§ 208 — Conditions of franchise award

§ 208. Conditions of franchise award. 1. In consideration of the\nfranchise and in accordance with its franchise agreement, the franchised\ncorporation shall remit to the state, each year, no later than April\nfifth, a franchise fee payment. The franchise fee shall be calculated\nand equal to the lesser of paragraph (a) or (b) of this subdivision as\nfollows: (a) adjusted net income, including all sources of audited\ngenerally accepted accounting principles net income as of December\nthirty-first (i) plus the amount of depreciation and amortization for\nsuch year as set forth on the statement of cash flows (ii) less the\namount received by the franchised corporation for capital expenditures\nand (iii) less principal payments made for the repayment of debt; or (b)\noperating cash which is defined as cash available on December\nthirty-first (i) which excludes all restricted cash accounts, segregated\naccounts as per audited financial statements and cash on hand needed to\nfund the on-track pari-mutuel operations through the vault, (ii) less\nninety days of operating expenses pursuant to generally accepted\naccounting principles which shall be an average calculated by dividing\nthe current year's annual budget by the number of days in such year and\nmultiplying that number by ninety.\n 2. As a condition of franchise acceptance, the franchised corporation\nand its predecessor shall irrevocably relinquish any present or future\nrights that it might have, or might claim, with respect to thoroughbred\nracing facilities and associated assets located in Queens county,\nSaratoga county and jointly located in Nassau and Queens counties\nwhereat running races, steeplechases or race meetings and pari-mutuel\nbetting on the outcome of the same have been conducted, including (a)\nall the land underlying the racetracks, (b) all improvements thereon and\nall physical assets thereon, and (c) all assets associated with the\nfranchise and the operation of the racetracks, including, without\nlimitation all rights to intellectual property and simulcasting now\nexisting or hereafter created, and any and all franchise rights or\ninterests in such assets including but not limited to leasehold\nimprovements and interests. The franchised corporation shall take all\nappropriate action on the date of substantial consummation, as defined\nby the federal bankruptcy code, of the confirmed chapter eleven plan of\nreorganization of the non-profit racing association known as The New\nYork Racing Association, Inc. in the pending bankruptcy case in the\nSouthern District of New York to ensure that the People of the State of\nNew York are vested with unencumbered ownership in the real estate for\nthe three racetracks, including all improvements thereon.\n 3. As a condition of franchise acceptance, the franchised corporation\nshall make application with the commission for live thoroughbred racing\ndates at thoroughbred racing facilities located in Queens county,\nSaratoga county and jointly located in Nassau and Queens counties in a\nmanner substantially similar to the racing dates presently undertaken.\n 4. As a condition of franchise acceptance, the franchised corporation\nshall agree that it will conduct running races, steeplechases and race\nmeetings in accordance with the provisions thereof and that all running\nraces, steeplechases or race meetings conducted thereunder shall be\nsubject to such reasonable rules and regulations from time to time\nprescribed by the gaming commission.\n 4-a. As a condition of franchise acceptance, the franchised\ncorporation shall enter into a franchise agreement that shall require\nsuch franchised corporation to use its best efforts to satisfy\nperformance standards, measured every four years by the franchise\noversight board. Such performance standards shall relate to racing\ndates, New York bred horse races, horse stalls, jockey and equine\nsafety, state concentrated animal feeding operation, backstretch\nconditions, the Saratoga training facility, handle and attendance,\npurses, expenses of the franchised corporation, and the communities\nsurrounding Aqueduct racetrack, Belmont Park racetrack and the Saratoga\nrace course. As a condition of franchise acceptance, the franchised\ncorporation shall continue to lease for nominal consideration the\nballfield property near the Aqueduct racetrack that includes lots 62,\n118, 119, 127, 133, 135, 136 and 138 of block 11535; lots 73, 110 and\n113 of block 11536; lots 5, 9, 10, 12, 14 and 110 of block 11551; and\nlot 204 of block 11562 in Queens County, as a ballfield for the\nappropriate community organization, and convey the parcel near the\nAqueduct racetrack that includes lot 1 of blocks 11558 and 11560 in\nQueens county to the New York city public school construction authority\nshould such authority desire and commit to purchase such parcel at fair\nmarket value.\n 5. A franchise may be revoked and cancelled by the commission only for\nthe reasons and in the manner prescribed under the provisions of\nsections two hundred twelve and two hundred forty-four of this article.\nThe action of the commission in revoking a franchise shall be reviewable\nin the supreme court in the manner provided by and subject to the\nprovisions of article seventy-eight of the civil practice law and rules.\n 6. (a) All contracts entered into by the franchised corporation for\nthe procurement of goods or services shall be pursuant to a competitive\nbidding purchasing policy approved by the franchise oversight board.\n (b) In its review of the contracts pursuant to this section in any\ncontract in excess of one hundred thousand dollars, the franchise\noversight board may review the character and fitness of the entity or\nits principals entering into contracts with a franchised corporation and\nprovided further the oversight board may require such information as it\ndeems necessary including the power to subpoena such books, records, and\nother pertinent information related to the contracts from the contractor\nor vendor of any contract.\n 7. Notwithstanding the provisions of section seven of the general\nbusiness law, or any other inconsistent provision of general, special or\nlocal law, the commission shall specify annually the dates on which, and\nthe hour of the first post time for days during which, such franchised\ncorporation may operate at the places and for the full number of days\nspecified in its franchise.\n 8. The commission shall permit the franchised corporation to conduct\npari-mutuel betting in the manner and subject to the conditions\nprescribed by this chapter, at the racetracks described in such racing\nfranchise for the duration of such racing franchise.\n 9. (a) The franchised corporation shall maintain a separate account\nfor all funds held on deposit in trust by the corporation for individual\nhorsemen's accounts. Purse funds shall be paid by the corporation as\nrequired to meet its purse payment obligations. Funds held in horsemen's\naccounts shall only be released or applied as requested and directed by\nthe individual horseman. Through calendar year two thousand twenty-seven\nthe New York Jockey Injury Compensation Fund, Inc. may use up to two\nmillion dollars from the account established pursuant to this\nsubdivision to pay the annual costs required by section two hundred\ntwenty-one of this article.\n (b) Unless otherwise permitted by written agreement with the\nhorsemen's organization recognized pursuant to section two hundred\ntwenty-eight of this article the franchised corporation shall fund\npurses in an amount (on an annual basis and not a per-race basis) in\nexcess of that required by this chapter, so as to reduce the purse\ncushion at the end of each calendar year by the amount set forth below:\nYear Reduction of Purse Maximum Purse Cushion at\n Cushion for Calendar Year Year End Not to Exceed\n2008 $0 $20.0 million\n2009 $1.0 million $19.0 million\n2010 $1.0 million $18.0 million\n2011 $2.0 million $16.0 million\n2012 $2.0 million $14.0 million\n2013 $3.0 million $11.0 million\n2014 $3.0 million $8.0 million\n2015 $2.0 million $6.0 million\nThereafter the maximum purse cushion at year end shall not exceed $6.0\nmillion.\n (c) The franchised corporation shall establish and maintain a separate\naccount for funds to be held on deposit in trust by the franchised\ncorporation for the horsemen's organization recognized pursuant to\nsection two hundred twenty-eight of this article. Starting in two\nthousand eighteen and annually thereafter, funds from the account\nestablished pursuant to this subdivision shall be deposited in the\nseparate account established under this paragraph in an amount to be\nagreed upon by the franchised corporation and the horsemen's\norganization recognized pursuant to section two hundred twenty-eight of\nthis article. Funds held in this account shall be used by such\nrecognized horsemen's organization solely as collateral to secure\nworkers' compensation insurance coverage, including through the New York\nJockey Injury Compensation Fund, Inc. Such coverage shall include high\ndeductible programs and forms of self-insurance.\n (d) In the event the horsemen's organization recognized pursuant to\nsection two hundred twenty-eight of this article determines that the\nfunds are no longer needed as collateral to secure workers' compensation\ninsurance coverage, then, upon agreement by the franchised corporation\nand such appropriately recognized horsemen's organization, funds in the\nseparate account established under paragraph (c) of this subdivision\nshall be returned to the account established pursuant to paragraph (a)\nof this subdivision.\n (e) The account shall be subject to annual audit by a certified public\naccountant approved and paid by the appropriately recognized horsemen's\norganization.\n * 10. It is incumbent upon the franchised corporation to ensure the\nhealth and safety of its equine participants. To accomplish that goal,\nthe franchised corporation shall, by September first, two thousand\ntwenty-five, make a one-time contribution of two million dollars to the\nHarry M. Zweig memorial fund, established under section seven hundred\none of this chapter, for the sole purpose of off-setting the cost of\npurchasing screening and imaging equipment for the research project as\nspecified in subdivision seven of section seven hundred four of this\nchapter. The Harry M. Zweig memorial fund shall hold such money in an\nescrow account until such time as it is necessary to purchase the\nequipment required to conduct the research. The money in the escrow\naccount shall not be used for any purposes other than purchasing\nequipment to be used for such research.\n * NB Repealed September 1, 2028\n