02/06/2008 1:00AM

NYRA issues shutdown schedule


The New York Racing Association told its employees and horsemen on Wednesday to prepare for a shutdown of racing on Feb. 14, the day after a short-term franchise extension granted by a state oversight panel is scheduled to expire.

In letters the association distributed to employees, trainers, and the media, NYRA's chief executive, Charles Hayward, said that nearly all employees would be laid off, with the exception of a small number of maintenance workers, administrative staff, and executives. NYRA employs 1,300 people full time, according to Hayward, including 900 union members.

Although NYRA officials said that the preparations for a shutdown were necessary to plan properly for the closing of Aqueduct, the decision to publicize the measures was clearly aimed at lawmakers involved in negotiations over a long-term franchise extension. The negotiations have been going on for more than two months, and NYRA has blamed Joseph Bruno, the majority leader of the Republican-controlled state senate, for standing in the way of an agreement. Both NYRA and Bruno are eager to deflect any blame for a shutdown.

Late on Wednesday, Bruno issued a statement that said an agreement on a long-term extension would be announced "very shortly," but Bruno has made similar statements in the past. An official involved in the negotiations said that staff members of Bruno, Gov. Eliot Spitzer, and the state assembly's speaker, Sheldon Silver, were scheduled to meet on Wednesday night to discuss the agreement, which the official said would extend NYRA's franchise for 25 years.

At Aqueduct earlier in the day, Hayward said that if racing were to shut down, then NYRA would close the backstretch at Aqueduct beginning Feb. 21, unless "a collective decision is reached by horsemen to fund the direct costs of track maintenance and backstretch operation." The cost of operating Belmont as a training center is approximately $280,000 a week, Hayward said.

Hayward said that NYRA hopes to keep the training track at Belmont open until Feb. 27 and that all horses and backstretch workers would be required to vacate barns and dormitories at both tracks by that date. He said that NYRA would ship any of the 300 horses based at Aqueduct to Belmont from Feb. 13 to 20 as a courtesy.

Last year, NYRA received a $32 million loan from the state so that it could continue operating throughout 2007, and the money from that loan has nearly run out, Hayward said. NYRA typically operates on a negative-cash basis during the winter months.

NYRA is operating under the protection of bankruptcy court, but a reorganization plan that the association filed late last year cannot be implemented unless a long-term extension to its racing franchise is approved by the state legislature and the governor. NYRA filed for bankruptcy late in 2006, and its franchise to conduct racing at Aqueduct, Belmont, and Saratoga expired on Dec. 31. The association has been conducting racing under two short-term franchise extensions approved by the state oversight panel since then.

"We don't have enough cash to make it through the end of the Aqueduct meet," Hayward said. "It's a better option to stop accepting short-term extensions and to shut down now rather than whimper and run out of all of our cash right before the Wood Memorial," a major 3-year-old prep race for the Kentucky Derby that is scheduled for April 5 at Aqueduct.

The association had already reached an agreement with Spitzer and Silver on a 30-year franchise extension. In exchange, the state would take undisputed title to the three racetrack properties, and the association would drop its longstanding contention that it is the rightful owner. Both Spitzer and Silver are Democrats. Bruno is a Republican.

The new agreement that was scheduled to be discussed on Wednesday night would extend NYRA's franchise 25 years and subject the franchise to a review every four years, according to the official involved in the negotiations, who spoke on condition of anonymity because he is not authorized to speak about the details. Under the review process, NYRA would have to meet benchmarks to retain the right to operate the tracks.

In addition, NYRA's board would be pared to 21 people, with NYRA responsible for appointing 11 of the directors. Of the 10 other directors, three would be appointed by the governor; another three would be appointed by the governor based on recommendations from horsemen, breeders, and labor; and two appointments each would be reserved for the senate and the assembly.

The agreement would require that NYRA's chairman, Steven Duncker, serve no more than one four-year term before he had to step down. In the future, no chairman would be able to serve more than two consecutive four-year terms, according to the official.

The agreement does not call for the legalization of slot machines at Belmont Park, the official said, or address concerns of offtrack betting companies in New York that are looking for a larger percentage of wagering revenues. The agreement does refer to those issues as being necessary to address in the future, the official said.

Earlier in the day, Scott Reif, a spokesman for Bruno, declined to comment on the issues that are still under negotiation but said that Bruno was confident a deal would be reached.

Any agreement requires approval by the governor and both houses of the New York legislature. The legislature is scheduled to recess after Feb. 13 and is not scheduled to return to session until Feb. 25.

According to several officials involved in the negotiations, a bill has already been prepared that addresses some aspects of a long-term extension. The 178-page bill, however, does not include details on the length of the franchise or the composition of the board, the officials said.

"If you can fill in those two blanks, then it could go to the legislature to be voted on the same day," one of the officials said. Officials of Spitzer's administration and Silver's staff have reviewed the bill, the officials said.

If NYRA does shut down on Feb. 14, control of the franchise would pass to the state oversight panel. Hayward reiterated on Wednesday that NYRA would not accept another short-term extension unless significant progress is made on a long-term legislative deal.

Should the oversight panel attempt to designate another operator for the franchise, NYRA would likely go to bankruptcy court to obtain a temporary restraining order. NYRA's legal counsel contends that the selection of another operator would put its assets and the claims of its creditors in jeopardy.

Steven Newman, the chairman of the oversight board, said it was "too early" to discuss what the board might do if NYRA shut down on Feb. 14.

"It's not a question I'm looking to respond to right now," Newman said. "The issues that separate the governor, legislative leaders and NYRA are not that large, and there's no reason why there can't be a resolution prior to that date."