Court Action Possible in NYRA's Plan to Auction Art

New York's top racing regulator said court action is still being considered as a result of the New York Racing Association's plans to auction off 19 pieces of artwork without first getting state approval.

State Racing and Wagering Board Chairman Michael Hoblock said the state remains convinced that NYRA cannot proceed with its planned Dec. 2 auction -- which NYRA officials hope will raise $2 million to help with its cash flow crisis -- unless the government approves the sale. NYRA officials have insisted that they never needed state permission before to sell things like tractors or machinery, and that it doesn't need the state's authority to sell paintings given to and purchased by NYRA over the years.

"We are still in the process of reviewing various avenues and options. It's very difficult to talk about because of potential litigation,'' Hoblock said in an interview. "To publicly discuss options and alternatives would give away legal strategies.''

Hoblock said the matter has still not been resolved since he sent NYRA a letter Nov. 15 demanding that the auction be stopped, or face the wrath of the state attorney general's office. NYRA did respond to Hoblock's letter, but neither side will reveal the contents of the letter.

Asked if he had referred the matter to Attorney General Eliot Spitzer, Hoblock would only say that "everybody is talking about their options.'' He added, "This is uncharted waters. Obviously, this has never happened before and everybody's treading very lightly, softly, carefully.''

Asked if he was satisfied with NYRA's level of cooperation in the dispute, Hoblock said, "I can't speak to that.'' NYRA officials have privately said the state took weeks to raise any complaints about the artwork sale. "I was out of town. I was on vacation,'' Hoblock said of the timing of his letter to NYRA a couple weeks before the scheduled auction.

NYRA has a serious cash flow problem. It has been delaying payments to vendors and has floated a plan to sell off 80 parcels of land in and around Aqueduct. State officials say that land sale also needs state approval. The state and NYRA for years have feuded over who owns the land at NYRA tracks -- the state or NYRA. With NYRA's franchise expiring at the end of 2007, the state has insisted NYRA not sell any of its major assets that could lower the value of the franchise.

NYRA President Charles Hayward did not return repeated calls for comment.

In his letter to Hayward, which was also copied to Sotheby's auction house, Hoblock called the sale "unauthorized'' and threatened legal action against both NYRA and Sotheby's if the auction went ahead. Soon after, officials with a new state agency that is overseeing NYRA's finances said it agreed with Hoblock that the art sale had to be approved.