Stronach Eyes New York Tracks

When a racetrack draws more than 65,000 fans, as Saratoga did Saturday, that would normally be cause for celebration in the executive suite. But officials from the New York Racing Assn., which runs Saratoga and the state’s two other major tracks, are tempering their glee these days. There seems to be no limit to the number of intruders who have put NYRA in their crosshairs.

NYRA, the non-profit organization that has operated Saratoga, Belmont Park and Aqueduct since 1955, is trying to ward off a possible federal criminal indictment; New York’s state controller says NYRA is at least $11 million in arrears on state franchise fees; New York’s attorney general has excoriated NYRA for spending practices and questionable business operations; and the New York State Racing and Wager Board is questioning the bidding process behind a recent contract that NYRA signed with a security firm.

Into this maelstrom, according to an Associated Press report out of Albany, N.Y., on Wednesday, steps Santa Anita owner Frank Stronach, whose hydra-headed Magna Entertainment Corp., has apparently renewed an interest in acquiring the NYRA racing license, which expires in 2007 and could be terminated even sooner by Gov. George Pataki and the state legislature.

Officials for Magna could not be reached, but Stronach is a familiar rival of Barry Schwartz, the embattled chairman of NYRA, and Stronach’s interest in the three New York tracks is not new. In 2001, after Stronach’s $260-million bid for the New York City Off-Track Betting Corp., was taken off the table when Michael Bloomberg replaced Rudolph Giuliani as mayor, Stronach said that he coveted the NYRA tracks as well.

“We would not only love to buy NYRA,” Stronach told a racing conference in Saratoga Springs, N.Y., “we would love to make it a major entertainment and destination center. [The three tracks] need investment. [They] need jazzing up.”

Stronach said similar things about Santa Anita when he bought the Arcadia track for $126 million in 1998 -- the start of a racing empire that now numbers 15 thoroughbred, harness and greyhound tracks. Magna has made numerous expensive improvements at Santa Anita, but the stable area is still badly in need of an overhaul, and the hotel and entertainment center proposed by Stronach are no more than the blueprints they were four years ago.

Schwartz, who bankrolled his lifelong friend and partner, Calvin Klein, as they built a multi-billion-dollar clothing company, has had a consistently low opinion of the way Magna has gone about its racetrack business. Schwartz, who took over at NYRA in October of 2000, after many of the track’s current difficulties had already surfaced, has been close-mouthed about possible federal indictments.

“[Magna] trying to buy NYRA is the same hollow rhetoric I’ve been hearing for years,” Schwartz said a couple of years ago. “[Stronach] is buying all these tracks, and I don’t know of one that he’s improved since he bought it. It would be a disaster for him to take over NYRA.”

Besides Magna and NYRA, the other leading racetrack power is Churchill Downs Inc. Churchill lost out to Stronach in bidding for Santa Anita and Gulfstream Park, Florida’s premier track, and was one of NYRA’s partners in a bid against Stronach for New York City OTB.

It’s likely that public bidding would be opened for the NYRA license in 2005.

“I want a fair bidding process,” Stronach once said. “Then let the best man win.”

There have been reports, neither confirmed nor denied by NYRA officials, that NYRA might be forced out of business if hit with a federal indictment. The ability of the three tracks to simulcast their racing to off-track betting facilities around the country might also be threatened, although most states wouldn’t shut off such a lucrative cash cow until convictions were obtained.

NYRA has been reeling since 16 of its parimutuel clerks were convicted of tax evasion and three more were found guilty of money laundering. According to the Albany Times-Union, NYRA has proposed paying fines instead of facing federal charges of criminal conspiracy.

After the purchase of three tracks last year -- Lone Star Park near Dallas for $100 million and Pimlico and Laurel Park in Maryland for $117.5 million -- Magna indicated that it might restrict expansion, but more recently the Canadian-based company has shown signs of rethinking that strategy. Magna completed the sale of subordinated notes worth $145 million in June, giving Stronach’s company $182.9 million in capital. Magna’s long-term debt as of June 30 was $169.3 million.