New York Racing Association Cedes Control to Gov. Cuomo
Gov. Andrew Cuomo accomplished something no other governor has been able to do in the 57-year history of NYRA: He seized the reins of the not-for-profit group that operates Aqueduct, Belmont and Saratoga tracks.
By James M. Odato, Times Union, Albany, N.Y.
The trustees of the New York Racing Association on Tuesday agreed to turn over control of the board and management to Gov. Andrew Cuomo.
The action ends concerns about the Saratoga season, a fight that appeared to be headed toward legal confrontations and continued threats from the state to revoke its horse racing franchise.
The reorganization of NYRA was part of "cleaning up problems we inherited" on a host of fronts, Cuomo said.
"This is a good day for racing; we've turned a page on a dark relationship," said John Hendrickson, a NYRA trustee from Saratoga Springs. "It's better to have government on your side. We're grateful that Gov. Cuomo has lent his brand to racing."
The governor's move also allays growing uncertainty within New York's horse racing community that Saratoga could have suffered with its summer racing season quickly approaching.
The newly reconstituted NYRA should be in place by the next NYRA board meeting in early August during the Saratoga meet, although it may take weeks to choose members and for required background checks to be finished.
The deal gives the governor the power to choose the chairman of the association and to control a board that will select the next chief executive officer, who will be chosen following a nationwide search for a CEO and general counsel.
In his 17th month of office, Cuomo accomplished something no other governor has been able to do in the 57-year history of NYRA: He seized the reins of the not-for-profit group that operates Aqueduct, Belmont and Saratoga tracks.
Cuomo wrested control of NYRA by getting directors to unanimously vote to give him a total of eight seats on a smaller board, including the future chairman's seat. The association will be restructured once new legislation is passed before the end of June giving legislative leaders four seats on a 17-member board, with just five NYRA-selected appointees.
Appearing at a news conference with three NYRA trustees as well as Senate Majority Leader Dean Skelos and Assembly Speaker Sheldon Silver, Cuomo unveiled an agreement arranged in recent days following some muscling by the Cuomo administration that put NYRA in a position of playing along with the governor or planning for legal action to prevent its long-term franchise from being pulled.
"Lawyers have gotten rich on the relationship between NYRA and the state," Cuomo said about the tense history between the two sides. "We decided not to do that."
Cuomo made the trade-off of power easier for NYRA board members to accept by promising a cut of casino revenues if the state ends up legalizing gambling halls via a constitutional amendment.
"The governor was offering to include the breeders and NYRA in prospective casino revenues, so that's a significant data point to those of us who are concerned about the future of racing," said NYRA Executive Committee Member Barry Ostrager. He said the franchise agreement that runs through 2033 only gives NYRA a cut of video lottery terminal money from the Aqueduct VLT parlor, and the new commitment from Cuomo for some casino cash was attractive.
The plan, to be part of a gaming bill submitted to the Legislature soon, will result in a board of trustees dominated by government appointees who will assure public control of the association for the remainder of the governor's term.
The "turn-around board," as one board member called it, will have eight fewer members than the 25-member panel now allowed under NYRA's current structure.
Cuomo said this reorganized board will be in place for three years and would include seven governor appointees, five private NYRA appointees, two members each from the Senate and Assembly majority conferences and two non-voting ex-officio representatives of the horsemen's and breeders' associations. Cuomo said he did not have anyone in mind for chairman, his eighth slot on the board, or other members.
Cuomo emphasized his optimism for the future of the racing industry in New York, which relies heavily on video lottery terminal revenues, saying he expects it to be a growing part of the state economy. Cuomo had gotten the attention of NYRA in many ways in the past few weeks, particularly when his administration steered NYRA's VLT revenues to a Lottery account and his surrogates made public statements questioning NYRA's judgment and eligibility to keep the franchise. That put pressure on the trouble-plagued NYRA board to agree to demands for change.
The overhaul is tied to the governor's concerns about NYRA amid a slew of missteps by the operators of Aqueduct, Belmont and Saratoga tracks. Cuomo, after meeting privately with NYRA board members twice this month, demanded state control after NYRA's recently fired president and general counsel were implicated in a state investigation.
The investigators said former CEO Charles Hayward knowingly allowed bettors to be cheated of $8.5 million in winnings during 15 months until state auditors figured out the overcharging last December. Hayward has described the overcharge matter as a mistake and said he would be exonerated once state investigations conclude.
General Counsel Patrick Kehoe and Hayward were fired by NYRA's board, but the directors then replaced Hayward with one of the top executives on duty during the 15-month period, Ellen McClain. That vote infuriated Cuomo, leading to the freezing of NYRA's VLT dollars, more than $3 million per month.
NYRA has the franchise to operate racing through 2033 and is preparing to host a potential Triple Crown championship at the Belmont Stakes in less than three weeks.
NYRA Chairman C. Steven Duncker, a Florida resident who did not attend the news conference, said in a statement that he appreciated Cuomo and pledged a "smooth transition."
Although NYRA will be under "temporary public control" Cuomo said he could not say if NYRA board meetings and records will be subject to state open government laws. But the association will continue to be under the watch of the Franchise Oversight Board, a group of gubernatorial and legislative appointees.
Ostrager said he expects that NYRA's five board seats will come from the current representatives on the board. Around the summer of 2015, NYRA would likely return to private control, according to the plan.
(c)2012 Times Union (Albany, N.Y.)