Empire Group Alleges Collusion in N.Y. Bid Process

Empire Racing Associates has accused two of its competitors of secretly meeting to discuss a possible joint venture involving New York’s Thoroughbred franchise, which Empire contends violates state procurement rules involving collusion.

The Empire group said that top officials from the New York Racing Association and Excelsior Racing Associates have met to discuss a plan in which Excelsior would run the gaming component of the franchise and NYRA, or a re-constituted NYRA group, would continue to oversee racing at Aqueduct, Belmont and Saratoga tracks.

NYRA and Excelsior officials denied the accusations.

The claims were contained in a May 31 letter to New York Comptroller Thomas DiNapoli and Richard Rifkin, who is advising Gov. Eliot Spitzer on the franchise bidding process. Empire called on the state officials to investigate the allegations.

Empire said the meetings included Charles Hayward, the NYRA president, and Richard Fields, a casino developer who is a partner with Excelsior. Empire said the division of the franchise would occur “presumably after’’ Excelsior was awarded the franchise and NYRA would then reassert its control of racing through a plan of reorganization filed with the federal judge overseeing its Chapter 11 bankruptcy proceeding.

“The information relayed was so specific as to include an actual breakdown of how the two bidders would plan to distribute VLT percentages between themselves,’’ Jeff Perlee, Empire’s CEO, said in the letter to state officials.

John Lee, a NYRA spokesman, denied any such meetings occurred. “No one from NYRA has been in any consultation or conversations with people from Excelsior since before the bids were placed in August,’’ Lee said.

"It is completely and utterly untrue,'' NYRA chairman Steven Duncker said of allegations.

“This allegation is unequivocally and completely false,’’ said Katie Burke, a spokeswoman for Excelsior, whose partners include casino developer Steve Wynn.

“Excelsior has complied with every regulation set forth by the panel, and this instance is no exception,’’ she said, referring to the administration panel considering the franchise plans. “Our team remains prepared to partner with the State of New York to ensure the best possible future for racing. Any allegation of impropriety is categorically untrue.’’

The ratcheting up of the franchise battles come as Spitzer is still considering his options – and whether to radically alter the Thoroughbred racing industry in New York through such ideas as shutting down Aqueduct.

Empire, whose partners include Churchill Downs and Magna Entertainment, said each bidder had to sign non-collusion agreements as part of the bidding process. The discussions it claims NYRA and Excelsior had over the past couple weeks “violates the spirit of competitive bidding and fair competition set forth to ensure the integrity of this process.’’

If the allegations are substantiated, Empire said it believes NYRA and Excelsior should be disqualified from the franchise process because it would violate integrity standards the Spitzer administration set for the bidding. It added that any talks between NYRA and Excelsior could also substantially change the bids by the two entities, which would violate rules about proposals changing after a deadline imposed by the state.

“Such a situation imposes a significant hardship and unfair disadvantage to other bidders who have not changed their submitted plans and approach and who have played by the procedural rules,’’ Perlee wrote.

Empire said that NYRA and Excelsior’s motivations could be a hope that “they might somehow together convince decision makers to alter the framework from that which all bidders responded to, to a new and different framework that better fits NYRA and Excelsior’s alleged interest in splitting up and dividing the gaming and racing components of the franchise.’’

“The notion of a newly designated franchise holder, working in concert with a reconstructed NYRA in bankruptcy, may in fact be a desirable way to wrap up the whole franchise puzzle. However, such a result cannot be the fruit of collusion between the bidders,’’ Perlee said in the letter.

The NYRA franchise expires Dec. 31. Besides a possible VLT casino at Aqueduct, the state is also considering a casino at Belmont.