Tom Noonan

Just about four years to the day that news broke of Governor Andrew Cuomo’s seizing control of New York’s premier racing, word comes of his latest attempt to stay in charge.  According to a report in the Albany Times Union, the Concerned Citizens for Saratoga are reporting that Cuomo is circulating a plan to make permanent state government control of the tracks of the New York Racing Association.

In May, 2012, Cuomo reached an “agreement” with the privately-controlled NYRA following a campaign of threats, intimidation and false charges against NYRA board members and officers.  It called for the majority of a NYRA “Reorganization Board” to be appointed by state officials, including eight by Cuomo who would also name the Board Chair.  Only five of the 17-member Board would be private appointees.  The law required the new Board to submit a plan for NYRA to be “returned to private control, remaining in the form of a not-for-profit corporation” in 2015.  It was the only requirement of the Board, but NYRA did not do it, and the law was extended for another year.

We now have Cuomo’s idea of “private control” according to the Concerned Citizens of Saratoga, a group affiliated with the Chamber of Commerce:

• The Governor appoints five members of the 15-member Board;
• Each of the legislative leaders appoints one;
• Seven “private” members;
• While not in the CCS statement, I have been told that the Cuomo plan calls for the 15th member and the Board Chair to be appointed by NYRA’s CEO;
• The State’s Gaming Commission would be able to “manipulate NYRA’s budget and operations”;
• Funds from the Video Lottery Terminals at Aqueduct would be “transferred” from NYRA.

So whatever else this is  –  other than yet another naked power grab by the Governor  –  it does not return control of the Saratoga, Belmont and Aqueduct race tracks to private control.  Seven of 15 members would be government-appointees, and an eighth  –  the Chair  –  would be appointed by someone hired by the current government appointees.  It’s beyond ludicrous to suggest that this is a return to private control.

The State Gaming Commission, while a reliable issuer of regulations and adjudicator of disciplinary matters, is not what one would call independent.  Of its seven members, five are to be appointed by the Governor.  And as uninformed as you may think the NYRA Reorganization Board is, the Gaming Commission has not demonstrated any familiarity with the day-to-day aspects of running race tracks.

Additionally, the proposal takes VLT money that supports racing and directs it to the state’s coffers.  As the statement from CCS points out, “New York State was given $1 billion in real estate at NYRA’s three tracks in return for the granting of a 25-year franchise agreement and a legislatively-approved revenue sharing formula from the VLT [sic] at Aqueduct.”

Should this occur, it would complete the trifecta of government actions this year that are harmful to the state’s racing and breeding operations.  The Gaming Commission awarded a casino license for a facility that will be only 29 miles from the Finger Lakes Racetrack.  There is a harness race track,  123 miles away, that will be getting “hold harmless” protection from the likely effect of “cannibalizing” gambling revenues from competing facilities.  Yet, the thoroughbred track, an integral part of New York’s breeding industry, gets no such protection and is facing dire consequences as a result.

Then we have the placement of an additional 1,000 VLT’s at Aqueduct for the benefit of an off-track betting facility on Long Island that will be competing with the other VLT’s that contribute a share of the wagers to support NYRA racing.  Now, admittedly I do not understand why an entity not running the costly enterprise of a racetrack, but only needs a building, computers and a bunch of patronage employees to take wagers on those tracks needs subsidies, but that appears to be unfortunate state of things in New York.

It’s no secret that the Governor does not like racing.  That’s fine, no one has to.  It doesn’t mean, however, he should be working to destroy it.  He is being aided in that effort, unwittingly I believe, by those who do not bring him to task for the obvious nonsense spouted over the years by the NYRA Board he controls.

The first bit of nonsense is that the “new” NYRA has brought the organization to a profitable status without consideration of the VLT revenues.  This “accomplishment” is the result of changing the concept of operational costs to exclude tax obligations and pension costs.  The VLT revenues go to meet those responsibilities and take enough off the books for NYRA to make its claim of profitability.

Then there is the NYRA Board’s plan to return the operation to private control.  At its April 12 meeting, they presented three options.  One was to retain the status quo, which even the Governor would not contend is privately-controlled.  One had no government appointees, the other had a total of four.  The so-called private appointees in each plan, however, were to be nominated by Cuomo’s appointees on one committee of the current Board and approved by another committee composed mostly of Cuomo loyalists.  These plans are described in more detail at this post.

Yet in the media, both mainstream and racing, the description of NYRA’s proposals were described uncritically as a return to private control.  The Concerned Citizens of Saratoga endorsed NYRA’s efforts because of this belief.  Having approved a plan in which all of the so-called “private” board members would be appointed by the Governor’s people, they face the rather delicate situation of describing the difference between that and a Cuomo proposal that would have him actually appoint three more people in addition to having his loyalists appoint the remainder.

The Senate Chair of the Racing Committee has also drafted legislation, but the most significant departure of that bill from Cuomo’s approach is that the New York Thoroughbred Horsemen’s Association and the New York Thoroughbred Breeders would each have a voting membership.  It is an improvement, but merely an incremental step in a bill as flawed as proposals from the Governor’s office.

If there is one thing that Andrew Cuomo is good at  –  I would even call him a genius  –  it’s manipulating the Legislature and, often, the media to get what he wants.  The NYRA reprivatization proposals, as bare bones as they were, had to first be approved by Cuomo.  So, once he gets approbation from the media and groups such as Concerned Citizens, he can now tinker with the plans to get what he really wants.  In this case, I think what he really wants are the VLT revenues.  He is hoping that gets lost in the fight over whether he has five actual appointees or two, when the reality is that he has almost all of them.  And the uncritical reporting of NYRA now operating at a profit further enhances his ability to grab VLT revenues needed by the tracks for his own purposes.

There is no one who will be covered in glory in this matter.  We have known for four years that there had to be a plan for reprivatization.  The Legislature did nothing.  The NYRA Board has been a useless appendage of the Governor’s office since its inception.  The media has been too accepting and the racing organizations have not put forward their own plans.

There are three components that a new NYRA board must have:  integrity, competence and independence.  The current NYRA Board has amply demonstrated that it lacks the last two attributes.  Any legislation that allows them to appoint the “private” members going forward means that we are destined to a continuing lack of competence and control by the Governor.

It doesn’t have to be that way.  There are ample examples of private groups screening appointees for public positions.  In some states, that is how judges are selected.  Cuomo himself demonstrated the utility of that approach when he named an independent panel of experts to examine the increase in fatalities at Aqueduct in early 2012.  The result of their work was a widely-acclaimed Report that has led to an impressive reduction in catastrophic racing fatalities in New York and that is a national model.  Indeed, I would argue that this Report is the most significant contribution the Cuomo Administration has made to horse racing.

There is no shortage of committed and knowledgeable people in racing who could come up with a list of qualified (and diverse) individuals who would similarly constitute a national model for how racing can be run.

The Governor’s plan and the proposal from the Senate merely perpetuates the current framewqrk, except now it would be on a permanent basis.  Indeed, of the proposals currently in play, the next NYRA Board could consist solely of members from the current Board except that CEO Chris Kay would become a member.  New York has an opportunity that is too valuable to waste.  It would actually be better if the current system were continued for another year rather than throwing that opportunity away.