NYRA Response Just the Prelim

By now, you may have read NYRA's response to The Letter which represents a potential first salvo in a bid by the state to revoke its franchise.  The statement deals strictly with the accusation that NYRA acted improperly, and in violation of unnamed regulations and by-laws, in appointing Ellen McClain as the new CEO President (CEO position is still open), and Kenneth Handal as General Counsel.  Not only, according to NYRA, were the appointments part of its "fiduciary obligation to exercise its business judgment to protect the best interests of racing and the income stream that pari-mutuel wagering provides to the state," (good one!), but, NYRA claims, they were actually encouraged by Racing and Wagering Board Chairman John Sabini. 

  On May 1, 2012....Sabini sent a letter to the NYRA Board of Directors, which stated “…it is imperative that you provide an interim operational plan to the Board, especially who will be performing functions as Chief Executive Officer and Counsel.”  This letter contained no indication of any concerns or limitations with respect to these appointments.

However,  Chairman Sabini shot back that he never told NYRA to appoint a president and secretary, but did urge it to promptly set up interim leaders. [Albany Times Union]  Looking at the (clumsily worded) May 1 letter from Sabini, it's really a matter of interpretation and intent of the language, and each side can make a case in my view.

But that's just a pissing match, really.  For one thing, NYRA was fully within its rights, if not acting out of its "fiduciary obligation" (I love that phrase), to appoint Ms. McClain as CEO - interim, acting, or otherwise.  Reasonable people can surely argue over the wisdom, or even the appropriateness, of appointing the person who was the Chief Operating Officer while the takeout was too high as the new CEO President.  But the investigation into the takeout mess will run its course, and look, heaven help NYRA should it determine that Ms. McClain was involved in any improprieties whatsoever regarding the takeout being 1% too high on certain exotic wagers.

What will be of far more interest and significance is how NYRA responds to the most explosive elements of the letter - the withholding of its share (not, we're told, the horsemen's or breeders') of slots money, and the point-by-point accusations of material and/or non-material violations of the Performance Standards laid out in the Franchise Agreement and/or the Racing Law that could in theory lead to revocation.  Matt Hegarty writes in the Form: 

In contrast to portions of the letter pointing to its authority to revoke the franchise, the letter did not cite a section of racing law in which the state had the authority to suspend the casino payments, so it was unclear how the state arrived at that position. As a result, it’s likely that NYRA’s attorneys are exploring whether the state has the right to authorize the suspension of the payments, either under the franchise agreement or the state’s racing law.

   And you can sure expect NYRA to push back strongly considering that its attorney is Brendan V. Sullivan, Jr. - a Washington, D.C. defense lawyer considered one of the top in the business - that, according to James Odato in the Times Union.  Sullivan has represented, and quite successfully, such illustrious characters as former Senator Ted Stevens, Oliver North (“I'm not a potted plant. I'm here as the lawyer."), and Richard Grasso (in approximate ascending order of contemptibility).  Not only did Stevens get off, but the prosecution ended up being accused of prosecutorial misconduct in a scathing report by a special prosecutor earlier this year.  That might be something for Racing and Wagering, and the Franchise Oversight Board to think about considering their own failures, as the ultimate regulators, to themselves correctly regulate the takeout rate.

 - Here's a story about Pepsi dropping its sponsorship of the annual Tennessee Walking Horse championship in the light of horrifying allegations, some backed up by video evidence, of not only abuse, but outright torture of horses.  That video led to a federal indictment of a leading trainer. 

  The tape shows McConnell and his stable hands beating horses with wooden sticks and using electric cattle prods on them as part of a training protocol to make them lift their feet in the pronounced gait judges like to see. [ABC News]

It actually gets worse if you read on.  Sounds like this guy could use Brendan V. Sullivan, Jr.  But what I'd like to know....considering how so very concerned they've been of late about the treatment of the equine breed, why hasn't this been on the front page of the New York Times?  (Or on any page of the New York Times for that matter?)