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.