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Thursday, September 13, 2007

They're Off In The Senate

- The State Senate conducted their first hearing on Spitzer's NYRA proposal, and a lot of what we read in the papers today really could have been written last week. That particular House of the legislature is the last corner of state government still controlled by Republicans, if just barely, and given the current tensions in Albany, it's little surprise that they expressed skepticism over the plan, complaining that they weren't consulted and that it was put together hastily.

I think that, at this point, if Spitzer came out and said he was now against any campaign reform and that special interest money (like that which he received from the franchise bidders) is good, Joe Bruno would then put on the Governor's corruption buster helmet and launch investigations of himself. So while I'm not alarmed to hear Bruno say “I can tell you now that what the governor submitted is not going to be the final product,” for him to say that it's “not appropriate” to deny other bidders a portion of the franchise is just patently absurd.

He speaks as if they have some kind of guaranteed right to get a piece of the action solely by virtue of having made a bid. I mean, what if the Friends of Barbaro lunatics threw their lobotomies into the ring and proposed to turn Saratoga into a dead horse shrine? “Just to sort of leave everyone by the wayside I’m not sure is appropriate....What we need is imagination, creativity, innovation." [Bloodhorse] Well, I'll tell you what Joe; if any of the other bidders had shown any of those things - aside from giant signs on buildings, helmet-cams and horse parks in Saratoga - perhaps they would have gotten the franchise!

And why does he keep mentioning Magna and Churchill, as he was again reported to have done in the Saratogian? What makes him so beholden to those companies, especially now that his buddy Jared Abbruzzese is no longer connected (or so we're told) to Empire? Bruno is supposed to be a racing guy, so what could he possibly see in a company that is desperately selling its racing properties to cover for its gaffes? It's like Canada thinking of having George W. Bush come to run their foreign policy! I just don't get that. And to think, I wrote not long ago that it might be a good thing to have Bruno in the room where the decision will be made; now I'm thinking that it's time for him to do the perp walk.

In response to that nonsense, Charlie Hayward told the Saratogian, correctly I believe:

"It is not in the interest of out-of-state racetrack operators, who are NYRA's competitors, to preserve and enhance the preeminence of New York racing. Their for-profit structure will result in more revenue leaving New York for Kentucky and Toronto, and less revenue being reinvested into purses and breeder awards for New York horsemen."
And indeed, revenue leaving NY and going to TrackNet Media among others is written in black and white, right there in Empire's bid. So, why the counsel to the committee chairman would assert that all of the bidders are still in the running is just beyond me, and, as related specifically to Empire (and even though I don't believe it for a second), makes me wanna puke.

- The NY Post reports that the Weightgate case is not going well for the least according to one of the defense attorneys.
"The way the evidence has unfolded, we feel the prosecution is in serious, serious trouble at this point," [Mario] Sclafani's attorney, Todd Greenberg, told The Post yesterday. "The videos that were shown (by prosecution) have established everything the defense has been saying: That the methodology used (by investigators) was terribly flawed and inaccurate." [NY Post]
- The Green Monkey is entered in the 4th at Belmont on Saturday. Judging from the interest I'm seeing and hearing about this longest of long-awaited debuts, you might want to head down to the paddock now. Looks like just another high-priced horse debuting for a trainer who's 1 for his last 34 with his first-timers in NY to me!


Anonymous said...

Re: The Green Monkey, I think the interest in his debut is not so much about perceived talent or potential but about the horse being a $16 million curiosity, a freakish symbol of ego and wealth and breeding concerns run amuck.

Anonymous said...

Wow, sounds like someone here doesn't like anything about Empire! Too bad, because I think the writer might be a bit misinformed concerning this group's actual intentions and motivations. Old NYRA, new NYRA, doesn't matter as its a failed enterprise, with, by the way, no plan or ability to make NY racing a benefit to the citizens of NY, or to those that support the racing and breeding business in the state. NYRA "good", Empire "bad", or vice versa, just isn't going to make the cut in the senate.

Anonymous said...

The Green Monkey will probably be looked upon as the Seattle Dancer of the 1999-2006 boom in the bloodstock market. Seattle Dancer was, for those who don't remember, the 13.1 million Keeneland July record setter of 1985. The Keeneland September sales topper this year will be 3.7 million, and to get that high, it required a duel between Sheikh Mohammed and Clarence Scherbaurer, Jr. an obscenely rich, 87-year-old, self-admitted depression sufferer who is looking to perk up his mood with some top class racehorses (and probably willing to slightly overpay market value for them...although he did stop at 3.7 million).

While Keeneland will say that the sale wasn't too bad, I'm pretty sure that we are undergoing a correction in the bloodstock market. I'm sure polytrack has a lot to do with that. Stud fees are going to come down, and auction prices should continue to slide.

It's not the end of bloodstock as we know it, but my guess is that it may be another 10-15 years before we see a $16 million auction purchase(or even $10 million), unless a previously unaviable family gets offered as part of a dispersal or something like that.

Anonymous said...

Ooh boy. Where to start? Where to start? You missed a few points of information in coverage of yesterday's hearing.


The New York Times reported Jeffrey Gordon, a spokesman for the governor, reacting to Joe Bruno's comments with a statement that the Senate should present a specific alternative to Mr. Spitzer's plan rather than "vague statements." The Albany Times Union quoted Mr. Gordon as saying "Last week the governor presented a detailed recommendation, it is now up to the Senate majority to either accept the governor's plan or, if he disagrees, to present a specific alternative." I hope Mr. Gordon doesn't view the Spitzer Memorandum of Understanding as detail oriented. Usually when a governor requests action to the legislature, it is done with proposed legislation. None presently exists.

The Saratogian reports Spitzer defending his plan, saying "This was done after an exhaustive analysis done by many, many individuals with many metrics, integrity being one of them." Interestingly, the governor has released no report to illustrate the objective nature of the review and what metrics were used. In fact, there is no evidence who these "many individuals" are. So much for transparency in the review process.

Paul Francis, Spitzer's budget director, is quoted in the Rochester paper as saying when NYRA transfers the tracks, taxing municipalities will be paid by the state as if a private entity owned the land. Why wasn't this in the MOU or any other supporting document?

The Hearing.

The New York Times likewise notes that Bennett Liebman, the coordinator of the Program on Racing and Gaming Law at Albany Law School, was highly critical of the Governor's integrity review, calling it "extraordinarily sloppy." While generally supportive of NYRA's selection by Spitzer, Liebman did question the conventional wisdom that NYRA's management runs the best racing wondering whether their success is "due to skill or serendipity."

The Saratogian article has Liebman saying "If you believe NYRA is transparent, you have blinders on, there is almost no reason for the pre-2003 trustees to remain on the board. Why are these people still there? It's not enough to proclaim reform at NYRA. We must achieve reform at NYRA." Good questions all.

Liebman also blasted the Inspector General report saying the report was based conclusions on newspaper accounts instead of objective findings and totally omitted glaring shortcomings, such as NYRA's legal problems earlier this decade where about 20 NYRA employees were indicted in a money-laundering scandal among pari-mutuel clerks and top NYRA executives were criticized for excessive, self-serving spending practices. Liebman said that all board members from that era, about half the present Board, should be replaced.

The Rochester Democrat & Chronicle picked up on Liebman saying other problems with the MOU involve uncertainty over what NYRA will do to improve the three tracks and when; how the public can learn more about NYRA's finances, meetings, contracts and actions; and why NYRA's long-term trustees can remain with the organization.


Senator Bruno, in the article, was quoted as stating if a deal is not made on the franchise by the end of the year, current state law envisions a five-member panel currently overseeing NYRA's finances taking over the control of the three tracks. Unfortunately, Alan only replicated a part of Bruno's quote. The second sentence is more insightful: "What we need is imagination, creativity, innovation. We don't just need more of what has been going on over these last seven or eight or 10 years because it doesn't work."

Alan makes a snide observation that "if any of the other bidders had shown any of those things - aside from giant signs on buildings, helmet-cams and horse parks in Saratoga - perhaps they would have gotten the franchise!" Please tell me that you don't think NYRA's substantive bid illustrated imagination, creativity or innovation. Read back through the bids submitted to the ad hoc committee, it looks like NYRA wasn't even trying.


According to the New York Times, Neil Getnick stated in a release that NYRA fully complied with racing law when it later retained his firm. The release apparently didn't detail his reasoning. The N.Y. Racing Board disagrees with Mr. Getnick and says it should have been bid.

The notes Paul Bowlinger, executive vice president of the ARCI, questioned the no-bid Getnick contract, stating there are at least 33 other firms in the New York City area involved corporate integrity issues that NYRA could have considered.


According to the Thoroughbred Times, under the Spitzer plan 6.5 percent of gaming revenues would be allocated to horsemen-related funds such as purses. Previously, NYRA had a contract with MGM Mirage that would have seen horsemen receive 7.5 percent.

NYRA President Charles Hayward said they negotiated aggressively and that the "horsemen we've talked to, although they realize that it's less, what's more important is to get this process going and get this thing built, starting to get some money to purses." This begs the question of why NYRA is conducting negotiations on behalf of the horsemen. Maybe because they don't want the horsemen to vote.

Anonymous said...

it's too bad you didn't actually watch the committee meeting on the Senate web cast. It was was actually quite good and very balanced.

Ben Liebman was the first speaker and he basically said that NYRA maybe the right choice, but that the MOU between the state (spitzer) and NYRA was really bad.
* shortchanges the horsemen -- gives them less from the VLT's than NYRA's negotiated agreement.
* no transparency -- no public meetings or agendas by the "new NYRA board, no financials made public now or in the future, no public list of salaries paid to NYRA
* asked if this was the "new" NYRA, wonders why the pre-2003 board members get to stay?
* said the NY IG's report was crap and an indication that government cant get anything right
* Said IG used different standards for each bidder and that your friends at Empire did get pretty much hosed by the review because it focused on the friends of racing stuff while glossing over NYRA's many faults and didn't even mention the pari-mutuel scandal.
* had a newspaper article from earlier in the year where Spitzer was quoted as saying "A 20 year franchise may be too long." and asked how he came up with a 30 year deal.
* talked about how NYRA, by transferring the land to state gets out of paying property taxes, making the state's bailout of NYRA even bigger because we taxpayers get that obligation, and leaving a great deal of uncertainty for the local governments.
* said no VLTs for Belmont is missing a great opportunity.

the guy from ARCI said that the Getnick deal was questionable and that the state racing and wagering board is underfunded and could put the money to far better use.

The stats guy gave projection on the VLTs and what he expected to happen at Aqueduct -- $340 per machine, but questioned why only 4500 machines?

there's so much more I am probably missing, but I did record the whole thing and I was very impressed because it wasn't just a bash Spitzer/NYRA deal.

Also noted in today's NY times that Getnick said that he complied with all laws -- that's simply not true, as the Times Union had a story last year that the Racing and Wagering board said it was not sole source and must be bid. The bankruptcy papers on Getnick's contract, which I read today show that the retainer that he wrotes says it is void unless in receives bankruptcy and or regulatory approval.

The ARCI guy also noted in his testomony that there are 33 firms in NYC that are listed as IPSIG (Independent Private Sector Inspector General) firms.


Anonymous said...

clarify -- the Times Union story was last week, not last year.

If I hadn't been writing while the anon post above mine was posted, i could have saved some time!


Anonymous said...

Great comments by Law Boy. Makes me wish I had a NY version of C-Span.

Alan Mann said...

Anon 6:41 wrote that I might be "misinformed concerning [Empire's] actual intentions and motivations."

Oh man, I guess you must be a new reader! I don't really want to write about them anymore, I've wasted enough time, so please check out the Thacher report, and some of my past posts by entering "Empire Racing" in the 'Search Blog' box above. Feel free and come back and tell me where I'm wrong. Thanks for reading.

Anon 7:22 - Yeah, I read all of that (other than the TT article about the horsemen's percentage). I would have loved to have written about all of this, but unfortunately, this blog is not my full-time job. I may have gotten to it anyway if you hadn't done it for me!

One comment though - You wrote 'Please tell me that you don't think NYRA's substantive bid illustrated imagination, creativity or innovation.' I've been very clear that NYRA just went through the motion with their bid. That's exactly my point - the franchise was up for the taking, but the other bidders just didn't inspire anybody....if they didn't implode entirely.

lawboy - I would have loved to have seen the hearings, but (see above). Thanks for the report. I actually don't disagree that Empire got hosed by having Thacher assigned to them. They seem like a pretty ruthless crew. But personally, I think they deserved whatever they got if just for their mean-spiritedness. And it doesn't make the substance of the report untrue.

Thanks for all the info.

Anonymous said...

I have enjoyed your reporting on the franchise debacle for the past two years. You were the first (and still one of the few) to expose Empire and its founding members, Smith, Abbruzzese et al as frauds.

I am still curious as to why the mainstream industry press gave them a pass.

NYRA ain't perfect, but at least they know how to run racing, and more importantly, truly care about it.

Most of the blame for the state NY racing is in lies with the state itself. The manner in which the franchise renewal has been bungled is just the latest example of that.

Good work, and I look forward to reading your Breeders' Cup blog.

Anonymous said...

Great coverage and comments on the Gov's racing franchise proposal hearings in the Senate. And Alan is spot on when he says that Empire should just go away, and no, Joe, we certainly don't want Empire in the franchise mix! That would be absurd! Joe is grandstanding right now, looking for all the mileage he can out of the Gov's self-inflicted spy-gate wounds, but when all is said and done, I predict the deal will go down pretty much as the Gov proposes. Still don't hear anything about racing and gaming law reform that is supposed to go with it? What about OTB's? Lower on-track take-out? And numerous other key issues? /S/Green Mtn Punter

allinfun said...

Hey Alan,
First good job getting the Breeders' Cup blog.

I have some new concerns with Bruno myself. I really thought he would be helpful in this process. I guess I shouldn't be shocked that he has let politics get in the way of this. I can't imagine he wants this to end up in the courts. The land is what is hanging over all of this. I know most people are against NYRA but I still think they are the best choice. Mostly because of the non-profit choice. I do understand all of the past integrity problems they have had but I believe most of that has been fixed. My problem is that since all of this started NYRA has been trying to work with their hands tied behind their backs. Even trying to raise money by selling paintings and the state stepping in to try and stop it. Also watching the approved slots never go in while the Big A space sat empty. This is all lost money to the state and they should have worked together to take care of this. Working to make NYRA fail doesn't help anyone. My real concern is the way racing in the state is run from the Racing & Wagering board. Small fines for fixing workouts and of course the trainer bans where their assistants can just take over. I also think they should set policies where all of these tracks run the place like a bank. Money handling wise you see things at these tracks that you wouldn't even see at a retail store.

I don't really care who gets the gaming side of things at all. I just hope they really work out a plan for the tracks to get a decent amount of money. Especially for capital improvements. I don't know how it is set up at Saratoga harness but you would be hard pressed to find improvements there. They did get some painting inside and bathroom improvements. Otherwise it looks like it always has. Nice in a retro kind of way I suppose.

Anonymous said...

In response to Alan at 10:25:

It's disheartening to think NYRA would simply win by default. Unfortunately their "win", with a dearth of protections, likely commences the beginning of the last chapter of New York racing.

Alan Mann said...

>>It's disheartening to think NYRA would simply win by default. Unfortunately their "win", with a dearth of protections, likely commences the beginning of the last chapter of New York racing.

Well, as sparse as their bids were, and despite their faults, I don't know if I would go as far as to say they won totally by default. As Mr. Liebman said during his testimony, "“N.Y.R.A., whether it’s due to skill or serendipity, does have, on the whole, the top racing in the country.” And I hope that your prediction about the 'last chapter of New York racing' turns out to be overly dire. I think that lies more in the hands of the governor and legislature, with whom the power and responsibility to fix the things that are wrong, especially the current structure of OTB.

Anonymous said...

None of you pundit posters wants to take the time to understand Empire's objectives for NY racing. My guess is because you are all NYRA "hackcs", or pehaps you are getting box seats at Saratoga. NYRA is a failed institution, PERIOD.