Magna loses bid; sells tracks

Sep 11, 2007 6:39 AM

The "For Sale" sign went up on two racetracks following the announcement by New York Gov. Eliot Spitzer that he had decided to award the new racing franchise to the existing operator, the New York Racing Association (NYRA).

Losing out in their bids to run racing were the partnership of Churchill Downs Inc. (CHDN) and Magna Entertainment Corp. (MECA); a consortium of investors in Excelsior Racing that included Suffolk Downs racetrack owner Richard Fields and Las Vegas casino mogul Steve Wynn, and the partnership of an Australian gaming company, Capital Play, and Connecticut’s Mohegan Sun.

Still to be decided is the operator of slots emporiums at Aqueduct racetrack and later Belmont Park. Spitzer said he would announce his choice at a later date.

MGM Mirage Inc. (MGM) might have been in the forefront of slots operators since it had a long-standing deal with NYRA to build the gaming facility. However, MGM walked away from that arrangement a few months ago, citing both political and financial difficulties within the state.

In announcing his choice, Spitzer was quoted as saying, "A new leadership team at NYRA has turned the organization around to the point where it is demonstrating real results and true transparency."

However, insiders are of the opinion that Spitzer decided it was easier to partner with NYRA than face litigation over the true ownership of the real estate on which the three racetracks — Aqueduct, Belmont and Saratoga — are located. For a number of years, NYRA directors have held that they truly had legal rights to the property while the state insisted it was the owner.

Possibly the first major clue to Spitzer’s choice came late last month when highly-regarded racing executive Hal Handel announced he was leaving his post with Greenwood Racing in order to join the NYRA team.

Although Spitzer has the right to make the franchise choice, the action must be approved by the New York legislature. Based on comments from some of the lawmakers, that was hardly a done deal.

A group of legislators immediately began discussing new legislation that would change the way both the racing and the slots operation would be conducted.