By Bennett Liebman
Government Lawyer in Residence
Albany Law School
In Yiddish folklore, there exists the mythical village of Chelm. Chelm is “inhabited by befuddled, stupid, foolish, but endearing people.” “It has become the archetypical home of simpletons, an incubator of amiable fools.” The saga of the reprivatization of the New York Racing Association (NYRA) is looking more like a story that should have been set in Chelm.
The Summary of the Status of the NYRA Reorganization Board
NYRA has held the franchise to operate the principal thoroughbred racetracks in New York State since 1955. Originally designed to be a one of a kind non-profit racing association, NYRA’s fortunes over the past 60 years have fluctuated significantly. Due to the declining popularity of thoroughbred racing, its financial situation has been dependent on the extent of State legislative support for NYRA.
In November of 2006, NYRA filed for bankruptcy, a year before its franchise was to expire. In 2008, the Legislature renewed NYRA’s franchise for a 25-year period. NYRA formally became a not-for-profit corporation. While a not-for-profit corporation under the 2008 law, 11 of NYRA’s 25 trustees were appointed by public officials.
In 2012, after a report issued by the State Racing and Wagering Board heavily criticized NYRA management for its involvement in mistakenly charging bettors an excessive unauthorized takeout, the Legislature and the Governor changed the composition of the NYRA board. They turned the former board into a publically controlled “Reorganization Board.” Of the 17 members of the Reorganization Board, 12 were appointed by public officials. Eight were appointed by the Governor, including the chairman of the new Board. The Reorganization Board was initially designed to exist for three years as measured from the date that the Racing and Wagering Board notified the Legislative Bill Drafting Commission of the “appointment of a majority of public directors of the temporary reorganization board.”
The legislative findings of the 2012 reorganization board act state, “In no later than three years, the state racing franchise shall be returned to private control, remaining in the form of a not-for-profit corporation.” Yet, there was no formal mechanism to replace the Reorganization Board. Instead, the Reorganization Board was to “propose, no less than one hundred eighty days prior to its termination, recommendations to the governor and the state legislature representing a statutory plan for the prospective not-for profit governing structure of The New York Racing Association, Inc.” In short, there was no agreement about how the NYRA board would be reconstituted after the end of public control. Before any recommendation from NYRA on its future had been made, however, the State’s budget legislation in 2015 extended the life of the Reorganization Board another year until the fall of 2016.
On April 12, 2016, the NYRA Reorganization Board met to submit its recommendations for reprivatization. The Reorganization Board supported two plans. These plans both involved a 15-member Board. One had no members appointed by government officials. The other had limited public representation, with 11 of the members being selected by the executive committee of the Reorganization Board and four by government officials. The preference of the Reorganization Board was for the plan with the four public appointees. The Reorganization Board proposal did not meet with the approval of the Governor’s office which wanted additional public representation, the continued application of the State’s sunshine laws to NYRA, and a ceiling on the video lottery funds that would go to NYRA from the Resorts World racino at Aqueduct. The Governor’s objections were, in turn, objected to by the so-called Concerned Citizens for Saratoga Racing, a group largely composed of Chamber of Commerce representatives from the Saratoga Springs area. The Legislature proposed and then passed a modified version of the NYRA Reorganization Board’s privatization bill only to be confronted by the fact that the Governor’s office would be likely to veto the bill. A veto would put the existence of New York thoroughbred racing in jeopardy. A decision could be made under which there would be no organization to operate the franchise in the fall of 2017, or the racing franchise would operate under the auspices of the racing franchise oversight board. Faced with this prospect, the Legislature, two days after it voted for NYRA reprivatization, passed a bill continuing the Reorganization Board for another year. That legislation was quickly signed by the Governor, and the Reorganization Board is now scheduled to continue into existence until the fall of 2017.
The Work of the Reorganization Board Since 2013
NYRA operated basically under interim management until June of 2013. At that time, the reorganization board appointed former Toys “R” Us and Universal Parks & Resorts executive Christopher Kay as its president and chief executive officer. Since Kay’s ascension to the presidency, there have been almost no Board dissents or disagreements and almost no public controversies arising out of the Reorganization Board’s activities. NYRA’s financial conditions have improved markedly under Kay’s reign, which is partially attributable to the fact that NYRA receives 7% of the net win from the video lottery facility at Resorts World run by Genting at Aqueduct. In calendar year 2014, that amounted to an excess of $56.5 million to NYRA. In calendar year 2015, the VLT contributions to NYRA increased to $58.2 million. President Kay has also increased prices at the tracks, and charged NYRA’s simulcast customers higher rates. Efforts have been ongoing to develop a nationwide online wagering system. Equine safety has improved at the NYRA tracks, as evidenced by reduced rates of breakdowns or on-track deaths.
The general understanding is that the quality of racing at the NYRA tracks has not increased over the past several years, despite the increases in purses generated by Genting’s VLT’s. Additionally, live attendance has clearly lagged, despite the presence of Triple Crown winner American Pharoah in 2015 and near Triple Crown winner California Chrome in 2014. NYRA no longer announces live attendance on most days, and many significant questions have arisen over the accuracy of the attendance figures announced by NYRA at the Saratoga meet. Many believe that current NYRA officials have limited knowledge of the nature and significance of horse racing. There also are indications that the goal of transparency that was supposed to be fostered by making NYRA a publically accountable organization has not been met.
The Reprivatization Plans of the Reorganization Board
Before the Reorganization Board’s April 12, 2016 meeting, there had already been a series of statements and leaks for a period of 15 months about what the Reorganization Board was likely to recommend. NYRA President Christopher Kay said at the March 10, 2016, meeting of the Reorganization Board that “the plan will be largely unchanged from the one the association expected to submit a year ago.”
Those initial plans from 2014 -2015 included:
- A smaller future Board, possibly 13 members down from the current 17 members.
- A large majority – if not all ‒ of the members of the Board to be selected privately, leaving none or a minimal number of members appointed by State government officers.
- Not-for-profit status.
- NYRA would no longer be subject to the State’s sunshine laws: the Open Meetings Law and the Freedom of Information Law.
- The CEO of NYRA would serve as a full voting member of the Board.
- The horsemen at the NYRA tracks and the State breeders would each continue to appoint an ex officio non-voting member. Under the 2008 legislation, these groups had appointed full voting members. Under the Reorganization Board, these groups each appointed an ex officio non-voting member.
- The new private-sector Board members would be appointed by the current Reorganization Board.
- There would be term limits for the members of the future NYRA Board. Each initial member of the future NYRA Board could serve one additional term. The term would be somewhere from two to four years.
- NYRA would set its own racing dates.
- Nothing would prevent the current Reorganization Board members from serving on the future privatized board.
In an uncritical manner, the Reorganization Board considered privatization plans at its April 12 meeting. The Board was presented with three scenarios. The first two privatization plans differed only as to the issue of publically appointed members. Plan 1 had 15 members, all privately appointed.
Plan 2 had 15 members of whom 11 would be privately appointed. Four would be appointed by government leaders, one each by the leaders of the State Assembly and Senate and two by the Governor. The Governor would also appoint the first chair of NYRA.
In all other respects, Plans 1 and 2 were identical. The CEO of NYRA would be a voting member. The current Reorganization Board would select the non-governmental Board members. The members would serve three-year terms, which would be renewable twice. The horsemen and the breeders would each appoint a non-voting ex officio member. Nothing would prevent current Reorganization Board members from serving on the future privatized Board.
Thus, in large measure, the NYRA privatization plans of April 12, 2016 were similar to the proposal that had been previously floated. The numbers of the members of the Board increased from the previously revealed plan from 13 to 15. The number of renewal terms available for existing members was increased from two to three so that some members might be able to serve up to an additional nine years on the Board. These two plans were unanimously approved by the Reorganization Board with a preference stated by a number of the members for Plan 2 with its minority of governmentally appointed members. Reorganization Board members Leonard Riggio, Earle Mack and C. Steven Duncker all voiced support for the publically appointed members.
The Reorganization Board also considered a third plan under which the current Reorganization Board would continue under public control for another year. This proposal was clearly opposed and dismissed by all the members of the Reorganization Board that discussed this issue. In a somewhat unartful manner, Acting NYRA Chairman Michael Del Giudice claimed he was asked to include the third plan for the Reorganization Board’s consideration. Board member Leonard Riggio added, assumedly referring to the Governor’s Office, “They asked us to include this.”
Given the fact that the Reorganization Board has largely acquiesced in the management initiatives of the Christopher Kay administration, it seems like the Reorganization Board has advocated for what is basically a Christopher Kay 2.0 administration with fewer governmental constraints.
Why the Reorganization Board Resides in Chelm
This puts the Reorganization Board in an anomalous position. At full strength, more than two-thirds of its 17 members are public appointees. It would seem that most of the Reorganization Board’s members anticipate continuing on as members of a privatized NYRA. They are basing their claims to continuance as members of a not-for-profit organization on the strength of the Reorganization Board’s record as a government agency in restoring NYRA to profitability and in its record in improving the safety of race horses. Yet, they are rejecting their own record.
The incongruity of this behavior can be described as follows. On one side, they are government-appointed members of a government agency. The basic claim for their continuance as members of the future NYRA is the assumed good record they claim to have made as members of a government agency. Yet, on the other side, they claim that functioning as a government agency is hampering their ability to run a racetrack. If the members are so antagonistic to the nature of a government agency serving as a racetrack proprietor, why are they serving as members of this government organization? What were the goals and objectives the members of the Reorganization Board wanted to achieve in 2016 (or even in the years from 2012-2015) that they were unable to achieve because of the Reorganization Board’s status as a public agency? What were they prevented from doing? If they have such a good record as a public agency, why should they be going private? How could it be said that the Executive Chamber controlled the votes of its appointees on NYRA policy when there were absolutely zero votes on the Reorganization Board for a proposal that likely originated from the Governor’s office?
The one substantive argument given for the end of the Reorganization Board’s governmental status is that the Reorganization Board, because of its temporary status, is currently incapable of doing long-time planning. Yet, the Reorganization Board was the first incarnation of any NYRA Board to even have a Long Term Planning Committee. The Reorganization Board has submitted plans for the major redevelopment of Saratoga, which is clearly the biggest long-term planned project at the NYRA tracks since Belmont Park was reconstructed in the mid-1960’s. It has also planned for an improved account wagering system and even the possibility of a synthetic track surface at Aqueduct. The Reorganization Board has done as much, if not more, long-term planning as any previous NYRA Board. The fact that there are no long-term plans for Belmont Park and Aqueduct are not due to the temporary nature of the Board. The problems these facilities face are so daunting and are subject to so much outside political and financial whims and pressures that nobody has any idea what should be done at these facilities.
Moreover, NYRA’s original November 2014 plan for a reprivatized NYRA suggested a suspension of the Long Term Planning Committee, and even the current plan only suggests the creation of an ad hoc Long Term Planning Committee. There is no indication that the current Reorganization Board cannot do long-term planning or any indication that a future NYRA Board will do any long-term planning. This is a red herring, or perhaps in this instance, an equine wild goose chase.
Moreover, at its meeting, the Reorganization Board recommended that it go private. Yet, there was no discussion or documentation whatsoever as to the ramifications of what would happen if and when the organization went private.
Would records of NYRA be subject to FOIL? If NYRA were no longer subject to FOIL, what would public access be to those records created before the time that NYRA went private? Would NYRA be subject to the Open Meetings Law? If NYRA were truly private, would it be possible constitutionally for the State Comptroller to audit NYRA? To what extent would NYRA be under the regulatory control of the State Gaming Commission and the Franchise Oversight Board? Why is there any need or reason to make the NYRA CEO a statutory member of the Board? Should there be any regional representation from those areas where the NYRA tracks are located? Why should the current Reorganization Board appoint its successor Board? If you are making the NYRA Board truly private, why would you have the Governor appoint the first chairman of NYRA? Would NYRA still need to appoint an integrity counsel? What competitive bidding standards would NYRA be required to follow?
One would have thought that these matters would have been publically discussed and included in any report covering NYRA privatization. Yet, there appears to be no report whatsoever to support or explain the recommendations. These are just two barebones recommendations made by the Reorganization Board to the Governor and the Legislature. One would think that the consequences of a NYRA reprivatization bill would have been more carefully thought out and articulated. It merited careful consideration rather than summary approval.
The Gubernatorial Response to NYRA Reprivatization
Many people could have viewed the NYRA reprivatization proposal as a gift to the Governor. The State would get to declare victory and leave the field of thoroughbred racing. Based on the accomplishments of the Reorganization Board, NYRA now is profitable financially and the horses that race at the NYRA tracks are now safer. It would be an appropriate time for NYRA to return to a private status. Since the current status of horse racing in New York State is at a historical low position as measured by handle, the State would also get to leave a failing industry.
Moreover, if the Governor wished to assert control over NYRA, Plan 2 effectively allowed him to do so. The Governor would have two appointees, and could name the first chairman of NYRA. Ten of the remaining members would be selected by the executive committee and the current members of the Reorganization Board. The Governor could, if so inclined, largely control the future members of the privatized NYRA through his authority to name eight appointees to the Reorganization Board.
Thus, the Governor could declare victory by authorizing a reprivatized NYRA while at the same time maintaining possible influence over the naming of the members of the future NYRA Board. The Reorganization Board had handed him a winning ticket.This was veritably a gift horse to the Governor.
Apparently, the Governor’s office did not see it in that manner. They looked the gift horse in the mouth.
Instead, the Governor’s office viewed the Reorganization Board’s proposal as an opening gambit in an ongoing contractual negotiation. Instead, the Governor’s office counteroffered.
The counteroffer from the Governor’s office apparently included the following elements:
- The Governor would select four of the 15 voting NYRA Board members, including the first chair. Legislative leaders would pick one member each.
- The Freedom of Information Law and the Open Meetings Law would still apply to
- Video lottery moneys to NYRA would be capped and would return to what had been anticipated in 2008 by NYRA and the State. The difference between current NYRA VLT revenues and the cap would be diverted from NYRA and added to the State’s overall education budget. The original estimate of VLT revenues to NYRA had been $46 million per year. NYRA would lose upwards of $12 million per year.
- $16 million of the moneys would have to be spent on improvements at Saratoga. Clearly this was a move to assuage the Saratoga community. If NYRA was to receive $46 million from VLT’s, $26.2 million would be allocated to capital improvements. If Saratoga received $16 million, that track would be receiving more than 60% of the capital improvement moneys.
- If NYRA’s financials objectively show the corporation headed to bankruptcy, then the State would assume greater financial management of NYRA.
If the Governor’s office was expecting any public support for its proposals, it did not receive any. The program bill was not even introduced in the current legislative year.
Why the Governor’s Office Resides in Chelm
Parts of the Governor’s proposal seem reasonable. Some form of financial governance constraints on NYRA are likely necessary. The State surely has an interest in NYRA avoiding insolvency and bankruptcy. The State in the first decade of the 21st century did provide significant financial support to keep NYRA in business. It would make total sense for the State to want to repeat this scenario.
Similarly, assuring that government sunshine laws apply to NYRA is also a worthwhile goal. Nonetheless, the fact is that NYRA has largely been avoiding these laws now. NYRA committee meetings have not been open. Little public business has been transacted at the Reorganization Board meetings. Almost nobody in government has tried to open these unauthorized meetings, and this includes the representatives of the Governor on the Reorganization Board. Transparent NYRA governance is a legitimate goal but one that has been infrequently pursued.
The major concern is in the video lottery moneys. In theory, one can argue legitimately that too much video lottery moneys flow to racing and not to education. Yet, applying this to NYRA would be the worst place to test out this theory. The fact is that the franchise agreements between NYRA and the State guarantee NYRA 7% of VLT moneys at Aqueduct, 4% for capital improvements and 3% for expenses. These funds are the only VLT funds to racing that are contractually obligated. Why would this be your first line of attack?
Additionally, the 2016 State budget provided for a floor on payments from Aqueduct VLT’s to NYRA. It stated that absent a plan for sufficient alternative revenues for the forthcoming not-for-profit NYRA, any agreement on VLT’s at Aqueduct “shall require the operator of video lottery gaming at Aqueduct racetrack to maintain racing support for general thoroughbred racing operations and capital expenditures from video lottery gaming at Aqueduct racetrack, at the same level realized in two thousand thirteen, to be adjusted by the consumer price index for all urban consumers, as published annually by the United States department of labor, bureau of labor statistics.” NYRA received $54.96 million form VLT’s in 2013. The State four months ago passed legislation establishing a $54.96 floor on payments to NYRA from VLT’s. How can it come in and try to change it to a $46 million ceiling?
Moreover, in 2016 the State in two instances lowered the percentage of moneys it received from VLT’s. The 2016 budget lowered the State tax on revenues from Resorts World by allowing Resorts World to have a vendor’s capital award. The 2016 budget similarly lowered the tax rate on VLT’s at Finger Lakes Racetrack. Why is the State lowering taxes on some VLT operators while significantly reducing NYRA’s income from VLT’s?
The most recent Comptroller’s office report shows that, at least for the time being, the VLT revenues are needed to keep NYRA operating in the black. Since the main accomplishment of the 2012 NYRA legislation is the profitability of NYRA, why would you advocate for a position that would end your basic accomplishment?
Even if there is merit in reducing NYRA’s video lottery payments, wouldn’t you expect the Governor’s office to be more strategic about its work here? A $12 million addition to the overall State education budget is less than a drop in the budget. But if you directed these moneys to the school districts in Saratoga Springs or in Elmont, where the NYRA tracks without VLT’s are located, you might have a proposal with decent local political support.
As to the Governor’s need to appoint four rather than two Board members, the general response should be “Why?” The Governor’s appointees to the Reorganization Board have voted lock, stock, and barrel with the other members of the Reorganization Board for 3 ½ years. The Governor’s representatives in April 2016 all voted unanimously for the NYRA proposal which would limit the Governor to either zero or two appointees, even knowing that the Governor’s office wanted them to vote on the continuation of the Reorganization Board. The Governor’s current appointees would likely, in large measure, be able to continue on the NYRA Board, under NYRA’s plan. The Governor gains nothing from this proposal, which only insures that the Governor’s office will share the blame for any future failings of NYRA. The notion of demanding four gubernatorial appointments on the NYRA Board is somewhat pointless.
The Saratoga Concerned Citizens Response to NYRA Reprivatization
While the NYRA Reorganization Board seemed to be negotiating in May of 2016 with the Governor’s office over NYRA privatization, a group in Saratoga Springs calling itself the Concerned Citizens for Saratoga Racing began advocating for reprivatization. This was a self-appointed group largely composed of individuals associated with the Saratoga Chamber of Commerce. The group had appeared previously in 2006, where it advocated during the fight over the racing franchise in support of maintaining Saratoga’s historic traditions. It advocated for local zoning control of Saratoga’s racing facilities and maintaining the dates that the Oklahoma training track at Saratoga would be open for spring and fall training. The Concerned Citizens eventually advocated for NYRA to receive the racing franchise. The current version of Concerned Citizens is chaired by Maureen Lewi whose public relations firm represented NYRA for several decades.
In mid-May, the Concerned Citizens began to go live with their advocacy of the NYRA Reorganization Board proposal. Maureen Lewi said, “It’s really just the governor now that’s standing in the way.” While stating “We’re seeing a renaissance of racing in Saratoga and New York State,” the Concerned Citizens rejected the Governor’s plan, claiming that additional gubernatorial appointees threatened reprivatization, and complained about the Governor’s appointment of the chairman of the NYRA Board. They also were critical of the diversion of the VLT funds to education and the powers given to the State in view of future potential NYRA financial difficulties. Finally, the Concerned Citizens complained that that the VLT payments were part of the State’s payments to NYRA for the land in 2008 and that the move to private control was necessary in order for NYRA to do long-term planning.
Subsequently, Concerned Citizens board member John Hendrickson resigned from his position as the special advisor to the Governor for Saratoga, and the Concerned Citizens has continued its advocacy of reprivatization with a “Whoa Cuomo” campaign.”
Why the Concerned Citizens Reside in Chelm
If the proposals of the Governor are subject to befuddlement, so are the proposals of the Concerned Citizens of Saratoga Racing.
First of all, this critique is severely undermined by the notion of “a renaissance of racing in Saratoga and New York State.” If that is the case, this renaissance clearly has some relation to the work of the Reorganization Board. Why is there an immediate need to rid horse racing of a Board that has presided over New York racing during its renaissance? If there is a renaissance, why wouldn’t we just continue the Reorganization Board? The short fact is that the Concerned Citizens make no case that the Reorganization Board has in any way harmed Saratoga or New York racing or that NYRA would operate any differently under the Reorganization Board’s reprivatization program.
If the basis for ending the Reorganization Board is the need for long-term planning, this argument avoids reality. As stated previously, the Reorganization Board has actually done more long-term planning than its predecessors. The Reorganization Board, unlike its predecessors, has a long-term planning committee. If the issue was the uncertainty of the time that the Reorganization Board was to remain in power, then perhaps the easier solution might have been to make the Reorganization Board permanent.
As to the specific criticisms of the Concerned Citizens, the fact is that the Governor’s power to appoint the first chairman of NYRA was a proposal that emanated from the NYRA Reorganization Board and not from the Governor’s office.
The fact that public officials would appoint 6 of the 15 Board members is hardly the end of the world. Under the 2008 legislation, public officials appointed 11 of the 25 NYRA Board members. Most everyone considered this legislation as establishing a private board, even with 44% government appointees. Under the Governor’s 2016 plan, 40% of the Board members would be public members. The percentages in support of private board members are actually increased over the 2008 board that was universally considered private. Again, under NYRA’s own proposal, a determined Governor could largely dictate the members of the future privatized NYRA board.
The critique of alleged additional powers given to State agencies to manage NYRA is hampered by the lack of any complaints about the specifics of these powers and why the State might want to protect itself from having to pay for NYRA’s losses. The Concerned Citizens also fail to account for the guaranteed moneys that would go to Saratoga capital improvements under the Governor’s plan.
Finally, as to the reduction of VLT payments, the idea that these payments are owed to NYRA on account of NYRA’s ownership of the track properties is subject to extraordinary doubt. The NYRA franchise extension legislation passed in 1983 was intended to give the State ownership of the properties after 2000. The legislation extended the NYRA franchise until 2000, after which “the racetracks will become the property of the state.” Even NYRA chairman Tom Bancroft stated, “It is an excellent bill… and we are delighted with it. We accept the challenge of the next 17 years and want you to know that NYRA will be competitive after the year 2000 in seeking to continue our operation of the New York tracks.” Even if you believe that NYRA somehow owned the racetrack properties, there was no indication in 2008 that VLT payments were designed to be some sort of mortgage payment for the property.
NYRA is entitled to VLT payments under its settlement agreement with the State, but it might be worthwhile for NYRA to amend its agreement. The payments are only due for VLT revenue. If Genting’s Resorts World Casino at Aqueduct converts into a real casino, there are no VLT payments, and NYRA will get nothing. There are surely legitimate reasons for a new NYRA to seek to renegotiate these terms and assure itself of a definite future revenue stream.
Finally, the support of the Concerned Citizens for the Reorganization Board proposals seems misplaced in light of the activities of the Reorganization Board. In 2006-2007, the Concerned Citizens seemed focused on maintaining the historical traditions and properties of Saratoga and in maintaining the dates that the Oklahoma training track remained open in Saratoga. Last fall, the Reorganization Board reduced the dates that the training track was used.
In terms of historic traditions, the Reorganization Board has already initiated the largest capital improvement plan in the track’s history involving nine years’ worth of capital improvements. Additionally, “Some of NYRA’s new initiatives last year, like raising prices for virtually everything, renting picnic areas and cancelling the free open house, were evidence of a tone-deafness to local concerns.” The Reorganization Board has moved forward with the type of plans that the Concerned Citizens appeared to abhor a decade ago. Yet, the Concerned Citizens support the organization advancing these initiatives.
The Legislative Response to NYRA Reprivatization
Both houses of the State Legislature introduced identical NYRA reprivatization bills. The justification of the bills was simply, “The time has come for the board to transition back to private control and this legislation provides for that transition.”
In large measure, these bills echo NYRA’s “four public member” proposal, with certain exceptions. These exceptions are the following:
- The horsemen and the State breeders’ organizations are entitled to one representative voting member on the 15-member NYRA board under certain conditions.
- NYRA must appoint a board member from each of the counties (Saratoga, Queens, and Nassau) where NYRA tracks are located.
- The provision which NYRA had initially sought imposing term limits on board members is not contained in the bill.
This proposal was passed by both houses on June 15, 2016. Much of the debate focused on the damage to Saratoga from the Governor’s proposal. Yet, there was no talk that the Governor’s proposal – as written – would actually have increased capital funds for Saratoga.
Yet, in the face of gubernatorial opposition, the Legislature reversed itself two days later passing a bill continuing the Reorganization Board for another year. That bill was quickly signed by the Governor.
Why the Legislature Resides in Chelm
One would have thought that with years to prepare privatization legislation for enactment that everyone would get the basics of the legislation correct. Yet there are serious technical flaws and very questionable policy decisions in the bill as drafted.
Chief of the issues is the fact that the NYRA nominees to the privatized board are to be named by the executive committee of the Reorganization Board. Yet, on the date that the law would have taken effect, October 18, 2016, the Reorganization Board is out of existence. The bill has the appointments made by a non-existent organization.
Moreover, the provision made in the bill for the non-governmental appointments to be made to the new NYRA board, are questionable. The provision reads, “A vacancy from the members appointed from the present board of the New York racing association reorganization board, shall be filled by the remaining such members.” What if there is only one such remaining member or no remaining members from the Reorganization Board? Who fills the vacancy?  Shouldn’t the vacancies of the non-public members be filled by a vote of all the non-publically appointed members?
There is no provision made for the length of the term of the chairman of the board. There is no provision for how to determine how to replace a chairman of the board.
Questionable policy choices abound in the legislation. The horsemen and the breeders only receive a voting member on the board “provided that a current board member of the New York racing association shall serve on the board.” Is there any reason for this quid pro quo to be imposed on the horsemen and the breeders? Either these groups merit a voting member or they do not. Their status is hardly changed if a current NYRA board member is also on their boards. What if there are no officers of the breeders’ association currently on the NYRA board? What if the one NYRA member who is a member of the New York breeding association dies or resigns? Can the breeders’ association retain or hold an appointment to the board?
What became of the NYRA proposal from April establishing term limits for the current board members?
Why should NYRA select the local representatives from Saratoga, Nassau and Queens counties? Shouldn’t the local officials make these appointments?
Why are there specific three-year terms for the government-appointed members and the members of the horsemen’s and breeders’ groups? Shouldn’t these appointees serve at the pleasure of their appointing authority? What if a new governor, speaker or temporary president of the Senate is elected? What if there is a change in the leadership of the breeders’ or horsemen’s associations? Shouldn’t the incoming authorities be able to determine their appointments to the NYRA board? That is the way it has been handled under the prior incarnations of NYRA.
The legislation provides the creation at NYRA of a compensation committee, an executive committee, a racing committee, an equine safety commission, and a finance committee. If the point of a new privatized NYRA was to do long-term planning, why is there not a long-term planning committee? Given NYRA’s past financial issues, why is there no specific audit committee?
Finally, what happens to the ethics provisions that had been put into place during the time of the Reorganization Board? What happens to the public availability of records created during the term of the Reorganization Board? What happens to the other ethics provisions ‒ no fund raisers – no campaign contributions from NYRA officers – no campaign contributions from NYRA itself or a NYRA-created PAC – that were put into place in 2012? What happens to the ability of the State Comptroller to audit NYRA?
Finding a Way Out of Chelm
It is almost too easy to dismiss this reprivatization controversy as a way to blame all the parties for total dysfunction. It is easy to view this episode as a way to place a plague on all the parties involved.
The NYRA Reorganization Board has based its claims on reprivatization on its record of accomplishments. Yet, the Board itself has done little but accede to all the initiatives of NYRA management. Its plan is simply a way of extending its existence with lessened public scrutiny. The Reorganization Board also provided no report on the reasoning behind its recommendations.
The Governor was given an outright gift by the Reorganization Board. Instead of accepting the gift, the Governor offered his own proposal. That proposal ‒ other than making sure that NYRA remains subject to the State’s sunshine laws and that NYRA does not easily relapse into insolvency – is largely pointless.
The Concerned Citizens position, complaining about the continued existence of the Reorganization Board, is illogical given its praise of the alleged “renaissance” in racing happening during the reign of the Reorganization Board and the fact that the proposed new NYRA board is likely to be a less open version of the existing Reorganization Board. Its statements about long-term planning are misplaced, as are its complaint about the power of the Governor to nominate the first NYRA board chairman. Its positions on NYRA’s past ownership claims about the land are ahistorical. It appears to support privatization for the sake of privatization, without providing any substantive criticism of the work of the Reorganization Board.
The Legislature crafted a reprivatization bill with serious technical flaws. Besides these technical flaws, there are a slew of questionable policy choices in this legislation. These flaws were compounded when the Legislature did a 180, two days after passing the reprivatization bill, and voted for the continuance of the Reorganization Board.
The one good thing about Chelm is that the controversies in that town were largely of minimal significance. The differences among the parties in the Saratoga reprivatization controversy, on paper, are not overwhelming. But the people of Chelm were amiable. The parties in the Saratoga controversy are not amiable or endearing, and that is what makes leaving the world of Chelm so difficult in the NYRA reprivatization struggle. The foolish intensity of this struggle is so great – with the parties fighting so hard over so little – that maybe they (and those of us forced to watch this) would be better off residing in Chelm than remaining in Saratoga.
 This essay uses materials previously used in earlier essays on this overall topic which include “The Future of the New York Racing Association Reorganization Board,” https://saratogainstitute.wordpress.com/2016/03/30/the-future-of-the-new-york-racing-association-reorganization-board/, “The Future of the New York Racing Association Reorganization Board: Take 2,” https://saratogainstitute.wordpress.com/2016/05/04/the-future-of-the-new-york-racing-association-reorganization-board-take-2/ and “New York State and the New York Racing Association: Can’t Anyone Privatize These Racetracks?,” https://saratogainstitute.wordpress.com/2016/06/08/new-york-state-and-the-new-york-racing-association-cant-anyone-privatize-these-racetracks/.
 Leo Rosten, Hooray for Yiddish, Simon & Schuster 84 (1982).
 Leo Rosten, The Joys of Yiddish, Pocket Books 84 (1968).
 Id. One of Rosten’s Chelm stories involves a rabbi who visited a prison and found that all but one of the prisoners claimed to be innocent. “So he came back, held a council of wise men, and recommended that Chelm have two prisons: one for the guilty and another for the innocent.”
 The three racetracks currently run by NYRA are Saratoga, Aqueduct and Belmont Park. NYRA also ran Jamaica Racetrack until that track was closed in 1959. The only other thoroughbred track in New York is Finger Lakes which is privately operated by the Delaware North Companies and is located near Canandaigua, New York, approximately 25 miles southeast of Rochester.
 See L. 1955, Ch’s. 812-814.
 See Racing, Pari-Mutuel Wagering and Breeding Law (hereinafter Racing Law) § 206.
 Id. L. 2008, Ch. 18, § 14.
 L. 2012, Ch. 457, § 8.
 Id. § 4. On information and belief that notification was made on approximately Monday, November 5, 2012.
 See generally, Liebman, The Future of the New York Racing Association Reorganization Board,” supra note 1.
 Minutes Of The Meeting Of The Board Of Directors Of The New York Racing Association, Inc. April 12, 2016 https://www.nyra.com/belmont/assets/4/7/2016_05_25_Board_of_Directors_Meeting_Materials.pdf.
 The State’s sunshine laws generally involve the Freedom of Information Law, the Personal Privacy Protection Law, and the Open Meetings Law. They encompass articles 6, 6-A and 7 of the Public Officers Law.
 The racing oversight board, whose members are appointed by the Governor and the legislative leaders, has the power to “conduct running races or steeplechases at racing facilities and conduct pari-mutuel betting on the outcome of the same when necessary to assure the continuation of the racing and pari-mutuel betting activities at such racing facilities (A) in the event that the racing and/or pari-mutuel betting franchises of the franchised corporation authorized by this chapter then holding such franchises have either been terminated in the manner provided by law or have been relinquished by such corporation…” Racing Law § 212.8.a.x.
 Even the State Comptroller, who has been generally critical of NYRA operations, has opined that “NYRA’s overall financial condition (including VLT revenue subsidies) is sound.” “Financial Condition and Selected Expenses New York Racing Association, Inc.,” June 2016, http://osc.state.ny.us/audits/allaudits/093016/15s21.pdf. The State Comptroller, however, found that “during our audit period (2012 through 2014) NYRA lost $62 million, net of the VLT subsidies.” On the other hand, the audit showed that NYRA lost $18.5 million less in its operations in 2014 than it had in 2013.
 New York State Gaming Commission, 2015 Annual Report, https://gaming.ny.gov/pdf/Annual%20Report%202015%20Final.pdf.
 Stephen Williams, Horse Deaths Decline at Tracks NYRA’s Rate Remains Below National Average For Third Consecutive Year,” Daily Gazette, March 25, 2016.
 VLT’s have increased purses by $221.8 million at NYRA from 2012 -2015. See notes 17 and15 supra.
 Tom Noonan Blog, https://tenoonan.com/2015/09/04/spa-attendance-in-precipitous-fall/; https://tenoonan.com/2015/07/15/nyra-falsely-inflated-2014-saratoga-attendance-by-174000/.
 See Mike McAdam, “NYRA to Saratoga Fans: Time To Pony Up,” Daily Gazette, June 27, 2015. A recent example of this came in NYRA’s press release after the 2016 Preakness was won by Exaggerator. NYRA’s release stated in reference to the 2015 Belmont Stakes festival that by “attracting 100,749 fans during the three-day period, the festival was the most successful event in New York’s long-storied history of thoroughbred horse racing.” It is hard to take this remark even semi-seriously. NYRA drew 90,000 on Belmont Stakes day in 2015; so the notion of drawing 5,000 a day on two other days is hardly a mark of any exultation. NYRA drew over 120,000 alone for the “Smarty Jones” Belmont in 2004. In earlier days, drawing only 100,000 attendees, including a day of racing on Saturday, would have been a major disappointment. During 1945, the attendance at Jamaica on Wednesday, May 30, Memorial Day, through Friday, June 1, 1945 (featuring two less-than-stellar weekday cards) was 116,141. For the 1964 Belmont Stakes and its preceding Thursday and Friday cards, the attendance was 115,391.
 http://www.timesunion.com/local/article/Betting-attendance-numbers-elusive-5670765.php. For example, as of July 26, 2016, the minutes of its May 25, 2016 meeting had not been posted. The Public Officers Law specifies that minutes of public meetings need to be available within two weeks of the date of the meeting. Public Officers Law, § 106.3.
 Much of this was disclosed in a PowerPoint shown at the November 2014 meeting of the Reorganization Board. https://www.nyra.com/assets/1/7/NYRA_2014_Legal_Structure__Governance_2.pdf.
 Teresa Genaro, “NYRA Board Preparing Privatization Plan,” Blood-Horse, March 10, 2016. In a more critical analysis of the meeting, Daily Racing Form columnist Steven Crist wrote, “More than a year after its initial deadline to present such a plan, the board once again was silent Thursday while saying that the long-awaited plan will be presented for board approval as soon as next month. What’s in it is anyone’s guess.” Steven Crist, “Big Brother Needed for NYRA Board Meetings,” Daily Racing Form, March 10, 2016.
 The meeting can be viewed at https://www.nyra.com/belmont/video—april-12-2016-board-meeting/.
 Riggio serves as an appointee of Governor Cuomo. Interestingly, over the years at NYRA, many government appointees to the board ended up largely in opposition to their original appointing authorities. Thus, Stuart Subotnick and Jim Heffernan, both of whom became top NYRA officers in the early 21st century, were originally appointees of Governor Pataki. The two most outspoken pro-reprivatization board members in 2016 have been Leonard Riggio and John Hendrickson. While not on the board itself, Hendrickson served until June of 2016 as a special advisor to the Governor for Saratoga. Riggio previously served as an appointee of Governor Paterson. Hendrickson had previously served as an appointee of both Republican Senate leader Dean Skelos and Senate Democratic leader Malcolm Smith.
 See Stephen Williams, “Citizens Group Opposes Cuomo’s NYRA Plan,” Daily Gazette, May 15, 2016. “The board called in April for reprivatizing NYRA, based on the success of the reorganization launched in 2012, following years of financial losses and management scandals.”
 In 2013, the Reorganization Board similarly voted against the State’s contention that the process by which NYRA had voted for an online wagering operator had been flawed. David Lombardo, “NYRA Board Eyes Hiring Firm to Improve Online Wagering,” Daily Gazette, June 11, 2013.
 Rick Karlin, “Synthetic Track Weighed at One Of NYRA’s Race Courses,” Albany Times Union, June 1, 2016.
 Matter of New York Charter Schools Assn., Inc. v. DiNapoli, 13 N.Y.3d 120 (2009); Matter of Dinallo v. DiNapoli, 9 N.Y.3d 94 (2007).
 See Liebman, “No Dinero from American Pharoah,” https://saratogainstitute.wordpress.com/2016/07/25/no-dinero-from-american-pharoah-new-york-horse-racing-in-2015/. Inflation adjusted handle in New York racing is lower than it was at the inception of pari-mutuel wagering in 1940.
 See generally Program Bill # 24 2016. https://www.governor.ny.gov/sites/governor.ny.gov/files/atoms/files/GPB24_NYRAREORGANIZATION_BILL. “Cuomo Submits NYRA Privatization Plan,” Blood-Horse, June 8, 2016.
 L. 2016, Ch. 60, Part SS.
 See note 15, supra. Given the existence of a contractual agreement guaranteeing VLT payments to NYRA, it is certainly questionable whether a statute can modify this agreement.
 See note 26, supra. Prior to the 2016 legislation, there was no vendor’s capital award authorized for the Resorts World at Aqueduct facility. See Tax Law § 1612.b.1.ii.(H).
 L. 2016, Ch. 60, Part DD. See Joseph Spector, “Finger Lakes Track Gets Better Tax Deal,” Rochester Democrat and Chronicle, April 7, 2016.
 The State budget for pre-secondary education is $34.36 billion dollars. See http://openbudget.ny.gov/spendingForm.html.
 Time Warner News 5:00 AM TW, 9 TW9N, August 30, 2006.
 Local News 6:30 AM CBS, 6 WRGB, August 21, 2006.
 Ed Fountaine, “NYRA Tabs Handel as New Messiah,” New York Post, August 24, 2007.
 “Concerned Citizens For Saratoga Racing Tabs Lewi As Chair, Pushes for Track Privatization,” Saratoga Business Journal, June 8, 2016. See also See Paul Grondahl, “Ed Lewi, Public Relations Legend, Dies at 81,” Albany Times Union, August 29, 2015; Kyle Adams, “Lewi Left Mark on Region,” Daily Gazette, August 30, 2015.
 Rick Karlin, “Group Fears State Raid on NYRA,” Albany Times Union, May 25, 2016.
 Press Release, Concerned Citizens for Saratoga Racing, “Concerned Citizens for Saratoga Racing Rejects Governor’s NYRA Re-privatization Plan,” May 24, 2016. Found in http://thoroughbredconfidential.com/concerned-citizens-for-saratoga-racing-rejects-governors-nyra-re-privatization-plan/. Todd Shimkus, the head of the Saratoga County Chamber of Commerce had previously stated of the reorganization board, “Management has come in and made the tough choices to make it profitable.” Stephen Williams, “Supervisors Back Returning NYRA to Private Control,” Daily Gazette, May 6, 2016.
 Id. The Concerned Citizens believed that the Governor’s plan called for seven public appointees. The actual plan of the governor called for six public appointees.
 Id. See also Stephen Williams, “Woerner, Marchione on Same Page on NYRA,” Daily Gazette, June 1, 2016.
 Stephen Williams, “Race Course Opens Its Gates NYRA Takes Wraps Off 148th Season at the Track,” Daily Gazette, July 22, 2016.
 See note 31, supra.
 Ed Comerford, “Cuomo Seeks OTB Reform, Simulcasting Bill,” Newsday, October 8, 1983.
 Joe Hirsch, “Gov. Cuomo Signs Racing Aid Bill to NYRA Tracks, Daily Racing Form, October 8, 1983. See generally Liebman, “Ownership of the NYRA Racetrack Properties: 1983 in Review,” August 24, 2015. http://dx.doi.org/10.2139/ssrn.2650038.
 Stephen Williams, “NYRA Anticipates $4M Profit,” Daily Gazette, November 9, 2015. See also Mike Veitch, “Moves could hurt New York racing,” Saratogian, January 26, 2016.
 Stephen Williams, “NYRA Eyes Annual $15M in Track Upgrades,” Daily Gazette, May 5, 2015. “If the projects go forward, it would be the largest set of improvements at the track since the 1890s, when the current grandstand was constructed.”
 “Time to Let NYRA Run Free,” Daily Gazette, April 14, 2016.
 Assembly Bill No. 10429, same as Senate Bill No. 7918.
 Memorandum in Support of Assembly Bill No. 10429. http://assembly.state.ny.us/leg/?default_fld=&leg_video=&bn=A10429&term=2015&Summary=Y&Memo=Y.
 Under these bills, they only have a voting member if a NYRA board member is serving on their respective boards.
 Rick Karlin, “Bill on NYRA Changes Awaits Will of Governor,” Albany Times Union, June 26, 2016.
 Senate Bill No. 8159, Part B, same as Assembly Bill No. 10741. This bill included amendments to the State budget.
 L. 2016, Ch. 73.
 Assembly Bill No. 10429, § 1.
 Arguably, the terms of § 703 of the Not-for-Profit Corporation Law governing the selection of board members would apply, but would this be affected by the provisions in Assembly Bill No, 10429 which states that “All
members shall have equal voting rights?” Assembly Bill No. 10429, § 1.
 Assembly Bill No. 10429, § 1. Additionally, there is considerable ambiguity over the meaning of the word “current” in the legislation.
 An audit committee would not be mandated by the Not-For-Profit-Corporation Law. See § 712-a.
 See Minutes of NYRA Board Meeting, December 12, 2012, Minutes of NYRA Board Meeting, June 10, 2013. https://www.nyra.com/assets/4/7/2013_(June_10)_BOD_meeting_minutes_(signed).pdf.
 See note 30, supra.