Talks Stalled With Week To Go

- Matt Hegarty's article in Saturday's Form is the only reporting I've seen on the franchise negotiations in the last ten days; and it basically reported that there's very little to report.

Though negotiations were conducted in earnest over the weekend of Jan. 4-5, the participants have not discussed the extension since Sunday, officials involved in the negotiations said Thursday, because of preparations surrounding Spitzer's State of the State address on Wednesday and the death in Bruno's family.

NYRA is said to have agreed to shorten its term from 30 to 25 years in order to attempt to maintain some control over the makeup of its board. If that's the case, that would be one contentious issue out of the way, though those five years has to be the most trivial matter of all to any of us who will be immediately affected by the final solution.

The statement issued by the NYTHA last week requesting a larger share of VLT revenues than the 6.5% contained in the MOU also noted this:

The New York THA....is the only horsemen’s group in the country not protected by the federal Interstate Horseracing Act, which means NYRA is not obligated to negotiate with, and secure simulcast and other approvals from, horsemen who conduct their business at Aqueduct, Belmont Park, and Saratoga.

“There is no rational, reasonable, or ethical reason that the New York horsemen racing at the NYRA racetracks should not have the same rights as every other horsemen’s group in the country,” Violette said. [Bloodhorse]

Maybe not, but there's certainly a legal reason. The NYTHA lacks those rights because of this exemption clause contained in the Interstate Horseracing Act: (except a not-for-profit racing association in a State where the distribution of off-track betting revenues in that State is set forth by law)

The host racing associations' control over their simulcast signal is a powerful tool to be sure. You may recall the dispute at Monticello in January, 2006 when the harness horsemen there withheld their permission to transmit the simulcast signal after going without a contract for a year and a half. As a result, handle on the races dropped by more than 60% and the track ultimately agreed to submit to binding arbitration which it previously insisted it wouldn't.

And recently, Florida horsemen, upset at TrackNet Media's refusal to sell Gulfstream's signal to Youbet, threatened to block its transmission altogether, even to TrackNet Media, which is half owned by the track's owner Magna.

"Our right is that we can consent for a signal to go or not go. But when we consent it to go, the track’s right is to not send it if they don’t want to, and that’s what TrackNet was doing. That’s what the Interstate Horseracing Act says. Everyone was within their rights.”

[Florida HBPA executive director Kent] Stirling said the potential loss of Youbet.com handle needed to be addressed by TrackNet Media, and after what was deemed an unsatisfactory offer, the situation was delivered to the Florida HBPA board of directors.

“We called our board and they said, 'Fine, if they won’t move from that, there won’t be a signal,' ” Stirling said. “We told TrackNet, that if we had to, we were just going to pull all the signals, and they wouldn’t have their own signal, which would be highly embarrassing to them.” [Bloodhorse]

And though the Florida group failed to force TrackNet to deal with Youbet, it did obtain more money in return. So it's certainly understandable that the NY horsemen would be upset at lacking this power. Unfortunately, the problem is not so easily solved. The industry is loathe to try to tinker with the federal law, which is part of the highly precarious and contradictory legal framework under which interstate simulcasting is currently permitted. (For more information, please read Chris Wittstruck's 2006 column on the subject, part of the US Trotting Association's informative Racing and the Law series.)

The other way around the exemption would be a change in the state's OTB system to one in which the distribution of its revenue is not set by law. (In this rather hilarious article from 2002 (pdf document), Albany Law School's Bennett Liebman argues that some such splits are indeed not presently determined by state statute, and that the NY group's status is therefore unclear.) Presumably, should the OTB's be consolidated under the new NYRA, distribution determined by law would no longer be necessary, and the NYTHA would no longer be exempt from control of the signal. Unfortunately for them, and for the industry in general, the OTB issue seems to be off the table at this time. But at least it may only be 25 years instead of 30 before we once again have this historic opportunity to revisit it.