09/04/2007 11:00PM

NYRA renewal subject to political wrangling


The agreement between the New York Racing Association and Gov. Eliot Spitzer that would extend NYRA's franchise for 30 years is expected to find wide support in the state's assembly but faces an uphill battle in the senate, political and racing officials said on Wednesday.

Sheldon Silver, a Democrat who is the leader of the assembly and one of the three most powerful people in the state capital of Albany, issued a statement late Tuesday praising the agreement, which was announced earlier in the day and would require NYRA to give up title to New York's three largest racetracks - Aqueduct, Belmont, and Saratoga - in exchange for state aid that would allow the association to emerge from bankruptcy.

"I support Gov. Spitzer's determination that, with strengthened oversight, a reinvigorated and reconstituted New York Racing Association is the best option for the future of the state's Thoroughbred racing franchise," Silver said.

In New York's unusual political system, all important legislation is typically passed only if the speaker of the assembly, the senate majority leader, and the governor agree. The senate majority leader is Joseph Bruno, a Republican whose relationship with Spitzer has become strained ever since an investigation revealed that members of Spitzer's staff used state troopers in attempts to uncover unflattering information about Bruno.

Any agreement on the racing franchise needs the approval of both houses of the legislature. Bruno issued a statement on Tuesday criticizing the agreement, and on Wednesday, a spokesman for Bruno said the majority leader objected to the "lack of clarity" in the proposal as well as how it was negotiated.

"Senator Bruno's position has always been that he wants what is best for New York racing and the racing industry in general," the spokesman, Mark Hansen, said. "It's just not clear from this agreement whether that will be achieved. This contract was done in secret and without any daylight or transparency, and Sen. Bruno has said he wants some additional clarity."

Steven Duncker, the chairman of NYRA, said on Wednesday that he had a personal conversation on Tuesday morning with Bruno, who represents Saratoga County and is a horse owner and breeder.

"I had a really good talk with Joe, and I think it's important to remember that Joe is first and foremost a fan of racing," Duncker said. "I think he'll see how this makes sense."

The next formal step in the process will be a meeting of the senate committee on racing, wagering, and gaming, scheduled for Sept. 12 in Albany. The hearing will focus on the agreement and whether members of the committee would support the measure, said Jackie Fiore, a spokesman for the chairman of the committee, Sen. Bill Larkin.

Larkin's staff has invited speakers who represent the racing and gambling industries, but Fiore declined to release the list, citing uncertainty on which members would attend. Fiore did say, however, that representatives of bidding groups that were competing with NYRA to get the franchise will not be asked to speak.

If accepted by both houses of the legislature, the agreement would give the state total ownership of the three racetracks, with the state forgiving or providing funds to settle approximately $130 million in debt that NYRA owes to the state and other creditors. NYRA filed for bankruptcy late last year, contending that it owned the tracks.

The 30-year extension of the franchise caught some racing officials by surprise, especially considering that Spitzer earlier this year had objected to the recommendations of a previous panel that the franchise award should contemplate a period of 20 years. Spitzer had said that such a period was too long, even as members of the NYRA board who were in discussion with Spitzer's staff insisted on the 30-year extension.

"This was as close to a total victory for NYRA that can possibly be pictured," said Bennett Liebman, a former state racing commissioner who is now the head of the racing and wagering program of the Government Law Center at Albany Law School. "It's hard to envision NYRA doing any better."

The agreement would allow NYRA to consult with the government on the appointment of an operator for a 4,500-slot machine casino at Aqueduct and to play a role in the design and operation of the casino. NYRA would keep 3 percent of the net revenue from the casino for its operations and 4 percent to fund capital improvements at the three tracks while horsemen and breeders would receive a total of approximately 7.5 percent of the net revenue. NYRA officials have estimated that the casino would likely have net revenue of $450 million in the first year of operation, and $660 million in the second year.

Duncker said that the agreement regarding the casino was an important part of the proposal because it allowed NYRA, which operates as a non-profit, to align its interests with that of the casino operator. An operator is expected to be named within 60 days.

"All of us are on the same page with this: us, the state, and the [casino] operator," Duncker said. "We all want the [casino] to succeed to the greatest benefit to horsemen and racing."