At the meeting of the New York Racing Association’s Reorganization Board on March 10, CEO Chris Kay announced that a proposal for returning NYRA to private control would be presented for the Board’s approval during the week of April 11. While government control of New York racing is supposed to end, the anticipated plan will continue to ensure that the racing franchise remains under the control of Andrew Cuomo.
When Governor Cuomo seized control of NYRA with a complicit legislature in 2012, the stated purpose was to have state government run the racing franchise for three years. Of the 17 members of the Reorganization Board, 12 were state government appointees. The Board was to present a plan by April, 2015, to return to private control by October, 2015. Even though this was the only specific responsibility assigned the Board, it did not do it, and new legislation extended both deadlines by a year.
NYRA’s General Counsel presented a proposed plan at a Board meeting in November, 2014. It can be viewed at NYRA’s web site here. The 29-page PowerPoint presentation could have been done on a single page of paper, and there are only two components of the plan that might be controversial. The first is a reduction in the size of the Board. The other is the method for selecting the new Board.
The prior NYRA Board had 25 members; the Reorganization Board has 17 slots, although only 15 are active because the Governor has not filled one of his vacancies and another of his appointees has been on a leave of absence.
The stated rationale for reducing the number of members is that a smaller board would be “small enough to be agile; large enough to represent multiple perspectives.” Lack of agility has not been an issue with this Board. Despite the myriad of significant issues confronting racing in general and New York in particular, they complete most of their meetings in less than an hour. There is rarely any discussion, and to the extent there are votes, they are on minor matters. Most of the votes taken by this Board since it began in December, 2012, have been the approval of minutes from the prior meeting.
Representation of multiple perspectives would indeed be a refreshing change. Since the initial Board was appointed more than 41 months ago, only two women have been appointed, one of whom resigned. There has never been a Latino/a member or a non-white member. It has been older white businessmen. Some have been owners and breeders; others have no background in racing. The organization representing horsemen does not have a vote, nor does the group representing New York’s breeders.
That brings us to the most troublesome aspect of the NYRA proposal – the method for selecting members of a new Board. The 2014 proposal called for new Board members “to be selected by the current Executive Committee of the Board upon recommendation of the Nominations Committee after consultation with all Board members.”
The Nominations Committee has five members: three appointed by the Governor, one by NYRA, and one by then-Speaker Sheldon Silver. The Silver appointee, Michael Del Giudice, has been a close confidant of the Cuomos going back to Mario Cuomo’s tenure as Governor. He also serves as the Chair of the Board since Cuomo’s nominee to be Chair, Anthony Bonomo, has been on a leave of absence since being a prominent figure in the federal corruption trial of then-Senate President Dean Skelos.
The Executive Committee has six members: three appointed by the Governor, one by Skelos, one by NYRA, and Del Guidice, serving as the Chair of this Committee.
There is only one member of each committee not appointed by a state government leader. Four of the five members of the Nomination Committee are effectively controlled by the Governor. Four of the six Executive Committee members are Cuomo loyalists. There is the possibility that these groups will simply name themselves or other members of the current Board to a new Board. The notion that NYRA will be returned to private control when all of the new Board will be appointed by the Governor’s hand-picked cronies is as farcical as it is ludicrous.
I think any fair-minded observer would agree that the three attributes most needed in a new NYRA are integrity, independence and competence.
New York’s residents have observed a lengthy and persistent strain of corruption among its elected officials. When both the Assembly Speaker and Senate President are convicted of corruption just months apart in 2015 – not to mention the myriad of other convictions of legislative figures – no New Yorker can be confident that decisions are based on merit and not political contributions or illicit money. And while the Governor has not been accused of illegal conduct, his most recent nominee to chair the NYRA Board, Anthony Bonomo, figured prominently in the federal corruption trial of Dean Skelos. Skelos was convicted of several crimes, including soliciting a bribe – successfully – from Bonomo, who has been a major political contributor to the Governor.
Independence is a prerequisite for any Board of Directors that takes its fiduciary obligations seriously. It is especially necessary in the hyper-political environment of New York. While Governor Cuomo’s micromanagement of the smallest details of state government is legendary, it is Michael Del Giudice who can give us the best perspective. He was quoted in Michael Shnayerson’s Cuomo biography, The Contender, discussing the prior NYRA: “Andrew is like a younger brother to me, but if there’s ever a moment when he can take political advantage, he’ll cut someone off at the knees, me or anyone else.” From someone who may play the most prominent role – if not the only role – in selecting a Board under the NYRA plan, it’s not exactly a comforting message for the tens of thousands who depend on New York racing for their livelihood, let alone racing fans.
As for competence, there is little this NYRA Board has done that suggests it is up to the task of leading New York racing in the 21st century. Its most recent Board meeting provided yet another disturbing example of how badly it is in over its head. The topic was federal legislation introduced in July, 2015, and co-sponsored by Congress Members Andy Barr and Paul Tonko, who represents Saratoga Springs. The legislation isn’t complex – it’s not a 2000-page bill overhauling the health care system. Its central feature is one that would create an anti-doping agency similar to one that exists for human athletes.
Even though regular readers of the racing media are familiar with this controversial legislation, it appeared to come as news to the NYRA Board members. One thought that it was a NYRA proposal and did not understand why the feds had not yet acted.
They ended up supporting the bill with almost no discussion – let alone an informed one – as a token gesture of support. They did so with an erroneous conclusion that New York could continue with its anti-doping efforts even though the legislation specifically states the new agency “shall have exclusive jurisdiction for anti-doping matters.” That’s right – one of the two most significant racing entities in the United States took eight months to get around to this bill, did not understand it and concluded they had little influence over it. (I no longer count Churchill Downs as a major racing organization since they appear to be primarily a casino company and only care about two days of racing each year.) If that is the level of involvement in a major issue in national racing, one can only be apprehensive about their commitment to coming up with a new structure for NYRA.
There is, however, an approach to selecting a new Board that will address the matters of integrity, independence and competence. And, it’s something New York tried the last time it sought to address a crisis in public confidence at NYRA.
Here is a proposed approach (all members have voting rights):
- Governor appoints three members;
- Senate President appoints one;
- Assembly Speaker appoints one;
- Comptroller or Attorney General appoints one;
- New York Thoroughbred Horsemen’s Association appoints one;
- New York Thoroughbred Breeders appoint one;
- Nine members appointed by Special Committee.
The Special Committee would be comprised of recognized industry leaders who have had hands-on experience in managing some aspect of the racing business.
There is a precedent for New York to address a crisis in racing by turning to a panel of recognized experts. In early 2012 when a rash of catastrophic breakdowns plagued the Aqueduct inner track, government officials and NYRA appointed the New York Task Force on Racehorse Health and Safety to investigate the causes and recommend improvements. The four members – Dr. Scott Palmer from New Jersey, Alan Foreman from Maryland, Dr. Mary Scollay from Kentucky, and retired jockey Jerry Bailey – produced a lengthy report. Their product was widely praised and could serve as a guide for tracks around the country in improving equine and human safety.
While the NYRA executives and the Reorganization Board may believe their press releases about the great job they are doing, it is not a sentiment shared in either the backstretch or the grandstand. The only way to restore confidence is to come up with a new Board that promotes integrity, independence and competence. Governor Cuomo knew that when he directed the head of NYRA in 2012 to “hire a qualified independent investigator or team of investigators” to review the circumstances of the Aqueduct fatalities. And it worked – I have never seen any criticism of the work done by the Task Force, and racing fatalities at the NYRA tracks have declined over the past four years.
The Special Committee envisioned by this proposal would consist of persons from within New York and outside. There is no shortage of respected, knowledgeable and committed figures who could serve on such a group. Indeed, the members of the Task Force serve as a useful starting point. The Committee can prepare a list of 15 nominees from which the current Board, voting in a secret ballot, can select nine of their successors.
Such an approach may not be perfect, but it would be insulation from a charge that “it’s just New York politics as usual.” It will maintain a level of involvement by New York’s government without ceding complete control to them. One reason the report by the Task Force on equine safety was accepted so readily was that the members had earned wide respect in the racing industry and were independent. While the NYRA Board members identified in the draft proposal to name new Board members may have their strengths, independence is not one of them.
It is important that New York get this right. There is too much at stake for this to be treated as just another exercise in political gamesmanship.
Tom, We need you now! After almost three years all we get from these appointees is we get a recommendation for the composition of the future board of directors? Am I missing something? Here are the things I had hoped the Board would have address during their tenure:
Marketability of the franchise Lease or sale of properties to interested entities determination of long term race dates Final determination of Aqueduct liquidation Meaningful capital improvement plan for facilities that includes or eliminates Aqueduct Plan for accommodation of large crowds on big race days (Belmont and Saratoga unacceptable) Takeout reduction alternatives ( at the lease a definitive study that quantifies impact to handle)
I know there is more but I am running out of time.
I have enjoyed your comments in the past. Very insightful and enlightening.
Thank you, Tom.