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Thursday, October 18, 2012
State now controls NYRA

By Tom Precious
Bloodhorse



The New York Racing Association is now the nation's largest state-controlled racing entity, paving a new and highly uncertain future for the not-for-profit corporation that has seen its highs and lows since being created in 1955.

The state late on Oct. 18 legally activated a new government-run board of directors at NYRA, many with little or no racing industry backgrounds. Gov. Andrew Cuomo named his eight picks and legislative leaders added their four names to operate what is supposed to be a three-year control period for the embattled racing corporation by the state.

Cuomo named David Skorton, president of Cornell University and a cardiologist with no apparent equine industry experience, as his choice to chair the new NYRA board. Skorton has been on an economic advisory panel appointed by the Cuomo administration, and his appointment as chair, given the state-control of the new board, is all but certain.

Other new members named by Cuomo include celebrity chef Bobby Flay, a Thoroughbred owner; film producer Jane Rosenthal, co-founder of the Tribeca Film Festival and chief executive officer of Tribeca Enterprises; Barnes & Noble chairman Leonard Riggio; Anthony Bonomo of the Administrators for the Professions and former medical malpractice lawyer; investment advisor and lawyer Vincent Tese, a former economic development chief in the administration of former Gov. Mario Cuomo, the current governor's father; Joseph Spinello, managing director of Navigant who was also the state Inspector General during Mario Cuomo's administration; Robert Megna, the governor's budget director who, until today, was chairman of the state's NYRA franchise fiscal oversight board.

John Hendrickson, breeding and racing manager at the Saratoga stables owned by his wife, Mary Lou Whitney, was named by Cuomo as a special advisor to the NYRA board.

Senate Majority Leader Dean Skelos named two people to the new NYRA board: Michael Dubb, founder of Beechwood Organization, a homebuilding company, and a Thoroughbred owner who has been on the NYRA board since 2008; and Earle Mack, a real estate developer in Manhattan and former NYRA board member who was also chairman during the 1980s of the New York State Racing Commission.

Assembly Speaker Sheldon Silver selected Michael Del Giudice, a longtime Cuomo family advisor and friend who has served on the NYRA board since 2003, including most recently as vice chairman; and Rick Cotton, executive vice president at NBC Universal.

The new state-run board became active once a majority of the 12 government-appointed members were named Oct. 18; Cuomo gets eight picks, and the Senate and Assembly majority leaders get two apiece. The previous NYRA board, was permitted five choices to the new board; it has settled on keeping several members from the NYRA board, whose leadership had been attacked by Cuomo, including retaining former chairman Steve Duncker.

The unusual move by the state to take over control of a not-for-profit corporation comes after Cuomo's criticisms of NYRA over everything from an unusual number of equine deaths at Aqueduct Racetrack to a failure by NYRA to lower, as required by law, takeout on certain exotic bets, which cost bettors more than $8.5 million on wagers made on races at Aqueduct, Belmont Park, and Saratoga Race Course.

It comes at a time when Cuomo is pressing for a sharp expansion of Las Vegas-style resort casinos around the state, including on the Aqueduct grounds. The administration is also looking to sell or lease land at Belmont racetrack, and Cuomo has floated the idea of lowering revenue-sharing deals struck over the years that give part of the proceeds from racetrack-based casinos, such as at Aqueduct, to purse and breeding funds.

For Cuomo, taking control of NYRA -- a step first considered a generation ago when his father was governor of New York and had his own battles with the corporation's leaders -- offers paths to possibly reorganize how the tracks are run and to make possible real estate deals with casino developers or others at one or more of the facilities. It also offers potential pitfalls for the governor: any problems that might arise at the large gambling enterprise will now rest at his doorstep.

Through the selections of his NYRA board members, Cuomo is clearly signaling he wants the panel to be rounded out with activists -- from academia to Wall Street -- to take NYRA on some new, and as yet unknown, path.

The NYRA takeover bill was approved by lawmakers in June, but Cuomo, sources said, had trouble finding the right people to name to the board, including a new chair. The new members have additional state ethics disclosure requirements, including revealing any financial ties to the racing or breeding industries. Exactly how that information will be made public, or if it will, remains uncertain.

By law, the new control board's authority expires in three years. However, there is nothing that could legally stop the state from reauthorizing the board's control at the end of that period. The Cuomo administration has publicly insisted it does not want the state to be in the long-term business of running racetracks, and considers the takeover a temporary period in which a whole range of options for New York's racing industry can be considered.

How this period will ultimately affect NYRA's long-term franchise to run the tracks -- which it re-signed in 2008 in return for relinquishing its claims that it owned the tracks -- is also uncertain.

"The structure of gaming and racing is undergoing change in New York, with the establishment of racinos, the creation of the New York State Gaming Commission and first passage of a constitutional amendment on commercial casinos,'' the June legislation, authored by Cuomo's office, states. It said the NYRA takeover is needed "in order to ensure the viability and continuity of horse racing, the racing industry and industries that support and are sustained by the racing industry.''

The legislation notes in several passages that the state control is "temporary,'' and that in no fewer than three years NYRA "shall be returned to private control.''

A memo accompanying the legislation says the state will have no fiscal impact on the New York government, which has provided numerous financial rescues to NYRA over the years.

"With the new leadership of the NYRA Reorganization Board, we have an enormously accomplished group to assist us in making New York Thoroughbred racing the best in the country," Cuomo said in a written statement. "The new Board is charged with reforming NYRA for the benefit of taxpayers, fans, track workers, jockeys, and the horses themselves."

Various names besides Duncker have been floated among the five members selected for the new panel by the now-defunct NYRA board. Duncker did not return calls for comment and the Cuomo administration could not confirm the names.

The new NYRA board will now conduct a national search for a new president to replace Ellen McClain, who took over when its former chief, Charles Hayward, was fired over this year's betting takeout error. Still to come is a report by the state Inspector General's office of the inflated takeout levels NYRA charged for more than a year before it was caught by auditors from the state comptroller's office.