Bruno: Franchise Proposal Will Undergo Much Change

New York’s top Republican lawmaker said a plan by Gov. Eliot Spitzer to give another exclusive racing franchise to the New York Racing Association will not be approved by the legislature in its current form.

In his strongest words yet on the Spitzer plan, Senate Majority Leader Joseph Bruno vowed “a lot of changes” to the proposal unveiled Sept. 4 giving a 30-year franchise to NYRA. “I can tell you now that what the governor submitted is not going to be the final product,” Bruno said Sept. 12.

The senator’s remarks at an education event came as a hearing was under way near the state capitol by Republican and Democratic senators studying the franchise issue. It also came after officials with Empire Racing Associates, one of the other bidders, complained publicly a company that reviewed its integrity background for the state had a conflict of interest that has undermined its efforts to win the franchise.

Officials earlier told The Blood-Horse Senate Republicans were eyeing a plan--as an alternative to Spitzer’s proposal--to create a state authority that would select entities to run various aspects of the franchise, including racing at Aqueduct, Belmont Park, and Saratoga as well as planned video lottery terminal casinos. Officials said it could result in different groups running different tracks or linking up with partners to run the overall franchise.

Spitzer Sept. 12 released a letter requesting any entities interested in running a VLTcasino at Aqueduct to respond with a bid and a plan to his administration by Oct. 15. Total VLT revenue is expected to exceed $500 million annually by 2010, Spitzer said, and the state expects to keep at least 70% for the government and about 14.5% for purses and other Thoroughbred funds.

But bidders, which can include companies beyond those that paid at least $1 million apiece to participate in the earlier franchise process, are being asked to consider two different models: one in which the state owns and finances the facility and uses a contractor to run the casino, and another in which companies finance and operate the casino and keep any excess VLT revenue after making certain statutory payments to the state.

The plan does not envision a casino at Belmont, but the administration has not ruled that out for the future.

Bruno went out of his way to note that if a deal is not made on the franchise by the end of the year--when NYRA’s contract expires--current state law envisions a five-member panel currently overseeing NYRA’s finances taking over the control of the three tracks. He made no mention, as other lawmakers have, of extending NYRA’s franchise temporarily as the sides continue negotiating next year in absence of a deal.

“People have to be willing to negotiate in good faith, not fold their arms, not just lay it out and think that because they propose it that that’s going to be the final product,” Bruno said of the governor’s NYRA plan. Bruno and Spitzer, a Democrat, are feuding over recent revelations that top aides to Spitzer engaged in a plot to use the State Police to monitor Bruno’s travels.

The senator noted the experience of Magna Entertainment Corp., Churchill Downs Inc. and Woodbine Entertainment--all members of Empire Racing--and Australia’s Capital Play as the kind New York should not ignore when deciding the future of Thoroughbred racing in the state.

“There are a lot of highly qualified, highly financed major players from all around the world who have an interest, and I think this is big enough to include a lot of others than just NYRA,” Bruno said.

“I have a feeling that when this plays out, there are going to be other entities” involved in running the franchise, said the powerful lawmaker who holds virtual veto power over the governor’s plan. Besides criticizing how long it took Spitzer to make his recommendation, Bruno said he should not have looked to just to NYRA again for the franchise’s control.

“Just to sort of leave everyone by the wayside I’m not sure is appropriate,” he said of the entities Spitzer passed over. “What we need is imagination, creativity, innovation. We don’t just need more of what has been going on over these last seven or eight or 10 years because it doesn’t work.”

Bruno said he still supports NYRA and its management team, but does not believe it should be alone in running racing.

Officials with Empire Racing told the New York Times Sept. 12 the group is considering suing Thacher Associates, which wrote a highly critical assessment of Empire Racing for a required integrity report presented by the state’s inspector general. Empire said one of the company’s investigators previously worked at Getnick & Getnick, a Manhattan law firm that served between 2004 and 2005 as a monitor for federal prosecutors as part of a deal that kept NYRA from being prosecuted for various offenses.

The Getnick firm has since been hired by NYRA. Thacher officials denied any conflicts arose in the company’s work on the Empire Racing integrity review. The review cost Empire Racing more than $1 million.

During the Sept. 12 Senate hearing, Bennett Liebman, head of the racing think tank at Albany Law School, told lawmakers the inspector general’s integrity review of the bidders was “extraordinarily sloppy.” Critics have called the review filled with rumors, old media clippings, and little independent research.

Paul Bowlinger, executive vice president of the Association of Racing Commissioners International, also questioned the NYRA decision to recently hire Getnick. He said the money NYRA is paying Getnick should be going to New York State Racing and Wagering Board for its own oversight duties at NYRA.

He also questioned NYRA self-policing itself with its own contractor, which he called highly unusual. He also questioned the no-bid contract, noting there are at least 33 other firms in the New York City area involved corporate integrity issues that NYRA could have considered.

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