchise expired Dec. 31, 2007. NYRA accepted its first temporary extension, which ran though Jan. 23, on Dec. 31. The second temporary extension of racing ends Feb. 13.
“I don’t think we are any closer today than we were Dec. 31,” Hayward said during a 30-minute meeting with the press. “(For racing to continue), we need confidence the deal is in place, and the bill was complete and agreed upon.”
When Hayward was asked if he believed racing would cease Feb. 14, he responded, “I wish I knew; I really don’t. Who wants to be a CEO of a racing association who shuts down racing?”
The NYRA threat was dismissed by Bruno, a Republican whose district includes Saratoga. "Last December, NYRA was threatening to close down racing in New York. That didn't happen in December, and it isn't going to happen now," Bruno said in a Feb. 6 statement.
Bruno said he believes a franchise deal, which would include NYRA continuing to run the racing franchise, will "be announced very shortly." Officials said the deal could be unveiled as early as the evening of Feb. 6, though NYRA has not yet signed off on what negotiators have been discussing.
"I have said that we cannot continue the status quo with NYRA, which is what the governor originally proposed," Bruno said. "Any new franchise agreement must include a reconstituted NYRA board, a franchise agreement with measurable benchmarks that must be met by NYRA, (and) improved oversight of the racing industry."
The current and incomplete bill, drafted by Spitzer’s office, leaves blank the number of years NYRA would have to operate racing, as well as the number and configuration of the NYRA board of directors. NYRA wants the 30-year extension Spitzer offered in his memorandum of understanding, which was drafted in September, in exchange for relinquishing its claim of ownership to the land at the three tracks.
Bruno has stated his desire to increase the number of NYRA trustees appointed by the state, and has said he would like to see the reduction of the size of the 23-member NYRA board. In the original MOU accepted by NYRA, the board was to be comprised of 13 NYRA appointees plus six state appointees.
Hayward met with members of the New York Thoroughbred Horsemen’s Association Feb. 6. Horsemen were made aware of the situation and the cost of operating the backstretch during a shutdown of racing.
Hayward said training would remain open for one week at Belmont and Aqueduct. He said the cost of keeping training open at Belmont for one day would be $40,000 because of the enormous expense involved in maintaining the barn area. That figure was broken down to $32,000 for operational expenses for the maintenance of the stable area, plus another $8,000 for the training track.
There are 2,300 horses stabled at Belmont and Aqueduct, and more than 1,000 men and women living in backstretch dormitories at both tracks.
On Feb. 6, NYRA sent out a statement to horsemen that read in part: “We do not know if this closure and cessation of racing will be short-lived or long-term, but have no recourse but to advise each of you that training at Belmont Park and Aqueduct will cease at the end of training on Feb. 20 and that horsemen and horses will be required to vacate the grounds of both racetracks on Feb. 27.”
The statement indicated that if horsemen were able to fund the operation of the backstretch and training, operations might be able to continue during a shutdown of racing. “In the event such an arrangement is not forthcoming, we will close down backstretch operations and vacate the barns as noted,” the statement read.
Trainer Rick Violette, president of the New York THA, said horsemen don’t have the resources to keep the barn area operational.
“I won’t say no to anything,” Violette said from Florida Feb. 6. “We have to investigate all the possibilities. At least there is a bill floating out there that can be argued or negotiated, and that is significant. Certainly now it seems dire, and gloom and doom.”
Hayward was to address NYRA employees the morning of Feb. 7. In a statement released Feb. 6, Hayward laid out the dire circumstances for the 1,300 full-time employees who work for the racing association. Many of the employees will be laid off Feb. 14, and those we remain working--executives, administration, and racing, and mutuel personnel--will be put on a four-day-a-week work schedule, with a 20% pay decrease.
Hayward indicated NYRA’s bankruptcy situation has a large bearing on the impending shutdown. He said the $32-million loan from the state comptroller’s office received by NYRA in 2007 after it filed for bankruptcy in 2006 was only intended to aid in keeping racing afloat through 2007.
NYRA has submitted a reorganization plan to the U.S. Bankruptcy Court for the Southern District of New York, but that plan’s financial details are based on a long-term extension. After May 2, 2008, if NYRA is unable to meet those obligations, by law another entity could come in, present a reorganization plan, and gain control of the franchise.