Piling On

The hits keep coming for NYRA....the latest being yet another audit by the State Comptroller Tom DiNapoli. As you may recall, the last one turned up nothing more insidious than the free van service that NYRA provides amongst and between its three racetracks. NYRA says that it has "significantly reduced" the $900,000 annual cost by bringing the service in-house.

But the Comptroller says he wants to see how NYRA has complied with his cost-cutting recommendations from prior audits. So you can be sure that he will once again draw attention to the executive raises that recently caused so much fuss from the Budget Director, and head of the Franchise Oversight Board, Robert Megna; as well as the ensuing dust-up over the release of their 2011 budget documents.

The Comptroller's announcement comes a day after Senator John Bonacic's release of a hearing agenda which, as detailed in the prior post, includes the question of "Can the racing franchise at State owned tracks be legally taken from NYRA?" And I can't help but think that this flurry, coming just a couple of days before the opening of NYRA's signature meet, was designed to blunt the positive karma the association has been trying, with notable success as we've discussed, to generate. (NYRA also released some very good attendance and handle figures for Belmont, including explosive gains in their telephone and internet business.)

One might certainly suspect that somebody has an agenda here....and not one at all favorable to the future prospects of the New York Racing Association. In his reporting for the Daily Racing Form, Matt Hegarty once again provides a possible motive.

Under a law passed in 2001, casinos were legalized at all of the state’s racetracks except Belmont and Saratoga. Gambling companies have been lobbying the state for approval to operate private casinos, and Belmont Park is considered an attractive site for a casino location. Under the current lease with the state, it is unlikely that a private casino operator could develop a casino at Belmont unless the lease with NYRA was revoked. [DRF]

Clearly, one way to have that lease revoked is to make NYRA go away. And since the notion of "private casino development" is a prominent one in Bonacic's press release, one can surely speculate that one or more private casino developers - and you can speculate as to who they are - could be behind a move to have the franchise revoked. And that's not as far-fetched an idea as one might think. NYRA is required to meet certain benchmarks as specified in its franchise agreement; as Megna reminded Charlie Hayward in no uncertain terms in his letter last month.

"I remind you that under Section 212.8.a(ii) of the Racing Law, the Board has the authority to recommend termination of the franchise agreement upon a finding of a material breach, or repeated non-material breach of performance standards under the franchise. There is little doubt that continued failure to comply with Board requests would amount to such a breach."

Now comes Senator Bonacic's agenda item, which you'll notice doesn't read 'Should the racing franchise at State owned tracks be legally taken from NYRA'...but, rather, 'can' it be taken away, as if somebody has already decided that it should.