Just days before the state is to take over control of the New York Racing Association, New York Gov. Andrew Cuomo is sending signals he wants to put the operation of the racing entity out to bid to for-profit companies.
The move, if true, would amount to a direct attempt to end the role of NYRA, which has held exclusive operation of three Thoroughbred tracks since 1955, in any form of racing and scuttle the franchise extension agreement signed several years ago between a previous administration and NYRA. The administration's idea was floated Sept. 24 in the New York Post, which reported the state envisions making a large amount of money from for-profit corporations that will want to run Aqueduct Racetrack, Belmont Park, and Saratoga Race Course.
A bill approved in late spring is, sources have been saying, expected to be signed by Cuomo the week of Sept. 23. It gives Cuomo the authority to name eight new board members, including its chair, to a newly constituted NYRA board that, with four members selected by legislative leaders, puts NYRA under the control of the state for the next three years.
Cuomo has not wanted to sign the bill until he could find his eight choices for board seats; only a board chairperson had yet to be finalized as of the week of Sept. 16.
Hours after the Post article appeared, administration officials, including the governor himself, appeared to try to walk back the details attributed to unnamed sources.
"I haven't read the story,'' Cuomo said when asked if the report was accurate. Asked if he felt the tracks would be better off in private hands, Cuomo said his administration is "not starting with a feel or predisposition'' on the matter and that the new NYRA board will be looking into all the various financial aspects of the tracks. "I'm not really a horse racing expert,'' Cuomo told reporters.
Howard Glaser, the governor's state operations director, added that while there are a number of ideas for the future of NYRA, he stressed that there are two distinctions: how are the tracks operated after the state takes over in the coming weeks and the franchise already held by NYRA. "The franchise is NYRA's,'' Glaser said. "They have the long-term franchise.''
The apparent float of an idea to privatize NYRA is not unique to the current governors. Previous chief executives of New York, most recently governors David Paterson and Eliot Spitzer, flirted with the for-profit route for NYRA's tracks. The ideas all died, some to controversy over bidding procedures. NYRA backers then−and likely in the future if Cuomo proceeds with the idea−raised the issue that while the NYRA business model has had its many flaws and scandals there could be other problems associated with bringing a for-profit concern into a troubled industry in New York.
Karl Sleight, a partner at the Harris Beach law firm in Albany, noted the history of New York's attempts to privatize Thoroughbred racing at the three tracks. "Selling off the premier New York racing product would allow for current VLT revenues to be diverted from the equine industry to other policy areas and provide the state with a one-shot revenue infusion,'' said Sleight, a member of the firm's racing and industry gaming industry team who also writes for the firm's new racing and wagering blog.
"Some are speculating that governmental control of NYRA through the Reorganization Board may be part of a greater vision to sideline potential impediments to the expansion of casino gaming in New York,'' Sleight said of the Cuomo-dominated board expected to be appointed in the coming week or so.
Indeed, some sources were privately saying a Cuomo-led NYRA board could seek, with the governor's blessing, to legally un-do the franchise extension that Spitzer okayed when he was governor a few years ago. That extender also required approval from the state Legislature, so presumably any move to change the terms of the extender agreement would need the approval again from lawmakers.
The Cuomo administration has been eyeing various land deals for NYRA property, including a full-blown casino next to Aqueduct and its video lottery terminal facility. Two weeks ago, the state put out to bid two separate parcels of land at Belmont, either for sale or lease; the proposal asks for a variety of possible uses for the more than 100 acres of land surrounding the track.
What Cuomo's long-term intentions are for the racing industry remain uncertain. He has said NYRA, based on various scandals over the years, including the recent one surrounding higher-than-permitted pari-mutuel takeout levels on exotic bets, is unfit to run racing.
Sources said the Cuomo administration has also taken over the rollout of a report by several industry representatives, including Hall of Fame jockey Jerry Bailey, looking into a high number of equine deaths last winter at Aqueduct. The report, finished for weeks, was set to be released the week of Sept. 16, but sources said it is now scheduled to be unveiled Sept. 28.
The report will be stinging, sources have said for weeks.
Recommendations will include proposed regulatory changes to the system of how the track-based veterinarians conduct their business to end what some industry insiders have said is a too cozy relationship between trainers and vets. The New York Times Sept. 22 published a lengthy article investigating what it characterized as a troubled system whereby trainers often tell vets what kinds of drugs a horse needs. The Post said a new oversight panel will be created to track equine health issues.
It is uncertain what legal avenue the administration will seek to end the agreement made in 2007 by former Gov. Eliot Spitzer to extend NYRA's franchise for 25 years. That deal, which included another round of state bailout money, also featured NYRA relinquishing its longstanding ownership claims to the land at the three racetracks in return for the exclusive extension to run racing.
The administration, the Post said, floated entities such as Churchill Downs Inc. and Madison Square Garden as potential bidders that might be interested in running NYRA. While the report said the administration was seeking to "privatize'' the tracks, it did not suggest the state would be seeking to sell the three facilities, which would be a true privatization effort.
