Note: This report, detailing the dire position in which the New York Racing Association faces in the weeks ahead, appears in Saturday’s editions of The Saratogian. It is reproduced here because we feel that the resignation of Charles Wait from the NYRA board is a significant development and a loss to racing in this state.
SARATOGA SPRINGS — The state’s racetracks will shut down if a franchise agreement isn’t reached by Feb. 13, Adirondack Trust Co. Chairman Charles Wait said Friday — one day after his surprise resignation from the New York Racing Association’s board of trustees.
“There is a real possibility that NYRA will run out of cash,” he said. “If that happens there’s a real possibility that racing will stop.”
Wait devoted more than one-fourth of his bank’s annual report, released Thursday, to the racing situation, blaming Senate Majority Leader Joe Bruno, whose district includes Saratoga Springs, for preventing a racing settlement.
Bruno responded Friday with a statement saying that he expects “to be able to announce a final agreement within the next two weeks.”
NYRA’s contract to run Saratoga Race Course, Belmont Park and Aqueduct Racetrack ended Dec. 31, and it has been operating under an extension agreement that expires Feb. 13 — in 10 days. Winter racing is under way at Aqueduct; racing in Saratoga takes place for six weeks starting in late July through Labor Day.
“I am confident we can protect Saratoga and the thousands who are employed by the racing industry, while ensuring that the New York racing experience continues to be the greatest in the world,” Bruno wrote.
Wait doesn’t share Bruno’s optimism.
“Unless there’s an agreement we’re facing a suspension of racing,” Wait said. “We’re out of time.”
Wait said he resigned from his longtime seat on the NYRA board in order to speak freely about what he believes is an impending crisis that could have dire consequences for the local economy.
State leaders are working toward an agreement but are still separated on several key points: the makeup of NYRA’s board, the length of its franchise agreement and whether Belmont Park should have VLTs. Insiders say one of the major sticking points is Bruno’s demand for a basically new NYRA board of trustees, people he would have a hand in placing.
Meanwhile, NYRA is running low on money and won’t be able to obtain additional financing if it doesn’t get a new franchise, Wait said.
Wait said he didn’t feel right making such statements while still on NYRA’s board, especially when it’s in bankruptcy and in the middle of franchise negotiations. As a prominent businessman and concerned citizen, he said he felt compelled to let the public know how serious things really are.
“It is unbelievable … that the State of New York has been unable to reach an agreement,” he said in the bank’s report to shareholders. “As of this date the Senate has still refused to compromise, putting the citizens in Senator Bruno’s district at risk of seriously adverse financial consequences.
“It is entirely within the power and ability Senate Bruno to solve this problem immediately.”
NYRA declared bankruptcy on Nov. 2, 2006 and has been operating with a state loan that was supposed to keep the firm going through 2007.
Creditors have already approved NYRA’s bankruptcy reorganization plan, but the court can’t approve it until there’s a franchise in place. Without that, NYRA also can’t get the debtor-in-possession financing that would carry it through the slow winter months.
“It’s going to get worse,” Wait said. “It’s going to be a disaster if there’s cessation of racing.”
Some owners have already pulled horses out of New York and local businesses aren’t getting reservations because of uncertainty about the Saratoga meet.
“The ramifications of this are unfathomable,” Wait said.
Wait’s departure from NYRA leaves Dennis Dammerman, General Electric Co.’s former chief financial officer, as NYRA’s only local board member.
“I think that’s a loss for Saratoga,” said Tom Roohan, a prominent local Realtor. “When you think of Saratoga you think of the Wait family.”
Roohan and Wait helped form the group Concerned Citizens for Saratoga Racing, which has tried to make sure the Spa City’s interests are protected in franchise negotiations. But Roohan said he disagrees with Wait’s criticism of Bruno, charging that Spitzer has done little to help the local area since taking office 13 months ago.
“I would bet on Sen. Bruno,” he said.
Wait was on the NYRA board for 23 years and most recently chaired its nominating and corporate governance committee. NYRA deposits funds with Adirondack Trust during the summer meet. There is no conflict of interest, Wait said.
“That’s disclosed every year,” he said.
“Everybody knows about it. I’d gladly give up those deposits if it means getting the MOU approved,” Wait said, referring to the “memorandum of understanding” that Spitzer and NYRA agreed on last Sept. 4. That non-binding agreement would keep NYRA in place for 30 more years.
Wait said the state Assembly and NYRA’s creditors have also approved the plan, leaving Bruno as the lone roadblock.
The plan calls for the state to give NYRA $75 million to pay off creditors, and the state would forgive a $125 million NYRA debt. In return, NYRA would give ownership of the racetracks to the state, with all sides apparently willing to avoid a court battle over whether NYRA or New York owns the property.
Bruno said such plans aren’t in taxpayers’ best interests and shouldn’t be approved.
At one point, he called for a complete resignation of NYRA’s board, comparable to the house-cleaning that put Saratoga Performing Arts Center back on solid footing following years of alleged mismanagement.
Bruno said NYRA’s longtime board members are to blame for allowing NYRA to operate in what Spitzer, as attorney general, called a “culture of crime.”
“We’ve made clear that the old racing model does not work and that significant changes are necessary,” Bruno said.
Citing NYRA’s bankruptcy, $364 million debt and last year’s $27.2 million operating loss, Bruno says NYRA needs an overhaul. He’s called for a new public authority to oversee the franchise. This body would name firms to operate various aspects of the franchise – racing, gaming, tote operations, marketing and track real estate development.
Wait disagrees strongly.
“A public authority would be crazy,” Wait said. “You’d never get anything done.”
Wait said NYRA has undergone major changes the past few years with a new president, new chairman and three new vice chairmen. The latter three are state appointees. Also, NYRA has been praised for instituting a series of new integrity measures.
“NYRA is completely changed,” Wait said. “You’ve got a new NYRA. The senator wants more oversight? We have a state Racing and Wagering Board, the comptroller’s office. There’s an internal and external audit. That’s four groups. Do you want six? Do you want eight?”
With new racing legislation and VLT gaming at Aqueduct, NYRA could start operating in the black within two years, NYRA President and CEO Charles Hayward says.
NYRA Chairman Steven Duncker said Wait will be missed from the NYRA board.
“He has taken decisive action aimed at protecting the interests of his community,” Duncker said.
Saturday, February 2, 2008
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3 comments:
From Sunny Jim in New Jersey:
I appreciate Paul Moran and his blog. He is an excellent writer who always keeps his eye on the big picture, as far as racing is concerned.
I thank him for letting me vent this, a little off topic from his post today:
Today is the day of the Donn Handicap. The Donn Handicap reminds me of the Donn family, who ran Gulfstream since 1946 and had the class and dignity to stay out of the limelight.
In the old days a racing fan could plan a vacation around Gulfstream. If you were visiting Florida from some cold clime, you could spend the afternoon in the warm February sun at Gulfstream with the feeling that there was no place else you would rather be.
Not any more. In stark contrast to the Donn family, Frank Stronach is a shameless and deluded man with lots of money, who has singlehandedly ruined what was once one of the world's premier race meets. In the sense that a race track is a quasi-public place, Stronach is accountable to no one and nothing for his actions. It's his track now, he can do what he wants with it.
I wouldn't be surprised if, propped up by the sycophants who surround him, Stronach thinks he has ushered in a new and improved era for Gulfstream. Just last weekend he was seen in the winner's circle, hyping his sugar-laden soft drinks and sexist beauty contests, which have nothing to do with horse racing. Not surprisingly, Donald Trump was also there, who to me is megalomania personified. I watched from afar and shook my head, longing for the good old days.
How did we get to this point in history, where maniacal numbskulls such as Joe Bruno and Frank Stronach control so much of racing? Someday we will look back on this era and wonder what went wrong? Where are racing's true heroes, like the Paul Mellons and the Phippses to rescue us from these inane drones? Please somebody help!
As much as I truly feel Joe Bruno is a sack of trash and all his ideas are junk, I have to call into question the author of this article who writes "Some owners have already pulled horses out of New York and local businesses aren’t getting reservations because of uncertainty about the Saratoga meet."
Serioulsy? What owners? What reservations up at Saratoga? Which hote/room/b&b???? That is total bull spit.
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