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.
Tom we now know it is all about the VLT money for the State to grab for the general fund and more social programs and more money for education etc. Can’t see anything good coming from the state and who if any buys the 3 tracks. Don’t see much hope for racing in NY. We ave to enjoy Saratoga while it lasts. Joe
The NYRA under Kay is becoming a scary enterprise. The feeling is that he wants to make the 3 tracks entertainment venues comes from his Universal Theme Park days and his Toys R Us governance. The man was hired admittedly only attending 5 horse races with his father. The racing business is multi faceted and needs an expert to run such a complex industry, Kay is not the man, which is why the Board is now looking for an additional position of V.P. of racing at another outrageous salary. A typical example of Kay’s ignorance was when Ramon Dominguez was honored and presented with his 3rd Eclipse award and Kay announced that Dominguez was the winner of 4,985 ‘matches’ (how about races Mr. Kay?) New York racing will indeed be in big trouble if he is left steering the ship.
Cuomo’s disdain for racing is apparent to a blind man.His failure to attend the Travers for the second straight year speaks volumes.His death grip on racing should frighten anyone who makes a living in NY racing.
Kay spending forty minutes mostly talking about the customer experience in not inconsequential. Tom, I’ll assume you were just distracted by what followed after that. It is possible that Skorton is trying to light a fire under the new managemnt to get spending under control. The spending in 2012 was about $7 million over budget. And this trend is continuing this year. Something has to be done about it.
NYRA has long needed expertise in the form of an individual/s with a higher level of business acumen. Perhaps Chris Kay can bring some of that. As a quasi state agency(before Cuomo seized it) profit or expense control was not a priority as NYRA had big brother to bail it out many times. There aren’t too many business models, if any, that produce profits from running a thoroughbred race track. NY State will have no takers in two years for privatization without guaranteed subsidies. A change of Govenors, if that happens, will probably see things stay as they are now, a mature business, without upside, maybe breaking even.
Bold innovation and radical change is necessary to possibly make NY racing profitable, the Albany crowd will never allow it.
I think that the NYRA’s highest priority is to bring the Belmont franchise back to life. It is possible to bring back sports franchises. In Boston, the Patriots franchise, a historically poor franchise, was brought to life by the business acumen and love of the sport of the Kraft family. CEO Kay is focused on finding a niche for Belmont.
For the long term, Kay spoke of hiring a consulting firm to help with a strategic business plan for future growth.
I thought about how sports franchises are revitalized. To me, it comes down to the quality of the product and customer service. These are Kay’s top two priorities. I believe he is right on there.
I watched the whole Board meeting online. I must admit the topic of the possibility of losing slots revenues came up enough times to make me feel uncomfortable. Maybe, Chairman Skorton knows more than he has let on. Nevertheless, I do believe it is the fiduciary responsiblity of the Board to focus on making the NYRA profitable at the operations level without slots revenues. It would be too risky otherwise. On a positive note, Chairman Skorton did say the NYRA is close to profitability already without slots revenues.
Rock Solid ! And . . what ever happened to the “public information request” relative to Mr. Kay’s non-disclosed incentives?
NYRA has continued its refusal to release it to me.