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New York may solicit private company to replace NYRA as operator of state racetracks
By Matt Hegarty
A top aide to New York Gov. Andrew Cuomo said on Monday that the state is considering a plan to seek a private, for-profit company to replace the New York Racing Association as the operator of the state’s three most high-profile racetracks.
Howard Glaser, Cuomo’s director of state operations, said on a radio show Monday morning that the state is considering issuing a request for proposals to replace NYRA, the not-for-profit company that by law holds the franchise to operate Aqueduct, Belmont, and Saratoga until 2033. The option will be considered once NYRA’s board is reconstituted with a majority of state appointees and the new board has time to assess the association’s operations, Glaser said.
“We’ll see when the new board is in place what the ultimate review will entail,” Glaser said.
Glaser was interviewed on the radio show by Frederic Dicker, a radio host who also writes a column for the New York Post. On Monday morning, Dicker, who is writing an authorized biography of Cuomo, quoted unidentified sources as saying that the new board would seek private companies such as Churchill Downs Inc., the Stronach Group, or “the manager of major entertainment destinations” to replace NYRA.
Earlier this year, the state legislature, acting at Cuomo’s behest, passed legislation requiring the dismantling of NYRA’s 25-member board, which currently has 11 state appointees. The new board, to be in place for three years, will have 17 members, of which 12 will be controlled by the state, including eight controlled by Cuomo.
Glaser said Cuomo is expected to sign the legislation “soon,” at which point he will make his eight appointments. Cuomo will also have the power to appoint the chairman. Currently, the NYRA board does not have a chairman. The term of the former chairman, Steven Duncker, expired at the beginning of September.
Rich Azzopardi, a spokesman for Cuomo, said on Monday morning that the governor would have no comment on his plans for NYRA’s board or the information in Dicker’s column.
Under an agreement reached in 2008 that allowed NYRA to emerge from bankruptcy, the state took the deeds to NYRA’s three tracks and gave the franchise to operate the tracks to NYRA for 25 years. That agreement was approved by the legislature.
It is unclear if the state would need new legislation in order to nullify the existing agreement. Chris Wittstruck, a lawyer who is an authority on New York racing law, said that it is possible the new board could approve a plan to dissolve NYRA at the end of its three-year tenure, freeing the state to select a new operator.
“It’s the simplest thing in the world for them to do that,” Wittstruck said.
NYRA has not been cash-flow positive for more than a decade. However, that is likely to change for the 2012 fiscal year due to payments that NYRA has begun to receive from a massive casino that opened at Aqueduct late in 2011, 10 years after it was first authorized by law.
On the radio interview, Glaser said that the “legal franchise” continues to reside with NYRA.
“That doesn’t change,” Glaser said. “That was part of a legal agreement. But that’s a different question as to who the operator is.”
J. Gary Pretlow, the New York representative who is the chairman of the New York Assembly’s Racing and Wagering Committee, said on Monday that he would be “opposed to any effort to privatize” the operation of the tracks.
“NYRA could work very well under the scenario we’d already put forward,” Pretlow said. “That is, they would operate under the new board and very strict oversight from the state for three years, and then we’d let them try to work it out.”
Cuomo and casino companies lobbied aggressively over the past year for gambling legislation in New York that would allow up to seven new casinos in the state. The state’s existing eight casinos are tied to racetracks and are restricted to operating devices called video lottery terminals, which are essentially slot machines that are tied into the state’s lottery system to get around the state’s constitutional ban on slot machines.
The legislation allowing for up to seven new casinos was passed earlier this year, but that legislation, which would put a constitutional amendment on the ballot, would have to be approved again by the legislature next year. The constitutional amendment would then have to be approved by a statewide referendum before the state could begin awarding casino licenses.
If the effort is ultimately successful, the existing legislation providing subsidies for tracks and horsemen from the operation of the video lottery terminals would not apply to the new casinos. The existing operators of casinos, including Genting New York, which operates the Aqueduct casino, are expected to be first in line when applying for the new licenses, which would also allow them to operate table games in addition to any type of slot-machine-like device.
Casino companies have been eyeing the sprawling property at Belmont Park in Elmont, Long Island, as a possible casino location for a decade. Several months ago, the state’s New York Racing Franchise Oversight Board approved a plan to solicit bids for two parcels of land on the property for redevelopment. The RFP for the parcels said that the property could not be used for video lottery terminals, though the RFP did not place any specific prohibition on other gambling activities.
Cuomo sought the dissolution of NYRA’s board after the association came under intense scrutiny last winter because of a takeout scandal and a rash of catastrophic breakdowns at Aqueduct. Cuomo and his aides have said that the two problems indicate that NYRA’s management is failing to operate the tracks successfully.
“The functioning of NYRA is substandard,” said Glaser on the radio program.
An investigation by the Inspector General into the takeout scandal has been conducted, but the results have not been released. In addition, a report examining the rash of Aqueduct breakdowns was completed more than a month ago and distributed to Cuomo’s office, but the office has declined to comment on the report.
Phil D you make a good point. A new racing operator might try and change the cooler policy. Attendance at the Spa would fall by 30% if they barred coolers. Gulfstream will always do well because they have virtually no competetion for horses on the East Coast during the winter. The options are Ship to So Cal, no one does that, ship to the Fair Grounds, a few do this, or race at Gulfstream.
ahhhh the NY fix is about to happen --- stay tuned
NYRA puts on the best racing program in the world including its showpiece Saratoga meet which is 2nd to none as far as quality of racing. Stronach controlled tracks arguably have inferior product and many would say that Gulfstream racing is inferior today to what it was prior to Stronach. With the exception of the Derby, Churchill and all its affiliated tracks run a 2nd tier quality product. My guess is a move away from NYRA will not positively impact the product but NY politicians continue to get involved screwing with NYRA and doing all they can to ruin racing in NY.
Assuming the Governor is serious about this deal, there are some outstanding issues: - The racing operations are not cashflow positive without VLT subsidies. - The VLTs subsidies are in jeopardy with the new casino bill. - And the state has a poor track record of honoring its agreements. Who would want a deal like this?
Glaser is doing a great job for New York . He should run the races. No matter who runs it the fan will be the last piece to consider.Grow some more wool race fans ,the time to get sheared again is fast approaching.
State this - fed gov that - am amazed more people are not outraged by these control freaks . Do not forget the state had a supposed oversight board that had no idea of the takeout situation
kudos to bonnie, stronach made alot of money ,but he didnt make it running racetracks, case in point gulfstream, lone star ,thistledowns, remington etc. etc. etc.
The "trickle down" economic theory will continue to plague the horse racing industry in New York State and as usual, the fan base will wind up with the dregs. Politicians, lobbyists, casino operators, racetrack ownerships -and yes-even horseman -will all profit from this transition. We the patrons and fan base stalwarts will wind up with little or no rewards.
Heaven help us racing fans if Stronach takes over NY racing - he ruined Gulfstream by building a monument to himself there with racing fans taking second seat to his endeavor
The government, state or fed, -cannot, has not, and never will be successful running any kind of business. Look at the mess this country is in , the racing world is just a microcosm.
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