Bidding Package for NYRA Franchise Approved by State Panel

The long-awaited Request For Proposals for the franchise to operate racing at Aqueduct, Belmont and Saratoga was approved for release June 13 by a state government panel, though it appears increasingly unlikely the winning bidder will be selected this year.

The Ad Hoc Committee on the Future of Racing approved a bidding package that gives prospective franchise holders multiple options for structuring a plan to run racing at the three tracks. Jumping into the legally unsettled waters over who owns the racetracks, the RFP notes that bidders should assume the properties are owned by New York state. The New York Racing Association, which has held the franchise since 1955, insists it owns the tracks.

The timetable for bidders is a short one. The franchise package requires bids to be submitted by Aug. 15, with the state committee selecting a proposed winner by Sept. 15.

But the bid still needs the approval of the state Legislature and the governor and with a change in control of the governor's office at the end of the year the odds are against a final decision this year.

Assemblyman Gary Pretlow, chairman of the Assembly racing and wagering committee and a member of the ad hoc committee overseeing the bidding process, said after the panel's June 13 meeting that he does not envision the final franchise decision happening this year. He said the matter will be for "the next legislature and next governor.''

While state lawmakers might return later this year, the 2006 session officially ends June 22. "I don't think that's going to happen,'' Pretlow said about lawmakers later this year taking up the franchise issue.

The RFP, which is due to be released later today, lets bidders make offers based on a series of possible changes to the state's racing law. For instance, bidders can offer a plan based on the current business model, though it's unlikely that option will be taken by bidders who have listened over the years to complaints by NYRA and others that the current non-profit structure is not financially workable. Another option has bidders considering major changes to state law, such as permitting joint partnerships with off track betting corporations to run the Thoroughbred tracks.

Bidders will also be able to craft proposals with and without the introduction of video lottery terminals at Belmont. Current law provides that VLT wagering is permitted only at NYRA's Aqueduct facility.

"I'm satisfied with the timing,'' J. Patrick Barrett, the ad hoc committee's chairman, said of the RFP process. "I think we covered every conceivable base from the various constituencies of racing.''

Besides issuing the RFP, would-be bidders were also warned to stay away from personal contacts with the board's members. The members said they will have no discussions with potential bidders, and advised franchise suitors to deal only with the committee's staff.

The RFP was approved by the committee members in a state Capitol room packed with lobbyists and other representatives for a host of potential bidders, some of whom have already revealed themselves –- such as Magna Entertainment, Churchill Downs and Empire Racing Associates –- while others remain as mystery groups, such as Excelsior Racing, which has supposedly attracted an assortment of potential backers. NYRA, whose leaders are also angling to make a run for another franchise award, was also represented at the meeting.

The NYRA franchise expires Dec. 31, 2007.

In an unusual move for a state bidding process, the RFP permits bidders to respond to one or more of several options for how the new franchise will be constructed. The first option calls for no changes to existing law.

The second option calls for a bid based on "incremental changes" to the racing law, including extension of race dates at Saratoga, account wagering via the internet, permitting joint ventures with off track betting corporations and changes in pari-mutuel taxes.

A third option calls for the incremental changes plus a major restructuring of the OTB system to create a single, statewide OTB corporation run by a board of directors that would include among its members representatives from the state's racetracks. The board members' power would be weighted based on the past 10 years' worth of handle generated on New York state races. The new combined racing and OTB public benefit corporation would have the dual charge of providing revenues to local governments -- now the function of the OTBs -- and promoting the racing industry.

All three options include a side option for bidders to include a package based on slot machines being permitted at Belmont.

"Each option provides the opportunity to increase the value of the Franchise," Barrett said. "This would permit the bidder additional revenue to frame their proposal."

Bidders will also have to state the kinds of racetrack improvements that are needed at the three tracks, how many days a year racing will take place and reveal plans for marketing, what will occur at the tracks when racing is not taking place, and how the bidder will address equine and ride health and safety concerns, improvements to backstretch conditions and thoroughbred retirement programs.

Half of a bid's consideration will be based on how bidders respond to the proposal questions, with other factors to include such things as the integrity, financial viability and experience of the bidders.

The committee embraced a quick timetable. Those bidders trying to sit anonymously on the fence the past year or so will see an end to the cloaking on June 30 – the date when prospective bidders must submit an "expression of interest'' to the committee. Visits to racetracks by bidders begin June 19 under the timetable adopted by the committee.

The length of the new franchise will be 20 years, the RFP states, commencing Jan. 1, 2008. The RFP states that the title to the racetrack facilities returns to the state at the end of the franchise period.

The RFP includes a lengthy form bidders must fill out that the committee will use to help determine a would-be franchise holder's integrity. Among the questions, bidders must state whether anyone connected with the proposal during the past 10 years had any sort of civil or criminal judgments or convictions, been investigated by authorities for any business-related conduct, labor law violations or run-ins with government agencies over environmental issues. Bidders must even state if they have had a bid rejected for contracts because of violations of the MacBride Fair Employment Principles, which guides conduct of U.S. companies doing business in Northern Ireland.

The committee also seeks from bidders five years' worth of audited financial reports and other barometers to judge their financial capabilities. The committee also expects bidders to show specifically how much money would be dedicated from track revenues for programs such as rider health and safety programs and things like drug testing. The RFP tells bidders to also show how much they would charge for racetrack admission, how much and who would benefit from gifts to charity and showing how programs for racing and VLT betting can be merged "while maintaining the state's commitment to each industry.''