NYRA Reorganization Board

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Andrew Cuomo’s scam to keep control of racing

Posted by noonante on May 26, 2016
Posted in: Horse Racing, Political/Social commentary, Politics, Saratoga thoughts. Tagged: , , , , . 5 Comments

Just about four years to the day that news broke of Governor Andrew Cuomo’s seizing control of New York’s premier racing, word comes of his latest attempt to stay in charge.  According to a report in the Albany Times Union, the Concerned Citizens for Saratoga are reporting that Cuomo is circulating a plan to make permanent state government control of the tracks of the New York Racing Association.

In May, 2012, Cuomo reached an “agreement” with the privately-controlled NYRA following a campaign of threats, intimidation and false charges against NYRA board members and officers.  It called for the majority of a NYRA “Reorganization Board” to be appointed by state officials, including eight by Cuomo who would also name the Board Chair.  Only five of the 17-member Board would be private appointees.  The law required the new Board to submit a plan for NYRA to be “returned to private control, remaining in the form of a not-for-profit corporation” in 2015.  It was the only requirement of the Board, but NYRA did not do it, and the law was extended for another year.

We now have Cuomo’s idea of “private control” according to the Concerned Citizens of Saratoga, a group affiliated with the Chamber of Commerce:

  • The Governor appoints five members of the 15-member Board;
  • Each of the legislative leaders appoints one;
  • Seven “private” members;
  • While not in the CCS statement, I have been told that the Cuomo plan calls for the 15th member and the Board Chair to be appointed by NYRA’s CEO;
  • The State’s Gaming Commission would be able to “manipulate NYRA’s budget and operations”;
  • Funds from the Video Lottery Terminals at Aqueduct would be “transferred” from NYRA.

So whatever else this is  –  other than yet another naked power grab by the Governor  –  it does not return control of the Saratoga, Belmont and Aqueduct race tracks to private control.  Seven of 15 members would be government-appointees, and an eighth  –  the Chair  –  would be appointed by someone hired by the current government appointees.  It’s beyond ludicrous to suggest that this is a return to private control.

The State Gaming Commission, while a reliable issuer of regulations and adjudicator of disciplinary matters, is not what one would call independent.  Of its seven members, five are to be appointed by the Governor.  And as uninformed as you may think the NYRA Reorganization Board is, the Gaming Commission has not demonstrated any familiarity with the day-to-day aspects of running race tracks.

Additionally, the proposal takes VLT money that supports racing and directs it to the state’s coffers.  As the statement from CCS points out, “New York State was given $1 billion in real estate at NYRA’s three tracks in return for the granting of a 25-year franchise agreement and a legislatively-approved revenue sharing formula from the VLT [sic] at Aqueduct.”

Should this occur, it would complete the trifecta of government actions this year that are harmful to the state’s racing and breeding operations.  The Gaming Commission awarded a casino license for a facility that will be only 29 miles from the Finger Lakes Racetrack.  There is a harness race track,  123 miles away, that will be getting “hold harmless” protection from the likely effect of “cannibalizing” gambling revenues from competing facilities.  Yet, the thoroughbred track, an integral part of New York’s breeding industry, gets no such protection and is facing dire consequences as a result.

Then we have the placement of an additional 1,000 VLT’s at Aqueduct for the benefit of an off-track betting facility on Long Island that will be competing with the other VLT’s that contribute a share of the wagers to support NYRA racing.  Now, admittedly I do not understand why an entity not running the costly enterprise of a racetrack, but only needs a building, computers and a bunch of patronage employees to take wagers on those tracks needs subsidies, but that appears to be unfortunate state of things in New York.

It’s no secret that the Governor does not like racing.  That’s fine, no one has to.  It doesn’t mean, however, he should be working to destroy it.  He is being aided in that effort, unwittingly I believe, by those who do not bring him to task for the obvious nonsense spouted over the years by the NYRA Board he controls.

The first bit of nonsense is that the “new” NYRA has brought the organization to a profitable status without consideration of the VLT revenues.  This “accomplishment” is the result of changing the concept of operational costs to exclude tax obligations and pension costs.  The VLT revenues go to meet those responsibilities and take enough off the books for NYRA to make its claim of profitability.

Then there is the NYRA Board’s plan to return the operation to private control.  At its April 12 meeting, they presented three options.  One was to retain the status quo, which even the Governor would not contend is privately-controlled.  One had no government appointees, the other had a total of four.  The so-called private appointees in each plan, however, were to be nominated by Cuomo’s appointees on one committee of the current Board and approved by another committee composed mostly of Cuomo loyalists.  These plans are described in more detail at this post.

Yet in the media, both mainstream and racing, the description of NYRA’s proposals were described uncritically as a return to private control.  The Concerned Citizens of Saratoga endorsed NYRA’s efforts because of this belief.  Having approved a plan in which all of the so-called “private” board members would be appointed by the Governor’s people, they face the rather delicate situation of describing the difference between that and a Cuomo proposal that would have him actually appoint three more people in addition to having his loyalists appoint the remainder.

The Senate Chair of the Racing Committee has also drafted legislation, but the most significant departure of that bill from Cuomo’s approach is that the New York Thoroughbred Horsemen’s Association and the New York Thoroughbred Breeders would each have a voting membership.  It is an improvement, but merely an incremental step in a bill as flawed as proposals from the Governor’s office.

If there is one thing that Andrew Cuomo is good at  –  I would even call him a genius  –  it’s manipulating the Legislature and, often, the media to get what he wants.  The NYRA reprivatization proposals, as bare bones as they were, had to first be approved by Cuomo.  So, once he gets approbation from the media and groups such as Concerned Citizens, he can now tinker with the plans to get what he really wants.  In this case, I think what he really wants are the VLT revenues.  He is hoping that gets lost in the fight over whether he has five actual appointees or two, when the reality is that he has almost all of them.  And the uncritical reporting of NYRA now operating at a profit further enhances his ability to grab VLT revenues needed by the tracks for his own purposes.

There is no one who will be covered in glory in this matter.  We have known for four years that there had to be a plan for reprivatization.  The Legislature did nothing.  The NYRA Board has been a useless appendage of the Governor’s office since its inception.  The media has been too accepting and the racing organizations have not put forward their own plans.

There are three components that a new NYRA board must have:  integrity, competence and independence.  The current NYRA Board has amply demonstrated that it lacks the last two attributes.  Any legislation that allows them to appoint the “private” members going forward means that we are destined to a continuing lack of competence and control by the Governor.

It doesn’t have to be that way.  There are ample examples of private groups screening appointees for public positions.  In some states, that is how judges are selected.  Cuomo himself demonstrated the utility of that approach when he named an independent panel of experts to examine the increase in fatalities at Aqueduct in early 2012.  The result of their work was a widely-acclaimed Report that has led to an impressive reduction in catastrophic racing fatalities in New York and that is a national model.  Indeed, I would argue that this Report is the most significant contribution the Cuomo Administration has made to horse racing.

There is no shortage of committed and knowledgeable people in racing who could come up with a list of qualified (and diverse) individuals who would similarly constitute a national model for how racing can be run.

The Governor’s plan and the proposal from the Senate merely perpetuates the current framewqrk, except now it would be on a permanent basis.  Indeed, of the proposals currently in play, the next NYRA Board could consist solely of members from the current Board except that CEO Chris Kay would become a member.  New York has an opportunity that is too valuable to waste.  It would actually be better if the current system were continued for another year rather than throwing that opportunity away.

NYRA farce continues Cuomo’s control of racing

Posted by noonante on April 13, 2016
Posted in: Horse Racing, Political/Social commentary, Politics. Tagged: , , , , . Leave a comment

The New York Racing Association’s Board of Directors approved a report on Tuesday with two proposals that would  –  according to them  –  return NYRA to private control.  Each of the proposals, however, would ensure that Governor Andrew Cuomo would retain control of the NYRA franchise for the foreseeable future.  And despite their self-serving rhetoric, either of the “new” Boards could very well consist of nothing but current Board members.

The Board, known as the Reorganization Board, was established by legislation in 2012 following the seizure of NYRA by the Governor.  The stated purpose was to have racing controlled by a government-appointed board of directors for three years and then “returned to private control, remaining in the form of a not-for-profit corporation.”  When they could not meet the legislative deadlines in 2015, the deadlines were extended for a year.

The NYRA report outlined three options.  The first two would create a 15-member board with NYRA’s CEO being a member.  Here is how the remaining members would be selected in each option:

Option 1:  Governor appoints two; Senate President and Assembly Speaker each appoint one;  ten members appointed by the Cuomo loyalists on the current Board.

Option 2:  Fourteen members appointed by the Cuomo loyalists on the Board.

Option 3:  Continuation of the current 17-member Board, with eight appointed by the Governor, two each by the Senate and Assembly, and five from the prior NYRA.

Under the first two proposals, the so-called “private” members would be recommended by the Board’s Nominations Committee and approved by the Executive Committee.  The Nominations Committee has five members, three appointed by the Governor and one appointed by the old NYRA.  The fifth Member is Michael Del Giudice who was appointed by the Assembly, but is such a close confidant of both Governor Cuomos that he has been quoted saying “Andrew is like a younger brother to me.”  The Executive Committee has six members: Del Giudice, three appointed by the Governor, one by the Senate and one by the old NYRA.  Of the 11 seats on both groups, there is only one on each that is not a government-appointee.  Andrew Cuomo controls eight of the seats.

There is perhaps a misperception that the current Board consists of actual government officials or employees.  In fact, of the more than 20 individuals who have served on the Board since its creation, only one, Bob Megna, was actually employed by the government.

The remaining members, except for the five NYRA-appointees, were all appointed by government leaders.  While this Board is widely-recognized as government-controlled, how can a Board appointed by the Governor’s loyalists not also be viewed as government-controlled?  Are there benighted souls out there who think that a Cuomo appointee is going to suddenly start acting independently?  If he does  –  and all his appointees are men  –  it will be his last act as a Cuomo-appointee. What we can expect, however, is that a Board appointed under this process will have many of the current members.

Michael Del Giudice, who serves as Chair of the entire Board, said that these three options to be presented to the Governor and the Legislature are the only ones.  Of course, they are not.  There are any number of options, so he must have meant that these are the only ones that perpetuate the Governor’s control.  I set forth a proposal in this post that would not only move towards real private control, but is based on a model that this Governor used when he addressed the crisis caused by fatalities at Aqueduct in early 2012.

Del Giudice made some revealing comments when he addressed a suggestion that the Board include as voting members, instead of their current ex officio status, representatives of the New York Thoroughbred Horsemen’s Association and the New York Thoroughbred Breeders. The former represents all owners and trainers who race in New York;  the latter those who breed New York-breds.

He summarily dismissed the comment by Rick Violette of NYTHA:  “We heard you.  We like it the way it is.”  In subsequent comments reported by David Grening in DRF.com, he added, “Expressing an opinion is one thing, but then voting their interests against NYRA interests potentially could create a conflict.”

That’s right.  One group that represents the trainers whose livelihood depends on a successful NYRA in addition to the owners who spend tens of millions  –  if not hundreds of millions  –  could somehow conflict with NYRA.  The same for the breeders who also expend tens of millions and contribute directly to New York’s farm economy.  Does Michael Del Giudice think people come to NYRA’s tracks to see him give away a trophy?

His statements are typical of the arrogance and ignorance we have come to expect from the Cuomo Administration’s control of New York racing.  “We like it the way it is.”  You will not find that sentiment often expressed on the backstretch or in the grandstand.

This is an opportunity for New York to take a major step forward in restoring it to a leadership position in the industry.  That will not be accomplished if the next NYRA Board is just more politics as usual.

Returning New York racing to private control – a proposal

Posted by noonante on March 30, 2016
Posted in: Horse Racing, Political/Social commentary, Politics. Tagged: , , , , . 1 Comment

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.

 

 

 

A year-end look at New York’s racing oversight agencies

Posted by noonante on December 23, 2015
Posted in: Horse Racing, Political/Social commentary, Politics, Saratoga thoughts. Tagged: , , , , , , . 3 Comments

In recent weeks, there have been meetings of the three New York government agencies that have responsibility for oversight of the state’s premier racing franchise run by the New York Racing Association.  It was a dispiriting and dismal look at groups who collectively  –  and individually  –  do nothing to warrant hope for the future of racing in this state.  This comes at a time when control of NYRA is due to revert to a not-for-profit entity instead of the current control by state government.

There is the NYRA Reorganization Board put in place in 2012 when Governor Andrew Cuomo seized control of the prior Board using phony claims of wrongdoing.  The Board is responsible for overseeing racing at the three NYRA tracks at Saratoga, Belmont and Aqueduct.

Then we have the Franchise Oversight Board that was established by law at a time when NYRA was experiencing financial problems.  Its purpose is to provide independent oversight of NYRA’s operations, including the Reorganization Board.

Finally, there is the Gaming Commission which has regulatory and adjudicatory authority over all forms of legal gambling in New York, including racing, casinos and the lottery.

NYRA Reorganization Board

The Board has been in existence for more than three years.  I have either attended or viewed a webcast of every meeting.  They are nothing more than a colossal waste of time in which the sole purpose appears to be to fill an hour.  This meeting did have a significant matter to present  –  the budget for 2016 as well as a review of this year’s financials.  That took less than ten minutes.

What was not raised at the meeting  –  and this a group that continually pats itself on the back for its transparency  –  is that the price of tickets for the Belmont Stakes are again going to be increased, according to David Grening of the Daily Racing Form.  CEO Chris Kay seems to think that Churchill Downs is a model for customer satisfaction and is moving in the direction of emulating the host of the Kentucky Derby.

There was also no mention of NYRA’s plan for reintroducing off-track betting to New York City, a matter that would seem to be crucial in growing the fan base.  This is a matter that has been on their agenda for the three years, and prior “plans” have called for getting wagering terminals into restaurants and bars.  Kay informed the Franchise Oversight Board two days earlier  –  but not the NYRA Board  – that he hoped to implement a plan whereby one could bet on their IPhone or tablet at a bar or restaurant.  So you just have to ask the bartender to turn one TV to an OTB channel and you are now an OTB.

There was one moment at the meeting that was downright surreal.  Acting Chairperson Michael Del Giudice described the awarding of the Triple Crown Trophy, and noted a comment by the Governor about how heavy it was.  There’s only one problem.  As reported by numerous news outlets, the Governor’s excuse for missing this year’s Belmont Stakes was the need to go to Dannemora to take charge of the effort to catch two escaped murderers.  Now it is perhaps a small step for an organization that will inflate actual attendance by up to 8,000 people who did not show to add one more.  But recounting a conversation that could not have taken place is another matter.

Franchise Oversight Board

The make-up of the NYRA Board was raised as a concern by James Towne, a member of the FOB, at its most recent meeting.  Towne was questioning the qualifications of Georgeanna Lussier, the most recent appointee to the NYRA Board.  He seemingly disparaged her as a “political appointee,” even though 12 of the 17 positions on the NYRA Board are appointed by the Governor (8) and the Assembly Speaker and Senate President (2 each).  Towne himself is a political appointee, as is each member of the FOB.  Perhaps he thinks that when one is appointed by the Governor that it is more akin to an ordination than a shabby political act.

It is interesting that Towne selected for criticism the only woman on a board otherwise consisting of older white men.  The FOB itself has one woman member of its five;  the seven-member Gaming Commission  –  each of whom is a poltical appointee  –  has none.  Now, Lussier is not immune from criticism because of her gender.  But no one who sits through any meeting of the NYRA Board could conclude that she is somehow dragging down the performance of the Board  –  which is non-existent.

Towne’s concerns about the composition of the Board might have more credibility if he did not single out one of the Assembly Speaker’s two appointees, and instead asked why his patron the Governor has yet to replace the prior Board Chairman who announced his departure 18 months ago.  Or, perhaps question the status of another Cuomo appointee who recently testified in the Dean Skelos trial under a non-prosecution agreement.

Towne also questioned the schedule of Saratoga’s training track.  Under the performance goals set by the FOB for NYRA, the facility must be open “from at least April 15 through November 1 of each year.”  Glen Kozak, NYRA’s Vice-President of Facilities observed that less than ten horses used the track in early October, and assured Towne that NYRA would be proposing a reduced schedule.  Two days later at the meeting of the NYRA Board, Georgeanna Lussier asked Kay about this.  Kay  –  who sat opposite Kozak at the FOB meeting  –  lamented the misinformation that had folks wondering if the track would be closing in early September.  He raised the number of horses to “two dozen in stalls” by the end of October, and seemed to assure Lussier there was little to worry about.

Another issue that came up at the FOB but not at the NYRA Board is Kay’s intention to spend $250,000 to expand what he calls the Walk of Fame at Saratoga, but in reality is little more than a tribute to himself.  It is a project that required the removal of trees from the backyard, was not wanted by anyone, and is not used.

Gaming Commission

I wrote at length about the Gaming Commission’s response to allegations by the People for the Ethical Treatment of Animals against Steve Asmussen and his staff at Churchill Downs and Saratoga in 2013 in this post.  Asmussen is a multiple violator of drug regulations and was determined by the Commission to have committed 58 additional violations during the 40-day Saratoga meet.  The Commission levied a fine of $10,000 even though the report by the Commission’s staff concluded that the minimum fine for such violations would have been $29,000.

At Monday’s meeting of the Commission, members said they needed more time to digest the staff report.  It’s not clear why they sought a delay.  Asmussen was fined  –  with no involvement by the Commission members  –  and draft regulations to correct issues identified by the staff have already been circulated for comment.

It is not unlike what the Commission has done on the issue of Lasix use.  The Commission  –  to its credit  –  convened a day-long forum on Lasix during the Saratoga meet.  While more heat than light was shed on the subject, the sole concern expressed by Commission members coming out of that had to do with the cost of administering the drug.  Not with whether race-day administration is beneficial to the horses or harmful to the industry’s reputation, but how much money was spent as if this is an economic development issue.

Conclusion

What is particularly disturbing about the ineffectual oversight evidenced by all three of these government agencies is that a new model for control of NYRA is to be presented by April, with a change to the new structure in October. We now have a situation where the NYRA CEO says one thing to an oversight body on important matters but not to his own Board. Sometimes what is said is contradictory at meetings just two days apart.

Even worse, however, is the passive approach taken by the Acting Chair of NYRA’s Board, Michael Del Giudice.  At the December 9 meeting, he informed the Board that the decision on a new structure would be decided by the Governor and the Legislature, and added NYRA “will give our input or recommendations if they want it.”

Of course, the final structure will be decided by the Legislature and Governor since they are the only ones able to enact laws.  But the sole responsibility given to NYRA in the 2012 Reorganization law was to present a plan by April, 2015 to restore a not-for-profit organization for implementation by October, 2015.  NYRA did nothing, and the law was extended for another year.

While we would like to think that those most knowledgeable about the industry would have a major say in what should happen, it is clear that none of the government agencies have that knowledge, and there is no indication that those with valuable insights and perspectives will be given the opportunity.

 

Audit slams NYRA mismanagement

Posted by noonante on October 19, 2015
Posted in: Horse Racing, Political/Social commentary, Politics. Tagged: , , , , , , . Leave a comment

Thomas DiNapoli, New York State’s Comptroller, sharply criticized the management of the New York Racing Association for its failure to plan capital expenditures.  The findings are not surprising to anyone who has observed the government-controlled agency in action, but is yet another disturbing red flag for the future of racing in New York.

Under New York law, the operator of the racino at Aqueduct pays a share of its net revenues to NYRA:  a defined percentage is for capital expenditures, another for purses and a third for operating expenses.  The audit examined what NYRA does with the money for capital expenditures.

DiNapoli concluded  –  unremarkably one would think  – that “[s]ound business practices include both long-term and short-term capital project planning,” but “NYRA’s planning was weak.”  Particularly disturbing is that the Comptroller’s office cited NYRA for similar deficiencies in 2007, shortly before NYRA filed for bankruptcy.

While NYRA did submit capital plans to its Board of Directors, the documents were apparently not worth the paper they were printed on.  DiNapoli’s office found that over $7 million was spent on projects that were not included on the submitted plans, and another 114 projects that were on the lists were not initiated during the audit period.

As an example of the lack of planning, DiNapoli cited the Longshots simulcast facility and sports bar that was built at Aqueduct.  Genting, the racino operator, was committed to paying $5 million with NYRA being on the hook for anything over that amount.  In large part because of change orders, the cost spiraled to $9.4 million.  According to the report:

“The three largest change orders, exceeding $1 million, related to the installation of audiovisual equipment and HVAC-related work.  Because these items were basic to an indoor simulcast center, we question how and why they were overlooked to such an extent in the original planning and design of Longshots.”

That fiasco  –  the project was also delayed by two years  –  is typical of NYRA’s “management” of capital projects.  The DiNapoli audit also faulted NYRA for not adhering to basic components of any capital plan:  “its annual plans lacked pertinent details regarding the projects to be financed, such as completion dates, and support for their associated costs.”

In addition, DiNapoli faulted NYRA for using funds intended for capital projects on routine maintenance.  That allows NYRA to maintain its well-publicized fiction that it is now operating in the black without consideration of VLT revenues.  Of course, when VLT revenues for capital projects are reducing the need to rely on operating revenues, it becomes the NYRA version of three-card monte.

NYRA responded to the audit by denying any deficiencies in its planning, while not disputing any of the factual conclusions in the audit.  As they are wont to do when criticized, they blamed others for any issues.  Genting was to be blamed for Longshots because they were in charge of the project, ignoring that when you are exposed for what turned out to be almost half the costs, a responsible manager would intervene.  The state’s Franchise Oversight Board  –  a group like the NYRA Board composed largely of Cuomo appointees  –  was identified as having approved the plans NYRA submitted.

NYRA also cited what it has done for long-term capital planning.  It appointed a Long-Term Planning Committee at one of its first Reorganization Board meetings almost three years ago. To the best of my knowledge  –  and I have attended or observed every Board meeting  –  this Committee has never done anything, other than recommending an $800,000 consultant to advise it on long-term planning.

NYRA further said it “has been, and is currently, engaged in significant long-term planning for Saratoga.”  They are referring to a comprehensive plan for the track prepared by Turnberry Consulting, and available on its web site.  One of the most significant changes recommended by the report is eliminating the parking inside the fence along Union Avenue, and replacing it with an expanded area for picnic tables and an amphitheater.  At a Saratoga preview held at the Museum of Racing  –  across the street from the site of the parking area  –  NYRA’s CEO and President Chris Kay had no idea that this was being proposed.  So much for NYRA’s “engagement.”

It would be one thing if this the lack of capital planning was an aberration  –  and, of course, not identified as a deficiency eight years earlier prior to a bankruptcy filing  –  but NYRA’s inability to plan is a major problem. The 2014 Belmont Stakes was not a fiasco because of the unexpected, but because of a lackadaisical approach to even the most rudimentary planning.  The NYRA Board has been talking about restoring off-track betting to  New York City for the three years of its existence, yet nothing has happened.

There is one area, however, that is the most troubling.  The one thing that the NYRA Reorganization Board was required to do in the legislation written by the Cuomo Administration was to come up with a plan to return New York’s premier racing to a not-for-profit entity instead of a government-controlled one in April of this year.  It is the only thing they were required to do.  The transition was to happen this month.  They did not do it, and the budget for this fiscal year extended both deadlines for a year.

If this persistent, demonstrated incompetence is not enough to cause you concern, ponder this.  A proposal drafted by NYRA’s General Counsel and presented to the Board last November called for the current Board to appoint the new one under a reorganization plan.  That’s right, the idea to get the government out of running New York’s racing was to have the government appointees select their successor.  What could go wrong with that idea?

 

 

 

Final thoughts from the Spa

Posted by noonante on September 15, 2015
Posted in: Horse Racing, Political/Social commentary, Politics, Saratoga thoughts. Tagged: , , , , , , . Leave a comment

The Saratoga experience is a unique one.  It’s only been a week since the meet ended, but it seems like a distant memory.  Yet, the first time I walk through the gates next year, it will be as though I never left.  Here are some final observations:

  • By most measures, a hugely successful meet.  The wagering handle was up significantly from last year, the weather was glorious, and there were many excellent races.  There were full fields and challenging cards.  The number of Pick 6 carryovers is a testament to the competitive nature of most days.  One troubling indicator, however, was the attendance over the last half of the meet.  While NYRA touted total attendance of more than a million, they could only arrive at that number by counting the thousands of season pass holders that did not show up on a given day.  They falsely inflated last year’s attendance in the same way, adding the number of unused season passes to each day’s turnstile count.  In 2014, there were a total of about 6,400 season passes sold;  this year there were about 8,400.  So when the NYRA announced attendance  –  again, not the actual attendance  –  was lower on most days than last year’s figure for the last 20 days, that should cause alarms to go off.  It may be for the rest of us, but probably not for those in the executive suite who believe their own nonsense.
  • Highlight of the meet:  For me, it wasn’t any race, but an experience.  I left my house an hour before American Pharoah’s scheduled gallop over the track, figuring I could park in my usual spot near the Nelson Avenue backstretch gate.  After going two blocks and seeing the streets packed with parked cars and throngs heading in the track’s direction, I gave that plan up, parking farther away than if I left the car in the driveway.  The reported attendance in the grandstand was about 15,000.  On the backstretch there were thousands more.  There were lines ten deep at the backstretch snack bar  –  longer lines than I saw at clubhouse betting windows on Travers day.  All this to watch a horse jog, then gallop, two times around the track.  While we sometimes forget what got us hooked on this game, it is obviously the horse.
  • Say what?  Perhaps the most interesting thing I heard on the backstretch several times was the idea that Anthony Bonomo would  –  or should  –  resume chairing the NYRA Reorganization Board.

Bonomo was the last Chair “recommended” by Governor Cuomo following the departure of David Skorton to head the Smithsonian.  Shortly after his election by the Board, Bonomo was apparently implicated in the federal indictment of former Senate leader Dean Skelos and his son Adam, and then decided to suspend his participation in Board activities.  I say “apparently” because Bonomo is neither charged with a crime, nor is he even mentioned by name in the indictment.

Even though he is not named, numerous reports have identified Bonomo, who is the head of a medical            malpractice insurer, as the entity identified in the indictment as having given Adam Skelos a no-show job in order to secure favorable legislative treatment benefitting the insurance company.  To my knowledge, Bonomo has never denied being the individual identified in the indictment, and he did leave his position in charge of a major governmental body that oversees racing at New York’s three big tracks.

Setting aside whether he would be a good pick as Chair, there are two significant problems with his returning if, indeed, he is the figure identified in the indictment.

The first is that even though he is neither charged in the indictment nor named in it, his alleged involvement is troubling.  One of the offenses with which the senior Skelos is charged is “soliciting a bribe” from the malpractice insurer.  The indictment alleges that a bribe was made by the insurer  – giving the son a no-show job in the hope of favorable legislative action.  The necessary corollary of that allegation, of course, is that the malpractice insurer bribed a prominent political figure.

The insurer not being charged with a crime seems to be consistent with the approach taken by United States Attorney Preet Bharara in both this case and the indictments against Skelos’ counterpart in the Assembly, now-former Speaker Sheldon Silver.  He is apparently not charging significant  –  and possibly culpable  –  figures in the hope of landing the big fish.  In the Skelos case, the Complaint providing the probable cause to arrest Dean and Adam Skelos alleges there are two “Cooperating Witnesses” who have entered non-prosecution agreements with the government in exchange for their continuing cooperation.  Obviously, one would need a non-prosecution agreement if there is potential criminal liability.  These witnesses are related to other allegations against the Skelos’ and not to those pertaining to the malpractice insurer.  The second indictment fleshed out the allegations relating to the malpractice insurer.  The level of detail strongly suggests that there are cooperating witnesses from the insurer, even though they are not identified as such.

I once again emphasize that Anthony Bonomo has neither been charged with a crime nor even identified in the Skelos indictment.  But if the resolution of that case concludes that he was indeed providing benefits in exchange for anticipated favors, it seems unlikely the Governor would allow him to resume as Chair.  It is perhaps the height of irony that Bonomo began serving on the NYRA Reorganization Board  –  created by the Governor purportedly to restore public trust  –  at the same time the indictment alleges that Adam Skelos began his no-show job with the malpractice insurer.

The other troubling aspect of Bonomo’s appointment are the reports that he was a substantial contributor to one Andrew Cuomo.  I realize there is nothing wrong with this in the sense of “legally wrong,” but is this the perception that an Administration that has touted its reform of racing  –  leaving aside whether there is any merit to that claim  –  wishes to pursue?

NYRA Board less diverse than GOP primary field

Posted by noonante on August 13, 2015
Posted in: Political/Social commentary, Politics. Tagged: , , . 1 Comment

The day before the New York Racing Association conducted “Fabulous Fillies” Day at Saratoga, it announced that yet another white male had been appointed to its Board of Directors.

In its almost three years of existence, the Board created by Governor Andrew Cuomo and legislative leaders has had 20 directors.  The Governor makes eight appointees, legislative leaders make four and the “old” NYRA makes five

The one woman appointed resigned.  The remaining 19 have all been white men.

Scenes from Saratoga

Posted by noonante on August 13, 2015
Posted in: Political/Social commentary, Politics, Saratoga thoughts. Tagged: , , . 4 Comments

Saratoga guests throng The Chris Kay Museum on Whitney Day

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On a day when NYRA announced attendance of 36,471, the people CEO Chris Kay likes to refer to as “guests” did not appear to appreciate Kay’s self-indulgent monument to himself.  The structure houses plaques and memorabilia for winners of the Saratoga Red Jacket  –  or, as Kay has said, the “prestigious Red Jacket.”  This is something Kay started two years ago to honor personalities whose accomplishments have been a major part of the Saratoga charm over the years, such as Allen Jerkens, Angel Cordero and Tom Durkin.  Another part of that charm, of course, are the tall trees that populate Saratoga’s backyard, providing shade and natural beauty.  Kay had six of those trees cut down to build his structure  –  something no one ever expressed a need for, and if these pictures are an indication, do not want.

 

Seriously?

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While the NYRA CEO can build a vanity project, he has yet to figure out how to repair an escalator that has been out of service for a year.  As anyone who has lived in an urban area or been to a shopping mall can attest, escalators do break down, but are repaired within days.  On Wednesday, the NYRA Board announced that Kay would receive a $250,000 bonus for the past year.

Isn’t it time for NYRA to end their false attendance silliness?

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This was the last seven sections of the grandstand on Wednesday when NYRA announced attendance of 23,780.  Last year it was revealed that NYRA was counting total season pass sales in the daily attendance whether or not the pass was used.  This meant that the figures announced for the entire 2014 meet were inflated by 179,345, by counting pass holders who did not actually attend.  On average, only 1  of every 6 pass holders actually go to a day’s races.  Since the number of season passes sold this year are some 2,000 greater than last year, this year’s figures are even more inflated than last year.  Also, I suspect that NYRA also counts the total number of reserved seats sold for each day even if the individual does not appear.  NYRA did not respond to my request for comment on this.

America’s Grandest Race Course

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This outhouse appears to be a permanent fixture of the Saratoga environment.  I assume it is there for the individuals who work in the tent when a race is being televised, but it was also there during the winter.  It must be a major attraction for those who live across the street, as well as those walking by on Nelson Avenue.

This NYRA can’t be trusted on track changes

Posted by noonante on June 29, 2015
Posted in: Horse Racing, Political/Social commentary, Politics, Saratoga thoughts. Tagged: , , , . 5 Comments

Monday is the deadline for commenting on the significant structural changes being proposed for Saratoga Race Course.  It has become clear that the current NYRA leadership, through a lethal combination of arrogance and obtuseness, cannot be trusted with the future of one of the nation’s most hallowed sporting venues.

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The deadline is occasioned by an environmental review process under a New York law known as SEQRA.  The NYRA web site has the complete description of the project that would make the following dramatic changes:

  • A permanent structure built on the other side of the horse path that runs next to the end of the current club house.  It would replace the tent and the temporary modular boxes that have been used in recent years.
  • A new picnic table area along Union Avenue, replacing the parking area now used by owners and trainers.
  • A “Top of the Stretch Club” to be built at the end of the grandstand, intended “to attract a younger crowd to the Race Course.”
  • Moving the jockey quarters from the administration building to the Paddock.

While there are a host of other changes  –  many of them necessary or desirable  –  these are the ones that would be most noticeable to the fan.

What is striking about the document called the Draft Generic Environmental Impact Statement  –  the SEQRA DGEIS, for those addicted to acronyms  –  is that it institutionalizes the separation of the well-off from the “commoner.”  Thus, the clubhouse extension would be a “high-end hospitality venue” with “higher-end amenities.”  Changes to the existing clubhouse would provide a “higher-end entertainment experience.”  Changes to the other end of the grandstand are designed to attract a “younger crowd to the Race Course by providing a more casual atmosphere.”  And, of course, the picnic table area is being moved farther away from the paddock, grandstand, horses, and those looking for that “high-end” experience.

This separation of the well-off from the unwashed masses is consistent with the philosophy of this NYRA Board, spearheaded by its leader CEO Chris Kay.  Last year’s modest admission and parking increases were controversial with the Board, although Kay ended up prevailing.  That paved the way this year for charging for the picnic tables near the paddock, as well as creating new areas in the Carousel for which NYRA is also charging a fee.

Kay and his “Chief Experience Officer” present these changes as a benefit to fans.  By paying to reserve a picnic table, you don’t have to wait for the gates to open and then race to secure a spot  –  a tradition that I never heard anyone complain about.  NYRA cancelled the Open House held on the Sunday before the meet begins.  It was a free event that drew thousands, including many families with young kids.  The Chief Experience Officer reportedly said that the local non-profits that benefited from this event complained that it was too much work for little gain.  I asked NYRA what non-profits had said they would not participate this year.  NYRA did not respond.

When Chris Kay announced his “Red Jacket” program that would honor Saratoga greats with a permanent plaque and, presumably, a red jacket, I thought it was hokey, but harmless.  It became not harmless, however, when Kay decided to cut down a half-dozen trees in the backyard to make way for the new structure now being built near the Carousel to house the “museum” for the red jacket recipients.

Since the DGEIS is intended as the blue print for changes to the Race Course, I went through it to see how Kay’s self-tribute was described.  It was not mentioned.  Even though the DGEIS identified certain “background projects” that did not have to be included  –  such as routine maintenance or repairs to existing projects  –  it did so anyway.  But Kay’s vanity project  –  kind of an over-sized Saratoga doll house  –  is neither listed as a new structure nor a routine event not subject to SEQRA.  I asked NYRA to explain this curious omission.  NYRA did not respond.

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What we have is a NYRA leadership that knows little about racing or the Saratoga experience that looks for every opportunity to gouge fans.  It has no accountability because of a Board of Directors that is impotent, and a communications strategy that simply ignores legitimate inquiries.  Chris Kay has referred to the red jacket program as a “new tradition.”  Because he thought of it, I guess that makes it more important than the traditions most people associate with Saratoga  –  the trees in the backyard, going to the paddock, interacting with the jockeys on their way to the paddock, the mingling of the rich and the “ordinary” fan, the morning rush to get a picnic table.

The NYRA “Reorganization” Board was intended as a temporary transition according to the law that created it and its author, Andrew Cuomo.  The law required them to propose changes that would restore New York’s premier racing to private control by April 18 of this year, with the new entity to assume control on October 18, 2015.  It was the sole responsibility of the new Board under the law.  They did nothing, and the law had to be extended for another year.  This is not a group that should be in charge of permanent changes to Saratoga.  One of the few actual things they have done in their almost three years of existence was approving a plaque honoring themselves.  They did it in their first months as a Board although I doubt anyone of them could actually identify a contribution they, as a Board, made to New York racing.

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At the last meeting of the Board, member Michael Dubb urged Kay to expedite the improvements to the dormitories used by stable help.  The dorms have been described as deplorable, and were one of the reasons used by Governor Cuomo to seize control of NYRA three years ago.

But Dubb would have been as productive baying at the moon.  The construction workers building Kay’s museum could, of course, have been working on the dorms.  But this leadership crew doesn’t care about backstretch workers or the fans.  They only care about self-aggrandizement and squeezing as much money as possible from New York’s racing fans.

Comments on the proposed changes in the DGEIS can be sent to carolyn.dunderdale@ogs.ny.gov

Can Saratoga tolerate any more NYRA “improvements?”

Posted by noonante on June 23, 2015
Posted in: Horse Racing, Political/Social commentary, Politics. Tagged: , , , , , . 6 Comments

The New York Racing Association held its annual pre-Saratoga press conference on Monday to highlight what it perceives to be the significant improvements it is bringing to this year’s meet.  The competition for what is the biggest outrage announced by CEO Chris Kay is expected to be intense.

  • Removing six large trees near the Carousel in order to build a museum.  The “museum” will house memorabilia of those honored as “Red Jacket” recipients, a Kay innovation supposedly to honor those who made a significant contribution to Saratoga, according to Mike Kane in TDN.com.  While one cannot criticize those selected  –  this year it is Mary Lou Whitney and Dinny Phipps  –  one suspects it is really a tribute to Chris Kay.
  • Eliminating the decades-long tradition of an open house, as well as the Wait Trials, on the Sunday before the meet opens.  It is an event that brought thousands to the track, many of whom were families with kids, and supported local non-profit organizations.  The kids got to wander around the track, go for pony rides, pet animals in a petting zoo, and eat all the junk kids love to eat at sporting venues.  According to Kay, he has a better idea  –  as he always does  –  of family fun days on Mondays.  Last year, this was a small area where dozens  –  not thousands  –  of kids could play in a bounce house and perhaps pet a pony.  NYRA’s other CEO  –  Chief Experience Officer Lynn LaRocca  –  said the event was a lot of work with little return for the non-profits, according to Teresa Genaro writing in BloodHorse.com.  In what appears to be a remarkable coincidence, it is also an event in which NYRA had not yet figured out a way to get its own taste.
  • Adding another 100 picnic tables in the backyard, in addition to the 100 added last year.  Oh, and NYRA will be charging for those 100  –  $40 on weekdays, $60 on weekends and $125 on Travers Day.  If you thought getting to the paddock was difficult last year, wait until you try to navigate among those who paid to be there.  The kids who loved getting an up-close look at horses?  They can come back on Monday’s family fun day.
  • Charging for tables in the lower level of the Carousel.  Kay is bringing “premium hospitality” to the area, removing the plastic rows of chairs to replace them with tables  –  for which, of course, you will have to pay:  $35 for a weekday table for four to $125 for a table of six on Travers Day.

I suppose none of this should come as a surprise  –  with the exception of removing six trees from an historic site that are as much a part of the Saratoga experience as enjoying a coffee at the rail in the morning.  CEO Kay revealed a great deal about his thinking in a piece in the Sunday Saratogian entitled “Numbers reflect a vibrant horse racing industry.”  According to Kay, Saratoga, “by all arguable metrics, is far more robust and sound today than at any time in recent memory.  This proposition is not based on opinion, but is rooted in fact.”  His facts are from “a recent independent economic impact study commissioned by the Saratoga County Industrial Development Agency.”

What numbers did he cite  –  attendance, handle, purse money?  Of course not, since those are “metrics” associated with horse racing.  His measure of vitality  –  and I am not making this up  –  are hotel room taxes.  In 2014, Saratoga Springs and County of Saratoga room occupancy taxes amounted to $536,475.  To put that number in perspective, it is less than the handle on a single race run at Belmont on Sunday.

In his Saratogian article, Kay points to the “remarkable progress in the past couple of years to strengthen our sport.”  That would be while Kay has been in charge.  But knowing his devotion to a proposition that is “not based on opinion, but is rooted in fact,” let’s return to what the Chairman of the IDA stated in his introduction to the report:

“Simply put, the VLT enhanced purse structure and breeders awards program has revitalized the industry and made the New York Breeding program the envy of the country.”

These would be the same VLT payments (Aqueduct’s Video Lottery Terminals) that NYRA tries to minimize in the interest of developing whatever accounting legerdemain they need to make the fatuous argument they operate at a profit.

The IDA Chairman further observed that NYRA “is mandated to submit a reorganization plan in 2015 which will hopefully return the operation of New York’s three primary racing facilities to the private sector.”  That plan was regularly cited by Chris Kay as one of his three primary goals last year.  It is also the only requirement of the 2012 legislation that established the NYRA reorganization Board.  Neither Kay nor the Board made any progress on this, and the law had to be extended for another year.

As a taxpayer, I am certainly grateful for the tax revenue provided by people staying in Saratoga hotels during racing season.  As a racing fan, breeder and owner, I am becoming increasingly concerned that this charlatan running New York’s premier racing is digging a big hole for the sport.

It’s not just cutting down the trees or eliminating events that Saratoga residents enjoy. It’s not just the failure to realize that getting families and kids to the track is a way of growing the sport.  It is that Kay clearly has no clue on what he is doing.  Yes, NYRA may bring in more money as a result of this year’s “improvements.”  But if the cost is racing’s seed corn, what have we gained other than a talking point for Chris Kay?