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Tuesday, October 10, 2006

Blows Against The Empire

- It's October, but two things that were supposed to have occurred by now in New York remain in limbo. The State Lottery has still not approved the racino at Aqueduct; and the Ad Hoc committee that is to recommend who the next franchise holder will be is still agonizing over their decision. We're told that it will be "at least" October until a recommendation is made, and with a new governor to be elected in November, how much weight it will have remains to be seen.

I came into the franchise battle without any agenda or preference. Sure, I've enjoyed 30+ years of top notch racing presented by NYRA, but given the well-documented corruption in the ranks of their past management, and their inability to effect change in the state's racing laws, I was open to new ideas. When Empire Racing first came along, it seemed like a most promising idea. I don't take the fact that Empire is supported by the New York Thoroughbred Horsemen Association (NYTHA) at all lightly. It seems only right and natural that the horsemen who breed, own, and train our horses should know what's best for the state's racetracks.

But I now find myself rooting against Empire. I feel bad about that, and I welcome opposing comment here to set me straight. But I'm only reacting to a series of events, as well as statements issued by both Empire and the NYTHA that have turned me off with their shrill rhetoric and which, in my opinion, call their judgment into question. And this is despite taking Empire at their word that the horsemen, and not their investors, will the ones be calling the shots (something that is surely up for debate...when things get rough, the men with the money are generally the ones who prevail).

The first sign of trouble was Empire's decision to allow Magna to be one of their investors. Now, I know that investments are limited to six percent, and that this does not mean that Frank Stronach will be razing and rebuilding Saratoga in his image any time soon. However, if there was one thing that everyone in the state seemed to agree on, it was No Magna. Fans and industry insiders made that quite clear at the public hearings conducted by the Ad Hoc committee. By taking Magna in, Empire, in my opinion, showed arrogance and demonstrated that they would take on anyone in order to raise the money they need.

The decision also showed a significant lapse of judgment as far as I'm concerned. For a company that seems so concerned about their public image that they've retained high powered public relations and marketing companies, it seemed curious that they would do something that would so easily and obviously subject them to critcism and ridicule that, indeed, wasn't long in coming. Who or what could possibly be an easier target than the bumbling Stronach, especially coming fresh off the public relations disaster that was the opening of the new Gulfstream?

It was just following the Saratoga meeting that the geniuses at Empire's PR agency, Eric Mower and Associates, put out the idiotic release about declining attendance at the Spa, despite the fact that average attendance at the meeting was actually up slightly from last year. It didn't take ESPN.com's Bill Finley long to point out the obvious incongruities of the statement.

Perhaps no track in the nation has seen more severe declines in on-track attendance in recent years than Gulfstream Park, which is run by Magna Entertainment. That's the same Magna Entertainment that is partnering with Empire it its bid to take over New York racing. Funny how Empire has failed to put out a press release castigating Magna for its many failings. [ESPN.com]
On Sept 20, Empire released a letter from CEO Jeff Perlee to the Oversight Board that feigned 'alarm' at NYRA's "most recent financial problems." Taking out of context a phrase that NYRA used to describe the Saratoga meeting, Perlee wrote: The fact that less than a week earlier NYRA was publicly declaring its “unparalleled success” makes this financial news all the more startling and confusing. Of course, the only people at all 'startled' by these so-called revelations are those that have not followed the developments over the last few years. On Sept 29, Eric Mower issued an embarrassingly poorly-written release that framed NYRA's bankruptcy threats an "important development," whereas the only real development was the State's continued refusal, even in the face of public pressure by Comptroller Alan Hevesi, to give the approval that would release the funds that NYRA needs to survive.

Why Empire sees the need to hire an expensive PR agency to issue venemous releases, I don't really understand. The four parties have submitted their proposals, and to think that they can influence the events through misleading propaganda is, I think, contrary to the spirit of the Request for Proposals, which quite specifically laid out the criteria that the applicants would be judged on. I'm pretty sure that retaining public relations agencies, especially one with bad writers, was not amongst those criteria. If Empire believes that their proposal is what's best for New York racing, why can't they let it speak for themselves instead of issuing pointless and distorted attacks? I don't see Excelsior behaving in this undignified manner.

The NYTHA has been getting into the act as well. I don't know if they coordinate their releases with Empire and/or Eric Mower; NYRA claims that they do distribute their press releases through the latter, and it wouldn't be surprising if that's true given the similar tone. An August 25 release quoted NYTHA President Richard Bromze as accusing NYRA of wanted to hold a "fire sale" of NY racing assets.
"The VLT program was enacted by the state Legislature and the Governor to help the horse industry, not as a giveaway program to be divided up among Las Vegas casino companies or Indian gaming operators."
There's some quite obvious hypocrisy here, which the release then actually acknowledges by discussing Empire's own investors. In addition, and please feel free call me naive if you disagree, but I personally find it hard to believe that NYRA's CEO Charles Hayward has any such devious agenda up his sleeve. I have found Hayward to be nothing but frank and honest, and refreshingly so. He fully cooperated with the federal monitors to the point where NYRA not only got a clean bill of health corruption-wise, but earned unsolicited praise for their unprecedented efforts to try and clean up illegal medication and addressing the problem of off-shore rebate shops. By contrast, I find the repeated attacks on his integrity to be shrill and uncalled for.

In response to Hayward's criticism of the state for withholding approval of the racino, Perlee was quoted as saying "NYRA previously antagonized Attorney General Eliot Spitzer and Comptroller Alan Hevesi, and they now seem intent on biting the last hand that had been willing to feed it." I'd respond to that, but honestly, I don't even know what it means.

Perhaps it's the same theme that we see in the NYTHA's latest effort, an amazingly cynical response to NYRA's own efforts to obtain NYTHA member signatures to a letter to Governor Pataki demanding approval of the racino. "The letter was neither conciliatory nor positive in nature." Well, for one thing, NYTHA should look in the mirror when it comes to being positive and conciliatory. More importantly, why should NYRA, or anyone connected with the racing industry in this state, be 'conciliatory' towards Pataki? Not only is he a lame duck, but his party is about to be thrown out of the governor's mansion in a landslide of possible historic proportions.

And secondly, this governor, in 12 years in office, hasn't done JACK DIDDLY for racing in this state! The dysfunctional OTB system that is killing NYRA remains in place, and the only changes we've seen have merely brought the state into the 20th century (now that we're in the 21st). Even today, arcane laws such as the one that prevents NYRA from accepting simulcast wagers after 7:30 PM so that they don't compete with the state's desultory harness tracks, are still on the books. That means that, as opposed to a state such as neighboring New Jersey where the Meadowlands and Monmouth conduct simulcasting nearly around the clock, NYRA loses all of that business to OTB or to the Meadowlands itself.

Even Pataki's approval of slots, portrayed by NYTHA as being "to help the horse industry," was just as much, if not more, to help himself establish a legacy of having settled Indian land claims, and to be able to stump for president on the claim that he's a responsible fiscal conservative who balanced the budget without raising taxes. I mean, Pataki wanted to open FIVE casinos in the Catskills, AND establish stand-alone slots parlors throughout the state, including locations in New York City. Help the horse industry?? HA!!! The legislative changes that we hope and expect will accompany the franchise renewal will be passed under a Spitzer Administration, if at all.

Finally, the latest letter seeks to blame NYRA for the racino delay because of their threats of bankruptcy and litigation over the issue of who owns the land. We've already examined the Catch 22 nature of the bankruptcy matter - approve the racino that benefits everyone involved (other than compulsive gamblers of course), and the remainder of NYRA's bailout loan is released. And as far as the land issue goes, yes, the general consensus outside of NYRA seems to be that the state owns the land. At some point, if NYRA is fighting what appears to be a losing battle with the sole purpose of delaying the proceedings, I will certainly have something to say about that. But now, does anyone with a modicum of sense or sanity really expect them to fold their hand while holding that card? C'mon man, it's business, and Empire, or any other business would certainly be doing the same thing if they were in that position.

I don't really know which entity will best be able to run New York racing. The answer, I suppose and hope, is somewhere in the mountain of papers that the Ad Hoc Committee is poring over. If Empire wins, perhaps we'll then see the positive proposals and ideas that earned them the franchise, rather than their tired criticisms and useless PR. But as of right now, they've made themselves awfully hard to root for. And that's one thing they can't blame on NYRA.

6 Comments:

Handride said...

That was amazing. I read the whole thing twice, you tell me who i should pull for and I'll do it. I'm guessing you're starting to lean to the NYRA, sounds good to me. If only people in charge knew as much as you.

Mike said...

Your blog is going to win a f* eclipse award.

Alan H. said...

I have been trying to make heads or tails between the bidders for the NY frachise. Thank you for a great analysis of the players. As a fellow NY resident, my only wish is for great racing. I hope the politics doesn't prevent the better party from winning the franchise.

Anonymous said...

I have gone from a strong supporter of the Empire concept to a supporter of NYRA at this point. As a businessman there is no way you can convince me that a for profit model is better for the horsemen and gamblers, of which i am both. By nature, a for profit model tends to be leaner, but any savings incurred will be passed along to the shareholders not the horsemen.

I was turned off to Empire the minute the NYTHA endorsed them BEFORE all of the bids were even submitted and the partners were known.

A few of the NYTHA board memmbers invested privately in Empire, then the board endorses Empire?? Come on, if that is not a conflict of interest what is? And what was the hurry? Those members that have invested should be disclosed and they should immediately resign from the board.

The NYTHA was in the position to be a percieved objective voice in the negotiations which would have given horsemen tremendous influence in the decision making process. Instead, a few greedy members of the board are trying to capitalize personally and consequently the NYTHA is now viewed by all parties as just another interested investor and their opinions have been downgraded as such.

Remember the backlash toward Contessa when he backed Excelsior? Why the venom, does not another member of the board have the right to express his opinion and invest his money? The whole Empire thing stinks.

Despite some of the forming members being excellent horsemen with the best interest of racing at heart, it seems to have taken on a life of its own and morphed into a greedy monster. As you correctly state, when push comes to shove the money matters most.

Alan, thanks for your astute analysis of the issue and for the forum to vent.

weegee said...

Hooray for you! I thought I was the only one who was put off by Empire's statements, not only by the belligerent tone, but the - how shall I say it? - stupidity. Perlee is not a polished, thoughtful spokesman and is not an asset to Empire except for his connections to the NY State Lottery (ever think of that?). A great love of NY racing must be the only thing driving Charlie Hayward because he has the most thankless job in the world. I only wish what you have written could be lifted up and published somewhere where more people could read it.

alan said...

Interesting points that Mr. Anonymous made about NYTHA board members having invested in Empire prior to endorsing it; also regarding how NYTHA ceded its position as a perceived objective vote because of the endorsement. Thanks for that input.

And I agree with weegee's point about Hayward; talk about thankless jobs! He just seems to me like an honest and straitforward guy doing his best under impossible circumstances, which makes the attacks on his motives come off as most unseemly.