Officials Knock Heads Over Racing Franchise

The battle over the franchise to run three New York racetracks got off to an unofficial start Aug. 2 when officials with the New York Racing Association and Magna Entertainment Corp. sparred during an Albany Law School symposium.

NYRA and MEC officials politely jockeyed over who is better positioned to run Aqueduct, Belmont Park, and Saratoga when the NYRA franchise expires at the end of 2007.

"We're very interested in participating in that bidding process," Jim McAlpine, vice chairman of corporate development for MEC, told the audience of lawyers, industry executives, and state regulators gathered in Saratoga Springs, N.Y.

With top NYRA officials looking on, McAlpine said MEC is "not the devil," and could bring its for-profit mentality to New York to help the pari-mutuel industry. Peppering his sales pitch with a PowerPoint slide show depicting the company's holding, McAlpine said MEC doesn't need to control the franchise. "We'd be thrilled to do it on a partnership basis," he said.

McAlpine finished up with a video of the company's rebuilding of Gulfstream Park. He called it a project that "could serve as a role model" for New York racing.

But NYRA president and chief executive officer Charles Hayward appeared unimpressed. "I'm not a PowerPoint kind of guy," he later said of the presentation. He called McAlpine a "gentleman" for not "coming out swinging," but he noted McAlpine talked of a bidder's past performances being considered, something NYRA officials apparently took as a jab.

Hayward told reporters he would "strongly encourage" officials to also look at MEC's past. He didn't elaborate but said: "I think people should make up their own minds about Magna."

Hayward said there are "some serious questions" about MEC's financial ability to put together a deal on its own for the NYRA franchise. He said that might explain why McAlpine said MEC is open to partnering with others on the New York franchise.

Hayward lashed out at MEC management operations, and talked of its management shuffles and the "big contrast" between how MEC operates and how Churchill Downs Inc. is run. He mentioned some industry initiatives undertaken by CDI but said MEC relies on its account-wagering platform.

"I just think the way Magna does business is not the way I'd choose to do business," he told reporters after he and McAlpine shared the stage during the law conference session. And while McAlpine opened the door to possible partners for the New York franchise, Hayward closed it to any notion of NYRA and MEC getting together. "I don't think a partnership with Magna and NYRA would be probable," he said.

With legislative aides and state regulators listening, Hayward said that while NYRA wants to remain the franchise-holder, state law must change to mend what he said is a broken business model. Industry insiders believe New York must re-examine the corporate structure of the franchise to end its non-profit status and to change the combative relationships that now exists between NYRA and off-track betting corporations.

Hayward said if the state offered to continue the NYRA franchise without any changes, "We'd say, 'No thanks.' The legislature is going to have to have an appetite to change those racing laws."

Either way, he said state officials would have to deal with NYRA. He said NYRA has "significant claim" to the land upon which the tracks sit. He said NYRA since 1955 has paid $440 million in property taxes to the local communities where the tracks are located.