Stronach Not Interested in Partnering with NYRA in New York Franchise

Magna Entertainment would be interested in partnering with Churchill Downs for New York's potentially lucrative Thoroughbred racetrack franchise, but wants nothing to do with the New York Racing Association, Magna Chairman Frank Stronach said Jan. 24.

In testimony before a state government panel that will oversee the bidding process for a new racing franchise, and with reporters afterward, Stronach lashed out at NYRA as being "clubish'' and says he has no interest in partnering "with a club.''

"I want to be in partnership with business people...I don't want to be in partnership with club members,'' Stronach said after he testified before the panel in Albany. The hearing continues Wednesday in Manhattan.

Stronach, reacting to what he called long-standing rumors that "I'm the bad guy,'' repeatedly told the state panel and reporters that Magna does not want to solely control the franchise for Aqueduct, Belmont, and Saratoga racetracks. "We do not seek domination,'' he said. Instead, he said, Magna envisions partnering with a consortium of parties, including horse owners and breeders, to run the franchise when it expires at the end of 2007.

Stronach said the state should also separate the future contract into two separate bids – one for the racing side and another for the casino, video lottery terminal side of the business. He could not say how his idea would affect the contract NYRA already holds with MGM Mirage for a VLT casino at Aqueduct. He said reliance on casinos to help bolster the franchise would offer only temporary help. "Horse racing is sick. Of casino operators, he said, "They don't really care about horse racing. It's a nuisance to them.''

The Magna leader's comments came during an otherwise predictable set of testimony by the various stakeholders interested in life after NYRA in New York. Part beauty-contest and part-pleading for changes in the state racing law, the session featured NYRA officials laying out the reforms they have instituted since NYRA began having its legal and financial troubles the past few years. Magna officials, complete with glossy color photographs beamed onto a screen for the panel, touted its development and successes as North America's largest racing company. It also featured all sides in the industry lobbying the panel to help make major changes in the state's much-criticized racing law that executives say is hampering the industry's attempt to survive.

Besides Magna, the panel heard from other players expected to be involved in the future bidding: NYRA and Delaware North. Churchill Downs, however, was not represented before the panel, and nor were a half-dozen or more groups that have been rumored to be interested in the franchise.

NYRA President Charles Hayward criticized the existing business model under which NYRA has operated since 1955, and said it and the state's racing laws have largely made NYRA unprofitable for years. Hayward also sought to push NYRA's position that it – and not the state of New York – owns the land upon which the racetracks sit. He said NYRA holds the deeds to the land and has paid over $450 million in property taxes on the land since 1955. The land issue promises to be one of the most politically and legally tricky debates going forward in the bidding process.

Questions were also raised at the hearing about breaking up the current three-track franchise into separate franchises for each track. But Hayward said such a plan would "only encourage more'' industry infighting and competition in the state.

Tim Smith, head of Friends of New York Racing, an industry group, urged the state panel to be "a catalyst for reform.'' He called the NYRA business model a "well intentioned, historic mistake'' that must be fixed by the state.

Magna officials were the least subtle in their desire to become a key player in the upcoming franchise fight. "We want to breathe life into this exciting sport,'' said Paul Cellucci, a Magna executive who is the former Massachusetts governor and U.S. Ambassador to Canada.

Cellucci urged the panel to help create a new environment in New York to ensure a "free enterprise'' system is put in place for the thoroughbred franchise. Promising that Magna will be "an active participant'' in the bidding process, Cellucci added, "There is huge growth potential for this industry that will mean more jobs for New York state and more revenue for New York state government.''

The panel, chaired by former Avis chairman J. Patrick Barrett and whose members include Sackatoga Stables managing partner Jack Knowlton, is expected to award the next franchise by the end of the year. However, there is much speculation that the process might be delayed until next year when a new governor will take office.