NYRA to Include For-Profit Partner in Bid to Retain Franchise

The New York Racing Association will include a for-profit partner in its bid to hold onto the state franchise to operate Aqueduct, Belmont, and Saratoga racetracks, NYRA president Charles Hayward said June 26.

"We are going to have to have a strategic partner,'' Hayward said after NYRA unveiled its plans for its upcoming Saratoga meet. He said a "logical partner'' would be MGM Mirage, the Las Vegas gambling company that is partnering with NYRA on the long-stalled plan to bring video lottery terminals to Aqueduct. But he added that other possible partners could include tote companies and others, such as Scientific Games Corp.

While NYRA has had its problems with other racing companies over the years, speculation has also been rampant that NYRA might hook up an out-of-state racing company, such as Churchill Downs or Magna Entertainment. While not ruling it out, Hayward said such a partnership would "not raise the capital or be the best strategic relationship'' for NYRA.

Hayward has said in the past that NYRA believes the "best entity'' to run racing in New York is NYRA continuing as a non-profit association. But the event was the first time Hayward confirmed that NYRA will team up with a for-profit partner in order to raise capital for the expected franchise price in the upcoming bidding process and to align itself with a company with expertise in the non-racing – such as VLTs – side of the business.

In an interview, Hayward said NYRA has held only informal discussions with potential partners. He praised MGM for being "extra patient'' during the delayed VLT project at Aqueduct – which he said is still awaiting final sign-off from the state. "There's a logical affinity there,'' he said when asked about partnering with MGM on a franchise bid. He added that companies with "expertise in off track betting'' could be another source for franchise partners.

Potential bidders must tell a state government panel by June 30 if they are interested in the franchise. Bids for the complicated and unusual request for proposal are due by August 15, and the government panel is to make its recommendation to the governor and Legislation by September 15. But lawmakers expect the final decision to be put off until next year when a new governor takes office.

Among the obstacles NYRA faces is the question of who owns the racetrack properties. State officials say the land reverts back to the state's ownership when the franchise expires on December 31, 2007. In fact, in the recent RFP made public by the bidding panel, bidders are told to assume in their bids that the state owns the land.

But NYRA insists otherwise. "NYRA's position all along has been that NYRA owns the land. Our response (to the RFP) will acknowledge our current position and will take exception with the position that is stated in the RFP,'' Hayward said.

Asked if that could be problematic to getting the franchise, Hayward said, "I think the difference in opinion about the land is problematic inherently, so going forward, clearly, that has to get resolved before the franchise is awarded. Our hope is that, by going down and responding the franchise, we can get the ownership of the land sorted out.''

Some state officials have said privately that NYRA could try to challenge the ownership issue in court, possibly bankruptcy court. "We don't have a specific strategy at this point. A legal remedy might appear on the surface to be attractive,'' Hayward said. But, noting the tight turnaround for the RFP and the expiration of the franchise in just 18 months, "I think we all need to take heed and make sure there is no potential disruption to what is the most significant racing program in the country.'