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Wednesday, May 23, 2012

Cuomo Gets the Crown

I think it took about ten minutes after NYRA got a one week deadline to agree to, for three years (unless everyone forgets about when it's supposed to sunset), cede control to Governor Cuomo. And I think it was both sides, not just NYRA, that was anxious to get it done.  "Lawyers have gotten rich on the relationship between NYRA and the state....We decided not to do that," the governor said.  I think I'll take some credit here for writing last week that the letter to NYRA was more bark than bite.  The state didn't have a sufficient case to revoke the franchise and they knew it.  With a bulldog lawyer in NYRA's corner, they used the letter to pressure NYRA into this deal rather than embark on what promised to be long litigation (that would have given me great subject matter for months if not years).  According to Jim Odato in the Times Union, Cuomo even threw NYRA a bone to encourage a settlement, promising a cut of casino revenues if the state ends up legalizing gambling halls via a constitutional amendment.

So, now, in the spirit of this new alliance, and with all the lofty talk of cooperation we heard at the press conference announcing the deal, Cuomo will definitely go to the Belmont, right?
The governor said he'll attend the Long Island race if his schedule permits.  [NY Post]
  Yeah, but....I mean....what else does a governor have on his schedule for a Saturday afternoon?

Besides, now, after getting what he wants, as he usually does, Cuomo can come and ascend to the announcer's booth (out of the way, Durkin), gaze down to survey his conquest, and bask in the adoration of his loyal and obedient subjects, including those who traveled to Albany on Tuesday to kiss his butt.  Such as NYTHA president Richard Violette Jr:  "We are excited we have a Governor who has announced he will champion our industry."  (I wonder what his harness counterpart Joe Faraldo would have said.)  And Barry Ostrager, president of the NY Thoroughbred Breeders: ""It is a great comfort to the New York thoroughbred breeders to know that Governor Cuomo has reaffirmed the State's commitment to support the New York breeding program..."   And NYRA Board member (for now) John Hendrickson: " Governor Cuomo is to be commended for his vocal support of racing, and for bringing all parties together for a positive resolution."

And indeed, the governor said (mostly) the right things. 
  "As the upcoming Belmont Stakes shows, the racing industry is a vital part of New York State 's culture and economy, attracting millions of dollars in tourism revenue from across the nation and supporting thousands of jobs,"
He did also refer to $675 million issued by the state to subsidize the industry; and while it may be a matter of semantics as to whether the tracks' share of slots money constitutes taxpayer or corporate subsidy at this point, Cuomo has obviously succeeded in framing it his way.  But, in any event, has the governor suddenly become enlightened as to the "net positive" that the industry is to the state?  Or is he simply giving himself three years to manipulate the finances more to the state's advantage and place casinos in the locations of his choosing before he's off to bigger and better things?

I certainly know how a buddy who is an owner/breeder of NY-breds feels. 
This is what can be accomplished in the first six months, god knows what else they can do in three years:

goodbye Big A, convention center scam full speed ahead
Racing season April-November,
spa season expansion 6/15-labor day
Increase in takeout
Elimination of "subsidy"
Reduction in purses.
reduction in breeders fund
Belmont Stakes run on Polytrack
unilateral elimination of Lasix
3 day race week
restriction in frequency of horses running
multi billion dollar backstretch "improvements" made by NYS Dormitory Agency or some other politically connected entity 
Maybe you can quibble with some of these points - a reduction of race dates, though maybe not to the extent expressed here, actually makes some sense, so you can probably cross those ones off.  But I'd surely wager that you can kiss the Big A goodbye.  And I wouldn't be at all surprised to see any of the other predictions come to pass, not a one.  Would you?

Just amazing that we've reached this point, and that things at NYRA deteriorated so quickly.  I don't know what could have done about the breakdowns....though, in hindsight, NYRA surely could have acted quicker when it became apparent that something was amiss instead of merely acting puzzled and insisting that the track was safe.  Something, anything, to show some concern, even a symbolic one - a one-day shutdown of racing to inspect the track, or an investigation along the lines of the one in which it was pressured into.  But the final straw was that ridiculous takeout snafu, a lousy 1%.  I know you takeout guys don't like when I minimize that by referring to it as dribs and drabs that most affected horseplayers didn't even miss (and likely lost it back if they did).....but its impact on New York racing, and on the career of at least one good man who had the best interest of the game at heart, has been far, far, far more profound than that $8.6 million figure was made to sound.   Oh, man.

33 Comments:

Anonymous said...

Hey A,

I like Charles too, but your glossing over the 1% just doesn't make sense to me.

If Exxon Mobil was told by the g'vt to lower a gas price by 1% by law, and they didn't, would anyone give them a pass because old company laws and the EPA/Dept or Interior/Dept of Commerce etc etc are complex ?

People get fired for that kind of stuff every day in business; a lot of them great CEO's and good men and women. It is what it is.

PTP

Anonymous said...

I just read that comment. Man I hate auto-correct.

o_crunk said...

I'm not feeling how otherwise reasonable people preface the takeout snafu without fail as "Hayward's a good guy". Okay, no problem. Nice guys do the wrong thing all the time. Even if you take Hayward's emails at their "off the record" face - you're left with a guy that didn't exactly play the politcal game he thought he was playing very well. Fair or not, that's what it looks like to me.

I also can't stand the "dribs and drabs" but I get your point. What I don't get is how it's impact is "made to sound". Hayward and these guys played with political fire and they got burned. Worse even, to me, is that they played politics with horse player's money *and* got burned. So this idea that it's the people or the media that raised a big stink about the takeout issue just doesn't play. If Hayward and NYRA played this straight from the get (and I know that's easy to say in retrospect), then maybe they ain't at home wishing it was different.

I expect the new NYRA to be about as effective as the NJSEA was in NJ when racing started to go south a decade or so ago. MTH was left with their dick in their hand when Christie red balled the joint. By the end NJSEA was a bunch of well paid political appointees who were more interested in keeping their paychecks than returning racing in NJ to the cash cow that it once was for the state. If Cuomo and company accomplish even half of the list your buddy sent you...consider it progress. After all, this blog itself was sick of AQU by the time the casino came online. There ain't no renovation that's saving the place as a racing enterprise.

Dan said...

I'm not convinced the convention center will take place. It took 10 years to get the VLT's at the Big A. This is NY everything takes a long time to get anything done.

The only good thing here is that this issue is done for now & NYRA will not be on life support. My NYRA rewards account will still be active. Lets all hope for the best. The key thing here is that they will conduct a national search for a CEO. This will give us more clues how this will turn out.

jk said...

Kill the horses and steal from the customers does not cut it. There is no amount of spin to gloss over what is going on. Management and Board changes are a necessary first step. Lets see what happens from here.

alan said...

OK, lemme clarify - Hayward fucked up and deserved to be fired for that, not matter what his intentions were....especially in retrospect now when one considers the ramifications of the error. Under the microscope as NYRA was, they could not afford to be anything less than perfect and, as CEO, no matter what his role was or wasn't, the responsibility was his and he paid the price as he should have. We might disagree on how significant the 1% really was, but we're in agreement on that point.

Dan said...

What will happen after 3 years? The goal is to get it back in "private" control. I'm happy NYRA will still get the casino $ for purses & improvements.

They should hire a good chairman & CEO that has a background in this industry. It should not be a political appointment (OTB president ect).

Anonymous said...

Once the government takes over it is all over. It was great while it lasted. Take a look at how NYOTB worked out.

Anonymous said...

Does anyone really believe that NYRA gave up the franchise it fought for for years so easily. Are we really meant to believe this BS?

A little history which we all remember: NYRA put itself in bankruptcy, went to the brink with former Governor Spitzer (who capitulated to NYRA in the end, one wonders why) and forced the state to bail it out to the tune of about $200 million and an additional $50 million or so for the next 20 years from Aqueduct VLT's.

Surely the truth is that the investigations were going to uncover the truth of how NYRA has operated at both management and Board level for years and the Board could not take this heat as it might lead to more than just embarrassment, possibly even to something much more seriious.
Jake!

Dan said...

It depends what NYS does during these 3 years. I don't want them to take the $ & run. The OTB systems are a joke but having the government come in & save the auto industry worked very well. GM is #1 in the world again & Chrysler is doing much better. Lets see what happens but I do have my concerns.

Anonymous said...

So does this deal Cuomo made clear the NYRA from any responsibility for shady dealings it may have been involved with in the past? Seems that is what the above poster is suggesting. If so, that would be hard to believe coming from a law enforcment guy like Andrew. Maybe it was set up to be the ulitmate "whiteout."

Anonymous said...

Michael Del Giudice, closely aligned to the Cuomo family (Mario Cuomo's former Chief of Staff) and Speaker Silvers appointee to the Board of NYRA where he has been Vice Chairman since 2005, orchestrated the bankruptcy of NYRA in 2006 and secured a $200 million bailout by the State, a new 25 year franchise and an additional $1.0 billion in VLT revenue from the Aqueduct casino over the next 20 years, money which would otherwise go to the State's education fund.

http://online.wsj.com/article/...
and
http://www.buffalonews.com/spotlight/article841563.ece

Yesterday's move by the Governor smacks of a time-honored tactic of federal and state politics to throw a tarp over the toxic dump, invoke higher authority, freeze the situation from the prying media, and work things out with the lights off.

A major scandal, especially one involving an old family friend, and old-style machine pols, while on the Governors watch and he didn't clean it up and distance himself, could be fatal for a presidential bid, especially with his Mr. Clean image.

The Governor may have to gore an ox or two before this is over.

Anonymous said...

What does Bennett Liebman know about the corrupt take out scandal.

Liebman is a lawyer (former Executive Director of the Government Law Center, Albany Law School), an expert on racing law and was a NYRA Board member for years until he left last July 2011 to join the Cuomo Administration as the Governors horse racing guy:

http://www.governor.ny.gov/press/0611appointments

Liebman appeared with the Governor yesterday when he announced this latest NYRA deal. He should be asked what he knew about the takeout scandal and if he did not know, why not. Surely he is either guilty of knowing and choosing to do nothing or guilty of being totally incompetent. Either way he should immediately resign from the Cuomo Administration.

Charlie Hayward and Patrick Kehoe should not be the fall guys for this bunch. They are both fools if they allow this to happen to them.

Steve Zorn said...

Let's take Charlie at his word. Say he passed on the first email about takeout to Pat Kehoe. Then when Kehoe put the email in his (very large) "too had" folder, Charlie didn't remind Kehoe about it for 15 months?? Still, he might have survived but for previous arrogance, no doubt supported by Kehoe's tone-deaf literalist reading of the law, that led Charlie to refuse disclosure of NYRA budgets and salaries, only to have to backtrack in the face of political pressure. The takeout mess was just the last straw.

Will be interesting to see if any of the Dinnies -- Phipps, Janney and Robert Evans are the chief suspects -- resurface on the new Board. If so, then I suspect the fix was in, as part of the old guard's last-ditch attempt to regain control of what they always thought was their family plaything.

Anonymous said...

DelGiudice and Len Riggio, both powerful members from the current NYRA board, are Cuomo fund raisers and old pals. I can't believe Governor Cuomo can permit either one of them to continue on serving the NYRA board based on their presence through all the "dark" days of NYRA. If he does let them stay, "no more questions your honor."

Anonymous said...

So many angles in this deal. Do some homework and look at all the peripheral investigations the NYRA is directly or indirectly involved in over the last 7 years. This Governor is no fool, so what's he up to?

Anonymous said...

The vast majority of the NYRA Board have been members through the scandals, corruption, bankruptcy and mismanagement over the past 10 years or so.

This same Board folded like a cheap suit yesterday and unanimously voted to effectively dissolve itself. Logic would lead us to ONE conclusion; the investigations were heading towards serious allegations against this Board.

Are we surprised? I think not.

This Board may think they have dodged a bullet and let’s face it, it will be in everyone's interest in Albany to whitewash the ongoing investigations; however at a minimum they all have dirt on their hands and will have to live with the fact that they were Board members of a corrupt and incompetent organization.

Let's see if Hayward and Kehoe allow themselves to be the fall guys and get bought off for their silence.

Anonymous said...

If they took the takeout seriously this never would have happened.


Lets hope the next figureheads will take the horseplayers seriously.

August Song said...

Too many were asleep on the sunsetting of the takeout, New York Racing & Wagering Board, Liebman, Sabini, besides NYRA and Hayward. Politicians are forever trying to blame somebody else for their own incompetence/corruption. We're still waiting for Cuomo to cite how many millions of dollars the Aqueduct Entertainment Group bid-rigging scam cost the state and New York's citizens? And, we're still waiting for Cuomo to recommend the indictment, prosecution, and impeachment of the politicians involved in the scam, namely Paterson ( I can pick whoever I want, screw the bidding ), Silver ( I can smell a good scam when I see one ), Sampson ( "I can't seem to remember what happened." ), and Smith ( "The Aqueduct Entertainment Group promised be a great position, when I retired from politics ).

New York politicians remain as corrupt as possible. Cuomo proves he is a supreme abettor of political corruption at all levels.

Figless said...

The result of the Nationwide search for new CEO is in..........Hazel Dukes!

Dan said...

Did anyone check out the editorial from the NY daily news today? They are so against racing. Wow. They say racing is a dying sport ect. I wonder how much New York State receives from the takeout per year from NYRA? The problem is that all the media is against racing & the general public doesn't get all the facts. Very sad..

Anonymous said...

Fools? Probably. Amazingly arrogant and self viewed "teflonic"? Absolutely.

Watch for Mikey Del Juice.

Anonymous said...

Was hoping they'd let Ellen have a crack at it. She's a terrific people person and smart as the day is long. Mwaaahahahahaaaaa.

Anonymous said...

Dan,from what I tell it's only the liberal media that is against horseracing.

Dan said...

Are you calling the NY Post editorial board the Liberal Media? They have been going after NYRA for years. This is not it. The NYRA has been a punching bag for the politicans & media for years because NYRA didn't get their message out effectively. Gov. Pataki was no fan of NYRA either. He signed the VLT law in 2001.

Anonymous said...

Hi Alan,

Can you please comment on the Drape article in the Times today re Getnick and Getnick? His take on the relationship between NYRA and that law firm didn't sound right to me and so I searched your archive - wow, what a convoluted saga, including the connection with Tim Smith, Joe Bruno and the Friends of NY Racing (remember that?). Through the years you've done a very thorough job reporting every new wrinkle. Maybe you can give some much-needed background on the Drape allegations.

Anonymous said...

Something must have gone wrong in 2010 between Getnick & NYRA. The relationship sure seemed cozy up to the point Getnick stopped getting paid in early 2010, yet they stayed on as integrity counsel until the March 2011 dismissal, then issued their final allegedly damning report in June 2011. I seem to recall DiNapoli suggesting that the NYRA negotiate a better rate from Getnick, but terminating them was not permitted by the franchise deal.

Agree to above, the "saga" continues.

alan said...

OK will try to get to this latest NYRA news soon, but, in the meantime, here's Matt Hegarty's report, which should help clarify far more than anything Drape could write:

http://www.drf.com/news/nyra-fee-dispute-getnick-and-getnick-flares-anew

Anonymous said...

New NYRA integrity counsel

The New York Racing Association has replaced its longtime integrity counsel, and the new firm's partner knows a little bit about NYRA's troubled past.

Without fanfare, NYRA replaced Getnick & Getnick, which had been given a no-bid contract four years ago, with the Manhattan firm of Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer. Partner Jonathan Sack is the firm's point man on the new NYRA contract and has been at the Saratoga thoroughbred track in recent days.

Sack was in charge of the criminal investigations division of the Brooklyn-based U.S. Attorney for the Eastern District of New York until the end of 2002. Assistant AGs under him were pursuing allegations of criminal fraud against NYRA at the time. In 2003, NYRA was indicted for alleged tax fraud by the office, a charge the association did not contest as part of a deferred prosecution agreement.

Sack said he did not get personally involved in that case, although his successor, Daniel Alonzo, took a lead role. As part of the settlement, NYRA had to hire a monitor for a few years, and that court-approved firm was Getnick & Getnick, which later got the no-bid contract at $125,000 per month in a deal first reported by the Times Union.

Sack said his firm was retained in June after it responded to a request to proposals. Its deal calls for no specific fees or length of representation.

"It's not a fixed sum, it's based on reasonable hours and reasonable expenses," he said. "We look forward to enhancing the organization." State law requires NYRA to have an integrity counsel.

The new firm has one other link to NYRA. A deceased partner represented a former NYRA official, Vince Hogan, who pleaded guilty in 2004 for his role in the tax fraud NYRA and mutuel clerks were caught in. Hogan was the parimutuel director. Sack said he has no ties to the Cuomo administration, although one of Gov. Andrew Cuomo's top lawyers, Linda Lacewell, was an Eastern District prosecutor under him when he was chief of the criminal division.

-- James M. Odato



Read more: http://www.timesunion.com/local/article/SUNY-consolidation-next-step-for-savings-1751640.php#ixzz1vuqczRWo

steve in nc said...

Interesting that the NY Times obtained a "confidential" email detailing special rules for O'Neill leading up to the Belmont. Drape and the Gray Lady seem to be allies with the Cuomo takeover of the NYRA.

And now (Thursday's article), rather than describing the NY racing industry as subsidized by the government, Drape said this:

"The hard-line stance on the security for one of America’s top races comes a week after Gov. Andrew M. Cuomo took control of horse racing in New York in the hopes of overhauling a scandal-plagued industry that generates hundreds of millions of dollars for the state."

Figless said...

Drape/Times supporting a goverment takeover of private industry??? Shocking.

This is the same guy that told Mike Francesa that Goverment should run the track using the Hong Kong model, with the State in charge of purchasing all horses and hiring all the help (vets, jocks, excersice riders etc). No shott, he actually said this.

Did Cuomo also take credit for the increases in attendance and handle on Memorial Day?

Surely the turnout was a reflection of increased confidence due to the State takeover.

steve in nc said...

Memorial Day for once was a card worth playing.

Let's not start the same old argument again over public/private since it is always a more complicated issue than we have space for and it incites the haters.

Let's remember that NYRA was never fully private to begin with and while it has to tithe to the state from the handle (something I'm not sure Cuomo has conceded), the industry is also subsidized by taxpayers through the state breeding program. It is also to an extent insulated from competition by bans on sports betting and limits on casinos.

I'm no fan of Drape as a journalist, but his exposes, as flawed as they are, are doing a job the racing media and industry have demanded by their own failure and negligence.

Hell, every horseplayer knows that the sport is being run into the ground. I want to see the sport improved and I don't give an ideological sh** whether a public or private entity does it.

And what would be so bad about having horses run clean, racing that is honest, and the backstretch help actually getting paid a living wage with health care? Aren't the stands always full in Hong Kong?

OTB was certainly a costly, useless patronage mill, but it was born because NYRA was so blind it wouldn't accept off-track business. NYRA has historically given OTB stiff competition for the title of patronage mill best at ignoring the needs of its customers.

So the issue for me isn't public vs. private but a matter of transparency and competence regardless of ownership/control.

Figless said...

Agree there is no reason to argue public/private, I just thought the Drape suggestion to run it like Hong Kong was absurd.

I respectively disagree that the industry is subsidized whatsoever by the taxpayers. The STATE makes money from the industry, every penny of the breeding fund comes from handle.

We can argue forever over the appropriate split of handle between the state and the industry, but even if one considers it a "subsidy" there is no doubt that in this particular instance the breeder program is working for the state by creating employment in depressed rural areas.