10/15/2007 11:00PM

Bruno offers new N.Y. franchise plan

EmailThe operation of New York's three largest racetracks and casinos at Aqueduct and Belmont should be auctioned off under the oversight of a new 11-member state corporation, the state senate's majority leader, Joseph Bruno, said on Tuesday.

The proposal was Bruno's opening salvo in the contentious political process to award the racing and gambling franchise held by the New York Racing Association. Under the proposal, the five-member, Republican-led Oversight Committee, established under former Gov. George Pataki, would anchor the new state corporation, which would take bids from companies interested in operating the racetracks and casinos and have broad oversight over how those companies make their business decisions.

Bruno, a Republican, outlined the plan during a press conference Tuesday as a counterproposal to a recommendation by Gov. Eliot Spitzer, a Democrat who has a strained relationship with Bruno and the Republican-controlled senate. Spitzer's recommendation, which is supported by the Democrat-led assembly, would give NYRA a 30-year extension of its franchise to operate Aqueduct, Belmont, and Saratoga, while reserving the operation of a casino at Aqueduct to a negotiated deal between a new operator and the state.

Any deal to award the franchise needs the approval of the governor, assembly, and senate. With two-thirds of the government lined up behind Spitzer, Bruno's proposal will likely face considerable opposition. In addition, the Bruno proposal does not address a controversy surrounding the ownership of the three tracks, an issue that would be resolved under the Spitzer agreement.

Sheldon Silver, the assembly speaker, issued a statement on Tuesday afternoon calling the Bruno proposal "all politics and no substance" and said that the plan "is an attempt to permanently install appointees of the former governor and Senator Bruno to determine the future of racing in New York."

During the press conference, Bruno said that he expects the senate to make compromises, but he contended that his proposal made the "most sense" for New York.

Under the proposal, companies could make bids for the operation of a single track, a single casino, or combinations of the operations, Bruno said. While detailed financial statements are not available, the only track that is believed to operate on a recurring positive cash-flow basis is Saratoga Race Course.

"I believe more in competition, in the creativity of not having a monopoly," Bruno said. "We've had a monopoly in New York, and it hasn't worked."

In 2001, New York legislators authorized slot-machine casinos at nine state racetracks. The only one that has not opened a casino is Aqueduct, where efforts to build the casino have failed because of political and legal issues surrounding the franchise.

Slot machines are prohibited under New York law at Belmont Park, but members of the senate have been increasingly pushing for authorization despite a lack of support in the Assembly.

Bruno said that legalization of slot machines at Belmont should be strongly considered. Revenue from a casino at Belmont would likely rival, if not surpass, the returns from the Aqueduct casino, which is expected to be one of the highest-grossing casinos on the Eastern Seaboard. Silver said in his statement that the Assembly remains opposed to slot machines at Belmont.

Bruno released his proposal six days before the senate is scheduled to return to session.

NYRA, a not-for-profit, filed for bankruptcy late last year. The association's current franchise expires at the end of this year, and though state law allows the existing oversight board to take over the operation of the tracks in the event that the franchise issue is not resolved as of Jan. 1, NYRA officials have said that the bankruptcy court would likely prevent the installation of an interim management company at the tracks because it would put the claims of NYRA's creditors in jeopardy. If that were the case, then racing would likely shut down in New York, NYRA officials contend.

The bankruptcy court has so far failed to rule on NYRA's claim that the association owns the racetracks, a position that is disputed by the state based on a law passed in 1983 that said the tracks would become state property at the end of NYRA's franchise. NYRA has said that the law violates a constitutional prohibition on taking property without due compensation.

The Spitzer proposal resolves the land issue by granting the state title to the tracks in exchange for financial assistance in helping NYRA emerge from bankruptcy and a 30-year extension of the franchise. Spitzer administration officials have said that they believe that the state would prevail in court, but that litigation could take years.

"I don't for a second believe that the board of directors of NYRA is going to let racing stop in New York state," Bruno said. "If they want that, let them try."

In a statement Tuesday, NYRA's president, Charles Hayward, said that the association did not support the Bruno plan and noted that the legislature had "77 days" to determine the future of the franchise.

NYRA "remains committed to the blueprint for the Thoroughbred racing franchise embodied" in the Spitzer recommendation, Hayward said.

Bruno said that Spitzer's recommendation ignored the expertise and creativity of the companies behind the three other partnerships that have made presentations on their plans for the franchise. The three companies are Empire Racing Associates, a partnership of upstate businesspeople and former political officials that last week lost three of its major partners; Capital Play, a partnership headed by the principals of an Australian bookmaking firm that includes Mohegan Sun, the Connecticut casino company; and Excelsior Racing Associates, a partnership of real-estate and casino developers who have said they are not interested in the franchise unless slot machines are legalized at Belmont and the state cuts casino operators in on a larger share of the revenues.

"You've got the best brains in the whole world" seeking the franchise, Bruno said. "This concept utilizes those brains."

Bruno did not provide details on how the other six members of the new oversight board would be selected, other than to say that companies interested in bidding on the franchise should have the opportunity to lobby for seats. In addition, Bruno said that representatives of trainers and breeders in New York should be considered for the seats.

The length of the contracts to operate the tracks would be determined by the board, Bruno said, in the process of negotiating how the tracks and casinos would be operated.