Senate Plan for Franchise Wins Support, Criticism

A new state corporation would be created to select new operators of New York's three-track Thoroughbred racing franchise under a plan by the Republican-led state Senate.

A new state corporation would be created to select new operators of New York’s three-track Thoroughbred racing franchise under a plan by the Republican-led state Senate.

The Racing, Gaming, and Equine Sports Development Corp. would select entities to run the racing and casino portions of the franchise, which involves Aqueduct, Belmont Park, and Saratoga. The plan, along with other aspects, is expected to be formally unveiled Oct.16 by Senate Majority Leader Joseph Bruno, who has been in a sharp disagreement with Gov. Eliot Spitzer over the future direction of the franchise.

Spitzer tabbed the New York Racing Association to continue operating the racing end of the franchise.

The Bruno plan envisions creating the new corporation, whose members would include the current members of the NYRA Oversight Board, which was created several years ago to monitor NYRA’s finances and operations. The oversight board is dominated by Republican appointees; its chairwoman, Carole Stone, is an appointee of former Gov. George Pataki.

In time, the Bruno proposal envisions turning the board of the corporation over to representatives of horse owners and breeders, along with representatives of racing, gambling, and real-estate development companies. In all, it would have 11 members.

Besides picking the franchise winners, the board would have new oversight duties over the next holder of the franchise, according to a Senate document. The corporation would have the authority to make contracts for everything from video lottery terminal operators to marketing companies.

The Bruno plan also calls for establishment of community advisory groups to be involved in VLT expansion efforts at Aqueduct and a possible future casino development at Belmont.

The plan further calls for the corporation to explore a new model to improve the long-criticized relationships between racetracks and off-track betting corporations. It offers no specific proposal for merging OTB corporations and tracks. It also recommends increases in purses and revenue to breeding funds.

The Senate plan, however, includes a major poison pill: the five-member panel overseeing NYRA’s finances is led by Republicans. Three of the members were appointed by Pataki; one by Bruno, and one by Democratic Assembly Speaker Sheldon Silver.

It is all but certain Spitzer, a Democrat already in a major political battle with Bruno on other issues, will not go along with any plan that would let appointees from a former governor decide the next franchise-holder.

Bruno said he also wants OTB corporations to come under the control of the new corporation. He said New York City Off-Track Betting Corp. officials told him they are “open" to a concept that they “may be better off combining" operations with the franchise than remaining in the competitive position the two entities have been in for decades.

“This is an opportunity of a lifetime," Bruno said Oct. 16 of the plan to fix a broken model involving racetracks and OTBs. He said “ultimately" his plan would be that all the state’s OTB corporations come under the control of the public corporation he proposed.

Bruno said the new corporation could award a single entity to run all aspects of the franchise, or split up the duties along the different business lines, including racing, casino, real estate, marketing, and tote operations. He suggested the three tracks could end up with one or as many as three operators depending on the desires of the corporation.

While Bruno said NYRA could be a part of racing under the plan, he sharply criticized any suggestion NYRA would not continue racing if a deal is not struck by the time its franchise expires Dec. 31. NYRA claims it owns the property at the racetracks; the matter is before a federal bankruptcy court judge.

Bruno said if the overall franchise issue is not resolved, the five-member NYRA oversight board, by law, legally takes over racing. It could tap NYRA to continue running racing on an interim basis while negotiations continue or turn to another operator.

In reponse to a reporter who said NYRA officials have said they are not interested in racing after Dec. 31 if the franchise issue is not resolved, Bruno said: “That’s not the right attitude. I don’t for a second believe the board of directors at NYRA is going to let racing stop. And if they think they can, let them try."

Spitzer noted the late timing of the Senate plan, coming six weeks after his proposal to give NYRA another franchise extension. "The plan appears to raise as many questions as it answers, including which entities would actually operate racing and the VLT facility at Aqueduct," the governor said. "I continue to believe that the proposal to give the racing franchise to a newly reconstituted NYRA, while selecting an experienced gaming operator to run the VLT facility at Aqueduct, offers by far the best solution for stability and growth of the racing industry in New York state."

Empire Racing Associates chief executive officer Jeff Perlee backed the Senate plan. "Everyone agrees that the status quo does not work," he said. "As taxpayers look beyond NYRA, this proposal from the Senate will ensure much stronger public oversight and accountability with the prospect of more efficient day to day business management."

Perlee said a new state authority plan "offers the best hope for a successful conclusion to this process and for the long term interests of the industry and taxpayers."

The Senate plan was immediately blasted by Silver, who said the proposal by Bruno “is all politics and no substance. It is an attempt to permanently install appointees of the former governor and Sen. Bruno to determine the future of racing in New York state."

Silver said the Bruno proposal “jeopardizes" the racing industry. Moreover, he said dismissed the Senate plan – which calls for VLT casinos at both Aqueduct and Belmont.

NYRA president Charles Hayward said his group “remains committed" to the plan already put forward by Spitzer, and backed by Silver, that would give NYRA a 30-year extension to the franchise. “With only 77 days remaining, NYRA is disappointed that the Republican Senate majority did not offer constructive comments on the substance of the MOU" signed by NYRA and Spitzer, Hayward said.

But Australian-based Capital Play called the Senate plan “a model for turning New York racing into the best racing in the world."