David Skorton

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After two years, NYRA Board still “blinking at reality”

Posted by noonante on December 8, 2014
Posted in: Horse Racing, Political/Social commentary, Politics. Tagged: , , , . 5 Comments

The Reorganization Board of the New York Racing Association held its last meeting of 2014 on Wednesday, and it tracked almost every meeting this group has held  –  an almost complete lack of either substance or meaningful discussion.  It also represents the latest effort by NYRA  –  which does not hesitate to boast that it is a reform organization  –  to operate in secrecy and, when it does make public statements, evade the truth.

The headline coming out of the meeting was NYRA’s turning a profit for the first time in 13 years, a “fact” dutifully reported by media outlets.  As with most statements emanating from NYRA, however, the assertion requires careful parsing.  The $1.5 million surplus  –  which does not consider revenues from the Video Lottery Terminals at the Aqueduct location  –  was achieved by placing pension and tax liabilities “off the books.”  If those expenses are treated as operating expenses  –  and I do not see how tax liabilities are not an operating expense  –  NYRA is operating in the black only if the VLT payments are counted.  NYRA, at the behest of the Cuomo Administration, persists in the fiction that the VLT revenue  –  mandated by state law  –   should not be considered even if it requires them to resort to the three-card Monte school of accounting.

What should have been the headline from this meeting, however, was a precipitous drop in the betting handle since the end of the Saratoga meet.  As David Grening reported in the Daily Racing Form, the handle at Belmont and Aqueduct had dropped by $58 million since Labor Day.  To put that number in perspective, the average daily handle for NYRA in the fall meets is less than $8 million.  In other words, NYRA has lost handle equivalent to cancelling racing for seven days.

When a Board member questioned CEO Chris Kay about this loss of revenue, he claimed to be unaware of the number.  Nonetheless, he was able to immediately offer excuses:  the weather  –  an explanation offered by this NYRA leadership for every negative occurrence  –  and, incredibly, the college football playoff system.  Yes, three college football games that will not be played until next year  is a reason for fans to bet less on the NYRA races in the fall.  The most disturbing aspect of this colloquy, however, is that a CEO who was hired for his purported management expertise was not aware the entity just lost $58 million is less than three months.

Ensuring that the NYRA Reorganization Board would be true to its past performances, there was no discussion of what should have been a bombshell.  Had a Board member not raised the matter, it is only Grening’s article that would indicate something was amiss.

The agenda item one would expect to consume most of the meeting was a discussion of the proposed budget for 2015.  That took all of 11 minutes.  The longest “discussion” in that span had to do with the food service at the tracks.  Board Chairman David Skorton wanted to save as much time as possible for Chris Kay’s slide show, even to the point of shutting down any meaningful discussion of the issue

Kay’s tedious PowerPoint went on for 42 minutes. In case you are wondering, it was a tribute to the great job done by this NYRA Board.  As has been the case so often in this group’s two-year existence, the Board meetings are little more than a group of men sitting in a circle discussing what a great job they are doing.  The rare problem they acknowledge is, according to them, that the public has an inaccurate perception of their efforts  –  for example, the prevalence of drugs in the sport.  Yet they have done nothing to change that perception.  Nor have they done anything about what one Board member described as its “blinking at reality” in failing to acknowledge that there are trainers with frequent and suspicious improvements in performance when they take over a horse’s training.

The NYRA Board and its enablers in state government like to boast about the “transparency” of their meetings in contrast to the prior NYRA.  But if you believe that any entity controlled by Andrew Cuomo is being open and accountable, you have probably made arrangements to have your chimney cleaned in anticipation of Christmas Eve.  Whatever decisions are being made, they are being made in secret, even though state law  –  and NYRA’s own policies  –  require decisions made in meetings open to the public.

What makes the secrecy even more troubling, however, is that after two-plus years of David Skorton and 18 months of Chris Kay, it has become abundantly clear that each is in way over his head when it comes to racing.  Skorton did his job  –  not by advancing the interests of New York’s racing, but in keeping the lid on potential problems until his boss got reelected Governor.  He announced his resignation at the meeting and is moving on to his next gig, being the top official at the Smithsonian Institute.  It may turn out to be an unfortunate irony that the person selected to supposedly revive the fortunes of New York racing is leaving to go to a museum.

Kay, on the other hand, is staying.  While he has demonstrated that he can be conversant on some racing issues at a very superficial level, he is clearly not fluent.  He made a big deal in his slide show that racing has a $2.1 billion dollar impact on the New York economy, and that the Saratoga meet generates $200 million to the Capital region.  One does not have to be particularly adept in either racing or mathematics to wonder how the premier race meet in the United States runs 16 per cent of NYRA’s race dates, but contributes only 10 per cent of the overall economic impact.  He is either making the numbers up or misconstruing valid information.

But Kay has amply demonstrated that he will stretch any detail to serve his immediate interest, even if he hasn’t clearly thought through the implications.  When the early attendance figures at Saratoga  –  following increases in admission and parking  –  appeared to be falling through the roof, he changed how attendance is counted.  Under his new approach, you did not have to actually be there in order to be counted as being there.  He has justified this by saying that actual attendance figures are not an important “metric,” but that revenue is.  He is fond of citing food and beverage sales as being significant, although actual fans attending races and wagering are what the sport should be about.  Now that one of his metrics  –  handle  –  is now falling through the roof, he resorted to lame excuses for the drop.

Then there are the innovations that cause one’s brows to rise.  As part of the Belmont Stakes “Festival,” Kay is proposing to cancel the preceding Wednesday’s racing card to focus attention on the draw for the Belmont Stakes.  It’s hard to think of a bigger non-event than the draw for a 12-furlong race that rarely attracts a full field.  And NYRA can’t conduct a race card and a half-hour program to draw the Belmont field?

Speaking of Belmont Park, if you want to wager on simulcast racing during dark days, you will not be able to do so at the Belmont Cafe.  It’s not profitable on dark days, so the most loyal NYRA fans will have to make do elsewhere.  I am sure Kay and his NYRA suits will say go to the internet, oblivious to the reality that there are some who go to a wagering facility because of the camaraderie.  Let’s not forget that New York City still is without OTB’s, and the Skorton-Kay team has apparently not accomplished anything in addressing that embarrassment.

In those rare public instances when Kay is not reciting his scripted talking points, he is actually charming and witty.  What he is not, however, is a national leader in the racing industry, a stature he should have as the head of one of the top three racing organizations in the United States.  With his small-bore focus on minutiae such as food and beverage sales and attracting B-level music acts to Belmont Stakes Day and, heaven help us, the Travers, he is more akin to a concierge than a figure of national import.

So there you have it.  New York racing is governed by a secret society composed of incompetent “leaders.”  The NYRA Board is made up of many accomplished business people and professionals, which makes their passivity on important matters and clear inadequacy as an oversight body even more frustrating.  And their plan for returning NYRA to private control next year is that they will pick the next Board.

NYRA Board offers food for thought on future

Posted by noonante on November 13, 2014
Posted in: Horse Racing, Political/Social commentary, Politics. Tagged: , , , . 2 Comments

The NYRA Reorganization Board got down to business at its Wednesday meeting as they began to discuss the future of the racing franchise.  There were some interesting announcements, but the most significant part of the meeting had to do with their ideas for a new governing structure.

First the announcements.  NYRA’s CEO Chris Kay said that the re-privatization plan would not recommend changes affecting the continuing existence of Aqueduct or Belmont.  He observed that the NYRA Board was established as an interim Board until a new structure could be put in place and thought it inappropriate for a temporary group to recommend such significant long-term changes.

Kay further stated that the Saratoga meet would remain at 40 days, running six days per week and ending on the traditional Labor Day.  There had been reports that NYRA wished to go to a schedule of five days per week beginning in early July.

There was also an announcement that NYRA’s operating costs would finish 2014 in the black without reliance on VLT revenues, marking the first time in 13 years it could say that.  This was accomplished by not considering pension and tax liabilities as “operating costs” and using the VLT revenues to pay them.  By law, however, the VLT revenues are designated for the purpose of “general thoroughbred racing operations.”  While it is not clear why NYRA is resorting to this bit of legerdemain, it appears it is for the purpose of giving the Governor the chance to say his involvement in running NYRA resulted in it turning a profit.

From my perspective, the most significant matter raised at the meeting  –  and the one with the longest-term consequences  –  had to do with NYRA’s future governing structure.  I realize that this is the sort of arcane matter that causes many eyes to glaze over, but nothing will be as determinative of the future for New York’s racing as this one.

The current NYRA Board, created by Governor and the Legislature in 2012 when Cuomo seized control of NYRA, has 17 members.  Eight are appointees of the Governor, two of the Senate and two of the Assembly.  The remaining five were appointed by the prior NYRA Board which, while it had a significant number of government appointees, had a majority of non-government members. The legislation creating that Board also directed it to propose a  “statutory plan for the prospective not-for-profit governing structure” for the next NYRA.

Joseph Lambert, NYRA’s General Counsel, reads the statute as requiring that the next NYRA be under “private control,” not government control as the current Board is.  While there had been speculation that there would be a bidding process to determine the franchise holder, Lambert is proposing that the next NYRA Board consist of some government appointees with the majority selected by the current Board.

Let’s unpack that one.  The “privately controlled” next NYRA would have a Board composed of some government appointees with the rest being appointed by the current “government-controlled” Board.  How is that not perpetuating government control?

Lambert offered additional ideas for the new structure.  (It should be emphasized that Board Chairman David Skorton said at the outset that he would not be seeking Board approval for any of these concepts, but rather just wanted to get the ideas out in the open.)  Under Lambert’s approach, the number of Board members would be reduced from the current 17, and the terms of office would be between two and four years with staggered terms.  He said that he developed these ideas based on “best practices” in the corporate world.  We do not know if these are the practices utilized by the boards of such responsible corporations as General Motors and JP Morgan.

But NYRA should not be viewed as a corporation.  The prime obligation of any corporation is to maximize profits for its shareholders.  NYRA’s “shareholders,” however do not hold stock.  It is owners, trainers, jockeys, exercise riders, backstretch workers and  –  let’s not forget  –  fans.  The new Board, therefore, should be protective of those interests and not just the bottom line.

There was some discussion of the importance of the next NYRA Board being “independent.”  Board member Robert Megna, who serves as Cuomo’s Budget Director, emphasized that “up here”  – presumably meaning the Governor’s office  –  the “question of independence is pretty critical.” Now, “independence” is an interesting word and concept.  I doubt there are many who would dispute the notion that the next Board should be “independent.”  I am guessing, however, that the Governor’s idea of “independent” means someone who is independent of any thoughts or views that do not emanate from the Executive Chamber.  That’s not, however, what most people are hoping for.

The notion of independence is also tied to how the Board is appointed, and how long the terms of office will be.  The Governor’s recent appointee to the Board suggested that the term of office should be ten years.  As noted earlier, the original idea by Lambert for a Board appointed by the current one would then mean that the existing government-controlled Board would retain its influence for ten years.  To put that in context, it would take us to the end of President Cuomo’s second term in 2025.

There has to be a better way.  Here is one modest proposal:  There should be a number of state government appointees.  One member suggested six, with nine more being non-government appointees.  Instead of having the current Board select those nine, they should nominate the nine. Then, there should be an external panel of knowledgeable industry professionals who would approve or disapprove each of the nine.  It is akin to the mechanism for external bodies (such as the American Bar Association) reviewing the judicial nominees of governors or the President.

There would be standards for reviewing the nominees  –  true independence being foremost  –  as well as goals such as diversity.  If the corporate world is the mindset for the current Board  –  which consists of 17 older, white men  –  we know that a Board appointed by them is likely to be made up of older, white men.  It’s not as if it would be difficult to find prominent and respected people within the industry who could serve on a panel to review their selections.  Dr. Mary Scollay from Kentucky already served on the Governor’s Task Force on Race Horse Safety.  Dr. Jennifer Durenberger from Massachusetts overhauled that state’s approach to racing safety and integrity.

Then I would turn to a long-time and respected member of racing in New York to chair the panel  – Tom Durkin.  Such an approach would give the next NYRA heightened credibility and help ensure that the resulting organization would truly be viewed as independent.

David Skorton and Chris Kay should be commended for their approach thus far on the re-privatization initiative.  The Board meeting, while brief, was substantive.  More importantly, they are making public their thinking on the direction going forward for NYRA, and doing so five months ahead of the deadline for submitting a final plan.  It gives stakeholders something to think about and debate.  It may even be an opportunity for the main stream media to deliver some insightful coverage.

 

NYRA to discuss its future on Wednesday?

Posted by noonante on November 10, 2014
Posted in: Horse Racing, Political/Social commentary, Politics. Tagged: , , , , . 2 Comments

We may learn this week the direction the leadership of the New York Racing Association wishes to take the racing and breeding industries of the state.  There is a meeting of NYRA’s Board of Directors scheduled for Wednesday, November 12.  Many of those involved with the thoroughbred industries are hoping for the best, although the current NYRA leadership has no past performances that warrant optimism.

The current Board was appointed over two years ago following Governor Andrew Cuomo’s takeover of NYRA.  The legislation creating the current entity put government firmly in charge with the state’s political leadership appointing 12 of the 17 voting Board members.  The Board was charged with submitting a plan by April, 2015, that would recommend a “statutory plan for the prospective not-for-profit governing structure” for NYRA.

Board Chairman David Skorton indicated that Wednesday’s meeting may be the first step in starting to discuss seriously the future of New York racing.  That this Board has been around for more than two years and has waited until now to have those discussions is, of course, an indication of how dysfunctional  –  or political  –  they have been.  Here are some of the matters that should be addressed  in the five months before their plan must be presented:

  • Governing structure of the body that runs racing at Saratoga, Belmont and Aqueduct:  The statutory language of “not-for-profit governing structure” leaves open the terrifying prospect that state government will continue to control racing.  Chairman Skorton said as much at one Board meeting when he said the new entity would be “hopefully us.”  While one does not know how much NYRA believes its press releases of how great they have been over the past two years, if they are that delusional, it is not a big leap for them to recommend they remain in charge.  If that is not the recommendation, however, there are a myriad of fascinating issues concerning the selection of the new NYRA.  How, exactly, is that to be accomplished, and what will the role be of the Governor and legislative leaders?  Will people actually knowledgeable about racing and breeding have a significant voice?
  • What is the future of VLT revenues that have been crucial to NYRA’s sustainability?  There had been a drumbeat by the Governor and his top racing appointees (Skorton, Budget Director and NYRA Board member Robert Megna and Franchise Oversight Board Chair Rob Williams) that NYRA had to achieve profitability without consideration of the revenues guaranteed by law to NYRA.  While that campaign had been put on hold while another more important campaign was taking place, now that we are past Election Day, is that issue going to take center stage again?  Convenient, isn’t it, that serious discussions were delayed until the gubernatorial race was decided?
  • What is the future of Aqueduct and winter racing?  There have been reports that the Cuomo Administration would like to sell Aqueduct.  After all, all those real estate developers who were such heavy campaign contributors need something for their largesse.  NYRA CEO Chris Kay told one group that Aqueduct loses $11.9 million during its winter meet.  Now anytime Kay gets near a number, it is time to pay attention.  In a written report to the NYRA Board he said that an indication of the success of NYRA’s “Big Day” concept of racing was the “$574 million” Pick 6 carryover from the July 5 card.  $574 million.  He has also said that an indication of the enhanced guest experience at Saratoga is increased spending by fans, actually citing the higher admission and parking fees as examples.  So when he says that Aqueduct winter racing loses almost $12 million per year, it’s time to ask for a detailed explanation of that figure.
  • Does NYRA care about New York’s breeding industry?  The discussion of winter racing is inextricably intertwined with the future of the New York-bred program.  Almost one-half of the NYRA’s NY-bred races are run at Aqueduct, and are crucial to the sustainability of the breeding program.  Not only is the New York-bred program on the upswing, but it provides some of the most lucrative incentives to breeders.  (Dayatthespa became the first Grade I Breeders’ Cup winner this year, and each juvenile race on the dirt saw a third-place finish from a NY-bred  –   Upstart in the Juvenile and Wonder Gal in the Juvenile Fillies.)  The winter meeting gives local owners and trainers a place to race their stock, a particularly important consideration if we want to maintain the low-profile operations in the game.  Not everyone can afford to move from New York to Florida during the cold weather months.

I give NYRA credit if Wednesday’s meeting is the start of an open, public debate about these issues.  It’s a conversation that should have begun a long time ago.  Board Chairman Skorton has been talking for at least 15 months about the hard choices facing NYRA and New York’s racing without specifying what he means.  I realize the Cuomo Administration has kept a lid on all matters that present difficult decisions until the political campaign was completed, but there are 30,000 jobs at stake in both the racing and breeding industries.

One of the major benefits of having that public discussion is that it will give the many knowledgeable and experienced horse people a say in how things should go.  Neither Chairman Skorton nor CEO Kay has any background in the business and, quite frankly, neither has demonstrated anything more than a rudimentary familiarity with the issues.  The fear, of course, is that any decisions are going to be made in the way that seems too typical of the Governor and his appointees  –  behind closed doors with no airing of the competing considerations.  A recent news report that a decision on expanding the Saratoga meet was made in a secret meeting that violated the state’s Open Meetings Law does not reduce the apprehension.  We can at least hope that this time it will be different.

Kay bonus award symptomatic of NYRA problem

Posted by noonante on October 27, 2014
Posted in: Horse Racing, Political/Social commentary, Politics. Tagged: , , , , , . 2 Comments

Recent news articles revealed the salary paid Tom Durkin, the legendary and (and now-retired) track announcer for the New York Racing Association.  Albany’s Times Union used the occasion to observe  –  correctly  –  that NYRA “needs to remember its obligation to the public when deciding how generous to be with salaries.”

At least we know what Durkin did for his money, and his performance was rated by tens of thousands of fans every time he called a race during a career that included Triple Crown races and the Breeders’ Cup.  Now that NYRA has released documents to me concerning the bonus and salary increase awarded CEO Chris Kay, we still do not know what he accomplished to warrant a quarter-million dollar bonus and a $9,000 pay increase.

When the NYRA Reorganization Board embarked on hiring a new CEO early in 2013, it was leery of fostering a perception that it was overly lavish with the salary since NYRA is now a state agency.  Thus, it established a base salary of $300,000 with eligibility for a bonus of up to $250,000.  The prior permanent CEO was paid $475,000  –  a level criticized by Andrew Cuomo’s Budget Director, Robert Megna,. Megna, appointed by Cuomo to the NYRA Board, however, apparently had no problem with a level of compensation that was greater by $75K.

Now, I don’t have a problem with a salary in that range.  What I do have a problem with is an agency of government being misleading, saying one thing and doing another.  When the NYRA Board discussed the concept of a bonus, Chairman David Skorton  –  appointed by the Governor  –  assured the public it was a performance-based bonus based on metrics and that he was a hard grader.  He also promised he would be “very public” about this.

The “very public” part did not mean the public would actually know what the CEO’s goals and performance measures would be.  After the protracted refusal of NYRA to disclose that information, ending with a finding they were violating the public records law, they released the “Performance Metrics” for Kay.  It is a vague document of less than a half-page containing nothing more than generalities, but again assures us that the CEO’s “performance will be reviewed annually against the goals set by the NYRA Board.”  The NYRA Board never established any goals, let alone discuss them.

Yet this document is the only piece of paper having to do with the CEO’s goals  –  unless you count the cancelled check for $250.000.  Nowhere is there a description of Kay’s specific goals and metrics, and obviously no explanation of how his performance measured against the non-existing standards.

The portion of the NYRA Board meeting at which Kay’s bonus and pay increase was announced took all of 80 seconds.  Laughably, one of the factors cited in the Board announcement was Kay’s “fostering transparency.”  No Board member mentioned any goals, nor was there a discussion in the 80 seconds allotted this topic.

Kay was asked about this during the September meeting of the Franchise Oversight Board, a state agency whose sole responsibility is to oversee and monitor NYRA’s performance.  He was, shall we say, less than forthcoming about the fact that there was no documentation relating to his performance and the bonus.  Board member Steven Newman pressed Kay on whether there were a written set of standards, stressing the importance of a public agency being transparent and accountable.

Kay danced around the issue without ever answering directly.  He offered to provide a written statement from Chairman Skorton, although it is clear it would be something Skorton would have to create from scratch.  The FOB Chairman, Rob Williams, said he would ask NYRA for the standards, but at no time did Kay acknowledge they did not exist.  (Williams referred to the “Performance Metrics” piece of paper as being a “loose description” of goals.)

It’s not as though there are not significant issues that arose during Kay’s tenure that warrant extended discussion.  One of the three areas that Kay stresses every time he speaks is his efforts to “enhance the guest experience.”  It would be nice to know how his management of the fiasco that Belmont Stakes Day was for many fans factored into the bonus decision.  Or, how the increase in admission and parking fees might have affected attendance and handle.  Kay remarkably described those increases as an example of the enhanced guest experience he has brought to NYRA in his comments to the Franchise Oversight Board.  It is not to that body’s credit that no one questioned Kay’s logic.  (Board member Newman, who appears to be immune to Kay’s relentless spouting of nonsense, had left the meeting by this point.)

In the greater context, the secrecy and obfuscation surrounding the awarding of Kay’s bonus are not the most significant matters that face racing and breeding operations in New York.  There is the upcoming matter of what form NYRA will take when the state-controlled entity expires less than a year from now.  But if NYRA and the Governor’s appointees cannot be forthright about the relatively minor issue of the CEO’s pay and what he did to earn it, who can trust them when it comes to truly consequential decisions that will affect the livelihoods of tens-of-thousands of New Yorkers?

NYRA’s latest farce of a Board of Directors meeting

Posted by noonante on September 29, 2014
Posted in: Horse Racing, Political/Social commentary, Politics. Tagged: , , , , . Leave a comment

I have written before about how completely useless meetings of Governor Cuomo’s Reorganization Board of Directors meetings of the New York Racing Association have been.  They have consistently been devoid of anything approaching serious content, and are a complete waste of time.  Now, however, they appear to be trying to outdo the silliness of a prior meeting by having an even more ridiculous one.

Today’s meeting was announced on late Friday afternoon.  The agenda was made available on Sunday afternoon.  You know, timing designed to attract the maximum level of interest.  NYRA could not even get the meeting announcement straight and had to issue three of them.  The first omitted one of the video conference locations.  The second omitted the date and time of the meeting.  The third  –  90 minutes before the meeting  –  got it all together.

In anticipation of yet another colossal waste of time, I would not even drive to Albany to watch the video conference there, and instead tried to watch the webcast.  In a day and age when web casting is a remarkablly useful and common tool, NYRA cannot even seem to get that right.  Today’s meeting lasted all of 51 minutes.  The quality of the webcast so dismal that I think I heard one complete sentence.  The broadcast was interrupted 120 times by freezing of the screen and sound.  If anything, I under counted.

What is even more troubling, however, is that I do not think I missed much.  We had CEO Chris Kay’s repetitive and typical blather  –  did you know that there were 750 HD televisions at Saratoga?  If you have heard him speak any time in the past year, you would.  I will see if any of the reporters who endured this session have anything new to report before I look for a hopefully coherent version to appear on NYRA’s web site.

At the end of the meeting, Board Chairman David Skorton apologized for scheduling so many meetings.  He should instead be apologizing for wasting everyone’s time by chairing meetings at which nothing ever happens.

Has NYRA turned a corner in public perception?

Posted by noonante on August 11, 2014
Posted in: Horse Racing, Political/Social commentary, Politics, Saratoga thoughts. Tagged: , , , , , . 5 Comments

When they start laughing, it is never a good sign.  And they are starting to laugh at the New York Racing Association.  In a self-inflicted wound, NYRA announced that they count in their Saratoga attendance figures people who do not actually attend that day’s races.  Then they prevented reporters from entering a public meeting.  To top it off, the NYRA Board at that same public meeting announced CEO Chris Kay was awarded a raise and a $250,000 bonus for, among other things, his accomplishments to “foster transparency.”

In last Sunday’s Saratogian, Paul Post reported that NYRA considers the 6,370 who purchased a season pass as having attended the races each day of the 40-day meet.  Communications Director John Durso said that this was consistent with NYRA’s past practice and with that of Major League Baseball and the National Football League.  As I explained in this post, neither statement could possibly be true.  It would mean that the announced attendance of 8,044 on July 23 meant that only 1,674 actually paid to enter the track.  While Presque Isle Downs might be happy with that number (where last Wednesday’s on-track handle was $33.000), it is a number that represents a crisis for NYRA.

The day after the article appeared I surveyed a  small sample and asked what they thought the actual attendance was, and then what NYRA would report it as.  The standard guess was that attendance was about 10,000.  The highest estimate was one who said NYRA would report 18,000.  The NYRA figure exceeded even that with 19,000 being given as last Monday’s attendance.

Needless to say, none of those surveyed had any factual basis for their estimates of actual attendance apart from being long-time fans.  The important thing is that NYRA had no credibility and was the object of ridicule.  Now the local media, including the Times Union and the Albany NPR affiliate WAMC, are joining the fray and they too are laughing.

The risk for any business or politician is that once the media narrative changes, it becomes difficult to undo, regardless of the actual facts.  The prior NYRA leadership was constantly depicted as “scandal-ridden” even though there was never a scandal.  That perception was largely fueled by Governor Andrew Cuomo and his henchmen, who steamrolled the compliant media and Legislature to support his taking control of New York racing.

The current NYRA leadership has mostly been given a free pass because the narrative had been that they were reforming racing.  Never mind that actual reforms were never cited.  But some of the current criticism is not warranted.

The NYRA Board meetings are, indeed, open to the media and the public.  I have attended every full-length meeting until this one.  The meeting notice states that  both the media and the public must call ahead to reserve a spot.  Part of this is for security  –  the meetings in New York City  are in the building with other government offices including the Governor’s.  The other reason is that space is limited.  I have never had an issue with calling ahead.  The meetings are also web cast, although this most recent one was in large part inaudible.

A more significant criticism would be what actually transpires inside the meeting, but that would require media outlets to actually observe the proceedings.  (The racing media  –  DRF, Blood Horse and TDN actually have reporters attend the meetings.)  One advantage for the non-racing media to have a consistent narrative is that it saves them work.  So the Times Union can run a second piece today on media being prevented from entering the meeting for 40 minutes without actually having to analyze what happened once inside.

Were they to do that, they would start to realize that these Board meetings are nothing more than fatuous farces.  This one was typical of other recent ones.

It began with the reading of a prepared statement from Board Chairman David Skorton, who holds the sessions in such high regard he scheduled it during his vacation.  Then we had CEO Chris Kay read from a report that he distributed in advance of the meeting, followed by CFO Susanne Stover reading from her report also distributed in advance.

The report of the Compensation Committee recommending the bonus and salary increase for Kay lasted all of 100 seconds.  Kay’s final compensation for his first year on the job is in line with salaries paid other racing executives.  But Skorton and the Board made a big deal about how it would be based on performance with measurable goals  –  and they were able to “address” that in less than two minutes.

The report of the Equine Safety Committee was even shorter, lasting 85 seconds.  Board members practically fell all over themselves in self-congratulatory statements about the reduction in equine racing fatalities from NYRA’s high level from two years ago.  No one, however, raised two numbers that should have warranted at least some discussion.  Racing fatalities for the preceding four months are three times the number from the same period last year.  And, just as ominously, the fatalities occurring during training hours have not been reduced.

There was no discussion or questions from any Board member on two of the most significant controversies involving NYRA  –  the wide-spread dissatisfaction with NYRA’s handling of the Belmont Stakes or the falsification of the Saratoga attendance figures.  It seems that the sole purpose of these Board meetings is to give its members and CEO a chance to congratulate themselves for the great job they are doing.

But the honeymoon may be coming to an end.  When there is blood in the water, the sharks begin to circle  –  just ask the man to whom NYRA reports, Governor Andrew Cuomo.

I walked around the clubhouse and grandstand yesterday, and observed entire sections where at least half of the seats were empty.  The benches on the apron in front of the clubhouse had plenty of vacancies.  There were empty picnic tables by the paddock.  NYRA announced attendance of 40,452.  To put that number in perspective, look at the attendance for Whitney day.  NYRA has been promoting their new concept of “Big Days,” and set an attendance goal of 50,000 for the Whitney.  The reported figure was 36,318.

The attendance story is not going away, because the falsified figures represent a government agency that has lost its credibility, and NYRA has been incapable of articulating an explanation that is either logical or consistent.  I also ssupect that in addition to counting all season passes in a day’s figure, they are also counting the number of reserve tickets they sell, even if no one shows up.  While the latter may be an understandable practice, NYRA would be counting those reserved tickets holders a second time when they come through the turnstiles.  I have asked NYRA if that is their practice, but have not received a response.

If there is one thing I have learned from working in government and observing it closely, there is one virtual certainty  –  the truth will come out.

NYRA’s summer and the future

Posted by noonante on July 6, 2014
Posted in: Horse Racing, Political/Social commentary, Politics. Tagged: , , , , , , . Leave a comment

The New York Racing Associations has announced scheduling changes for the Saratoga meeting beginning on July 18.  Among the differences from last year:

  • A small reduction in the number of races, with only nine flat races carded for Mondays, Wednesdays and Thursdays;
  • Steeplechases on both Wednesdays and Thursdays, with the post for those events being 12:25;
  • Loading up the card for Whitney Day, August 2, by moving two Grade I races, the Test and the Alfred G. Vanderbilt, to that Saturday.

I think the first two changes are positive, although there are some who prefer longer programs.  I realize you are not being handcuffed to a seat to prevent you from leaving before the nightcap, but my personal preference is for fewer races, hopefully producing better quality racing.  Increasing the days on which there are steeplechases will appeal to fans of the jumps, and by making the post time 35 minutes before the standard 1:00, those who do not care for the events won’t be bothered (and the earlier race will not factor into the pick 5).  NYRA is to be credited with coming up with these changes that I think should only be viewed positively.

Loading up the Whitney card by moving two grade I’s from other days is an effort to repeat the increased handle that NYRA believes resulted from a similar approach on Belmont Stakes Day, when they moved Grade I’s from Memorial Day to have a card with six Grade I’s as well as four other stakes.  Martin Panza, the senior vice president for racing, was quoted by Thoroughbred Daily News as saying, “Instead of handling $40 million, we hope to be handling $80 million.  We hope … 50,000 people show up….”

This notion of creating “big” days as a way of enhancing attendance and handle, as well as attracting new fans, is one of the innovations by NYRA this year.  My view is that 100,000 showed up on Belmont Stakes Day not because there were six Grade I’s, but because California Chrome was going for the Triple Crown.  NYRA’s stated purpose in moving three Grade I’s from Memorial Day was to give Belmont Stakes Day insurance against the Crown not being at issue.  I would hazard a guess that at least half the crowd that day had no idea what a Grade I is. The increased handle, on the other hand, very likely was the result of one of this year’s most enticing race cards.  It undoubtedly came at the expense, however, of what I surmise was a seriously lower handle on Memorial Day.

So NYRA’s theory as espoused by Panza will be put to the test on this year’s Whitney day.  My prediction is that the attendance will be about what it was last year, despite what I anticipate to be a heavy marketing campaign by NYRA.

Speaking of attendance, I was at Belmont on Saturday and Sunday two weekends ago.  Both days were absolutely perfect early summer days.  On Saturday, 6,060 other fans joined me; Sunday’s crowd was 5,414.  By contrast, Monmouth Park attracted 40 percent more people over the weekend.  Even Suffolk Downs, cozily nestled between huge oil storage tanks and train tracks in East Boston, attracted a Saturday crowd that was more than half of Belmont’s.  The Monmouth cards did not come even close to approaching the quality of NYRA’s offerings  –  and we need not go into the “quality” offered by Suffolk, a track that may well be on its last legs.

Even more significantly, this weekend’s heavily touted “Stars and Stripes Day” drew a mere 11,118 for a terrific card of racing featuring two Grade I turf races and the Dwyer and Suburban.  Now I realize that Andy Serling works for NYRA, but when he mentioned the “great crowd” as I was looking at tens of thousands of empty seats, I had to wonder if working for NYRA comes at the expense of any pretense of integrity.

The Belmont numbers are not atypical.  They do, however, point to a significant issue concerning the future direction of racing in New York state.  With the exception of Saratoga and Belmont Stakes Day, attendance at New York’s tracks rarely hits five figures.  New York’s handle, from all sources, nonetheless accounts for 20 per cent of all wagers on thoroughbreds in the country.  It may not matter, then, what on-track attendance is when that amount of handle is being generated.  At the very least, however, it is a conversation worth having, particularly since the closing of NYRA’s other down-state track, Aqueduct, is frequently raised.

It is not the only subject worth discussing about New York’s future.  The Governor’s top racing figures have openly mentioned removing revenues from Video Lottery Terminals that currently go to the thoroughbred purses.  The legislation creating the current state-controlled NYRA expires a little over a year from now, and a recommendation on the future structure of NYRA must be filed in less than 10 months.

In addition, there are industry-wide issues that need to be addressed.  Tom LaMarra recently wrote in BloodHorse.com about the significant drop in both recent foal crops and the number of owners. Yet there is not even a peep from NYRA’s so-called leaders talking about these issues.  Chairman of the Board David Skorton rarely says anything about the future of the racing and breeding industries in New York.  He came to the job almost two years ago with neither a background in racing nor any knowledge of it.  I am not sure he has ever been to a horse race.  His pick for NYRA’s CEO, Chris Kay, similarly has no racing background.  At least he had been to a race, albeit 40 years before his appointment.  While his pre-Saratoga press conference demonstrated his knowledge of the eligibility for a free scoop of ice cream at the Spa’s traditional open house on July 13, the next interesting thing he says about the direction of the racing and breeding industries will be his first.

New York should be a national leader in the racing, particularly given the dramatic decline of Churchill Downs as either a racing venue or voice for the industry.  Neither Skorton nor Kay has demonstrated any aptitude  –  or interest  –  in assuming that role.  The NYRA Board that has 11 government-appointed members out of 16, is as useless an entity as exists in racing.  Its last meeting  –  the only one it will have over a six-month period  –  lasted all of 56 minutes, except for an executive session, even though it is facing these significant issues.

According to The Saratogian, Board member Charles Wait said that the preliminary report on returning NYRA to a non-government controlled entity is expected in August.  It is a report that should be made public in order to encourage a much-needed discussion about the future of NYRA.

If past performances are any indication, however, NYRA will refuse to release it.  It’s not as though a Board consisting entirely of older white men could not use some input that the 30,000 people dependent on the racing and breeding industries might have.  Last time I looked, “older white men” is the only demographic amply represented by racing patrons, a concern that should be paramount to an organization that is purportedly interested in expanding its fan base.

NYRA Board – a scam or just plain incompetence?

Posted by noonante on June 3, 2014
Posted in: Horse Racing, Political/Social commentary, Politics, Uncategorized. Tagged: , , , . 1 Comment

The Board of Directors of the New York Racing Association held the only meeting it is scheduled to have over a six-month period on Wednesday.  The public portion of the meeting lasted all of 56 minutes.  The meeting’s brevity and lack of any meaningful discussion indicates either that the real discussions are happening behind closed doors in violation of state law, or that there are no meaningful discussions.  I am not sure which is worse.

It is not as though NYRA does not have significant matters on its plate.  It is charged with recommending a reprivatization plan to the Legislature by April 18 next year.  In addition, NYRA continues to operate a deficit in its racing operations, and must decide what, if anything, to do about the VLT revenues that enable it to operate in the black.  Then there is declining attendance, even at its signature Saratoga meet, and the question of whether Aqueduct should remain open.

You would not know from attending the meeting, however, that anything is amiss.  CEO Chris Kay engaged in his typical happy talk.  You have to give him credit, however, for mustering enthusiasm for a Belmont Stakes music line-up that includes Frank Sinatra, Jr. and an Eagles cover band.  Board Chairman David Skorton proclaimed that it was a “very positive year,” that NYRA was “closing in on a balanced budget,” and added that Belmont Stakes Day is a “perfect example of the progress we have made.”

There is no question that June 7 has the potential to be a special day of racing and handicapping with six Grade I events.  But the hopefully outstanding card was achieved by eviscerating Belmont’s Memorial Day, an event that had featured the Met Mile and two other Grade I’s.  This year the feature was a Grade III that lured a less-than-robust 6,946 patrons through its turnstiles.

But in terms of the “progress” claimed by Skorton, it is not clear what he means.  NYRA ended the first quarter with a loss of $10.2 million from racing operations even though handle from all sources increased compared with the same three months last year.  Even after including the revenues from VLT”s, the deficit was, as Chris Kay reported, “only” $1.5 million.  Attendance at Aqueduct was down six per cent from last year despite three more racing days.  (Yes, I know it was an unpleasant winter, but I believe the facility has heat.)

I fear that Skorton’s notion of progress has nothing to do with improvements for fans or the horsemen, but rather just the fact that they are not the old and discredited NYRA.  (Many of the improvements at tracks were actually initiated by the former group.)  Neither NYRA’s leaders nor other high-level state officials miss an opportunity to boast about their running racing in an open and transparent manner.  The reality, however, is that NYRA does neither.

NYRA is required to follow New York laws governing access to public records and public meetings.  I have detailed previously NYRA’s blatant disregard for the public records law.  The NYRA Board misrepresented the financial terms of CEO Chris Kay’s contract and then attempted to cover up the distortion.  This latest meeting of the Reorganization Board indicates they may be taking a similarly cavalier approach to the open meeting law.

At his first meeting as Chairman, David Skorton stated that all meetings of both the full Board and its committees would be public.  The Executive Committee, chaired by Skorton, has never had an open meeting;  the Finance Committee has never held one;  the Long-Term Planning Committee has never held one.

The full Board does conduct a public meeting, but it is so devoid of content and serious discussion that it is legitimate to question whether it is just a sham to feign compliance with the law.  If it is indeed a sham, it raises the possibility that meaningful discussions on the future of New York racing are taking place in secret.

The other possibility, of course, is that no such discussions are taking place, even behind closed doors.  It was at last August’s Board meeting that Chairman Skorton stated that NYRA should start operating as if the VLT revenues are no longer there.  His proposal was greeted with significant dissent, an unusual occurrence for this Board.  Since then, there has been almost no mention of this crucial matter.  Nor has there been an actual discussion of what is being considered for the reprivatization report that is due in a little over ten months.

The bottom line is that it is now almost two years since the Governor rammed through a somnolent Legislature, with the approval of a flaccid NYRA Board, a takeover of the organization running Saratoga, Belmont and Aqueduct.  While they did a great deal of chest-thumping on how New York’s tracks would now witness substantial improvements with a competent and open leadership, I am hard-pressed to identify a single significant difference.

 

 

 

 

NYRA’s CEO has a sweet deal

Posted by noonante on May 5, 2014
Posted in: Horse Racing, Political/Social commentary, Politics. Tagged: , , , , . 5 Comments

The New York Racing Association finally provided me its contract with Christopher Kay, its CEO since July, 2013.  I now understand why they fought tooth and nail to deny my access. Among the interesting provisions of the agreement are:

  • The bonus Kay for which Kay is eligible can be higher than the $250,000 NYRA has publicly stated on several occasions;
  • Kay’s “generous” automobile allowance effectively increases his base salary beyond $300,000, again an amount publicly stated on several occasions;
  • An unusual severance agreement would pay Kay $550,000 even if the contract expires at the end of its term;
  • The “Reorganization” Board can extend Kay’s contract beyond its own legally-mandated expiration;
  • Kay is permitted to sell his “concept for an on-line lottery game;”
  • While probably the result of sloppy legal work, Kay has the sole power to amend or terminate the contract.

I first requested the contract with Kay and his performance goals shortly after he was hired by the NYRA Reorganization Board.  NYRA denied my efforts to obtain the contract and Kay’s performance goals.  They even stated they did not have to abide by a decision of the state agency charged with overseeing the public records law.

When NYRA began its search for a new CEO in early 2013, the Board of Directors did not want the unfavorable publicity that would result from paying the new CEO more than the $470,000 reportedly paid the prior one.  The Board was particularly leery because they are now a state agency, with 12 of the 17 members being appointed by government officials, including eight by the Governor.  So they came up with a compensation structure that would consist of a base salary of $300,000 and a bonus of $250,000 attached to achieving performance goals.

While some might say that looks like a public relations move to increase the CEO’s pay by a healthy 17 per cent, David Skorton, the Governor’s appointee to chair the Board, assured us there would be meaningful goals and that he wanted to be “very public” about the process of determining eligibility for the bonus.

In every public comment about the bonus, including a NYRA press release, the bonus amount the CEO would be eligible for was always stated as $250,000.  The contract with Kay, however, identifies this not as the maximum, but as the “target.”  According to the contract terms, NYRA “may at its discretion” pay Kay a bonus “greater than the target.”

When the bonus concept was discussed at the February, 2013 Board meeting, Chairman Skorton assured us this was “not just a sneaky way to give more money.”  He said there would be “actual milestones to be reached,” and that he was a “hard grader.”  The chair of NYRA’s Audit Committee stressed the need to “define very specifically the parameters for the incentive comp to make sure there is no gray area.”

But as I discussed in this earlier post, there are no specifics in the statement of Kay’s performance goals.  It is nothing more than a listing of general categories that could be used to develop milestones against which performance could be measured.  The document is so useless that the one item that Skorton identified as being a milestone  –  the reprivatization of NYRA  –  is not even mentioned.

Then there is the automobile allowance of $1,650 per month.  It is a set amount and not dependent on actual expenses.  I realize that the New York City area is expensive, but yesterday’s Times had an ad for a lease on a 2014 Jaguar F-Type for only $739 per month.  So Kay can get two and still have some pocket money left over. Kay’s salary has been consistently identified by NYRA officials as $300,000, so the excessive automobile allowance should be viewed  –  as Chairman Skorton would say  –  as “just a sneaky way to give more money.”

NYRA’s generosity with its CEO doesn’t end there, however, for there is a somewhat unusual severance agreement. While one would expect a severance provision in the event that NYRA decides to end prematurely their agreement with Kay, this contract provides severance if NYRA and Kay do not reach an agreement to extend the contract beyond its end date of October 17, 2015.  Kind of like the way a baseball teams pays severance to a player who reaches the end of a contract without a new agreement.

A person with whom I consulted who has experience in negotiating employment contracts with executives for a non-profit was dumbstruck by this notion.  If NYRA and Kay are not able to reach agreement on a new contract, Kay would get both the base payment of $300,000 and the full amount of his performance-based bonus less than four months into the year.  It’s nice to start negotiations with a half-million already in your pocket.

Speaking of negotiating a new contract, why is NYRA committing to negotiating a new contract since  –  by law  –  the NYRA Reorganization Board ceases to exist on October 17, 2015?  A successor to this NYRA would then be liable for paying Kay $550,000 even if they decide to hire a new CEO.  And this is a Board that talks about putting NYRA in a solvent position, a goal not advanced by saddling its successor with potentially a half-million dollar loss right off the bat.

In another interesting provision of the contract, NYRA has agreed that Kay can profit from a “concept for an on-line lottery game” that he has developed, apparently even during the term of his contract.  It is not clear how allowing its CEO to profit from licensing competition to horse racing is in the best interests of the sport.

Finally, and I stress that this is probably the result of sloppy legal drafting, the contract can only be amended or terminated by Kay.  It provides that, “No amendment … [or] termination … shall be effective unless the same is signed by” NYRA’s “President” and the “Employee.”  NYRA’s President is Chris Kay and the referenced “Employee” is Chris Kay.

NYRA releases CEO’s performance goals

Posted by noonante on April 15, 2014
Posted in: Horse Racing, Political/Social commentary, Politics. Tagged: , , , , , . 1 Comment

The New York Racing Association has finally released to me the “performance metrics” that will be used to determine whether Chris Kay, NYRA’s CEO, will be paid a $250,000 bonus.

When NYRA began its search for a new CEO in early 2013, the Board of Directors did not want the unfavorable publicity that would result from paying the new CEO more than the $470,000 reportedly paid the prior one.  The Board was particularly leery because they are now a state agency, with 12 of the 17 members being appointed by government officials, including eight by the Governor.

So they came up with a compensation structure that would consist of a base salary of $300,000 and a bonus of $250,000 attached to achieving performance goals.  While some might say that looks like a public relations move to increase the CEO’s pay by a healthy 17 per cent, David Skorton, the Governor’s appointee to chair the Board assured us this were meaningful goals and that he was a “hard grader.”  He further guaranteed us that he wanted to be “very public” about the process of determining eligibility for the bonus.

That supposed desire to be “very public” apparently did not extend to releasing public documents without a prolonged fight.  I first requested the performance goals and Kay’s contract last August.  After NYRA refused my request and then denied my appeal, I obtained an opinion from the state agency charged with monitoring the public records law that NYRA was violating the law.  While NYRA has now released the performance goals, they continue to refuse to provide the contract.

Here is what is in the document identified as the “CEO Performance Metrics:”

“The CEO’s performance will be reviewed annually against the goals set by the NYRA Board.  Examples of items on the balanced scorecard are:

  • Financial:  Revenue, Operating Results versus Prior Year, Management of Capital Expenditures, New Revenue Initiatives
  • Quality:  Return on Marketing Initiatives, On Track Customer Experience, Development and Implementation of New Technologies, Leadership (e.g., Develop strong management team and relationships with external constituencies), Improvements in Equine and Jockey Safety”

One does not need an MBA to realize that these are not exactly measurable standards of the sort that would prevent a perhaps skeptical public from thinking that the fix is in on Kay’s bonus.  The NYRA Board has not set goals against which Kay’s performance may be measured.  That is, unless they did so in a secret meeting which, of course, would violate Skorton’s promise to be “very public.”

There are, however, actual measurable metrics to assess how Kay is doing in meeting these overly broad objectives.  The following is based on data from either NYRA’s web site or that of the New York Gaming Commission, another state agency.

Equine fatalities while training have increased by almost fifty per cent during the first nine months of Kay’s tenure.  Since Kay started in July, 2012,  2013, 31 horses have suffered a catastrophic breakdown while training, compared with 21 in the preceding nine months.  While NYRA has made a big deal about the decline in racing fatalities  –  and they have unquestionably made progress  –  it is interesting that the 18 racing fatalities since Kay started are equal to the number in the previous nine months.

What is particularly troubling about the numbers while training is that the head of NYRA’s Safety Committee frequently says NYRA has accomplished everything recommended by the 2012 Task Force on Race Horse Safety that is within its control.  Yet, I have not heard a word at any Board meeting of a potentially significant problem.  Since horse fatalities were one of the supposed reasons Governor Cuomo took over NYRA in 2012, it will be interesting to how this factors into Kay’s bonus.

Attendance at NYRA’s tracks is down almost five percent in the first six months of Kay’s administration compared with the same six months in 2012.  I assume the phrase “On Track Customer Experience” in the performance metrics means improving it.  The last time I heard Kay talk about an actual metric for measuring customer satisfaction, it was the increase in food and souvenir purchases.  Maybe it’s just me, but fewer people coming to your business is rarely seen as a good sign.  All sources handle, incidentally, is up by about one per cent over the comparable six-month periods.

For the return on marketing initiatives, we have to wait and see if Churchill Downs gets added business from its sponsorship of the Wood Memorial.  It is beyond me why NYRA would allow Churchill’s advance deposit wagering platform to sponsor NYRA’s signature race of the spring.  Yes, I know it is more tasteful than “The Kentucky Derby Presented by Yum!,” but is not NYRA competing ADW Rewards an important vehicle for increasing revenue and fan interest in the its product?

At least there is progress on increasing revenue.  I am not sure that jacking up admission  and ticket prices should have been the go-to option, but this metric will be realized provided there is not a further decline in attendance because of it.  It does, however, run counter to what Kay likes to refer to as the “guest experience,” even if it will help him get the bonus.

The reprivatization effort is not one of Kay’s goals?  It has been almost two years since Governor Cuomo took control of NYRA, supposedly as a temporary step to come up with a plan to return the racing franchise to private control.  The plan to do that is due a year from now.  Yet there has been almost no public discussion of this crucial matter at NYRA’s Board meetings, let alone any sense of specific ideas.

While the above metrics would suggest that Chris Kay needs to show substantial progress in order to achieve his $250,000 bonus, I am not sure a betting person would wager against NYRA’s Board doing a complete whitewash of his performance and awarding it.  There is a reason they refuse to provide his contract.  Their rationale for doing so is contrary to all relevant court decisions and a directive from New York’s Committee on Open Government, and it must be assumed there are some very embarrassing details in it.

Clarification:  This post has been updated to reflect that training fatalities occurred during training hours, not necessarily on separate training tracks.