As the Saratoga season gets underway, the Cuomo Administration continues to catch heat for not allowing NYRA to once again, become private. After years of corruption, inflated salaries and perks to executives and other shenanigans, the state stepped in 2012 and took control of the New York Racing Association. They pulled the plug on excessive salaries and bonuses and tried to make the NYRA more accountable. The public had had enough and so too, did the state.
And, guess what? For the most part it has worked. The NYRA has done a better job. Rather than pay the CEO millions, Chris Kay’s salary was set at $300,000. In 2015, he received a $250,000 bonus, and that didn’t go over well with people who follow both the NYRA and state politics. Imagine if Kay wasn’t under state watch? How much would his bonus have been? How much would his base salary be? Definitely more than $300,000, that is for sure.
Since 2012, racing has improved and New York remains the most lucrative circuit in the country. The Saratoga meet has 69 stakes races with a total purse of nearly $19 million. Del Mar, the other summer place to be won’t touch that number. Kay, love him or hate him and his testy personality has added stability to an organization that was rife of misdeeds and mistakes. The NYRA brought in Martin Panza as racing secretary and he has enhanced New York racing. Belmont Stakes week features plenty of top quality stakes action as does the Stars and Stripes Racing Festival. Panza has tried to create a big-time atmosphere with special events on the calendar. Only Breeder’s Cup Saturday offers more big-time races than Belmont Stakes day.
The state said in 2012 that they would have control for three years, and recently they denied the NYRA’s request for privatization until at the least, October 2017. That means the state will have control of the NYRA for over five years and many are saying, “enough is enough.”
It’s funny; in 2012, many were upset at the graft and corruption that faced the NYRA and were calling on the state to not only take control of New York racing, but to take control and sell it off. Three years later all seems to be forgiven and now the state looks like the bad guy with NYRA coming off as a victim. Do people forget that fast what was going on before the state took over?
So, why has the state been reluctant to allow the NYRA to go private? Simply, the NYRA is not ready. They need oversight, period.
NYRA claims that they are profitable and their accountants show black. The state, led by comptroller Tom DiNapoli claims that the only reason is because of revenue that the NYRA gets from VLT money. Both have a claim here. VLTs were established to help the horse racing industry and most of the VLTs are headquartered at harness tracks and thoroughbred tracks, so why shouldn’t those figures count towards NYRA profitability?
On the other hand, both the comptroller and the governor would like to see the NYRA be profitable without the aid of VLT money. The state’s ultimate goal would be to take away VLT monies from the horse racing industry altogether so they can use it for other purposes. I’m not sure that is fair, but that state has their agenda and so too does NYRA. I’m not sure why the NYRA can’t count VLT money in their reports, but this has turned into a classic chess match between two stubborn organizations who both want to be right all the time.
When the NYRA was private, it was a non-profit organization, which can be good and bad. With non-profit companies the bottom line has to be zero, so what would the NYRA do if they were making profits? Would they pour those profits back into racing, or would they bump up the salaries of the administrators like Kay, Panza and others? History suggests that they would take care of themselves with enhancements possible suffering.
Saratoga is the moneymaker for the NYRA. If things go to plan, the NYRA loses money at Aqueduct, breaks even at Belmont and makes a windfall at Saratoga. Knowing that, what would private NYRA do to make more money at Saratoga? They have increased admissions, they now charge for reserving picnic tables as well as securing a place at their sports bars. Sure, they have added better televisions and have made enhancements for the fans, but if they can squeeze the duck, they will squeeze the duck.
As a pure horse-racing fan, I fear that the purses for all races will decrease. The NYRA right now does a good job with the average daily purses. There are allowance races on a Wednesday with $77,000 and $85,000 purses. At other tracks, that would be designated as a stakes race. At Saratoga and Belmont, it isn’t. Would that continue under privatization? I doubt it because it doesn’t exist at places like Churchill Downs (owned by Churchill Downs Incorporated) and Gulfstream (owned by Stronach Racing).
There is nothing wrong with making profits—big profits. Look at Wal-Mart. They make huge profits, but they offer consumers value. Horse racing has to do the same. They want your money, but they have to do things to make it attractive. NYRA tracks are popular throughout North America, not just New York, and if purse money decreases, would handle decrease, too? Finger Lakes Race Track in Western New York offers live horse racing but with small and often paltry purses, it isn’t a place where bettors are dying to drop their money on. The NYRA tracks would never fall to that level, but even a couple hundred thousand dollars in overall handle will create problems for an industry that already deals with plenty of them.
If consumers don’t see value, they will look somewhere else and as always, they will find another place to spend their discretionary monies.
The concerns are genuine. Most agree that the state really shouldn’t be running businesses; that they should stick to governing. But, the NYRA does not have a stellar–excuse the pun–track record either. Right now, things are going decently, and if that’s the case, why change? Let’s be patient and give this more time. Let’s see another NYRA financial report in 2017. Let’s take the temperature at this time next year and reassess. There is no need to rush this without checking every aspect of every report. We’ve been down this road before, so patience must be the virtue.
Until next time.