Tuesday, December 04, 2007

Saratoga Racetrack needs some holiday cheer to save it.

The New York Racing Association (NYRA) franchise expires on December 31, leaving the future of racing in this state teetering on several issues. Since 1955 NYRA has held the franchise governing race track operations at New York’s three major Thoroughbred racetracks. It was then that the State Racing Commission authorized them to acquire the assets from four separate racing organizations operating under the auspices of The Greater New York Association, Inc., who then operated Belmont, Jamaica, Saratoga and Aqueduct racetracks. NYRA paid $20 million for the properties. In 1959 NYRA closed Jamaica and sold that property.
There have been several extensions of the franchise since ’55; the latest, a 7-year extension installed during the Pataki administration. It is that legislation which is expiring on December 31.
New York legislators do not appear to have mapped out a future for racing or defined its marriage with gaming. No one seems informed of what is in the works and without a contract New York racing will shut down. This would have devastating effects to the racing industry and all of its ancillary businesses. This is an emergency situation.
Today, with Video Lottery Terminals shining brightly on the horizon, other management entities are champing at the bit to displace a financially troubled NYRA and pull milk from this new breed. The new players profess they will steward racing, but you have to wonder if they truly recognize the budget left for racing, after the pie is sliced.
Every informed person knows there are some blemishes on the underbelly of racing. It is impossible to believe that multi-billions of dollars could pass through any gambling environment without occasional circumstances enabling some of it to stick in wrong places.
It would be an act of futility to hold today’s NYRA responsible for things that occurred through earlier management regimes. It is the right time to correct the problems which have paved the road to NYRA’s bankrupt condition. A revamping of the distribution of monies derived from gambling is in order. NYRA’s operating expenses and administrative costs should be closely scrutinized and necessary adjustments made. Precious time is slipping away.
On November 28th, The U.S. Bankruptcy Court approved NYRA’s disclosure statement, detailing its bankruptcy reorganization plan. On December 21st NYRA’s creditors will have the opportunity to vote on this plan and on December 27th a confirmation hearing will take place in which the Court may approve NYRA’s reorganization and thus end its bankruptcy. At best, this leaves us with a crippled NYRA and we would at this point be 4 days from shutting down racing.
Meanwhile House Majority Leader, Joseph L. Bruno wants to see the creation of a public entity called the New York State Racing, Gaming and Equine Sports Development Corp. He is recommending an 11-person board, named by the state legislators to select operators to run racing, gaming, marketing, and real estate development as separate entities. Bruno wants VLT’s implemented at Belmont which is not a proposal popularly received within the racing industry. Bruno has a vision of Excelsior Racing Associates, Empire Racing Associates, and Capital Play, Inc competing with NYRA for different facets of the franchise. This all looks good for Joe Bruno and company but it promises little to the future of racing.
Capital Play, Inc. is running a mud-slinging campaign; airing ads in Saratoga Springs, Albany and New York City. Their attacks on NYRA are scathing, and as Charles Hayward, President and CEO of NYRA retorted: "It’s so inflammatory and incorrect, it doesn’t merit a response". It is distasteful and unnecessary for them to stoop to such tactics.
Excelsior Racing Association and Empire Racing Association are both start up organizations headed by leaders from other facets of racing. It would be a real stretch to think there is a safe bet among the NYRA competitors, and even if the three firms challenging to replace NYRA were experienced and well-intentioned; it would remain a very risky bet that they could grasp the intricacies of this mammoth operation quickly enough to keep it running smoothly.
NYRA has approximately 300 million in debts. It owes the state 125 million, is behind 95 million in its pension funds and owes private creditors about 75 million. Governor Eliot Spitzer has proposed keeping NYRA in place for 30 more years, forgive them their debt, and have a separate firm run Aqueduct’s proposed racino. In turn NYRA would relinquish its ownership claim for the racetracks, which are valued at more than a billion.
This purports to be a solution unfavorable in the long term of both racing and for the well-being of the areas surrounding the tracks. An ardent effort should be put toward a less egregious solution.
NYRA’s accumulated tax indebtedness is very possibly a result from many years worth of unfair take-out and miscalculations of taxable earning by the IRS. The IRS is charging NYRA with taxes on its gross income, which equates to 1.6 billion in back taxes. This is absurd. If they don’t balk here, we may all be destined to being led into bankruptcy by the forelock. Government has to play by rules too.
It is a difficult puzzle to solve and before attempting to move any of the pieces an overview of the history of NYRA and the future of racing needs to be considered.
In ’71, Off-Track Betting was installed to destroy "ugly bookmakers". NYRA fumbled that contract by poorly handicapping OTB’s ability to steal away patronage. Thirty-six years later, that fumble looms larger than ever. Attendance at live-racing has steadily decreased and the accumulated damage OTB brought to the bottom line is incalculable. During this period added competition has come from phone and Internet wagering.
The race tracks are guilty of driving away patrons through their lack of hospitality. They have attempted to reduce the sting of lower attendance by charging those that come more. Parking fees have steadily increased and the punishment keeps on, right through the admissions gates, to the price of a program, a seat and a hot dog. A trainer’s wife or jockey’s wife cannot go to the races in New York without paying admission. It’s amazing that they have not raised the price of a $2 wager. No wonder the casual fan or a guy just wanting to buy a daily-double ticket stops by OTB. Fan development has to part of the formula.
But whoa, now Mayor Bloomberg wants New York City to sever ties with OTB. This action could force 73 New York City OTB outlets to close. These betting parlors are unattractive to the Mayor and he is unwilling to give them the help they will require to stay in business. "I have always had reservations about city government being involved in gambling" says the Mayor.
NYRA’s contract with The Off-Track Betting Corp. is flawed, but nonetheless, it does pay revenue to the organization. The long-lost patrons are not likely to return through the gates at the tracks; their habits have changed and there is ever-increasing competition for the gambling dollar. New York City OTB’s paid the racing industry approximately $98 million last year of which NYRA received 54 million. Anyone operating the franchise would be ill-equipped to make do without this revenue.
NYRA has delivered block-buster after block-buster to Saratoga, worthy performances at Belmont and at Aqueduct they nourish the supporting cast. They have proven what new recruits have not, that they are capable of putting on the show. With racing across the nation struggling to be profitable it would be risky to displace management possessing this ability.
The pie is only so big and can only serve so many. Self-preservation is our most basic instinct and Charles Hayward has selected to keep NYRA alive at the expense of paying taxes and satisfying all of its creditors. Their debt reflects the dire need to restructure New York racing and the immediate necessity of properly incorporating VLT’s into downstate racing.
Presently, Senator Bruno is gently stroking the forehead of this nervous industry, assuring its participants that racing’s bugle will be heard into the future. It’s a pretty good bet that he is right. There is too much money involved to think that racing should be interrupted, but the political strife between Governor Spitzer and Bruno is creating obstacles. They are making political hay while one of New York’s most important industries is at peril.
An unjustly treated industry cannot continue to feed government coffers anymore than a lame horse can be repeatedly led to the post. NYRA has paid more than $3.069 billion in direct tax revenue since its 1955 inception and not a nickel of this has resulted from VLT’s. Municipalities will be adversely affected if real estate deals cause shifts in the tax base. We could be in for an ugly break-down.
Any interruption or reduction in New York racing will adversely impact the quality of life, even for those people who will never own, bet on a racehorse, or frankly "give a damn" about horseracing. The foot-print of racing feeds thousands outside the industry in ways that may be veiled but are nonetheless real. For those in the industry, it truly is a run for their life situation.
The horsemen at Aqueduct are acutely worried and rightly so. Aqueduct has never been a "Saratoga" and to think trainers may be stuck there without racing is a real nightmare.
Finally, when global warming has made racing in the northeast tolerable the environment for racing at Aqueduct is so uncertain that many trainers have fled south.
There were a record number of requests for stall space at The Fairgrounds in New Orleans, Philadelphia Park is maxed out and there are no stalls available at Delaware Park, even though that racing season has ended. Laurel is full, as are the stables at Pimlico and Bowie. There are no barns available at the Fair Hill Training Center.
In the past year, the climate in New York racing has prompted as many as 1000 broodmares to ship to states where brighter forecasts are on the horizon. Be prepared for more adverse consequences if racing continues to be ridden into the ground.
The future of 400 breeding farms in New York, and that of numerous ancillary industries are in a quaking mode. The racing industry provides 40,000 jobs across the state. Horses provide opportunities to connect with nature. They require acres to run and develop, and to retire to when their racing careers are over. Race tracks, training tracks and their stabling areas preserve open-space in some of our most densely populated areas. Growing hay, grain and bedding is a green industry itself, and even horse manure serves an end purpose. With racing or even the amount of racing at risk, valuable real estate becomes in danger of being developed and more open-space could disappear. And that’s just the tip of the iceberg!
VLT’s are easier to handle than horses; their return per square-foot of real estate is higher than is that from racing, and their ability to be calibrated to insure profit is very enticing. But, they have a flaw; they are not horse enough to pull the burden of New York State’s tax appetite alone.
It is good to know that horses are not obsolete and that the wonderful tradition of horseracing does have a place in a world dominated by technology, but poorly executed strategies could allow for VLT’s to gain undesirable advantages. Like lost patrons, horses once relocated are not likely to return.
Racing is a tax revenue producing machine, but it requires expansive real estate to stage it. Aqueduct Race Course occupies 192 acres in South Ozone Park, Queens. Belmont Park is made up of 430 acres in Elmont, NY and Saratoga Race Course with its additional Oklahoma track sits on 350 acres in the heart of Saratoga Springs. Knowing the value of real estate and the immediate return its sale could generate causes concern for Bruno’s plan of creating an entity exclusive to real estate development. The silence of political planning is deafening.
It has to be considered that legislators may use management issues as decoys to lure our attention from their real agenda. The ownership and control of the real estate looms a larger issue than who writes the races or who operates the VLT’s. It has become a no holds barred wrestling match and just because we are not seeing the moves does not mean they are not taking place.
The NYRA/OTB/VLT trifecta is a multi billion dollar bet. If we are so naïve as to think that the only dogs on the scent have only the stewardship of lovely Saratoga or the preservation of the great history and tradition of horseracing on their minds; we could be in for a rude awakening.
Spurs need to be put to Governor Eliot Spitzer, state Assembly Speaker, Sheldon Silver and Senate Majority Leader Joseph L. Bruno. It is time for them to put political agendas aside, pick up the reins and place this industry in position to win. They need to address the VLT issue and place it appropriately. We bet on them to lead us, but it was not on the ballot that we should be forced to follow them if they jump the rails.
It is post time for the public to make their collective voice heard or we can prepare to say "Dubai" to the best racing in the world.

Marilyn Lane, a free-lance writer has a lifelong association with horses. Her experience includes more than 20 years as an owner, trainer and breeder o fThoroughbreds. She was an assistant trainer for Hall of Fame trainer, Jack Van Berg during Alysheba’s racing career.

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