SARATOGA SPRINGS - Empire Racing Associates plans to challenge what it describes as factual errors in a recently-concluded integrity review of firms seeking New York's thoroughbred franchise.
The state inspector general's office conducted the review at Gov. Eliot Spitzer's direction and released its exhaustive report Monday.
Empire is one of three firms challenging New York Racing Association, whose franchise expires on Dec. 31, for the right to run Saratoga Race Course, Belmont Park and Aqueduct. The inspector general's office selected high-profile investigative firms to carry out the reviews that cost bidders from more than $700,000 to $1 million each.
"We don't question the need for it," Empire CEO Jeff Perlee said. "We just want to make sure the facts are correct and don't lead to wrong conclusions."
Specifically, he challenged a special report's finding that
says New York horsemen would lose control to out-of-state interests if Empire gets the franchise.
"The evidence supports the conclusion that Empire was not created by New York horsemen for the benefit of New York horseracing," the report says. "If Empire were awarded the franchise, the horsemen would likely lose control to ... Canadian-based Magna Entertainment and Woodbine Entertainment, and Kentucky-based Churchill Downs."
On Tuesday, the New York Thoroughbred Horsemen's Association announced that it was severing ties with Empire.
"A lot of people were wondering whose drummer we were marching to," President Rick Violette said. "Maybe the message of the horsemen has been lost."
The special report, accompanying the main integrity review, was prepared by New York-based Thacher Associates. Thacher is one of three firms the inspector general's office named to conduct integrity reviews. Thacher reviewed Empire, Deloitte Financial Advisory Services handled NYRA and Excelsior Racing Associates, and PricewaterhouseCoopers reviewed Capital Play.
"It's pretty clear they had different standards," Perlee said. "It just seems like different practices were used. That's a pretty significant procedural issue that has to be taken into account. The misstatements and mistakes of fact have got to be reconsidered.
"We're in the process of putting together a list to correct the record."
Perlee said Empire plans to submit its concerns to state officials today.
The main review covered thousands of pages of regulatory records, legal action and newspaper reports including background checks of principals in the four competing firms, and did not find sufficient cause for any bidder to be dropped from the franchise selection process.
Also on Tuesday, Perlee wrote to Spitzer's special counsel Richard Rifkin, who's chairing a committee charged with recommending the next racetrack operator to the governor.
"Much of the information on our company was provided by, and attributed to individuals who are associated with competing bidders," Perlee wrote. "There were a number of factual errors in the Thacher submission which, left unaddressed, could paint an inaccurate picture for decision makers going forward."
Racetrack bidders had to bear the cost of integrity reviews, with fees that were paid to each of their respective auditing firms.
The requirement cost Empire, Excelsior and Capital Play about $1 million each.
NYRA's review was somewhat less, about $700,000, primarily because NYRA was subject to intense scrutiny in 2004-05 in the wake of a money-laundering scandal among pari-mutuel clerks. The latest review relied on many of the findings in that report.
In addition to individual investors, Empire's coalition includes five racing-related entities that collectively own a roughly 30 percent share of the firm. They are Magna Entertainment Corp., Churchill Downs Inc., Delaware North Companies, Woodbine Entertainment Group and Scientific Games Holding Corp. Woodbine invested $100,000 and the other four $250,000 each.
Perlee has maintained that each of those firms would be limited in their control of the company by the percentage of board representation each firm would have.
©The Saratogian 2007
The state inspector general's office conducted the review at Gov. Eliot Spitzer's direction and released its exhaustive report Monday.
Empire is one of three firms challenging New York Racing Association, whose franchise expires on Dec. 31, for the right to run Saratoga Race Course, Belmont Park and Aqueduct. The inspector general's office selected high-profile investigative firms to carry out the reviews that cost bidders from more than $700,000 to $1 million each.
"We don't question the need for it," Empire CEO Jeff Perlee said. "We just want to make sure the facts are correct and don't lead to wrong conclusions."
Specifically, he challenged a special report's finding that
says New York horsemen would lose control to out-of-state interests if Empire gets the franchise.
"The evidence supports the conclusion that Empire was not created by New York horsemen for the benefit of New York horseracing," the report says. "If Empire were awarded the franchise, the horsemen would likely lose control to ... Canadian-based Magna Entertainment and Woodbine Entertainment, and Kentucky-based Churchill Downs."
On Tuesday, the New York Thoroughbred Horsemen's Association announced that it was severing ties with Empire.
"A lot of people were wondering whose drummer we were marching to," President Rick Violette said. "Maybe the message of the horsemen has been lost."
The special report, accompanying the main integrity review, was prepared by New York-based Thacher Associates. Thacher is one of three firms the inspector general's office named to conduct integrity reviews. Thacher reviewed Empire, Deloitte Financial Advisory Services handled NYRA and Excelsior Racing Associates, and PricewaterhouseCoopers reviewed Capital Play.
"It's pretty clear they had different standards," Perlee said. "It just seems like different practices were used. That's a pretty significant procedural issue that has to be taken into account. The misstatements and mistakes of fact have got to be reconsidered.
"We're in the process of putting together a list to correct the record."
Perlee said Empire plans to submit its concerns to state officials today.
The main review covered thousands of pages of regulatory records, legal action and newspaper reports including background checks of principals in the four competing firms, and did not find sufficient cause for any bidder to be dropped from the franchise selection process.
Also on Tuesday, Perlee wrote to Spitzer's special counsel Richard Rifkin, who's chairing a committee charged with recommending the next racetrack operator to the governor.
"Much of the information on our company was provided by, and attributed to individuals who are associated with competing bidders," Perlee wrote. "There were a number of factual errors in the Thacher submission which, left unaddressed, could paint an inaccurate picture for decision makers going forward."
Racetrack bidders had to bear the cost of integrity reviews, with fees that were paid to each of their respective auditing firms.
The requirement cost Empire, Excelsior and Capital Play about $1 million each.
NYRA's review was somewhat less, about $700,000, primarily because NYRA was subject to intense scrutiny in 2004-05 in the wake of a money-laundering scandal among pari-mutuel clerks. The latest review relied on many of the findings in that report.
In addition to individual investors, Empire's coalition includes five racing-related entities that collectively own a roughly 30 percent share of the firm. They are Magna Entertainment Corp., Churchill Downs Inc., Delaware North Companies, Woodbine Entertainment Group and Scientific Games Holding Corp. Woodbine invested $100,000 and the other four $250,000 each.
Perlee has maintained that each of those firms would be limited in their control of the company by the percentage of board representation each firm would have.
