Tuesday, September 04, 2007

Rising from the ashes

Charles Hayward stopped in mid-sentence and stepped back from a microphone hastily set up at the Saratoga Race Course Tuesday. The New York Racing Association’s president and chief executive officer suddenly choke up, as the cool realization of Gov. Eliot Spitzer’s recommendation washed over his brain

“The real winner here is the racing industry,” he said, before apparently letting his emotions get the best of him.

Yes folks, NYRA is back in the saddle again. Under the organization’s 30-year deal awaiting legislative approval, NYRA will operate New York’s thoroughbred tracks under a not-for-profit model. Contracts to operate Video Lottery Terminals at Aqueduct will be offered to the other companies, namely Excelsior, Empire and Capital Play; the Legislature will choose between them within the next 60 days. Seven percent of the VLT revenues will come back to NYRA as a funding source. Steven Dunker, vice-chairman of NYRA’s board of trustees, emphatically denied the idea that the VLTs will ever be a part of the Saratoga Race Course.

“It’s been an incredible saga for us, but we still have a lot of work to do,” he said.

As part of the 30-year contract with the state, NYRA will relinquish its claim to ownership of New York’s tracks. NYRA will also transfer more than a billion dollars of land to the state, which will in turn forgive the organization’s indebtedness. NYRA will also pair down its 28-member board of trustees, eight of which were legislatively appointed. NYRA’s board will now consist of 13 trustees, two appointed by governor and one by both the state Senate and Assembly.

Despite its fiscal troubles, NYRA does appear to be the best choice to run racing; it’s difficult to deny 52 years of successfully running the game in the Spa City. Not to mention, the organization is a not-for-profit venture, which means they’re less likely to pinch pennies when it comes to investing into the sport.

“We’re not in this to make money,” Dunker said of the deal. “All we care about is to make racing the best it can be in the state.”

What a long strange trip it’s been. Not more than a year ago, officials were leaving NYRA like rats from a sinking ship. NYRA had no friends among the Pataki Administration, which spent its last days in office sandbagging the organization. Originally, it didn’t seem as though Spitzer, who was rumored to support Excelsior, would be much better,

Hayward acknowledged NYRA’s relationship with Spitzer was rocky from the outset, but has evolved since he became governor. About four years ago, Attorney General Spitzer castigated NYRA as an inherently corrupt organization that should be dismantled quicker than a ticking time bomb.

“The record is pretty clear,” he said, “A lot has changed in the last four years.”

This summer, NYRA clearly emerged as the front-runner, a dark horse that shot ahead as the process moved into the final stretch. While the other organizations continued to pour money into their proposals, NYRA was quietly amassing a stable of well-know executives, none of whom seemed prone to joining a sinking ship.

Hopefully now, NYRA can rise from the ashes of its former self and rejuvenate the tracks around New York City. The governor chose wisely in keeping a household name in racing running its tracks. Now, the burden is on Hayward and his executives to prove its former critics wrong.

5 Comments:

Anonymous Anonymous said...

HO: You say that "as part of the 30-year contract with the state, NYRA will relinquish its claim to ownership of New York's tracks."

It seems like I've seen this movie before. Didn't NYRA agree to relinquish its claim to the racetracks when it got a franchise renewal back in 1983? How many times does NYRA get to relinquish the same claim?

By the way, you left 3 important words out of your story: NYRA IS BANKRUPT.

3:13 PM  
Blogger Horatio Alger said...

What part of fiscal solvency did you not understand? The state bailed NYRA out and then forgave $130 million in debt. Provided the Legislature approves the deal and moves quickly to pick an operator of Aqueduct’s VLTs, NYRA will be anything but bankrupt come this time next year. In fact, they stand to gain millions once video crack is installed down south. Again, I suggest you take a gander at what is written in the blog, or maybe one of the many news stories on the subject.

12:22 AM  
Anonymous Anonymous said...

Horatio,

Did you forget to answer the first guy's original question or did you dodge it on purpose?

4:51 AM  
Blogger Horatio Alger said...

With regards to 1983, it’s my understanding that the state proclaimed ownership of the tracks, seeing as though technically NYRA is a non-profit vested by the state. NYRA said this was a violation of federal law and the matter was left at that until the bankruptcy proceedings two decades later.

The point is, this agreement will take ALL of NYRA’s legal recourse to argue this point in a long protracted court battle by avoiding the argument altogether. If NYRA transfers whatever legal claim they have to the tracks over to the state, then there’s no real argument to begin with. Perhaps NYRA lawyers could fiendishly bring up the unconstitutional card again later, perhaps forcing the state to sell the tracks. But what would be the purpose of that? NYRA surely couldn’t afford the property, which they even estimated at more than a billion dollars in value.

So to answer your question and to better answer the aforementioned question, it’s a moot point, unless a sulking Joe Bruno throws a wrench into the deal. I’ll close on this note, which is a quote pulled from a Sept. 5 article appearing in the Daily Gazette: “The agreement, if approved, would take NYRA out of bankruptcy and settle the legal issue[ownership of the tracks].”

Unless the Gazette has since ran a massive correction, I’d take that as the truth.

7:35 AM  
Blogger Horatio Alger said...

…And a bit more on the 1983 event, unearthed from the Albany Times Union, August 1997:

“NYRA was established in 1955, under another name, and has run thoroughbred racing in New York ever since. It was initially granted a 25-year franchise, then a five-year extension. NYRA officials outraged some lawmakers in 1983 by claiming that it actually owned Saratoga, Aqueduct and Belmont.

‘It was too emotional an issue to decide who actually owns it, so they didn’t,’ recalled Frank J. Mauro, who represented then-Assembly Speaker Stanley Fink in the 1983 negotiations. Mauro now runs the Fiscal Policy Institute in Latham.

Without resolving the ownership question, the Legislature and then-Gov. Mario M. Cuomo approved a bill that gave NYRA a long-term extension –15 years –to ensure that it would have ample time to establish a record and to assure lenders of its viability. Coupled with the extension was a requirement that future franchises be awarded through competitive bidding.”

…so there you go. Two and a half decades’ worth of bickering wrapped up with a simple agreement. As for NYRA’s claim to ownership, it can be boiled down to this in a nutshell: they took care of the tracks for 25 years, therefore they own them. True, they were using state money for upkeep and doing so under the auspices of the state, which is what makes their claim all the more murky.

7:50 AM  

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