Hochuls recuse on Gaming Compact, Bills Stadium, not Niagara Falls State Park

 

 

 

It’s common knowledge that Governor Kathy Hochul is in bed with the multinational casino, hotel and fast food conglomerate Delaware North, and we mean that quite literally, given that her husband, former US Attorney for the Western District of New York William J. Hochul Jr., presently serves as Senior Vice President and General Counsel for the Buffalo-based “hospitality” giant.

The governor is acutely aware of this significant conflict of interest, and steps have been taken to distance her, at least in the public’s perception, from the business interests of her husband’s employer.

It was an issue from the very start of the Hochul administration, as the one-time Hamburg Town Board member and former Congresswoman found herself swept into office when Andrew Cuomo resigned in disgrace.

“It’s unacceptable to have him as general counsel and her as governor… the next governor should not be involved in enriching their spouse, it’s that simple,” John Kaehny, executive director of the good-government group Reinvent Albany, told the Daily Beast at the time.

“The conflict of interest exists as long as Bill Hochul is getting paid from this company with such extensive business before the state,” added Robert Galbraith, senior research analyst at the Public Accountability Initiative. “The decision to carry this blatant conflict of interest into the Governor’s Office is an ignominious start for Kathy Hochul’s administration.”

But carry it she did, and as a result of all this pointed criticism accompanying the first woman governor’s ascent to the Executive Mansion, Hochul pledged to officially recuse herself from all business New York State conducts with Delaware North, which amounts to around $50 million annually. Alternately, Delaware North released a statement that Bill Hochul would be hermetically sealed off from all matters before New York State.

The new governor’s promise not to use the power of her office on behalf of her husband’s employer has been tested at least three times. Two are largely inconsequential. However, the third will greatly benefit Delaware North’s bottom line at the expense of the city of Niagara Falls for many years to come. Let’s examine them one by one.

Gov. Kathy Hochul announced last week that she is recusing herself from talks with the Seneca Nation over their gaming compact with the state, which is set to expire at the end of the year, the reason being that Delaware North’s casinos are in direct competition with those of the Seneca. This appears to be mostly window-dressing, since two of Hochul’s top aides were delegated the negotiating responsibilities.

The two main issues attendant to the compact renewal discussions concern the size of the state’s cut of casino revenues, and exclusivity zones. These are inversely proportional. The more favorable the exclusivity (meaning that competition is restricted in the vicinity of the Seneca properties) terms are for the Senecas, the higher the percentage of revenues the state would be in a position to demand, and vice versa.

Of ten Delaware North casinos nationwide, only two, at a Hamburg horse track “racino,” and a small “gambling parlor” outside of Rochester, are generally considered to be in direct competition with the Senecas. Both are modest facilities, lacking hotel, spa and salon, upscale dining and other features of the Seneca sites.

The overall decline of the gaming industry over the years, and the Seneca casinos locally, doesn’t seem particularly conducive to Delaware North expanding its footprint in the Seneca exclusivity zone for the foreseeable future.

The reality, therefore, is that even if Gov. Hochul was to rule over the Seneca Gaming compact negotiations, any impact on Delaware North’s bottom line ($4 billion in revenues in 2022) would be both indirect and negligible.

So while Delaware North’s encroachment on Seneca territory may be a big deal for the Senecas, it’s more or less peanuts for the Fortune 500 company and its multibillionaire owners, the Jacobs family.

Downside to Delaware North’s balance sheet? Not much. Bolstering the Hochuls’ public image as selfless recusers? Priceless.

Then there’s the announcement last week that Delaware North fumbled the concessions contract for the new $1.4 billion Buffalo Bills stadium under construction in Orchard Park, to be scooped up and run back for a score by competitor Legends of New York City.

Again we ask, what’s the trade-off between Delaware North’s profits vis a vis the Hochuls’ carefully cultivated image as self-abasing, uninvolved spectators? Rather one-sided, as it turns out.

Delaware North’s Highmark Stadium contract elapses after next season. It currently deploys around three dozen employees at the facility. For all of 9 games for the 2022-23 season. By a megacorporation that owns or runs concessions at over 200 stadiums, airports, casinos, hotels and national parks worldwide. The blow from losing the contract was more to their pride than their balance sheet, or at least, that’s how local media portrayed it…

On the other hand, consider the deft defusing of the calvacade of criticism heaped on Gov. Hochul during the controversial stadium talks that just took place. Among other complaints, locating it out in the boondocks of Orchard Park instead of the city of Buffalo would have benefited Delaware North concession stands instead of neighborhood bars and restaurants. With the loss of the contract, any appearance of undue influence on Gov. Hochul’s part vaporizes at the cost of Delaware North’s small financial set-back and supposedly hurt feelings.

Maybe it was more of a punt than a fumble.

The third episode, around which there were no discussions of recusals or conflicts of interest, was the January, 2022 renewal of Delaware North’s contract to provide food service and other amenities at Niagara Falls State Park for the next 13 years, a mere six months after Gov. Hochul took the oath of office. Pretty much silence, as a matter of fact, even though Bill Hochul had been at Delaware North since 2016.

And unlike the gaming compact and stadium deals, this contract locked in a lucrative arrangement, serving finger food and sugar-loaded beverages at the former nature preserve surrounding the falls. Many believe that downtown Niagara Falls is a crime-ridden slum basically because Delaware North feeds the 9 million who visit Niagara Falls every year, funneling money that should be going to local eating and drinking establishments, instead to Albany and Bill Hochul’s employer.

We reported in this newspaper back in 2017 that, according to documents we obtained through the Freedom of Information Act, Delaware North Companies made more than $4.72 million from concessions operations they ran in the Niagara Falls State Park over the one year period from Aug. 1, 2016 to July 31, 2017.

For the month of July, 2017 alone, Delaware North realized $305,579.22 from Top of the Falls restaurant and catering-based activities there, and $919,434.68 from its free-standing snack booths, two gift and souvenir shops and Cave of the Winds food court in the park, for total revenues that month alone of over $1.2 million.

According to “Open Book New York,” a service of the Office of the State Comptroller, Delaware North entered into a $10.2 million agreement with the New York State Office of Parks, Recreation and Historic Preservation commencing on July 1, 2002, to operate food, beverage and gift shop concessions in the Niagara Falls State Park, with a contract end date of Dec. 31, 2121.

Based on that contract, Delaware North tendered to New York State $523,076 a year for its monopoly rights to provide food service in Niagara Falls State Park, the oldest state park in the nation, which receives between eight and nine million visitors annually.

Therefore, Delaware North’s revenues from its operations in Niagara Falls State Park, for 2017, were nearly ten times over and above what it paid New York State over the same period.

And last January a juicy new 13-year state contract was served up by Gov. Kathy Hochul’s State Parks office to her husband Bill’s employer, Delaware North.

No recusals asked for, and none given.