The New York Racing Association, which says it will run out of money next year, will not open up its books to let New York’s chief fiscal watchdog examine its operations to verify those claims.
New York State Comptroller Thomas P. DiNapoli said Dec. 28 he has gone to the extreme measure of issuing a subpoena to NYRA to force it to give his auditors access to the financial records.
NYRA later said it is within its legal right to refuse to cooperate with an audit by DiNapoli.
Just last week, NYRA President Charles Hayward, lamenting the lack of a deal by state officials to choose an operator for the long-delayed Aqueduct casino project, said NYRA might have to cancel next year’s Belmont Stakes (gr. I) if, as it looks now, the racing entity runs out of money to pay its bills in May or June.
DiNapoli, however, is clearly suspicious of those claims. "Less than six months ago, NYRA said it was financially stable,’’ the Democratic comptroller said in a written statement Dec. 28. "Now, NYRA says without VLT money it may not be able to stay in operation until the Belmont Stakes. In the meantime, it’s been trying to hide its books from my auditors.’’
DiNapoli is not the first state official NYRA has butted heads with over the past decade – a point not lost on the comptroller. "It’s the same old NYRA in new sheep’s clothing, trying to shortchange taxpayers again,’’ DiNapoli said.
NYRA over the years has sought to keep its financial records secret, arguing such information could put it at a competitive disadvantage. Regulators at the New York State Racing and Wagering Board have long complained that getting information from NYRA has been a hit-or-miss effort.
DiNapoli said the 2008 law that gave NYRA a new 25-year exclusive franchise to operate Aqueduct, Belmont and Saratoga racetracks also included provisions to permit its operations to be examined by state auditors. DiNapoli said he wants to get a look at what has happened to the millions of dollars the state has provided NYRA in previous bailouts, while also looking at NYRA’s claims about other entities owing it money.
The comptroller noted a payment of at least $105 million the state made to NYRA to help it come out of its bankruptcy protection in 2008. He also recalled a past state audit that uncovered more than $50 million in franchise fee payments NYRA failed to turn over to the state between 2005 and 2008.
"NYRA operates for the benefit of New York. Taxpayers have a right to know what’s going on, and we’re going to audit NYRA and find out,’’ DiNapoli said.
In a statement later in the day, NYRA said it is willing to go to court to keep the comptroller from looking at its books. NYRA said that at the time of its 2008 franchise extension, it made it clear to the Legislature that the renewal law "prohibits'' the state comptroller from auditing the not-for-profit association. It cited a court ruling by the Court of Appeals, the state's highest court, as ammunition.
"The law is clear. If NYRA and the comptroller cannot agree amicably on the clear meaning of the Court of Appeals decision, we should agree to immediately seek a declaratory judgment from the judiciary to quickly resolve this matter,'' the NYRA statement said.
NYRA also bristled at suggestions that the state bailed out its finances. It said money it obtained from Albany in 2008 was in return for NYRA giving up its land claims to the three tracks -- real estate, it said, that is worth more than $1 billion.
"NYRA operates without a single penny of taxpayer subsidy,'' the statement said. It also said the state has failed to live up to an agreement to get the Aqueduct casino up and running by last April -- which would have supplied a steady stream of funds to NYRA in the form of VLT revenue sharing proceeds.
"NYRA's current financial situation is not a surprise to anyone in state government who is familiar with the NYRA franchise agreements,'' NYRA said.
NYRA added that it is already one of the most "pervasively'' regulated private companies in New York, with its operations under the eye of agencies from the state racing board to the attorney general. And NYRA said it already cooperates on oversight matters with government agencies "that have actual legal authority to regulate and audit its operations.'' It added that the state already appoints 11 of NYRA's 25 board members, and that a state entity has budget oversight authority over NYRA.
"Any suggestion that the taxpayers are placed at risk by the constitutional prohibition on comptroller's audits of NYRA is misleading,'' NYRA said.