Lobbying, Marketing Helped Secure NYRA's $455M Funding

For more than a generation, the concept of shuttering Aqueduct Racetrack and consolidating New York City area Thoroughbred racing at Belmont Park has been whispered about, argued over, cautioned against by some, and promoted by others.

Now, with approval last week by New York Gov. Kathy Hochul and her fellow Democrats who control the state Senate and Assembly, it will become a reality, perhaps in as few as three years if an ambitious construction schedule happens that the New York Racing Association plans for reconstruction of a smaller, more modern Belmont.

"This is really about New York racing, and not really about NYRA. This was pushing the future of Thoroughbred racing downstate with a logical plan,'' said David O'Rourke, president and CEO of NYRA.

Indeed, the consolidation of New York City area Thoroughbred racing is a process that began in earnest 115 years ago, taking off for real following a ban on racing between 1910 and 1913—an edict that killed off four of the seven tracks that had been operating in that downstate area, noted Bennett Liebman, an expert on New York racing and gambling issues from his years as a top government regulator, gubernatorial advisor, legislative staffer, and law school professor.

By sometime in 2026, Aqueduct is slated to be closed with its racing dates shifted to Belmont, which will get a new grandstand, new amenities, track improvements, more green space, and other work on a site now adjacent to the new, multi-purpose UBS Arena, home to the New York Islanders.

But how did it happen? How did NYRA, which over the decades had chilly, at best, relations with top officials in state government on both Republican and Democratic sides, rebrand itself politically at the state Capitol and get passed in 2023 a massive borrowing plan that died not once but twice just a year ago in Albany?

The story of getting to the point of approval of a $455 million Belmont construction loan from New York State to NYRA is one involving many fiscal and political complexities, timing, connections, flexibility, and, importantly, something rare in the history of New York racing matters at the state Capitol: an alignment of stakeholders from across racing, business, and union interests.

The NYRA plan faced opposition from animal rights groups, led by PETA, which raised equine safety concerns about racing, and some fiscal watchdogs, who said the state should not be in the business of fronting funds for a massive construction project for a private racing corporation that has already gotten millions in government subsidies over the decades.

But the opposition did not have the political juice to derail the NYRA plan this year. It also did not have wealthy benefactors or big political donors in its corner. And like-minded legislators who agree with their cause ended up having bigger and more contentious issues on their plate during a budget that saw a sharp divide between Hochul and Democrats in the Legislature.

The leading voice among lawmakers who raised concerns about the NYRA deal was Senate Finance Committee Chairwoman Liz Krueger, an influential Manhattan Democrat. She has long sought to stop or slow state policies that expand gambling or benefit gambling-related interests. Krueger and some fellow Democrats were instrumental in blocking the NYRA plan in 2022. 

"I still believe it is a waste of money, and NYRA will not be around for 30 years to pay the state back. I have seen no data ... (that) people will swarm back to horse racing from other kinds of gambling just because NYRA has a new clubhouse,'' Krueger said a few days after the NYRA provisions were passed as part of an omnibus, $229 billion state budget.

O'Rourke dismisses opposition to Belmont based, in the end, on a belief that NYRA and perhaps horse racing itself won't be around as it is now at some point in the future and so the Belmont plan is a waste of money. "I would frame that more on ideology than on the reality of economics,'' he said.

The final NYRA plan calls for NYRA to repay the $455 million loan over 20 years. One concern raised often by critics: what happens if NYRA is not awarded a new franchise when its current exclusive arrangement with the state to run racing at three tracks—Belmont, Aqueduct, and Saratoga Race Course—is not extended when it expires in 2033?

On that question, Krueger, with final changes in the adopted budget, ends up agreeing with NYRA on the answer: proceeds to pay off the loan—derived from video lottery payments NYRA receives from the Resorts World-run casino at Aqueduct—will continue even if NYRA is not on the scene after 2033. 

Important to its passage the NYRA plan also morphed in the past year to address state officials' concerns. A year ago, the NYRA plan envisioned the state floating a special bond specifically earmarked for the Belmont construction costs. The final version this year calls for a $455 million appropriation directly to NYRA, though there is still some wiggle room for the state to tap into general obligation sales or income tax-backed bonds.

Additionally, the final measure includes more community, state, and New York City involvement in future development plans for Aqueduct, a 113-acre prime piece of real estate next to JFK Airport.

"I did get a bunch of transparency language, environmental language, and labor protections into the deal. I also got language making clear that once Belmont is finished and Aqueduct closes, the land returns to the state. It cannot be kept by NYRA or given to Resorts World,'' said Krueger, who noted that her bid to ensure that affordable housing be a component of future Aqueduct projects failed in the final budget talks.

But the senator said the fact that NYRA had to rely on the state—instead of the private lending marketplace—is worrisome.

"NYRA admitted they tried and failed to get a normal bond deal from Wall Street because the 'market' agrees with me: there is no 30-year happy story for racing,'' Krueger said.

After NYRA's plan was killed in June 2022, NYRA regrouped.

"It was a learning process for us,'' O'Rourke said of the 2022 session and lack of interest by Hochul or lawmakers in doing anything with its Belmont plan.

What did NYRA do? Like many successful legislative campaigns, it opened its wallet and outreach and education efforts.

• It added money to its influence efforts in Albany. In just the first two months of 2023, NYRA spent $188,000 on lobbying, including money with lobbyists who can boast of having certain geographic or other connections to lawmakers, according to a review of state lobbying disclosures. (Updated reports for March and April were not all on file yet with the state.)

  NYRA spent lobbying money on four different firms, as well as in-house; among its executives registered to lobby in Albany are O'Rourke, communications vice president Pat McKenna, and vice president of government affairs Jeffrey Cannizzo, who NYRA brought on board in 2020 to help manage the work of getting the plan considered and understood by key state officials. Also listed in the lobbying files: NYRA board chairman Marc Holiday, who is also head of SL Green Realty, one of the largest commercial real estate development firms in New York City that wants to build a casino in Times Square. Holiday's real estate and financial expertise would prove to be invaluable during the Belmont process, O'Rourke said.

• NYRA unleashed a marketing and advertising campaign; It spent $332,500 in digital and cable/broadcast tv ads between January and April. Compared with some special interest blitz campaigns designed to influence officials in Albany, it was a relatively modest sum, but it was an important part of an overall influencing effort in ads aimed really more at policymakers than any kind of general audience of New Yorkers.

• It resurrected and expanded membership in We Are New York Horse Racing, a coalition of business, labor, community, and horse racing groups that wrote letters to lawmakers—many using the same wording from group to group—as well as to Hochul. NYRA put together a rally at the Capitol, attended by about 100 people, and it spent months on outreach to local government and community groups near Belmont and Aqueduct as well as Saratoga Springs. Its involvement in upstate racing, business, and political interests helped it promote a central theme: that the Belmont reconstruction would have a far-reaching impact beyond just Nassau County where the track is located.

By the fall of last year, NYRA was fully focused on a singular goal: convince Hochul to include Belmont in her 2023 state budget plan that was later unveiled Feb. 1. Lobbying records show outreach to an assortment of Hochul budget and other advisors to achieve that goal. (Given that much of what a governor proposes ends up in some form in a final budget, such a plan was crucial to NYRA's Belmont lobbying success.)

Something else happened that many believe helped the Belmont plan. In a state dominated by Democrats, Hochul had a lackluster victory last November to a full, four-year term. Her performance was especially bad in Nassau County, where she was handily beaten in local voting by Republican Lee Zeldin.

Liebman believes her poor showing in the home county of Belmont helped push the Belmont plan into the Hochul budget because, at least in part, she also used the budget to promote a huge change in state housing and zoning laws that drew immediate and harsh criticism from Democrats and Republicans in Nassau County.

"Advocating for Belmont would show she was not totally anti-Nassau,'' Liebman said.

Just 10 days after her re-election, despite her sour performance on Long Island, Sen. Joseph Addabbo and Asm. Gary Pretlow, Democrats who head the racing and wagering committees in the Legislature, wrote Hochul urging her to include Belmont in her budget. It was a nearly identical letter that Hochul received just days before the election from Asm. Michaelle Solages, a Democrat and lifelong Elmont resident, who worked the issue behind the scenes with fellow Democrats in the Assembly.

Other lawmakers checked in, as did unions and groups that were financially and politically supportive of Hochul's campaign. The Saratoga Chamber of Commerce penned a letter to her saying the Belmont plan "would ensure this sport has a future in New York." Thoroughbred groups checked in, as did local village mayors and the Long Island Hispanic Chamber of Commerce.

Hochul did not make a big splash out of it, but she did include the $455 million for NYRA amid the thousands of pages in her overall spending plan.

While it might not have been the original intent, structural changes at NYRA over the past 15 years almost certainly helped NYRA's lobbying efforts. In 2008, to help it emerge from bankruptcy protection, NYRA agreed to the state's longstanding claims that the state government, not NYRA, owns the properties at Belmont, Aqueduct, and Saratoga. Ironically, Liebman said, while the original intention years ago might have been to weaken NYRA, it ended up helping NYRA with its Belmont construction plan because the state has a direct financial interest in what happens at Aqueduct and Belmont.

Also, Liebman believes a greater role in the state selection of NYRA board members has reduced the "open hostility" that so readily existed in years past. He says the presence of O'Rourke, "who is genuinely liked by most people in the political process,'' also served NYRA's lobbying cause.

In an interview last week, Addabbo said his colleagues just had too many questions and concerns for the Belmont plan to advance in 2022. Importantly, the idea was pushed at the same time as what he called the "Bills' stadium fiasco,'' in which state and local governments agreed to provide $850 million for the Buffalo Bills to build the team a new stadium.

"It got mired in that (issue),'' he recalled.

Also, it took much work, he said, to fully explain to colleagues that NYRA would get a loan, not a grant, from taxpayers for Belmont. 

On March 14, the NYRA plan, in essence, was given tentative approval. On that day, both houses introduced non-binding budget resolutions that included the $455 million loan for NYRA. From there, it was just a matter of cleaning up some ancillary—if still important—issues, such as community involvement in Aqueduct's redevelopment and union job guarantees. Albany being Albany, though, NYRA and its allies kept up their pressure, holding a late March rally outside the Senate and Assembly and keeping its ad campaign going on the airwaves. And many of the issues that would be internally debated in Albany over the ensuing month involved Aqueduct's future, and NYRA has no actual say in that matter.

In its victory, NYRA also indirectly benefited from the major battles that occurred this spring between Hochul and lawmakers over key issues that had nothing to do with Belmont, such as housing and criminal justice disputes; those matters took up all the air in the negotiating rooms, as well as the attention of much of the media. In the end, that left the NYRA issue to find itself in the "less controversial" pile of budget matters as negotiators pushed to wrap up the budget, which ended up being a month late because of those major disputes.

Another key: NYRA wasn't just closing a historic racetrack in Queens. It was essentially green-lighting redevelopment of Aqueduct, which real estate developers will be engaging in hand-to-hand combat in the years ahead to get a piece of. And, it was keeping alive and greatly improving the aging Belmont facility, which the mayor of Floral Park said is "deeply woven into the fabric" of his Nassau County village.

"First, look at the fiscal impact on the state. It's positive. The state gets all its money back, plus the Aqueduct property. It's pretty much assured fiscally that it's a sound agreement,'' said Addabbo, a Queens Democrat who grew up in the shadows of Aqueduct Racetrack.

Addabbo said lawmakers understand that consolidating downstate racing at Belmont, and building a smaller grandstand, makes for a more efficient industry.

"NYRA is an entity you can invest in,'' he said.

For O'Rourke, the success in 2023 after Belmont's defeat in 2022 in Albany was "a lot about messaging and packaging." He noted it was a complicated issue with many moving parts. O'Rourke says NYRA is on stronger footing than in the past, vastly growing, for instance, television coverage of its racing products and expanding its national wagering program. He said NYRA has demonstrated "we run our business in a credible manner,'' which helped push the Belmont plan in 2023. Also, lawmakers understood a new Belmont would help protect thousands of jobs, from backstretch workers and trainers and jockeys to farmers in upstate.

"This was about real people's jobs, not about ideology,'' he said.

Belmont had been studied by NYRA for years. COVID-19 derailed plans to try to push the issue in 2020 and 2021. The plan's rejection in 2022 convinced NYRA to both focus its message and broaden its base of helpers.

"One of the best things that came out of this was ... all the stakeholders in New York were aligned. The message was clear,'' O'Rourke said.

O'Rourke said it helped that Hochul has shown herself a fan of horse racing, and has been to NYRA tracks several times as governor.

"Getting (Belmont) into the governor's budget was the most important aspect,'' he said. Why? "It's the way the budget process works."

A crucial step behind it, NYRA has much work still to do. The most immediate step coming up: a loan agreement for the $455 million to be negotiated by the state and NYRA. It will put into writing many specifics about the financing that was not part of the budget bill. O'Rourke said the sides expect to kick off those talks in the next couple of weeks.