NYRA Asks Court to Halt Franchise Award

The New York Racing Association is asking a federal bankruptcy judge to halt the state's plan to turn Aqueduct, Belmont Park, and Saratoga over to the next Thoroughbred franchise-holder.

NYRA, in a battle to hold onto its franchise after a state panel recommended it be replaced at the end of 2007 by Excelsior Racing Associates, also filed a motion with the United States Bankruptcy Court in Manhattan to force the state to approve a long-stalled video lottery terminal casino at Aqueduct.

The court action throws yet another wrinkle into the state's franchise bidding process. An effort by some officials to get the franchise issue resolved Dec. 13 in the state legislature appears dead, legislators and state officials said.

The legislature is in town for a one-day special session, and some backers of Excelsior were trying to get lawmakers to accept a recent recommendation by the Ad Hoc Committee on the Future of Racing that Excelsior get the next 20-year franchise.

The developments came as officials with Australian betting company Capital Play met with state officials to discuss its interest in the NYRA franchise. Capital Play was disqualified earlier in the fall by the ad hoc committee for failing to produce certain documents.

The firm, sources said, is telling officials it will provide $1.8 billion to the state, including $50 million a year, for the franchise--about $1 billion more than the next-highest bidder.

The land claims fight between NYRA and the state has been brewing for some time. The state insists the land reverts back to the state when the NYRA franchise expires Dec. 31, 2007.

NYRA insists otherwise; its move is seen also as an attempt to try to keep it in the running for the franchise. NYRA recently placed last among three groups bidding for the franchise.

The NYRA legal action began Dec. 12 against Gov. George Pataki and other state officials and state agencies. It alleges the state unlawfully blocked NYRA's agreement with MGM Mirage to operate a VLT casino at Aqueduct, the proceeds of which could have been used to share revenue with the state and to also keep NYRA financially afloat so it wouldn't have had to file for bankruptcy protection.

NYRA, in its court papers, said the state willfully denied the casino deal "and then has used that refusal as a pretext to deny NYRA access to critically needed funding."

NYRA also is asking the court to approve a $50-million loan with GE Capital to keep NYRA afloat through next year. About $8 million of the money would be used to re-pay state funds were recently provided to NYRA after the bankruptcy action was commenced.

Further pressing its point on the land claim, NYRA proposes using the three racetracks as collateral for the $50-million loan.

"NYRA is the cornerstone of an industry that provides 17,000 jobs and $1.4 billion in economic impact to the State of New York," NYRA president Charles Hayward said. "It is critical that we move forward for the future benefit of Thoroughbred racing with clarity. These actions help to preserve, protect, and enhance New York's long tradition of producing the world's finest horse racing product."

"This lawsuit filed by NYRA is just the latest sad chapter for an organization that is mired in scandal and out of options, and that continues to blame others for the problems they have created," Scott Reif, spokesman for Gov. George Pataki, told Associated Press.

NYRA is asking the judge to declare that NYRA, and not the state, owns the racetracks. It argues NYRA obtained title to the land on which the tracks sit 50 years ago.

A court date on the loan request is likely in early January, with arguments on the land claims expected sometime in February.