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.
Tom, excuse me while I take a contrary position here. Operations are usually what it takes to run the operations. I believe many companies report this number and leave other costs off this book.
Nevertheless, for however it is reported, it is important that Kay and Skorton have chosen to strive for profitability at some level. There appears to be little interest in it in horseracing as long as subsidies are abound. Maybe, this is the real blinking at reality.
The conversation between Violette and Flay probably held more significance than the rest of the meeting. Also, I saw an exchange between Steve Zorn and Joe Drape on Twitter that was similar. In the end, it indicates to me that the horsepeople do not want to enter into a discussion that takes into accounts the main issue of horseracing. That is how does the game become profitable. Also, how does the game satisfy the needs of the horseplayers.
Skorton has left and Kay will too, but horseracing’s problems will remain unless the stakeholders focus on these issues.
Let’s not forget how Kay has gutted the number of employees to the point that you cannot even find a Security guard when one is needed because of the low numbers a fact that didn’t escape the view of the public during the Belmont Day races. The fact that the Board is thinking of naming Kay to their group is a little scary also.
Tom as always a very good and informative report on NY Racing. Thanks for keeping us informed.—Joe
Tom – what’s your take on this: Skorton is (soon to be ‘was’) President of Cornell University and Chairman of the NYRA Board who then appointed Kotlikoff – Dean of Vet School at Cornell (also advising the Board) to oversee NYGC Racehorse Necropsy Program (conduct necropsies on all racehorses who die on NY tracks and issue reports as part of Task Force In initiatives) being conducted by the vet school (Department of Pathology) and by all accounts a monumental mess of unspeakable proportions…….is the conflict of interest here not apparent to anyone else? Scott Palmer (NYRAs Equine Medical Director & Adjunct Professor at Cornell) is also suspiciously aligned with Big Red. Maybe the NY times would be best heading to Ithaca to ask for some answers from the ‘honourable’ and ‘august’ institution – Cornell. NYRA has many bedfellows, mostly white men of position and power……..based in Ithaca NY.
I may have a conflict as well, having had a horse treated at Cornell. To my knowledge, it is a well-respected veterinary hospital.