07/27/2006 11:00PM

Unresolved issues raise drama

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SARATOGA SPRINGS - The biggest race at Saratoga this year is neither the Whitney nor the Travers, but the one to see who's going to be running this place two summers from now.

The New York Racing Association's franchise to operate the state's three major tracks expires at the end of 2007, and Gov. George Pataki's term will be over a year sooner, a bit of timing that has led to an accelerated process to determine the next franchisee. Formal bids for the NYRA franchise are due Aug. 29, then a Pataki-appointed panel will review proposals from as many as 16 identified bidders and make a recommendation a month later.

It is unclear whether this will be followed by a changing of the guard or thundering silence. The legislature has adjourned for the year, and by the time it reconvenes there will be a new governor, who may well have entirely different ideas about how racing should be conducted, and by whom. There's also the sticky issue of whether the NYRA or the state actually owns the track properties, which could tie up any proposed change in franchisee through the courts.

A year ago, as a variety of prosecutors and politicians sought headlines through various probes and audits of NYRA, the prevailing political wisdom was that NYRA was dead in the water and had to be replaced by someone, anyone - especially since Attorney General Eliot Spitzer, the loudest of the probers, is 1-9 to get Pataki's job this November. That wisdom may be stale. A series of management and procedural changes has left few ongoing complaints about NYRA's current operation, and provided Spitzer with the political cover to say that his crusade for reform was successful. Spitzer has privately indicated that he may actually prefer a not-for-profit stewardship of racing rather than the for-profit plans of other prospective bidders.

NYRA is the unlikely winter-book favorite if only because entropy and the status quo are always the chalk when it comes to politics and racing in New York. While every study group and blue-ribbon panel has identified an overhaul of the 35-year-old OTB system as a top priority, the OTB's are so politically entrenched and powerful that fundamental change is unlikely. It is also difficult to see how politicians will justify allowing outside ventures take revenue out of the looming slot-machine operation at Aqueduct, as opposed to a not-for-profit model that would direct the slot revenues entirely to government and the racing industry.

If NYRA is the favorite, the hot second choice in the early betting is the first-time starter Empire Racing Associates, which likes to call itself a horsemen's group but is primarily a venture-capital enterprise among upstate business people that has been busily selling shares to investors for seed money. Empire has also sold minority interests to Delaware North and Woodbine Entertainment Group and is closely aligned with Tim Smith, the former commissioner of the National Thoroughbred Racing Association and head of the defunct Friends of New York Racing, a so-called public interest group whose work became the basis for Empire's formation.

This is where the story veers into territory somewhere between grand opera and soap opera. Two summers ago, NYRA offered Smith the job as its chief executive. Then, for a variety of reasons that remain murky, everyone decided it would be better if Smith instead headed up Friends, which was expected to make recommendations for legislative changes that would benefit NYRA or any future franchisee. Friends was given office space at The Jockey Club and $100,000 donations by several of the prospective franchise bidders, including Churchill Downs and Magna.

Now those outfits are, to put it mildly, surprised and disappointed that the work they funded has evolved into a new competitor. NYRA officials and trustees are apoplectic about the situation. Smith may want to consider having someone else taste his food and start his car when he returns to Saratoga this Tuesday to speak about the franchise process at the annual Albany Law School forum.

It's still very early in that process and there are bound to be dozens of twists and turns and realignments before anything substantive actually happens. Perhaps the most disappointing part of the drama to date is that no bidder has publicly articulated a single new idea, much less a grand vision, for the future of the game in New York. There are no proposals being debated, just NYRA saying it's doing a better job than it used to and everyone else saying they're not NYRA. Perhaps after the bid deadline, there will actually be some public discussion of what, besides putting some money into their own pockets, the various bidders actually have in mind for New York racing.