Mixed Signals on NYRA Franchise Deal

New York's governor sent mixed signals about the NYRA franchise agreement.

New York Gov. David Paterson sent mixed signals about reopening the deal giving the New York Racing Association a 25-year franchise extension to operate Aqueduct, Belmont, and Saratoga racetracks.

Paterson on May 28 first suggested he was looking to renegotiate the deal with NYRA or possibly even turn to other entities to run the tracks, and then later backed away from the idea he floated. Just four hours later, though, he backed off the idea.

At a time when his administration is negotiating the final details of an agreement to help NYRA emerge from its Chapter 11 bankruptcy protection, Paterson indicated he might consider reopening the entire franchise talks again with NYRA. The racing entity was awarded a 25-year franchise by Paterson’s predecessor, Gov. Eliot Spitzer, who resigned in March amid a prostitution scandal. The final details of that agreement have still not yet been signed.

“I would like to take a look at it,’’ Paterson said of the deal given NYRA, which includes more than $100 million in bailout and loan forgiveness from the state in return for NYRA giving up its ownership claims of the three tracks.

“I was just not particularly pleased. I don't see how the state won in this exchange’’ with NYRA, Paterson said on an Albany radio station.

The new governor, however, then suggested that it would be difficult for his administration to go back on a deal agreed to by the Spitzer administration, in which he served as lieutenant governor.

Still, he then added, he wanted to look at “the parameters by which I would challenge this, because if I could I would.’’

But later in the day, Paterson backed away from the notion of scrubbing the deal with NYRA. “I don’t think I can reopen’’ the NYRA deal, he told reporters. Still, he criticized NYRA's past performance as "if not failure pretty poor.’’ He added the deal brokered by Spitzer is “not something I would have done.’’ He did not elaborate why.

But, he added, "That deal is basically done.''

The fuzzy signals the governor sent were not unnoticed by NYRA executives, who are still negotiating with the Paterson administration as they also plan the details of its busy upcoming summer Saratoga meet. NYRA is still operating under a temporary agreement that must either be renewed again by the state before the Saratoga meet or given final enactment with the signature by Paterson and NYRA on the final agreement.

Still also up in the air is the future of the New York City Off-Track Betting Corp., which Mayor Michael Bloomberg is threatening to shut down if the state does not alter the revenue sharing agreement with tracks and other entities that he says is unfair to the city. The Paterson administration is floating an idea that would let NYCOTB keep a larger percentage of money it now sends to NYRA and other in-state and out-of-state tracks, as well as a breeding fund. For NYRA, it would mean a loss of at least $12 million annually – a move NYRA insiders have said could hamper its efforts to emerge from bankruptcy protection.

New York breeders, meanwhile, criticized the plan that would cut NYCOTB revenue sharing to the state’s breeding and development fund. “Mayor Bloomberg should stop threatening and start thinking about how the city’s OTB can reform its ways, improve efficiencies, and become more profitable – without hurting horse racing and taking money out of New York’s Thoroughbred breeders who are the backbone of our state’s horse racing industry,’’ the New York Thoroughbred Breeders said in a statement.

The group said no cuts in funding to the breeding program should be on the table, especially at a time of rising fuel, hay, and other prices. “Breeders can’t afford to lose funding, and New York can’t afford to lose its Thoroughbred breeders,’’ the group said.

NYCOTB officials disputed the criticism leveled by the breeders group.

"I think the breeders must be unaware that during my tenure NYCOTB has been run as much like a private sector business as a government entity can be run," said NYCOTB president Raymond Casey. "Over the last five years expenses have been cut an average of $5 million annually and headcount reduced from nearly 1,800 employees to fewer than 1,500.  NYCOTB does nothing but make a positive contribution to the well-being of the State’s horse industry.  Over just the last five years NYCOTB has contributed nearly $48 Million to New York state breeding funds and if a moderate reduction in the next term is needed, it is only to keep NYCOTB in business, which will save the breeders from losing 100% of what we give them annually." 

The OTB took out an ad in a New York newspaper May 29 looking for companies to help the OTB liquidate its operations if a deal is not struck in Albany. The ad says the services needed, which include auctioneers, would be needed beginning June 15 -- the date the city has said it will shutter the 70 different locations, from betting parlors to a warehouse, and stop taking bets. OTB officials have warned the state that the threats to shut down the OTB are real; some state officials believe the OTB is merely trying to enhance its bargaining position in the talks.