Empire Racing Backs NYRA Effort to Secure State Funds

A group vying to replace the New York Racing Association as operator of three Thoroughbred racetracks has joined NYRA's effort to get the state to release $19 million in funding for the financially ailing operator.

Empire Racing Associates said the state should help NYRA avoid bankruptcy by turning over the funds, which were approved by state lawmakers earlier this year, to keep NYRA solvent until its franchise expires at the end of 2007.

The support from Empire, albeit with a healthy dose of criticism for NYRA, came just days after the state's chief fiscal watchdog suggested the Pataki administration's lottery agency is delaying approving a VLT casino contract at Aqueduct to muddy the waters in the bidding process. State officials at another agency say they won't release the $19 million until the casino project is assured, which NYRA officials have said they have provided.

Jeff Perlee, chief executive officer of Empire, whose partners include Magna Entertainment, Churchill Downs and a group of New York horsemen, said in a Sept. 20 letter to a state panel overseeing NYRA's finances that NYRA's threats of a bankruptcy filing "demonstrates that the status quo has failed and that fundamental change for New York is required. We are hopeful that 2007 will be a time of change for all of us.''

Perlee added, however, that "much long term harm'' could occur if NYRA goes broke, including uncertainty for NYRA workers, horsemen and breeders and others who rely on the industry.

"For those reasons, we urge the oversight board to take necessary steps, including advancing public funds, to ensure that racing operations will continue until such time as a new, financially capable operator can be selected,'' Perlee wrote.

Earlier this week, The Blood-Horse reported that state comptroller Alan Hevesi sharply attacked the state lottery office, which regulates VLT casinos in the state, for not approving the Aqueduct casino contract between NYRA and MGM Mirage. He suggested the state agency was not only helping to drive NYRA into bankruptcy but was possibly interfering with the process now underway to award a new franchise holder when NYRA's contract expires at the end of 2007. NYRA, Empire and two other groups are vying for the franchise.

"Is it actually someone's intention to change the dynamic of what is purported to be an open and fair competitive process to select the next franchisee?" state comptroller Alan Hevesi asked the lottery division in a scathing letter.

A lottery spokeswoman, Jennifer Mauer, said in response Sept. 20, "While it is unfortunate that recent reports have not portrayed an accurate picture of the division's diligence in establishing VLT's at Aqueduct, the division remains committed to the installation of VLT's at Aqueduct and will continue to work with NYRA and MGM in resolving the issues created by their proposed changes.''

The flurry of letters the past week between the various sides illustrates the extent to which the fight over the lucrative franchise –- which could eventually include 10,000 VLTs at two racetracks –- has heated up. Another state panel is actively engaged in scoring the bids it received from the four groups with an eye to completing its non-binding recommendation to the governor and Legislature by September 29; sources have said that deadline may have to be bumped back.

The Empire group in its letter to the lottery agency also made clear it does not believe the MGM contract to run the Aqueduct casino should necessarily be in effect even if NYRA loses the franchise, as various officials believe. "Significant questions have been raised about this unreleased agreement, the terms of which could bind and influence racing operations for many years, affecting the income available for necessary racing improvements and lease payments to the state's taxpayers. We are separately asking Comptroller Hevesi and Attorney General (Eliot) Spitzer to review and compare this agreement with other such VLT management contracts in the state and industry,'' Perlee wrote.

While siding with NYRA on the funding matter, the Empire group at the same time offered sharp criticism of its competitor. "Obviously, everyone would prefer if these funds were advanced to an entity that was reformed, responsive to the public, and able to generate financial confidence going forward. In the meantime we urge you to do whatever is necessary to keep the present track operator from endangering the future of New York racing,'' Perlee said.

A spokesman for the state agency overseeing NYRA's finances said NYRA has made changes to its VLT plans that have slowed the approval process and that the money cannot flow until a repayment plan is in place.