Ownership of the NYRA Racetrack Properties: 1983 in Review

By Bennett Liebman
Government Lawyer in Residence

Eleven years ago, Abigail Nitka and I co-authored a law journal article, entitled “Legislative Intent and the NYRA Racing Properties,” for the Government, Law and Policy Journal.[1] The article was designed to show that “the legislature clearly intended in 1983 that if the New York Racing Association[2] [NYRA] were to lose its franchise to conduct racing, its racetrack properties would become the property of the state.”[3]

While there were some questions raised about whether NYRA should have been compensated for any of its rights to the properties, everyone understood that the legislature had limited NYRA to a life estate to the racetrack properties in return for NYRA receiving an extension of the racing franchise until the year 2000.[4] If NYRA were to go out of existence or lose its franchise, the racetrack properties would belong to the State. As Arthur Kremer, the chairman of the Assembly Ways and Means Committee, proclaimed in the Assembly debate on the 1983 legislation, “In the year 2000, when the charter of the Racing Association and the franchise expires, all of the tracks presently used by NYRA and covered by their franchise will be turned over to the people of the State of New York for the people of the State of New York to own as their property.[5]

Whatever understanding there had been that NYRA had relinquished its future rights to the racetrack properties seems to have been airbrushed in the 2000’s. NYRA’s continuing ownership rights to the properties were asserted as part of NYRA’s efforts to retain its franchise rights in the period from 2006-2008. When the racetrack properties were formally ceded to the State of New York after enactment of the 2008 legislation, NYRA’s relinquishment of the properties was alleged to be the consideration for the State’s continuing obligation to supply NYRA with revenues from video lottery operations at Aqueduct.[6]

Yet this all conveniently ignores what actually was said and done in 1983. It is rank revisionist history. In 1983, everyone following the NYRA story – including the racing media – continually reported that under the NYRA franchise extension legislation, the racing properties would belong to the State, and that NYRA ultimately consented to the legislation and the loss of the racing properties.

Background on NYRA in the Early 1980’s

NYRA in the early 1980’s found itself in a most difficult economic position.[7] On-track racing was becoming less popular. Inflation was high. The NYRA franchise was expiring in 1985. Its capital needs for its tracks were extremely high. With the combination of the high interest rates and the upcoming franchise expiration, NYRA could not borrow funds to solve its capital needs.

NYRA’s solution was in 1981 to propose that the State would issue bonds on NYRA’s behalf. Under NYRA’s plan, the State would “float $70 million in tax-free bonds for 25 years” and the NYRA franchise would “be extended for the same period.”[8] The State would buy the tracks and lease them back to NYRA. After the term of the arrangement, NYRA would regain the ownership of the tracks for a nominal fee.[9] Neither house of the legislature seemed to be enthusiastic about the NYRA proposal.[10]

Instead, Assembly Speaker Stanley Fink introduced his own ideas. His proposal was that the State of New York should own the tracks.[11] He believed that the State would not need to pay any moneys to NYRA since the State equitably owned the land since the tracks were bought and maintained by public moneys.[12] He simply suggested a payment of $1,000 to The Jockey Club to offset that group’s original 1955 investment.

No action was taken on NYRA in the 1981 legislative session. While Governor Carey suggested that the State should issue bonds for NYRA capital improvement, the Senate Republican leadership was calling for a joint super-track for both harness and thoroughbred racing to compete with the Meadowlands in New Jersey,[13] and Speaker Fink was still pressing for State ownership of the tracks.[14] There was no agreement.

Similarly, no actions were taken on NYRA by the legislature in 1982. The legislative resolution was “stuck.”[15] Governor Carey grew closer to the NYRA position. He advocated for legislation that would extend the NYRA franchise until 2005 and create a State agency to issue $150 million in tax-free bonds to assist NYRA.[16] The Senate was not in support of the Carey legislation, and Speaker Fink maintained his position that the State needed to own the racetrack property before relief could be provided to NYRA.[17] Fink’s aide, David Langdon, stated, “This bill is essentially the same one which died in 1981. There was not a soul in the building [who] thought that had a chance to pass. The Speaker’s position is that the state must get title to the tracks. After that is established, there would have to be an awful lot of talk about how and when. But that’s absolutely a must.”[18]

Legislative Action in 1983

Governor Carey was replaced in office in 1983 by Governor Mario Cuomo. Cuomo did not appear to have a position on the issue of the State versus NYRA over ownership of the racetrack properties. Neither did the State Senate. The issue over State ownership of the property simply came down to Stanley Fink against NYRA.

Stanley Fink prevailed. At the conclusion of the legislative session in 1982, a bill emerged under which NYRA’s franchise was extended until the year 2000, a thoroughbred racing capital fund was established to provide capital investment funds for NYRA, and a system was established for future bidding of the tracks after NYRA’s franchise expired in 2000. Should NYRA lose its franchise, “the existence of such association shall terminate at any time that such franchise expires.”[19]

All parties and the media recognized that this provision made the State the ultimate owner of the NYRA properties. In 2000, the State would own the racetrack properties. Newsday quickly wrote that final passage was given to “a bill extending the New York Racing Association’s franchise to run tracks at Belmont, Aqueduct, and Saratoga through the year 2000 after which they would belong to the state.”[20] Newsday sports columnist Ed Comerford added, “But to obtain the extension of its franchise – scheduled to expire at the end of 1984 – the NYRA will have to give the state title to the three racetrack properties in the year 2000.”[21] Gannett Westchester sports columnist Chuck Stogel wrote, “There was a hitch to the NYRA franchise extension, however. A stipulation was tacked on which calls for a state takeover of ownership of the three NYRA tracks – Belmont Park. Aqueduct and Saratoga – by as early as 2001.”[22]

The Saratogian’s racing columnist, Mike Veitch, was upset at the legislation. He wrote, “The NYRA gets 15 more years to operate Aqueduct, Belmont and Saratoga. Then in 2000, it must surrender title to these tracks to New York State. Furthermore, the license to operate the three tracks will be open to competitive bidding every 10 years thereafter. Why isn’t the NYRA screaming? Would you surrender your home without proper compensation?”[23] Steven Crist, the racing writer for the New York Times, noted that the NYRA trustees were discussing a bill “that would extend the N.Y.R.A.’s franchise to operate Aqueduct, Belmont Park and Saratoga until the year 2001, after which the state would take over the tracks and offer the franchise to public bidders.”[24] Andrew Beyer at the Washington Post wrote that “the state government is threatening to take over the tracks and put the non-profit New York Racing Association out of business.”[25]

The thoroughbred trade papers similarly reported on the fact that the State was taking over the NYRA racing properties. The Daily Racing Form called passage of the legislation “an unprecedented victory for Assemblyman Fink.”[26] Kent Hollingsworth, the editor of the Blood-Horse, wrote despairingly of the bill: “Now we have the Fink Legislation so named not because it is preposterous but after House Speaker Stanley Fink who somehow thinks New York has always owned the properties. The Fink Legislation provided for a bond issue to refurbish the tracks and a 15-year extension of the NYRA franchise, at the end of which the state would take over the NYRA properties. It passed both legislative houses and went to the governor.”[27]

The Thoroughbred Record wrote, “The bill, which was supported by Governor Mario M. Cuomo allows the state to take over the property at Aqueduct, Belmont Park, and Saratoga in 17 years, and then issue ten-year leases based on competitive bidding.”[28] Thoroughbred Record editor Timothy Capps – similar to Kent Hollingsworth at the Blood-Horse – castigated the legislation. He wrote, “ Assemblyman Fink has, in fact, maintained that Aqueduct, Belmont and Saratoga were actually owned by the state, and he wheedled an opinion from the state attorney general’s office last year that gave some support to that view. He has ensured that the choice of who will operate New York’s Thoroughbred tracks will reside totally with the state’s politicians whose track record in such matters is generally a mixture of ineptitude and self-serving empire building.”[29]

There was certainly a widespread understanding that the 1983 legislation had erased NYRA’s future rights to the racetrack properties. Once NYRA went out of business or lost the franchise, the State owned the properties. Stanley Fink had won.

One Last Shot at the Legislation

NYRA did, however, get one last chance at revising the franchise legislation. First the NYRA trustees met to review the legislation. Arguably, if they raised objections to the issue of ownership of the tracks, this would pave the way for litigation between the State and NYRA. Instead, the trustees took no position on the legislation.

Steven Crist at the New York Times viewed this as a sign of NYRA’s surrender to the State. He wrote, “The New York Racing Association, which operates Aqueduct, Belmont Park and Saratoga, finally may have conceded that those three tracks belong to the state of New York and its people, not to the N.Y.R.A. That seemed to be the meaning of a white flag of silence the association hoisted yesterday. … The bill extends the N.Y.R.A.’s franchise to operate the three tracks until the year 2001, after which control reverts to the state, which must offer the franchise for public bidding. … So although the N.Y.R.A. may no longer be saying that it owns the tracks, it will run them for the next 18 years and probably beyond that. That is all that really matters, so it makes some sense that the N.Y.R.A. has nothing more to say.”[30]

Ed Comerford at Newsday was not sure of the meaning of the non-decision by the NYRA trustees. In his column, he took the position that “by not telling us anything, the NYRA may be telling us a lot. After rubberstamping directives from Albany for years, the trustees may finally be hollering, ‘Whoa!’”[31] Comerford also thought that “the best guess is that the trustees are not in open rebellion, just stalling in hopes of getting a better deal.”[32]

At the Blood-Horse, Kent Hollingsworth saw the vote of the NYRA trustees as their rejection of the Fink legislation. He wrote, “The NYRA board ultimately said no unanimously. And the governor sent the Fink Legislation back to the Assembly for reworking. There are finks everywhere. … It would be better to pay cash and get a clear title.”[33]

Secondly, due to technical difficulties with the legislation, Governor Cuomo had the racing legislation that affected NYRA recalled by the legislature.[34] Thus, NYRA did get a second chance at revising the legislation.

The parties soon began negotiations over the bill, and resolution of the issues was achieved in a matter of weeks. The State would still own the racetrack properties, but the State would not be able to bid to be the operator of the franchise. NYRA president Gerard McKeon said, “The way it was first written, it took no stand on whether the state or private industry would run racing after 2000. … Now it specifies the intent of the . That was a very important point to clear up.”[35] Based on these changes, the NYRA trustees unanimously endorsed the legislation.[36] The legislation provided that properties “will belong to the state after 2000. The NYRA will be permitted to bid, with other private groups, for 10-year franchises to operate them.”[37]

NYRA Chairman Thomas Bancroft endorsed the bill “finding that the legislative package when enacted into law will form the foundation for the physical revitalization of our three racetracks.”[38]

Governor Cuomo explained the legislative arrangement at a visit to the Saratoga racetrack in mid-August. Cuomo said “In exchange for the franchise extension, the state would get to what amounts to complete control of the three tracks in 2000. At the end of that year, the state would award future franchises every 10 years on a competitive basis to either profit-making or non-profit racing associations.”[39]

 The State legislature returned to Albany in September 1983 and passed the agreed-upon chapter amendment which contained the technical and semantic corrections as well as the provision that the State could not bid on operation of the racing franchise.[40] The vote was unanimous, and Governor Cuomo signed the full racing legislative package on September 27, 1983.

A public bill signing was held in New York City on October 7, 1983. The bill was described as extending NYRA’s franchise until the year 2000 after which “the racetracks will become the property of the state.”[41] NYRA Chairman Tom Bancroft praised the bill: “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 the NYRA will be competitive after the year 2000 in seeking to continue our operation of the New York tracks.”[42] In response to Bancroft, Cuomo said that the bill “will give you the opportunity to prove that NYRA is still the best implement to run the tracks.”[43]

Despite what people may believe in the 21st century, in 1983: (1) Everyone involved in New York racing, including the media, knew that the legislation made the State the owner of the racetrack properties, and (2) NYRA fully consented to the arrangement under which NYRA racetrack properties became the property of the State.

[1]http://www.albanylaw.edu/glc/publications/glo/Documents/Legislative%20Intent%20and%20the%20NYRA%20Racing%20Properties.pdf. New York State Bar Association, 6 Government, Law and Policy Journal 33 (Fall 2004).

[2] The New York Racing Association has run thoroughbred racing at Aqueduct, Belmont and Saratoga since its inception in 1955. The racetrack properties refer to the land held by NYRA at these facilities.

[3] Liebman and Nitka, supra note 1, at 36.

[4] Id. at 35.

[5] Assembly Debate on Senate Bill No. 6969, June 27, 1983, at 267-268 of Assembly Records.

[6] See for example, Graham Rayman, “State Frees $8M for Racetracks,” Newsday, November 4, 2006; Ed Fountaine, “NYRA Prez: OK Franchise Now,” New York Post, October 12, 2007; Ed Fountaine, “Through the Binocs,” New York Post, May 20, 2010.

[7] See Joel Stashenko, “All’s Not Well in NYRA,” Associated Press, Utica Daily Press, January 18, 1983.

[8] Bob Keeler, “Albany and the NYRA,” Newsday, February 21, 1981.

[9] Id.

[10] Id.

[11] Bob Keeler, Racetrack Take-Over Proposed,” Newsday, March 15, 1981; “New Bill Seeks Racing Change,” United Press International, Hartford Courant, March 15, 1981.

[12] Dorothy J. Gaiter, “Assembly Speaker Urges State Takeover of Race Tracks,” New York Times, March 15, 1981. Fink later said that the NYRA “is an instrumentality of the state … and can therefore be appropriated without fear of fiscal cost or running the risk of due process penalties.” See note 13 infra.

[13] Lena Williams, “N.Y.R.A Franchise Renewal Questioned,” New York Times, May 8, 1981. See also John Omicinski, “Time of Decision for State Racing,” Utica Observer-Dispatch, August 22, 1981.

[14] Lena Williams, “State Racing Told: Prove Need for Aid,” New York Times, June 18, 1981.

[15] John Omicinski, “Bettors Shortchanged at Outdated Saratoga,” Gannett Westchester Newspapers, September 2, 1982.

[16] Ed Comerford, “A Racing Fan Makes Last Bid To Assist NYRA,” Newsday, December 17, 1982.

[17] Id.

[18] Id. Both Stanley Fink and David Langdon ended up serving in the private sector as lobbyists for NYRA.

[19] Ch. 1006, L. 1983, Racing, Pari-Mutuel Wagering and Breeding Law § 202.5. See also Governor’s Bill Jacket for Ch. 1006, L. 1983; July 26, 1983 Budget Report on Bills. Section 202 would “provide that upon the expiration of the NYRA’s franchise its existence also terminates.”

[20] Josh Friedman and Allison Mitchell, “Accord Seen On Bond Issue,” Newsday, June 28, 1983.

[21] Ed Comerford, “NYRA Keeps Control of Tracks,” Newsday, June 30, 1983.

[22] Chuck Stogel, “Shhh, State Votes NYRA Extension on Franchise,” Gannett Westchester Newspapers, June 29, 1983.

[23] Mike Veitch, “Who Holds the Reins in New York?,” Saratogian, July 3, 1983.

[24] Steven Crist, “Vasquez Appeal Bid Is Rejected by Court,” New York Times, July 14, 1983.

[25] Andrew Beyer, “Bigger Fields Mean Better Racing for New York Horseplayers,” Washington Post, July 17, 1983.

[26] “NYRA Franchise Extension Bill Gains Senate Support,” Daily Racing Form, June 29, 1983.

[27] Kent Hollingsworth, “What’s Going On Here?,” Blood-Horse, August 8, 1983.

[28] “Record Review,” Thoroughbred Record, July 6, 1983.

[29] Timothy Capps, “On the Record,” Thoroughbred Record, July 6, 1983.

[30] Steven Crist, “N.Y.R.A. Chooses Silent Surrender,” New York Times, July 15, 1983.

[31] Ed Comerford, “Bettors Are Forgotten Titleholders,” Newsday, July 17, 1983.

[32] Id.

[33] Hollingsworth, supra at note 27.

[34] See New York Legislative Record and Index, Bill Histories for Assembly Bill No. 8212 and Senate Bill No. 6989 (1983). The process of recalling legislation – under which the leaders of the legislative houses agreed not to present certain passed legislation to the governor for approval – was subsequently found unconstitutional by the New York Court of Appeals in Matter of King v. Cuomo 81 N.Y.2d 247 (1993).

[35] Ed Comerford, “New Racing Bill Gets NYRA’s Vote,” Newsday, August 5, 1983.

[36] Id.

[37] Id.

[38] Joe Hirsch, “Will Extend NYRA’s Operating Franchise through Year 2000,” Daily Racing Form, August 6, 1983. See also “NYRA Votes to Endorse New Package,” Saratogian, August 5, 1983. The chapter amendment would work by “enabling NYRA or some other corporation – but not the state – to remain in control of racing when the franchise expires.”

[39] “OK Near for Racetrack Improvements,” Associated Press, Saratogian, August 14, 1983; “Facelifts in Store for State Tracks,” Associated Press, Utica Observer-Dispatch, August 13, 1983. See also “Cuomo Signs Race Bills,” Newsday, August 14, 1983.

[40] Ch. 1007, L. 1983. Chapter 1007 in its legislative findings stated that NYRA’s record “demonstrates the advisability of continuing the operation of thoroughbred racing in this state by private racing corporations or private nonprofit racing associations.” The legislature further found that measures were needed to “ensure that franchises of reasonable lengths are awarded to private racing corporations or nonprofit racing associations to conduct thoroughbred racing and pari-mutuel betting.” See Chapter, 1007, Section 1. The legislation allowed only private corporations and a nonprofit racing association (i.e. NYRA) to bid for the racing franchise. See Chapter 1007, Section 8.

[41] Ed Comerford, “Cuomo Seeks OTB Reform, Simulcasting Bill,” Newsday, October 8, 1983.

[42]  Joe Hirsch, “Gov. Cuomo Signs Racing Aid Bill to NYRA Tracks,” Daily Racing Form, October 8, 1983. See similarly William Rudy, “Dispatches,” Blood-Horse, September 24, 1983.

[43] Comerford, supra at note 41.

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