Franchise Process Degenerates to Bad Farce

- To me, the entry of two new bidders for the New York franchise and the ongoing enhancing of the original proposals add a large element of farce to the proceedings. Forget the deadlines, and the months of work by the Ad Hoc Committee (and the taxpayer money spent on it). For one thing, it's like two horses jumping into a race at the eighth pole, after the others have already done all the work, setting the pace, making their wide moves, and helping to set the race up for the fresh entries. Not that I necessarily think that either the Catskills OTB or the Steve Wynn-led Thoroughbred Racing-NY has much of a chance to win the franchise. But they know exactly what they're up against, and can use all the work done by the others to craft their own proposals with the previous bids as benchmarks.

Then there's the written statement issued on behalf of Governor Spitzer: “The fact that additional companies have come forward demonstrates the great appeal and potential of Thoroughbred racing in New York.’’ Ha!! This is as cynical of a statement one could ever hear, even from a politician! The OTB is looking to protect its own turf, and we're supposed to believe that Steve Wynn cares about racing? As a matter of fact, are we supposed to believe that Spitzer is focused on racing rather than on slots revenue? Or for that matter, that any of the bidders with the exception of NYRA are?

In the case of the OTB, its president Donald Groth said his pitch will call for the state to create a new public benefit corporation to run the tracks.

"That's the only way for the people of the state of New York to share in the profits and to protect county governments that get revenues they have come to count on from off-track betting." [Albany Times Union]

The idea of creating a new quasi-state agency (the Metropolitan Transit Authority and the Port Authority are other examples of public benefit corporations) sounds very much like an idea that Steve Crist, prescient as usual, floated in his recent Form column:

Almost every time that government panels have taken on the challenge of designing a new blueprint for New York racing, they have ended up rejecting any private operation in favor of - surprise! - a vast new government agency. This seems especially possible in the New York situation as a new bureaucracy might fold in the state's six OTB corporations.

Of course, the old bidders are no longer bound to their bids, and are now free to enhance any aspects of their proposals that were previously deemed inferior. Empire spokesperson David Vermillion told the Saratogian:

"There's going to be a lot of changes, a lot of new information across the spectrum of areas....The money's going to be there."

Like Excelsior, Empire has pledged to pay off $50 million of NYRA's pension fund debt, which wasn't in its original proposal. The concern some observers have expressed is that re-starting the selection process could turn things into a bidding war.

I think it's obvious that the bidding war has already begun. And despite the promises of an open process in which the bidders, old and new, will present their proposals at public hearings and to the state legislature, it seems rather clear that sometime in June, shortly before the legislature adjourns, Eliot Spitzer, Sheldon Silver, and Joe Bruno (or whoever is the Senate Majority Leader at that time) will lock themselves in a room, determine which proposal translates into the most revenue to the state, and determine the future of racing in the state on that basis.