Group's Goal: A Better Model for New York

The future shape of New York's Thoroughbred industry will be the focus of a new group of the nation's leading racing industry insiders, whose chief mission will be to propose a new business model for the racing in the state..

Friends of New York Racing insists the organization, set to launch in January, isn't designed to undermine or promote the New York Racing Association's bid to keep its franchise for Aqueduct, Belmont Park, and Saratoga when it expires at the end of 2007. They also insist the group isn't some sort of commercial bidding conglomerate in disguise to devise an alternative bid to take over New York racing.

"The basic business structure and underlying legislation for New York racing and wagering was created in the 1950s," said Tim Smith, the former commissioner of the National Thoroughbred Racing Association who will head the group. "The gaming universe, the competitive environment, the relevant technology, the economics of horse racing, and the fiscal needs of state and local governments each has changed greatly since then. Friends of New York Racing will look at ways to modernize and improve the racing business to help ensure New York racing remains the best in the world, and to generate added economic benefits to the state and local communities."

Speculation has been rampant in recent weeks that the formation of Friends of New York Racing was solely about getting a group of partners together to take over and privatize the franchise now held by NYRA. Officials said that isn't the goal, but they don't deny some of the members will be in the race to try to succeed NYRA-- with or without a cooperative deal involving NYRA's current leadership.

The group's founding members are Breeders' Cup, Churchill Downs Inc., Magna Entertainment Corp., Keeneland, Oak Tree Racing Association, Scientific Games, Woodbine Entertainment Group, and The Jockey Club. CDI and MEC are among those interested in taking over NYRA's franchise.

The bidding process for the franchise could begin as early as the end of 2005. Friends of New York Racing said the entity wouldn't support any one company or group that wants to take over the franchise.

The entities are putting up seed money for the organization, but the group's board of directors will include a number of other leading voices in the racing industry, such as officials from New York's breeding industry and horsemen's group. Notably missing, though, is any representation from NYRA. Officials with Friends of New York Racing insist NYRA will play a role--if it wants to--in the organization.

"Officially, we have nothing to do with it," outgoing NYRA chairman Barry Schwartz said. "NYRA has not been a part of the discussions."

Schwartz said it would be important for NYRA to have some sort of "arms length" role if the new group is going to succeed in its mission.

Though two members are CDI and MEC, Schwartz said he hopes Friends of New York Racing won't end up proposing a plan to take the three tracks to a for-profit, public company model. "A public company would bleed New York racing," Schwartz said.

Friends of New York Racing is described as a sort of think tank, with a few twists. It will lobby state officials, so by law it will have to register as a lobbying entity in the state. It will try to build a consensus among its members for how the current franchise system should be reworked. It will have a public advocacy role to promote racing. And it will make recommendations on everything from video lottery terminals to relationships with off-track betting corporations.

Its end goal will be a series of statutory changes in state law that will go beyond the franchise to conduct horse racing. It will operate on a budget of about $1 million in 2005, and intends to hire a lobbyist or two.

The group's ideas are intended to improve the current racing climate for all stakeholders, including the state of New York, which shares in racing revenues and wants to preserve the estimated 40,000 jobs tied in one way or another to the racing industry, officials with the group said.

Given the timetable for the franchise, and the state's likely move for major racing legislation next year to help get more VLT casinos up and running at places like Aqueduct, the group plans to move quickly. It hopes to put out a preliminary report in April or May.

The court-appointed monitor overseeing NYRA is expected to release its own report in June or July concerning the future of NYRA. Friends of New York Racing would then release a final set of recommendations by the end of 2005.

Smith was in line to become the new NYRA president, but he withdrew his name suddenly in late summer and said he wanted to concentrate on the future of New York's racing industry.

"New York racing has maintained a competitive purse structure despite the structural flaws that NYRA has had to contend with," Alan Foreman, counsel to the New York Thoroughbred Horsemen's Association, said in a statement. "Our several thousand members, along with their families and employees, are naturally concerned about the future viability of the state's racing industry and New York's ability to keep pace with rising purse levels in surrounding states."

"The long-term future health of New York's breeding agribusiness, farms, and jobs depends on the long-term future health of the pari-mutuel industry," said Dennis Brida, executive director of the New York Thoroughbred Breeders. "Our organization is pleased to be a part of this important effort to preserve and enhance New York racing."