03/10/2006 12:00AM

Wary of new New York player


NEW YORK - The road to the future of New York racing took a couple of strange turns this past week with the introduction of one group's swan-song proposals to reform the state's racing laws, and another group's appointment of itself as not only a successor to the first group but also a potential bidder to wrest the franchise away from the New York Racing Association.

Friends of New York Racing, the think-tank and advocacy group headed by Tim Smith and funded by a variety of national racing interests, concluded its mission and existence this week with its release of proposed new racing legislation. Most of its suggested reforms are worthy, overdue, and in the public interest, such as permitting Internet wagering, enabling customer-rewards programs, and calculating the parimutuel tax based on revenue rather than gross handle.

Another no-brainer was removing the statutory language prohibiting anything but a nonprofit racing association from operating the state's tracks. Whether a for-profit model is the best one for New York is still up for debate, but it was going to be impossible even to consider the question and conduct a bidding process for the NYRA franchise without the change.

Things became somewhat disquieting, though, when the official wind-down of Friends of New York Racing was followed almost immediately by the announcement that a new entity, including several members of Friends of New York Racing's "Business Advisory Council," has been formed to bid for the franchise. This new group, Empire Racing Associates LLC, in addition to engaging Friends of New York Racing's executive director, publicist, and some advisory council members, is presenting itself as a "coalition of New York horsemen and breeders" dedicated to preserving quality racing in New York.

Before anyone mistakes this undertaking for the efforts of industry leaders to save the local sport 51 years ago through the initial formation of the NYRA, it should be noted that Empire Racing is not exactly a nonprofit venture. As Matt Hegarty reported in Daily Racing Form earlier this week, a confidential offering memorandum has been circulated seeking capital from Empire Racing board members and other investors in exchange for an equity position in a company that will operate slot machines at Aqueduct and, it hopes, Belmont Park.

That same memorandum said that the New York Thoroughbred Horsemen's Association would receive a 3 percent equity stake in the venture in exchange for its exclusive support for Empire Racing's franchise bid. So it was not surprising that Empire Racing's announcement contained a glowing endorsement from the horsemen's association's board, which voted unanimously to support its bid.

Both the timing and propriety of the endorsement are highly questionable.

Why, at this very early stage of the franchise process, should the horsemen's association be aligning itself with any one of the many groups of venture capitalists sure to take an interest in owning the monopoly on slot machines in New York City? Other than offering the horsemen a piece of the action, what qualifies the Empire Racing group, composed largely of upstate businessmen with no racetrack operation experience, to receive their exclusive support?

And where exactly does NYRA fit into all this? Whatever one thinks of its problems and performance over the last decade, NYRA's board includes plenty of owners and breeders - with much stronger credentials and credibility than the Empire Racing board - who have worked for decades for the betterment of the sport for no compensation or equity stake. Are they all merely to be discarded because Empire Racing has invested one horsemen's organization with a financial interest in slots operations?

Empire Racing Associates clearly wants to present itself as a unified front of industry participants, perhaps in an effort to win an accelerated franchise award before Gov. George Pataki leaves office next January, at which point the entire process may revert to square one.

Empire Racing already overstepped in its initial effort to create this impression of industry unity by issuing a press release listing Dennis Brida, the executive director of the New York Thoroughbred Breeders, among 12 "board members and/or investors in ERA." Brida issued a statement the next day saying that he is not an Empire board member because "such activities could potentially conflict with the interests of the NYTB."

Horsemen's groups, and the various government regulators and commissions charged with overseeing the process, also need to examine carefully the previous affiliations of investors in Empire Racing Associates and every other group that throws its hat into the franchise auction ring. There are numerous venture-capital and casino interests with no particular affection for racing who are hungrily eyeing the New York slots franchise. It would be a shame if horsemen's or other industry groups ended up being used as fronts and shills by people whose long-term agenda has more to do with slot revenue than with putting racing first.