Friday, February 05, 2010

Ya Wanna Bet?

The more we look at the recently announced Aqueduct raceway deal the more we get the feeling that it will fall apart at the seems-and the meeting between Governor Paterson and Floyd Flake only adds to the heebie jeebies. As the NY Times reports: "Three days after awarding a lucrative state contract to a company connected to the Rev. Floyd H. Flake, one of New York’s most influential black pastors, Gov. David A. Paterson summoned Mr. Flake to his Harlem office Monday morning and sounded him out about his political support."

We're surprised that no one had the good sense to prevent the governor from opening himself up to this charge of insider trading-particularly as news continues to emerge that Paterson himself, overriding the judgment of those charged with doing the due diligence, personally intervened to make the deal happen. As the Times tells us: "In fact, the Aqueduct Entertainment Group received poor ratings in a ranking of the bidders compiled by the state’s Lottery Division, according to several people with knowledge of the process. The Lottery Division refused to release the document or make its director, Gordon Medenica, available for comment."

And then there's the question of the financial viability of the winning bidder. As the NY Post observes: "Sources raised questions about where AEG will find $300 million -- the up-front licensing fee it must pay to move ahead with the project. The lead financial partner for AEG is a Canadian merchant bank, Clairvest, whose total assets come only to about $300 million, a Post review found."

But the governor's obfuscation continues apace-and we assume that the prevarications will begin to start attacking each other. Now the governor is claiming, against all available evidence, that AEG wasn't his first choice. The News picks up on this tall tale: "Gov. Paterson said Thursday that the controversial pick of a politically connected group to run a video casino at Aqueduct Raceway was not his first choice. Paterson announced last Friday the selection of Aqueduct Entertainment Group, which has ties to influential Queens Rev. Floyd Flake. The endorsement came just days after Flake had left open the possibility of endorsing Attorney General Andrew Cuomo for governor. "This was not the original group that I thought originally would have been the best," Paterson said of AEG."

Don't tell that to Speaker Silver who has said that the governor personally called him on AEG's behalf. Silver, clearly no dummy, fed the governor a poison pill that will, we believe, prove fatal: "AEG also agreed to four additional provisions Assembly Speaker Sheldon Silver demanded, Paterson said, including increasing the up front payment to the state by $100 million and ensuring that no one connected to the group has been convicted of a crime in the past 15 years. Silver, though, sent a scathing letter to Paterson on Wednesday, contradicting the governor's claim that he didn't favor AEG. In the letter, Silver said the governor "called me to personally and strongly recommend" AEG."

All of which underscores the views of one of the losing bidders that the entire process would make an Abbot and Costello episode look like Shakespeare. James Featherstonough, a veteran Albany lobbyist and principal in the Delaware North bid, told the News: "Businesses who wanted to win the right to run video slot machines at the racetrack told how Gov. Paterson and his crew behaved "exactly like they were making the process up as they went along," said James Featherstonhaugh. Featherstonhaugh, a principle for another bidder, Delaware North, revealed the high stakes efforts to score the racetrack deal detoured into silliness because Paterson never made clear what he wanted. "It's hard to describe the process," Featherstonhaugh laughed. "It has been so fluid."As the months went on, the proceedings became "looser and looser and more extemporized," the veteran Albany lobbyist explained. He insisted the whole deal was screwed up from the moment bidders entered the starting gate."

So, as we have said, this is a disaster in the making-one that will, Helen of Troy-like, launch a thousand subpoenas. In the end we would be shocked if AEG has anything to do with the development of a racino at Aqueduct.