Former official Tim Smith caught up in NYRA controversy.

Former official Tim Smith caught up in NYRA controversy.

Mike Corrado

Former NTRA Commissioner Comes Full Circle

Tim Smith was a racing outsider when he was recruited as the first commissioner of the National Thoroughbred Racing Association in 1998. Now, he's again an outsider--maybe even an outcast--caught up in the acrimony dominating the quest for the franchise to operate the three major Thoroughbred racetracks in New York.

The turnaround stems in part from Smith's involvement in Friends of New York Racing, which he helped form as president in 2004 soon after his departure as NTRA commissioner, and his candidacy earlier that year for the presidency of the New York Racing Association, which operates Aqueduct, Belmont Park, and Saratoga.

The situation came to a head Aug. 1 during an Albany Law School conference in Saratoga Springs, N.Y., when NYRA officials pressed him on his involvement with Empire Racing Associates, one of the bidders for the franchise. Smith has said repeatedly he didn't form FNYR as a lead-in to Empire Racing; NYRA officials and others believe otherwise.

Smith, largely credited for his role in important industry initiatives such as an increased lobbying presence in Washington, D.C., and growth in television coverage of racing, now lives in Florida and has moved on to other projects tied to golf and real estate. He maintains a small financial stake in Empire Racing but said he has no intention of taking on a bigger role with the organization.

After the battle at the law school conference, Smith e-mailed a lengthy letter to board members and others associated with FNYR to discuss questions raised about "the objectivity and good faith of the work of (FNYR) and specifically about the appropriateness of my own conduct at different points." He credited all those associated with the effort and noted the request for proposal for the franchise employed many FNYR recommendations on how to revise the economic model for racing and breeding in New York.

Still, the atmosphere in New York is poisonous, though not unexpectedly. Alan Foreman, an attorney and longtime industry player by virtue of his position as chief executive officer of the Thoroughbred Horsemen's Association, indicated Aug. 9 divisiveness was almost inevitable.

"You've got a situation where the existing franchise-holder and (prospective bidders) are operating under two different models," said Foreman, who has been a member of the NTRA board of directors since the organization was launched and has been through many industry wars. "You almost expect this type of thing to happen."

Smith, in his letter, a copy of which was obtained by The Blood-Horse, said allegations that FNYR was a "vehicle" for formation of Empire Racing is "blatantly unfair nonsense." He then said it's true "numerous and varied discussions happened along the way about what should happen after FNYR finished its report (and funding), what types of industry coalitions might grow out of Friends' work to implement its recommendations and/or operate a revived New York pari-mutuel industry, whether in some sort of strategic alliance with NYRA or through some completely new entity."

Smith in his letter said he spoke with horsemen and breeders last year and encouraged them to form a bidding entity, mostly likely with partners, including NYRA. He said NYRA officials were asked "multiple times to be part of FNYR," but "almost without exception, refused these requests."

NYRA is among the bidders for the three-track franchise, which expires Dec. 31, 2007.

NYRA president Charles Hayward, who took that post in November 2004, acknowledged Smith sought to have NYRA board members join FNYR, but the board believed its members shouldn't participate because NYRA is non-profit and FNYR employed a private-equity model.

"There is no question Mr. Smith asked members to be on the board, and NYRA did decline," Hayward said Aug. 9. "Our board felt it would be a conflict of interest."

In earlier comments made Aug. 1 to Daily Racing Form, Hayward said NYRA officials believe Smith "was never fully honest" with those who supported FNYR, from which some board members, staff, and advisers ended up joining Empire Racing.

One of the partners in Empire Racing is the New York THA. When its involvement in Empire Racing was announced in March, NYRA was immediately put on the defensive given comments made by New York THA president Richard Bomze.

At the time, Bomze said Empire Racing would seek partners, including NYRA. "We would let them be a part of the business, but we are going to run racing," Bomze said of the new entity. "I'm not saying we'd throw everybody out, just the board of directors."

Smith's letter said that in 2004, when FNYR was considering its options, formation of a for-profit entity was discussed. That led to creation of New York Racing and Entertainment, a shell company that would accept any industry investors, including NYRA. The limited liability company was established in November 2004 and dissolved several months later. State records classify the entity as "inactive."

Smith in his letter said New York Racing and Entertainment was formed by The Jockey Club, though a document filed with the New York Department of State Division of Corporations lists Smith as the contact and contains his former New York address. Smith couldn't be reached to comment on his role with New York Racing and Entertainment or its structure.

Industry officials indicated the entity was formed on behalf of FNYR, and that The Jockey Club had no intention of forming a for-profit enterprise that would seek the racing franchise and compete with other entities. New York Racing and Entertainment was said to be an alternative that proved to be not feasible.

Smith in his letter said he and others realized New York Racing and Entertainment "could be perceived as compromising the credibility of FNYR's non-profit, think-tank work and policy recommendations." Still, he said the consensus was and remains that an "industry-wide coalition is the best long-term solution to recapitalizing and sustaining New York racing."

Despite the conflict, personal attacks, and uncertainly over the franchise, there seems to be widespread acknowledgment that FNYR did achieve its goal.

"We at The Jockey Club formed FNYR in the fall of 2004 because with all the trouble surrounding NYRA at the time, we felt somebody needed to step up and do public advocacy work that needed to be done in advance of the franchise expiration and franchise renewal process," Jockey Club president Alan Marzelli said Aug. 9. "The work of (FNYR) has been validated by the impact it has had on the RFP developed by the Ad Hoc Committee on the Future of Racing. The Jockey Club hopes the interests of the Thoroughbred racing and agribusiness in New York are kept in the forefront as the process moves forward."

"I don't think anyone knows where it's going to go," said Foreman, who serves as chief legal counsel for the New York THA but isn't directly involved in the Empire Racing franchise quest. "I don't believe the charges being leveled back and forth are going to make any difference going forward. It's just an interesting sideshow."

Foreman said the decision ultimately lies in the hands of New York Senate Majority Leader Joseph Bruno, a Republican; Assembly Speaker Sheldon Silver, a Democrat; and the incoming governor, mostly likely Democratic New York Attorney General Eliot Spitzer. Republican Gov. George Pataki's term is up this year, and there's a good chance the franchise won't be awarded before he leaves office.

"All the posturing is well and good, but they will decide the fate of New York racing," Foreman said. "At the end of the day, this whole process will be decided by the (government) leadership."

Smith in his letter said he believes FNYR has been a positive force and should be a "source of pride" despite the controversy in which he ended up a central figure. "Perhaps all is fair in love, war, and franchise competitions, and I am in for some spear-catching practice, particularly after nearly 10 years of being extremely well-treated by the industry overall," Smith said.

In early September 2004, Smith said he had decided against pursuing the CEO position at NYRA, but questions remain unanswered as to whether Smith and NYRA officials parted amicably. In July 2004, then NYRA chief executive officer Barry Schwartz told The Blood-Horse he was "excited" about the prospect of having Smith at NYRA, and that the association needed someone like Smith who could take control.

That was only two years ago, and it has been less than one year since the Smith-led FNYR submitted its well-received report on how to strengthen New York racing. In the words of one longtime observer of the horse racing industry: "The luster is very much off of Tim's star. In this business, it doesn't take long for them to carve you up and spit you out."