Tom Noonan

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.