11/21/2006 12:00AM

Excelsior gets New York nod


A state committee that has spent the last 11 weeks evaluating proposals to run Aqueduct, Belmont Park, Saratoga Race Course and a casino at Aqueduct recommended Tuesday that Excelsior Gaming Associates operate New York's racing franchise.

Steve Swindal, the son-in-law of Yankees general partner George Steinbrenner, heads Excelsior Gaming Associates, a for-profit group that also includes the former Donald Trump associate and casino developer Richard Fields, plus the real-estate development company Tishman Speyer Properties.

Excelsior's bid was rated the highest among three bids. The other bids were from Empire Racing Associates, a for-profit partnership of New York businessmen and racing companies, and the New York Racing Association, the non-profit company that holds the current franchise but recently filed for bankruptcy protection.

The recommendation by the committee is non-binding but will make Excelsior the front-runner to be awarded the franchise to operate the tracks and the Aqueduct casino for the next 20 years. Any deal to award the franchise must be approved by both the New York legislature and the governor. NYRA's franchise expires at the end of 2007.

"The committee's informed recommendation is the culmination of months of hard work and we would expect that the governor and the legislature will give it the weight it deserves," said Scott Reif, a spokesman for the committee.

The racing franchise in New York has never had more potential value than it does now. In 2001, state legislators passed a law legalizing slot machines but limiting them to nine New York racetracks, including Aqueduct. Although the Aqueduct casino has yet to be approved by the state's lottery corporation, the 5,000-machine casino there is expected to be the highest-grossing casino on the East Coast.

According to the complex scoring method used by the committee, Excelsior's bid rated a 94.6 under a scenario in which the legislature would make undetermined changes to the racing law but retain the slot machines at Aqueduct. Also under that scenario, Empire's bid was rated at 93, while NYRA's bid was rated at 76.5.

Under a second option, in which slot machines would be legalized at Belmont Park in Long Island - creating perhaps the second highest-grossing casino on the East Coast - Excelsior scored at 97; Empire followed at 92.5; and NYRA trailed at 76.5.

The New York legislature does not have any plans to reconvene this year, though it is possible for lawmakers to come back into session before the end of the year. The legislature is expected to need to make significant changes to New York's racing law before a franchise can be awarded, and therefore approval this year of a new franchiseholder is considered unlikely.

The process to award the franchise is further complicated by a host of other issues, including the recent election of New York Attorney General Eliot Spitzer as the state's new governor. Spitzer, a Democrat, will take office in December, replacing Gov. George Pataki, a three-term Republican. In addition, NYRA has contended that the state cannot award the franchise without compensating the association for the racetracks and property, a point that Spitzer has disputed in comments published prior to his election earlier this month.

It was unclear on Tuesday how the recommendation impacts NYRA's current plan to open a casino at Aqueduct. The state lottery corporation has failed to approve a management contract for the casino between NYRA and MGM Grand, and an existing state law protects MGM's contract regardless of who holds the franchise. It is unclear how the law would be interpreted if the franchise is awarded prior to the lottery corporation approving the MGM contract.

One of Excelsior's partners, Richard Fields, has extensive experience in developing casino properties and co-developed the Seminole Hard Rock Hotel and Casino in Florida. In comments prior to the group submitting a bid, Swindal had said that Excelsior envisioned major renovations at Belmont Park to make the track an "entertainment destination."

In a statement, Swindal said on Tuesday: "We are extremely pleased with today's outcome. Today is the beginning of a new era in New York horse racing."

NYRA president Charles Hayward, in a statement, downplayed the significance of the committee's recommendation, calling it "one step in a process that involves the State Assembly, the State Senate, the Governor" and the New York State Racing and Wagering Board.

"We are certain that state officials will study the bids submitted and seek independent verification of any franchise candidate's suitability to conduct racing in New York before any final recommendation or action is taken," Hayward said.

Also on Tuesday, NYRA officials appeared before Judge Arthur Peck in bankruptcy court for the U.S. Southern District in Manhattan. At the hearing, Judge Peck ruled that NYRA would be allowed to compensate its bankruptcy advisors while reorganizing under Chapter 11, according to Bill Nader, a NYRA senior vice president.

NYRA is scheduled to meet with its creditors' committee on Nov. 29, and will meet with the bankruptcy judge in December. (Daily Racing Form is a creditor of NYRA and has a representative on the seven-member creditors' committee.)