The reconstituted New York Racing Association held its first meeting as the NYRA Reorganization Board on Wednesday in a small conference room in Manhattan. While the takeover of horse racing in New York by state government has been in the works for seven months, I had the unsettling feeling as I attended this meeting that many of the Board members were thinking for the first time about their role in improving the sport.
It has now been a year since the discovery by state regulators that NYRA had not lowered the takeout rate on certain wagers from 26 per cent to 25 per cent. An “interim audit” by the State’s Racing and Wagering Board in April led to the termination of NYRA’s CEO and General Counsel. (The interim audit, in spite of numerous flaws, was never finalized; nor has a review by the State’s Inspector General materialized.) Governor Andrew Cuomo seized this opportunity to secure a change in the law governing NYRA, replacing a Board that had significant involvement by government appointees to one in which 12 of the 17 members are either appointed by him or the legislative leadership. Although the law written by the Governor was enacted by the Legislature on June 20, he did not sign it until October 1; on October 18, he announced the appointees to the new Board.
The Governor’s public decision to take control of racing in May appeared to be a precipitate action, and one accompanied by the type of rhetoric suggestive of meeting an emergency need. One would think that in the intervening seven months, the now responsible actors would have devoted considerable time to developing an agenda, as well as a plan for moving forward on it. None of that, however, was on display yesterday.
Seven of the 17 members of the Board, including Chairman David Skorton, are new to the Board. Skorton, who acknowledged having no experience with racing, is the President of Cornell University and demonstrated a certain adeptness in moving the meeting along, and synthesizing issues that came up. He also made efforts to encourage discussion of those topics that seemed to warrant further explication. Nonetheless, one would expect that someone with an admitted learning curve in the business of racing, and of New York racing in particular, would have known that scheduling only four Board meetings for the next year, with the next one not until March 6, suggesting he may not fully grasp the magnitude of challenges he is facing.
The new Board members should be given the benefit of the doubt as they get up to speed. They also did not receive much assistance in that regard from the 10 experienced hands who had served on the Board. At several points, agenda items being discussed were interrupted with unrelated matters. While most such diversions did deal with important issues, at no point did any of the prior Board members identify a list of the most significant matters that needed to be addressed. Several members had their own notion of critical issues, but I did not get the sense that any one person had a broad vision of the direction that should be taken by NYRA. Skorton ended up asking NYRA Chief Operating Officer Ellen McClain to prepare such a list before the end of the year. (McClain and Chief Financial Officer Susanne Stover presented a decidedly upbeat presentation on the current status of NYRA, particularly its robust financial condition.) The Chairman also realized that going three months without a Board meeting was not a good idea, and said he would schedule another for next month.
One reason for the seeming lack of direction is that eight of the 17 members were appointed by Governor Cuomo, and may not know where he would like to go - although they do have a fiduciary responsibility for NYRA and should be exercising independent judgment. As I have written in the past, I have no idea of the Governor’s vision for New York racing because he has not articulated one publicly. Given the diffuse nature of this meeting, it would appear that he has not stated one privately either. There was one telling discussion during the meeting. It had to do with a proposal to ban wagering by NYRA’s corporate officers. I did not understand the need for such a ban since there had not been any problems identified in the past from allowing wagering, and I could not think of a possible rationale for the revision. Nor could at least two Board members who questioned the need for the restriction. In response to the questions, both Chairman Skorton and NYRA’s counsel offered justifications that were, at best, weak. Nonetheless, the resolution passed unanimously, suggesting that this Board - at least initially - was not going to be rocking any boats.
One of the longer discussions had to do with the appearance of the racing facility at Aqueduct. (This was one of those digressions from the actual agenda.) There was agreement by those with actual knowledge that it had a dingy appearance and was not even being cleaned regularly. According to COO McClain, this was because the VLT operator, Genting’s World Resorts Casino, was now the landlord and was contractually obligated to clean the part of the building devoted to the racing operation. After describing her difficulties working out a solution with the VLT operator, the Chairman asked her to prepare a written summary of the issues before Christmas, and present it to one of the Board’s committees.
That is a useful first step in resolving the problem. Here is my idea for the second step: have the Governor call up the head of Genting and tell him to start abiding by the contract and clean the facility. At this time last year, the Governor was working on a multi-billion dollar no-bid contract to give Genting the right to a casino in exchange for building a convention center. That deal fell apart - perhaps because of the seeming impropriety in doing it - but Genting undoubtedly has a considerable interest in building such a casino should that Cuomo initiative on casinos come to fruition. And let’s not forget that Genting has been a major contributor to Cuomo’s super-PAC. What we have here is a win-win-win-win. The Cuomo-appointed Board gets an early accomplishment; Cuomo gets credit for a positive action affecting racing; Genting curries additional favor for hoped-for considerations down the road; and - lest we forget - the customers of racing can sit in a clean seat without having trash all around them.
It sounds like a minor matter. But if this new Board cannot get something as simple as this done, my fear is that the unsettling feeling with which I left yesterday’s meeting is only a precursor of things to come.