The New York Racing Association, created more than 50 years ago to bolster the Thoroughbred industry, is taking on a new life Sept. 12 with the formal approval by the state of a new 25-year franchise to exclusively operate Aqueduct, Belmont Park, and Saratoga.
The backing by the state comes with vows of stronger oversight of NYRA’s operations by state regulators, and an end to NYRA’s longstanding ownership claims of the three tracks. New York State is giving NYRA $105 million to help it emerge from its Chapter 11 bankruptcy protection.
NYRA officials were poised to discuss the developments later in the day following meetings by regulators in Manhattan and near Albany. Still uncertain is the future of the long-stalled video lottery terminal casino at Aqueduct; state officials have not settled on an operator for the facility, which will feature 4,500 VLTs, between three bidding entities vying for the lucrative contract.
The transfer of the deeds from NYRA to the state will close an often-bitter chapter in the rollercoaster relations between the racing monopoly and state regulators. NYRA was believed even by many of its insiders to be living on borrowed time following a remarkable run of legal and financial troubles in recent years. But, thanks in part to the political muscle of its key supporters, NYRA was able to beat back its competitors and win a 25-year franchise extension.
In return, it agreed to some mostly minor oversight mandates by the state, including additional government officials being appointed to its board of trustees. The franchise was agreed to by the state legislature in February.
Two of the key negotiators in the whole deal – Eliot Spitzer and Joseph Bruno – weren’t around to witness the final approval; Spitzer, the former governor, resigned in March amid a sex scandal, and Bruno, the former Senate majority leader who had an up-and-down relationship with NYRA, retired earlier this summer.
NYRA has operated the three tracks since 1955. Besides the direct state aid, NYRA will have tens of millions of additional dollars of debt written off by the state.
NYRA has been operating this year under a series of “extenders” as it negotiated the final terms of the agreement.
The new state NYRA oversight board met for less than three minutes in Manhattan Sept. 12 in what was essentially a legally required session to begin its official capacity. It approved only one resolution: to give chairwoman Laura Anglin, who is also Gov. David Paterson’s budget director, authority to sign the bankruptcy documents.
The New York State Racing and Wagering Board is expected to approve NYRA’s new incorporation Sept. 12; the board recessed in the morning while awaiting paperwork to be delivered from the state Secretary of State’s office. The developments were possible following approval the day before by a federal bankruptcy judge of NYRA’s plan to pay off its creditors and emerge from Chapter 11 oversight. The emergence from bankruptcy is being formalized with the signatures from the various state entities and NYRA officials.
The state is expected to wire $75 million to help pay off NYRA’s financial obligations in the bankruptcy proceeding.
“It’s a new era of accountability and transparence in New York’s Thoroughbred horseracing industry,” said Morgan Hook, a spokesman for Paterson.
The legislation approved earlier this year creates a 25-member board, down from the current 28 members. NYRA selects 14 members, giving it control, while the state has 11 members on the panel. The governor controls seven of those members, and one each will be made on the recommendation of the off-track betting community, breeders, horsemen, and the state AFL-CIO.
Additionally, two members selected by the Assembly speaker and Senate majority leader will serve on NYRA’s executive board. Current NYRA board chairman Steven Duncker would face a term limit; the bill states he cannot serve more than four years.
The legislation creates a formula by which NYRA will pay an annual franchise fee to the state by April 5 every year. An escape clause exists, however, permitting NYRA to ignore the payment schedule if it runs into financial problems.
The deal creates local advisory boards from the communities surrounding Aqueduct and Saratoga, giving them input in matters such as real-estate development plans. NYRA must meet with the local boards, whose members include area politicians, at least twice a year.