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Saturday, December 23, 2006

NY News - Dec 23

- Recently, in speculating on ways for major league baseball to cast a blind eye to involvement by Yankees partner and Boss-to-be Steve Swindal in the eventual Aqueduct and Belmont racinos, I suggested that he could pledge to limit his involvement to the racing side of the venture. In response, I got a note from someone with connections to Empire claiming that NYS law does not allow the racing operation to be separate from the VLT's - that they are "by intent and design, interwoven." It was also suggested that Swindal, by virtue of his involvement with the Yanks' farm team in Staten Island, may already be in violation of MLB rules regarding ownership of minor league teams. Those regulations prohibit any involvement by officers or directors of such clubs in a "Legalized Gaming Enterprise" other than the breeding or ownership of racehorses.

Of course, there's always Swindal's wife, and Mr. Steinbrenner's daughter Jennifer; as well as the Boss' other daughter and sons, all of whom are involved with Excelsior. Blogger Verifiable checked back in with some more details of the gambling ambitions of Detroit Tigers' owner Mike Ilitch's wife Marian; given that, I still would imagine that Bud Selig will not cross the Boss on this.

Things have obviously changed in the last decade. In the course of doing some research, I came upon a 1995 NY Times article regarding the Steinbrenner family investing in the Red Mile harness track in Lexington, which states: Steinbrenner himself will not hold stock in the Red Mile because major league baseball rules prohibit franchise owners from having gambling investments. Swindal's involvement with the racing itself doesn't presently seem to be an issue at all.

- Empire CEO Jeff Perlee spoke to the Saratogian about the possibility of the company going public should they win the franchise. The article discusses the increased financing opportunities that come with publicly traded stock. Of course, it also can put a company in play, as we've seen recently with the humongous buyout of Harrah's by two private equity firms. As racing becomes more and more intertwined with and dependent on far more lucrative casino gambling, the possibility increases that it will eventually be swallowed up and spit out as more strictly bottom-line oriented investors become involved.

Excelsior principle Bill Mulrow is being mentioned as a possible successor to NY Comptroller Alan Hevesi, who has been forced to resign in disgrace. Hevesi, who once called NYRA the "poster child for mismanagement and corruption," thus avoided a possible jail sentence for using state employees to chauffer and tend to his wife. The NY tabloids seem to be taking particular delight in his fall.



Mulrow will obviously have to decide between one or the other; even in the wacky world of New York State, the comptroller cannot have an interest in an entity over which his office has traditionally exercised oversight; in fact, it would seem logical that his association with and lobbying for Excelsior thus far would already be sufficient to disqualify him from consideration. In any event, Mulrow, like Richard Fields, has close ties to Governor-to-be Spitzer. New York Magazine reports that: The Mulrow and Spitzer families are so close they vacationed together in Ireland last year.

As more entanglements between the two top bidders and state politicians emerge, Charlie Hayward must be smiling over at NYRA. Presently, no politician in his right mind would be seen on the same block as a NYRA executive. But who knows, by the middle of next year, an organization that was given a clean bill of ethical health by the federal government, with a proven track record of conducting the best racing in the country, and with no private planes with which to provide free rides to governors and senate majority leaders might not look so bad.

4 Comments:

Green Mtn Punter said...

Alan, great post today on the latest in the franchise battle. I'm with you, glad to see NYRA finally winning a few rounds after being unfairly kicked around for much too long. Yup, Charlie Hayward must be getting a good behind the scenes laugh out of Alan Havesi's less than graceful exit, not to mention that short-timer Gov Pataki and Co must be reeling as a result of NYRA's recently filed blockbuster lawsuit. Wonder if Gov Spitzer, Mr Anti-Corruption himself, has any more dirty laundry that hasn't been washed or buried? And the political and other entanglements of Empire and Excelsior are also cause for holiday cheer at NYRA, as you also pointed out. Now, if Joe Bruno starts trying to kiss and make-up with NYRA, we'll know something is really afoot, that the tide may be turning back to NYRA. But on the other hand, Joe is damaged goods now, and he may be more of a liability than asset, and one would also have to say that there may well be a new franchise kingmaker in the new legislature. Who will it be? Joe's replacement would be a Republican senator from Nassau County, as I understand it, a senator and his allies who may be engineering a palace coup at this very moment. And what about a compromise franchise consisting of non-profit NYRA with a proven track record in NY track operations and management on the racing side, and the Excelsior casino management team led by Richard Fields on the for-profit VLT side? Why wouldn't that be a home run? Or, is it a deal only a politician would love?

Dan said...

Alan:

This race amongst the three (NYRA, Empire and Excelsior) seems just to be heating up - and I suspect it will get more and more sneaky and perhaps downright ugly akin to a close political campaign. I hope I'm wrong, but the signs are definitely there and there's such big money at stake. In any event, this will be very interesting and very lively in the coming months. I wrote a related entry (incidentally, before I read yours) in my blog at www.funsaratoga.com - it's the entry dated 12/22 entitled "Thoughts on a Cold and Rainy Friday night". This is my first time on your blog but I will be checking it out regularly now - as soon as I figure out how to master RSS feeds I won't have to log on anymore! Merry Christmas.

Anonymous said...

PUBLIC??? What a disaster that would be! Imagine Warren Buffet or Carl Icahn running the franchise! What planet is Empire on to bring that up at this point in the negotiations? How could that comment possibly help their bid? If they make this many mistakes in the courtship how can anyone trust them in the marriage?

Racing law should be immdiately amended to prevent public companies from holding the NY franchise.

AND, under no circumstance should a "for profit" holder of the franchise own the land, or it will be Roosevelt Raceway all over again.

Late Scratch said...

Yes, things are just get started, uh-huh. What I glean from the going public ploy by Empire is that everything is on the table. Do we really not want the franchise run like a business? Haven't we learned from what happens when it's run like a racing club?

As a "for profit" holder of the franchise owning the land as Anon suggests, it's clear that no one other than the State of New York (or NYRA) will ever own the land.