Clueless Clowns lurk over NY racing

[miff]

BY:Tom Noonan

\"NYRA Board – agenda is now clear\"

Posted August 29, 2013


The August 28 meeting of the New York Racing Association's Reorganization Board was the most significant one in the Board's 10-month history.  It was the first meeting for Chris Kay, NYRA's newly appointed President and CEO, but it was not because of him that the meeting had such importance.  Rather it was the constant, almost subliminal, comments by David Skorton, Chairman of the Board, concerning the financial future of NYRA.  The issue can be stated simply:  what role will revenues from the video lottery terminals at the racino adjoining Aqueduct have in the NYRA's future?  When VLT revenues are included in NYRA's financial statements, NYRA turns a profit;  when they are not included, there is a loss.
 
It is clear where the Cuomo Administration is on the question  -  NYRA should be operating without the revenue from the VLT's.  That was the constant refrain by Skorton, Andrew Cuomo's hand-picked Board Chairman, with Cuomo's Budget Director and Board member Robert Megna nodding vigorously anytime someone commented that the revenues should not be considered.  The issue has both immediate and long-term significance.  If NYRA decides to operate as if the revenues are not available, it will require significant controls on expenditures  -  serious cutting of costs.  The long-term in this case is not actually all that long.  NYRA has to come up with a recommendation on returning to private operation in less than 20 months.  If that means putting the franchise out-to-bid, it is unlikely an outside group will bid unless the franchise is operating at a profit without the VLT revenue.
 
Given the importance of this matter, along with Chairman Skorton's obvious focus on it, one might expect it would have taken up the better part of the two-hour meeting.  But we first had to sit through Chris Kay's reading of a prepared statement for almost 40 minutes.  Interspersed throughout the statement were a series of video clips, including Kay's interview on NBC  on Travers Day, Kay's unveiling of the viewing tower, Kay's plaque honoring the winningest jockeys, etc. There was also a clip of one of the daily unsung heroes.  This particular one was the security guard who helped a lost five-year old reunite with his mother.  When your standard for heroism is not letting a five-year old wander around a race track, the bar is obviously not set too high.
 
Most of his remarks had to do with enhancing the "guest" experience, as Kay refers to fans.  One of his "metrics" for measuring increased satisfaction is that spending on food, drink and apparel is up 18% over last year.  He also mentioned enhancing the experience for women, referring to the "Fabulous Fillies" promotion, a lunch honoring Mary Lou Whitney that raised money for breast cancer awareness, and a concert starring Zendaya that attracted mostly girls and their mothers.
 
A second priority for Kay is improving the quality of racing, a topic to which he devoted a mere five minutes of his speech. He mentioned equine safety, specifically noting the decline in fatalities at the Belmont spring meet.  While this is indeed a notable accomplishment, his failure to mention either the four racing fatalities at Saratoga, including two in the same race on Sunday that equaled Belmont's total, or the serious injury to an exercise rider on Monday, gave his remarks a rather unsettling feeling.   Another five minutes were devoted to his main priority  -  the reprivatization effort  -  including his observation that the "critical figure" is net profit without the VLT revenues.
 
The VLT revenue topic came up in other reports, including the report by the CFO and one by the head of the Board's Finance Committee.  At no point, however, was there an in-depth discussion of the matter.  Then, with only about five minutes left in the meeting, Skorton asked if "everyone was comfortable" with operating as if there were no VLT revenues.  And, he made it clear that such a decision would "dictate expenditure control."  I wondered if I was hearing correctly.  The Chairman of the Board allows the CEO to drone on for forty minutes about a host of inconsequential matters, pushes every other speaker to move quickly so the meeting can end on time, and then drops a bombshell with little time to discuss it.
 
Fortunately, not everyone was "comfortable" with taking such a significant step.  After several Board members raised legitimate concerns, Skorton allowed how "these subtleties are important," and that a "fuller discussion"  -  presumably one lasting longer than five minutes  -  was warranted.  But he also wants to have that discussion in private, while simultaneously stating his commitment to operating in public.
 
Skorton's regular comments expressing his "commitment" to a public process for important decisions has become nothing short of laughable, and after 10 months of failing to follow through on even the most basic aspects of open government is significantly undermining his credibility.  I realize that he is following the lead of his boss, the Governor, but the Cuomo NYRA is about to embark on a path that is going to have a significant impact on New York racing and the tens of thousands of lives dependent on it.  It is a discussion that is necessary and important, which is why it is one that must be conducted in the open.

[toppled]

Reading between the lines, if my livelihood was dependent on winter racing at Aqueduct, I\'d be worried.  NYRA non VLT profitability, quality of racing & guest experience does not equate to February at Aqueduct.

[SoCalMan2]

Not only is this unfair, it seems so shameful and disingenious.  Can\'t people see what is going on?  If I was the guy proposing this, I would be so embarrassed I could not show my face.

As I understood it, the NYRA agreed to allow Aqueduct to be largely replaced with a casino in exchange for benefiting from the casino. That sounds like a reasonable exchange to me.  Now all of sudden, after the exchange is made, the state wants to re-write the deal?  No business in their right mind would have ever allowed the majority of their property, customers, business, goodwill to be usurped by a competing business unless they were getting something in return -- which in theory the NYRA was supposed to get the benefit of. Now the state says the racing is supposed to run stand alone?  That is a complete ff\'ing rewrite of history.  How is it supposed to be a stand alone business when it allowed a huge competitor to take most of its customers, business, and space?  Am I missing something here? To me, this is transparently ridiculous.  

This would be like building a building and renting all the office space to the state.  You expect them to be a tenant according to the long term lease and you rely on that rent.  Then, one year into the deal, they say they should be able to keep the space but not have to pay rent and instead you should be able to support your whole building cost on just the revenue from retail space on the bottom floor.  If the state tried that with anybody else, they would be laughed off the planet and whoever proposed such a thing should be totally embarrassed.  Where I come from, it does not pass the redface test.

Also, I would say the appearances are even worse.  If this comes to pass, it will look like the state wanted to build casinos to extract money from the people but knew that was not politically feasible.  So, they used the convenience of the racetracks already being there as \"cover\" or a \"beard\" for their real intent.  Now that they have the casinos up and running, they are ready to kill off their \"accomplice\" to take the whole pie.  By almost any standard of ethical and fair dealing, this is a total sham.

This is really making my blood boil.

[SoCalMan2]

Also, why isnt this being reported in the DRF?  Where is Steven Crist? Why isn\'t this being hollared about everywhere?  These guys should be totally shamed.  If it wasn\'t for the fact that everybody just views horsebettors as anti-social degenerates (somehow it is more socially acceptable to sit mindlessly in front of a machine for hours), this would be a major scandal and these guys would be the subject of loud volume ridicule for suggesting something so transparently unfair and not right.

[SoCalMan2]

by the way, thank you to Miff for reporting on this....I never would have even heard if he hadn\'t posted here.

[miff]

So Cal,

From the beginning this has been nothing more than a money grab by Cuomo who was not prepared by bail NYRA out ever again.NYRA now like Motor Vehicle Dept, a NY State Agency.Even the powerful upstate racing lobby not getting any sugar from Cuomo.

Genting(Owns Aqueduct slot joint) has lawyers and lobbyists all over Albany trying to see where they stand if Casinos pass the referendum in NY later this year.Genting probably gets a square deal in the end,NY racing future VERY unclear and could end up somewhat the sacrificial lamb.

Lawyers salivating!

Mike

[SoCalMan2]

miff Wrote:
-------------------------------------------------------
> So Cal,
>
> From the beginning this has been nothing more than
> a money grab by Cuomo who was not prepared by bail
> NYRA out ever again.NYRA now like Motor Vehicle
> Dept, a NY State Agency.Even the powerful upstate
> racing lobby not getting any sugar from Cuomo.
>
> Genting(Owns Aqueduct slot joint) has lawyers and
> lobbyists all over Albany trying to see where they
> stand if Casinos pass the referendum in NY later
> this year.Genting probably gets a square deal in
> the end,NY racing future VERY unclear and could
> end up somewhat the sacrificial lamb.
>
> Lawyers salivating!
>
> Mike


But it seems to me that either (a) the NYRA made a deal which the State is now going back on and there should be something like a serious breach of contract claim or (b) the NYRA did not make a deal in which case the NYRA board that decided to allow this to happen without making a deal should be subject to a serious malfeasance lawsuit..I do not know how much the Enron Directors and Officers insurance paid out....but if board members are complicit in the destruction of a business they are suppose to be safeguarding there should be serious ramifications.  

The NYRA was not like the DMV, it was not a government function for safeguarding the public welfare, the NYRA was always supposed to be a business.  That is what the Cuomo reps are even saying today...it needs to be run like a business.....well, if they take their own medicine, they should know a business would have only allowed the casino in exchange for the revenue, so they should be fine with observing a normal bargained-for-exchange that happens in the business world all the time.

What are they saying?  It was not a business when they sold out the guts of it, but now that it is left with huge liabilities and little assets it needs to run like a business? That is pure unadulterated Lewis Carroll.

[SoCalMan2]

miff Wrote:
-------------------------------------------------------
> BY:Tom Noonan
>
> \"NYRA Board – agenda is now clear\"
>
> Posted August 29, 2013
>
>
> The August 28 meeting of the New York Racing
> Association's Reorganization Board was the most
> significant one in the Board's 10-month history.
> It was the first meeting for Chris Kay, NYRA's
> newly appointed President and CEO, but it was not
> because of him that the meeting had such
> importance.  Rather it was the constant, almost
> subliminal, comments by David Skorton, Chairman of
> the Board, concerning the financial future of
> NYRA.  The issue can be stated simply:  what role
> will revenues from the video lottery terminals at
> the racino adjoining Aqueduct have in the NYRA's
> future?  When VLT revenues are included in NYRA's
> financial statements, NYRA turns a profit;  when
> they are not included, there is a loss.
>  
> It is clear where the Cuomo Administration is on
> the question  -  NYRA should be operating without
> the revenue from the VLT's.  That was the constant
> refrain by Skorton, Andrew Cuomo's hand-picked
> Board Chairman, with Cuomo's Budget Director and
> Board member Robert Megna nodding vigorously
> anytime someone commented that the revenues should
> not be considered.  The issue has both immediate
> and long-term significance.  If NYRA decides to
> operate as if the revenues are not available, it
> will require significant controls on expenditures
> -  serious cutting of costs.  The long-term in
> this case is not actually all that long.  NYRA has
> to come up with a recommendation on returning to
> private operation in less than 20 months.  If that
> means putting the franchise out-to-bid, it is
> unlikely an outside group will bid unless the
> franchise is operating at a profit without the VLT
> revenue.
>  
> Given the importance of this matter, along with
> Chairman Skorton's obvious focus on it, one might
> expect it would have taken up the better part of
> the two-hour meeting.  But we first had to sit
> through Chris Kay's reading of a prepared
> statement for almost 40 minutes.  Interspersed
> throughout the statement were a series of video
> clips, including Kay's interview on NBC  on
> Travers Day, Kay's unveiling of the viewing tower,
> Kay's plaque honoring the winningest jockeys, etc.
> There was also a clip of one of the daily unsung
> heroes.  This particular one was the security
> guard who helped a lost five-year old reunite with
> his mother.  When your standard for heroism is not
> letting a five-year old wander around a race
> track, the bar is obviously not set too high.
>  
> Most of his remarks had to do with enhancing the
> "guest" experience, as Kay refers to fans.  One of
> his "metrics" for measuring increased satisfaction
> is that spending on food, drink and apparel is up
> 18% over last year.  He also mentioned enhancing
> the experience for women, referring to the
> "Fabulous Fillies" promotion, a lunch honoring
> Mary Lou Whitney that raised money for breast
> cancer awareness, and a concert starring Zendaya
> that attracted mostly girls and their mothers.
>  
> A second priority for Kay is improving the quality
> of racing, a topic to which he devoted a mere five
> minutes of his speech. He mentioned equine safety,
> specifically noting the decline in fatalities at
> the Belmont spring meet.  While this is indeed a
> notable accomplishment, his failure to mention
> either the four racing fatalities at Saratoga,
> including two in the same race on Sunday that
> equaled Belmont's total, or the serious injury to
> an exercise rider on Monday, gave his remarks a
> rather unsettling feeling.   Another five minutes
> were devoted to his main priority  -  the
> reprivatization effort  -  including his
> observation that the "critical figure" is net
> profit without the VLT revenues.
>  
> The VLT revenue topic came up in other reports,
> including the report by the CFO and one by the
> head of the Board's Finance Committee.  At no
> point, however, was there an in-depth discussion
> of the matter.  Then, with only about five minutes
> left in the meeting, Skorton asked if "everyone
> was comfortable" with operating as if there were
> no VLT revenues.  And, he made it clear that such
> a decision would "dictate expenditure control."  I
> wondered if I was hearing correctly.  The Chairman
> of the Board allows the CEO to drone on for forty
> minutes about a host of inconsequential matters,
> pushes every other speaker to move quickly so the
> meeting can end on time, and then drops a
> bombshell with little time to discuss it.
>  
> Fortunately, not everyone was "comfortable" with
> taking such a significant step.  After several
> Board members raised legitimate concerns, Skorton
> allowed how "these subtleties are important," and
> that a "fuller discussion"  -  presumably one
> lasting longer than five minutes  -  was
> warranted.  But he also wants to have that
> discussion in private, while simultaneously
> stating his commitment to operating in public.
>  
> Skorton's regular comments expressing his
> "commitment" to a public process for important
> decisions has become nothing short of laughable,
> and after 10 months of failing to follow through
> on even the most basic aspects of open government
> is significantly undermining his credibility.  I
> realize that he is following the lead of his boss,
> the Governor, but the Cuomo NYRA is about to
> embark on a path that is going to have a
> significant impact on New York racing and the tens
> of thousands of lives dependent on it.  It is a
> discussion that is necessary and important, which
> is why it is one that must be conducted in the
> open.


No one else outraged by this? These guys are going to kill New York racing, and nobody is going to care.  How can the chairman and ceo of a company ask the board to agree to forgo a major source of revenue in exchange for nothing?  Could the directors of a private company just decide to forgo a major source of revenue for nothing in return and not be sued into oblivion?

[miff]

So Cal,

NYRA now listed as \"A Component Unit Of New York State\" on their certified financial.WTF is that,legally? and why does financially strapped NYRA have to pay NY State taxes. Does the DMV or any Component Unit of NY State pay State Tax.

Any lawyers out there?


Mike

[TGJB]

As it happens I talked to someone today, highest level of industry and very wired into what\'s going on there, and he thinks it\'s every bit as bad as you do.

[Topcat]

Once upon a time, a deal was made for NYRA to benefit from a portion of video revenues for the foreseeable, in exchange for certain considerable considerations.   Now, it\'s as if that deal is simply to be shredded, to the full benefit of certain politically-connected interests.  It\'s unspeakable.

[SoCalMan2]

What is upsetting to me is that everybody apparently agrees this is terrible, yet, there are no articles in the DRF or the New York Times (etc.) exposing what is clearly shameful behavior. If this were any other field of human endeavor, people would seize on how shameful and unethical the State\'s conduct in this case is. This is the media letting us down (I say this with my family being all media guys).  However, if the affected constituency is degenerate horseplayers, then nobody cares.  Thus, this is the way that horseracing dies.

[miff]

Jb,

No worries.Paesano Cuomo\'s ultimate plan to jettison NY Racing/NYRA and reap billions from casinos over time will end up in a deal which keeps NY racing on life support. NY Racing has strong long time supporters and it would be politically dangerous to be the Governor who killed NY Racing.His absence from Saratoga\'s 150 year celebration speaks volumes re his disdain for the game.

Over in NJ,Christie has abandoned racing and something will have to happen to save it.Stronach too old,CDI not interested in racing outside of Derby brand, to absorb all the venues that WILL be thrown under the bus by Governors who want racing slot subsidy monies redirected to the general State fund.No less than 5 States face this fate with the current Gov\'s as well as some in Canada.

Rationalization/contraction a certainty,smaller foal crops of past few years will further exacerbate problems with small fields.Smaller venues will have to reduce meets to boutique type 30 day meets or go under.

Bright side is the players who hang tough in spite of inept Racing Organizations,lightweight management at many venues,and politically appointed stooges.

Being a gambler, I\'m betting on the players prevailing in the end if they ever get serious about using their united handle power.


Mike

[BitPlayer]

As I recall, there are separate allocations of slots revenue to NYRA and to purses.  Is that correct?  If so, does anyone know whether Skorton is talking about doing without both, or just the NYRA portion?

In my mind, none of this should come as a particular surprise.  See, e.g., Woodbine.

At the risk of agreeing with Frank Stronach and the ideas behind the new Gulfstream, it seems to me that NY racing needs to come to grips with the notion that technology has significantly changed the way racing is consumed.  In the era of Living Room Downs, there must be a way to reduce the costs now associated with operating two downstate racetracks year-round.

[miff]

Bit,

If possible they would give no slice to purses or NYRA,period!

When Cuomo\'s attack on NYRA/NY racing began, he barked of the NYRA/racing \"free ride\" loans, bailouts, debt forgiveness,criminal activity.

Cuomo somewhat relented and exchanged a slice of the new Aqu slot money to NYRA/racing for complete control(basically seized NYRA in spite of a Franchise agreement awarded by the State Of NY) The then Board was threatened, point blank, that the State would use its substantial power to defeat any attempt to save NYRA\'s legal and binding franchise deal.Sign racing over, they were told in effect. While some board members wanted to fight the Cuomo grab in court, the sheer weight and power of the State, along with a popular anti racing Governor,was too much.The Board capitulated with a gun to its head!

Cuomo floated pulling the plug on all racing subsidies but could not get that  thru Albany. So plan B is now in effect, let privatization deal with that nuisance racing crowd(figs say it ONLY generates a billion or so for the State coffers along with 5-6k jobs)Privatization of NY racing will never happen unless the State gives guarantees that puts the buyer at no financial risk. Not gonna happen.

Even if the NY casino referendum fails, not likely, Cuomo has stated he will flood NY with VLT\'s to stop New Yorkers from going to NJ, PA,CT to gamble. No matter how you slice this, without future support from the State,in the form of subsidies, racing in NY will be at deaths door.


Mike