Tom Noonan

It’s been more than a year since the NYRA Reorganization Board was established.  Since the law written by Governor Andrew Cuomo calls for it to disappear three years after its creation, this is a time to look at what difference it has made to New York’s racing.

The “new” NYRA was deemed necessary by the Governor, who browbeat the former NYRA Board and a somnolent Legislature in May of 2012 to give him control of New York’s racing, despite the Governor’s admission that he did “not know this industry especially well.”  He waited four months before signing the law, and did not appoint his Board members until October 18.  The purported reason for the dramatic step of state government taking over the industry was a supposedly “scandalous” prior NYRA that had failed to make a one percent reduction in takeout in some exotic wagers.  (Never mind that the promised review by the Inspector General has never materialized, nor that Cuomo’s new Board concluded there was no intentional misconduct by the prior NYRA’s leadership.)

Cuomo named David Skorton, President of Cornell University, as Chairman of the new Board and made seven additional appointments to go along with four appointments by the legislative leadership and five appointments by the old NYRA.  Skorton, who has no experience with horse racing, was praised at the time because he once stayed in a Cornell dorm room.  Skorton viewed the problem with the prior NYRA as resulting from a lack of “leadership and management,” and promised to run a transparent and accountable organization.

So, what has he accomplished?  Answering that question is somewhat difficult since, despite the promise of transparency, the “new” NYRA has been anything but.  We are left with what has been discussed at the public meetings of the Reorganization Board.

Chairman Skorton’s first priority was to focus on the safety of the participants in New York’s races.  A Task Force that was appointed and made a comprehensive report prior to Skorton’s arrival on the scene, had recommended a number of changes to how NYRA and the state conduct racing.  Some of the significant changes proposed in the Report were made by a separate state agency, the Gaming Commission that has the authority to issue regulations.  They made changes in rules governing the administration of some medications, as well as modifications to claiming rules.  For its part, NYRA appointed a committee to review safety policies, another committee to investigate racing fatalities, and have started conducting necropsies of catastrophically injured horses.

Of the Task Force’s 39 main recommendations and 93 subordinate proposals  –  a number of which required action by the Gaming Commission  –  how many did NYRA implement?  We do not know because NYRA has refused to provide any information regarding their action or inaction.

At one point this year, it appeared that the Gaming Commission regulations and NYRA’s focus on safety may have produced results.  Following some earlier fatalities at Aqueduct, there was a marked decrease in catastrophic breakdowns at the spring meetings.  Unfortunately, that trend stopped during the Saratoga meet, and while Belmont fall meeting fatalities are down from six in 2012 to four this year, it has not mirrored what appeared to be a significant success.  The cause of fatal breakdown is a complex one with many contributing factors, but NYRA’s failure to divulge information as to what they have done does not benefit horses, riders or the industry.

Another priority became the hiring of a new Chief Executive Officer.  While Administration sources reportedly said there would be a “nationwide search” commencing in October and that there had already been considerable interest expressed by experienced racing executives, the new Board did not begin the search until the end of February.  They ended up hiring unemployed business executive Christopher Kay who, unlike his boss, had actually been to a horse race  –  albeit 40 years ago.  As an indication of the Governor’s interest in the industry he now controls, as well as the juice Kay will possess when it comes to making decisions affecting New York racing, Cuomo did not even meet with Kay prior to his being hired.  Although Kay signed a $550,000 contract, apparently it did not call for him to be ready as CEO on day 1.  The Times Union has reported that NYRA also paid a consultant $75,000 to “mentor” him.

The issue that prompted the most discussion at the Board was a proposed contract for an Advance Deposit Wagering platform.  The Gaming Commission’s Acting Director Rob Williams, supported by Cuomo’s Budget Director and Board member Robert Megna, had expressed reservations about the process used to select the winning bidder.  Since the contract was expected to bring in between $3 and $5 million each quarter (starting with the one we are in), it was not an insignificant matter for NYRA to get right.  This is particularly important because of the insistence by Williams and Megna of NYRA becoming self-sufficient without relying on  the VLT revenues from the racino at Aqueduct.  While I agree that the procurement process was fatally flawed, neither Williams nor Megna did much to bring the matter to resolution, even though it could have been resolved with a phone call to Skorton.  Despite the hectoring on VLT revenues, the two Cuomo employees allowed the process to drag on for months.  While Chairman Skorton  –  the “leadership and management” advocate  –  said he would work the matter out in April, he did nothing and the full Board ended up withdrawing the procurement at its June 18 meeting.  So in the six months after then-CEO Ellen McClain identified this as a problem, the Board sat on its hands, and a technology that was expected to start a month ago has been delayed while a new procurement is conducted. 

So that is one person’s assessment of what the new NYRA has “accomplished” in its first year of operation.  Although it is a 17-member Board with several “Special Advisors,”  David Skorton is clearly in charge.  If you follow the activities of the Cuomo Administration, you are not going to see much independent behavior, and this Board does not disappoint in that regard.  In all of the Board meetings, there has only been one vote that has not been unanimous  –  the decision to withdraw the ADW contract.  The “discussion” at the meeting to select the CEO lasted all of eight minutes.

In addition, Skorton’s promise of transparency has been as hollow as that of the Governor’s frequent invocation of that phrase while doing the exact opposite.  (The law establishing the new NYRA was laughingly entitled “New York state racing franchise accountability and transparency act of 2012.”)  NYRA consistently refuses to release documents that are clearly public ones  –  a prime example being Kay’s $550,000 contract and performance goals.  Skorton said all decision-making meetings of NYRA would be public, but only one committee  –  Equine Safety  – has regularly conducted its business in the open.

These are not esoteric matters.  NYRA has three significant decisions on its plate that could have a profound and long-lasting impact on New York racing and the tens of thousands of jobs dependent on it.

The first is whether NYRA should start to operate as if there are no VLT revenues.  Skorton tried to sneak this through in the last minutes of the August meeting of the Board.  In a rare show of independence, there was sufficient backlash for the Chairman to back down.  The VLT revenue is important because a racing operation that has operated at a loss without the revenue operates profitably with them.  The VLT revenues, incidentally, come from the profits of the casino operator, not “state subsidies” as Cuomo Administration figures continually say.

The Board must also come up with a plan to “reprivatize” NYRA.  The law creating the new Board calls for a report on this to be made by April 2015  –  less than 18 months from now.  There have been leaked stories from Cuomo’s Administration raising possibilities ranging from Santa Anita (sic) to Madison Square Garden (double sic) as potential franchise holders.

The third big issue comes to us courtesy of The New York Daily News.  The Governor has apparently decided that Aqueduct is a “waste”  –  which to the Governor’s mind means property that could be transferred to real estate developers.  Robert Megna, who attended the meeting with the editorial board, stated that Skorton and Kay are studying the possibility of closing Aqueduct “very closely.”

So, there you have it.  As a frequent examiner of past performances, when the Governor says something, the only response one can expect from his appointees is “Yes, Sir!”  We thus have the uncomfortable scenario in which three people who know nothing about racing or the breeding industry are on a path to make decisions profoundly affecting both.  And, it is clear they intend to make those decisions in secret to the extent they can get away with it.  Skorton already said as much at the August Board meeting on the subject of the VLT revenues.

It is not as though there are not plenty of talented people with a wealth of knowledge and experience who deserve to be part of these discussions.  They can be found on back stretches, farms, industry organizations or working for NYRA.  Each of these issues is significant and complex and would benefit for a full and open airing.  They don’t lend themselves to the sound bites of a Governor’s reelection campaign.