A consortium of major horse industry companies vying for the Thoroughbred franchise in New York began falling apart Oct. 10, as Magna Entertainment Corp. and Churchill Downs Inc. announced their withdrawal from Empire Racing Associates. A third partner, Delaware North, was said to have followed suit, which would leave Woodbine Entertainment Group as Empire's only remaining partner.
The pullout came hours after it was revealed Empire Racing was in negotiations with Australian-based Capital Play to merge their bids for the franchise to run Aqueduct, Belmont Park, and Saratoga. In what could be a major boost for the New York Racing Association to retain its franchise, the MEC and CDI withdrawals empty Empire Racing of its leading horseracing corporations. Delaware North did not announce its withdrawal nor immediately return calls requesting confirmation.
MEC, in a statement, said Empire Racing's bid was rebuffed in two key stages of the bidding process in the past year, “and the process has progressed in a manner which MEC does not see leading to a successful outcome for Empire Racing."
Empire Racing chief executive officer Jeff Perlee said the Spitzer administration said it did not recommend the group for the bid in part because of possible antitrust and other concerns involving MEC and CDI. Perlee said Empire Racing has a “duty" to listen to those concerns by Gov. Eliot Spitzer and said the changes to Empire Racing's composition reflects those concerns.
“This can only make us stronger going forward in the competition," Perlee said.
Empire Racing and Capital Play are in what one executive with knowledge of the groups described as “heavy talks” to merge their bids to compete against NYRA and Excelsior Racing Associates for the right to run racing in New York. “It’s a recognition there are synergies that together they can be stronger,” said an executive who spoke on condition of anonymity.
Spitzer recently recommended NYRA be awarded a 30-year franchise extension, a plan that has gotten a cold reception in the Republican-led Senate. Spitzer also wants the state to choose a company to run a video lottery terminal casino at Aqueduct and down the road possibly at Belmont.
The governor has clearly been less keen on Empire Racing and Capital Play, and the new talks among the two bidders appear to recognize that their best shot would be by combining forces. Senate Majority Leader Joseph Bruno has criticized Spitzer’s plan and said he believes other operators should have a role in the franchise.
Australian-based Capital Play also includes Mohegan Sun and Extell Development Co.
Word of a possible merger came as a Senate racing panel Oct. 10 held a hearing in Albany to take testimony from the bidders on the best business model for the franchise.
In the Senate hearing, NYRA officials were forced to defend the entity’s financial performance, stating what it has done with bailout money from state and its decision to award a no-bid, $125,000-per-month contract to Getnick & Getnick, a Manhattan law firm, to oversee an integrity program at the tracks.
“Don’t count (your) chickens before they are hatched,’’ Senate Racing Committee Chairman William Larkin told NYRA officials after they spoke of the support for the governor’s recommendation for another franchise extension for the group.