Thursday, June 30, 2011

Not Your Father’s Saratoga Press Briefing

SARATOGA SPRINGS, NY, June 29, 2011--I don’t normally feel sorry for executives who earn a half million dollars per year because their health insurance premiums cost $400 a month, especially when they are working at their dream job.

As anyone who works at their hobby already knows, just because you like what you’re doing doesn’t mean it’s not hard work. And when you’re the face of the New York Racing Association, expected to man up every time something goes awry, there’s nothing glamorous or easy about it.

Even before admitting “I made a mistake,” it wasn’t difficult to have empathy for NYRA President Charlie Hayward at the press briefing annually conducted on the last Monday of the month preceding the opening of the Saratoga racing season.

The normally glib Hayward was anything but this week, his tone measured, deliberate. This year’s welcome to the Saratoga racing season wouldn’t be business as usual. Even the usually benevolent local media were fresh out of softballs when the Q and A session began.

Hayward’s opening remarks were upbeat as he noted the positive momentum in NYRA’s recent fiscal fortunes: All sources handle on the Belmont Stakes was up 10 percent, the only Triple Crown track to experience any growth this year.

Then came an announcement that the 15 percent increase in net revenue was attributable to improved business spurred by the closure of New York City OTB.

That, coupled with the advent of its new “off track” facility, the Belmont Café on the grounds of Belmont Park, with projected handle of $75 million would make the facility the largest “OTB” in the state.

And finally how, after acquiring public access Channel 71 in the wake of NYC-OTB’s closure and creating the new “NYRA Television Network,” the volume of its phone business increased nearly 500 percent as 10,000 new accounts were opened while live attendance increased 53%.

But then, in words penned by the author of a New York State of Mind, Billy Joel, a summer in Highland Falls, or Saratoga for that matter, will be always what our situations hand us; either sadness or euphoria.

And so it turned out that NYRA failed to make timely provisions to deal with the increased volume, necessitating a quick fix via a collaboration with, Churchill Downs’ advance deposit wagering company in Oregon.

[Correction made July 1]***While the State Racing & Wagering Board eventually and reluctantly gave its approval to the TwinSpires deal, the refusal to divulge proposed salary increases for its top management was part of an inadequate accounting of why the company would lose $11 million this year.

The final straw for the state was Hayward’s failure to show before the Franchise Oversight Board, NYRA’s Chief Counsel and CFO appearing instead. Whether the omission was deliberate or unavoidable, it wasn‘t well received. It wasn’t the kind of tone a new franchisee should set a month before it opens the world’s most visibly successful extended race meet.

And so came the public apology to Robert Megna, Gov. Andrew Cuomo’s Budget Director, and what seemed a gratuitous tip of the cap to the SRWB for allowing orphaned OTB bettors to instantly sign up and fund their new NYRA Rewards accounts, and for permitting the video streaming of all tracks throughout the state. The public mending of fences had begun.

In a letter to the FOB chairman on the Friday prior to the press conference, Hayward disclosed the salaries of its executives and promised to cooperate with the board on a long term financial plan.

Shortly thereafter, Hayward then threw himself on the mercy of the court of public opinion by refusing to reveal the salaries publicly, saying the FOB was free to do so if it wished.

He also invited interested parties to watch a four-hour video of the meeting on the Division of Budget website or read the 41-page report which NYRA’s Media Director would make available; all you had to do was ask.

But then Hayward made some good points of his own, the NYRA President explaining how the association pays the highest parimutuel tax in the country to the state, twice that of runnerup California.

The seminar continued as attendees learned that NYRA’s reconstituted Board of Directors has 11 new members appointed by the state’s political leaders and how that Board approved the unpopular 2010 salary increases by a margin of 24-1 before noting that the same Board unanimously approved the 2011 budget.

Hayward was also correct to indicate that a sizable portion of last year’s $17.2 million operating losses was the result of NYC-OTB going out of business before it could pay the NYRA any of the $28 million it owed the association.

But there wasn’t much sympathy to be gleaned there since the NYRA has itself been forgiven hundreds of millions in state indebtedness at various intervals since its inception in 1955.

Hayward certainly earned his considerable salary on Monday and showed a measure of contriteness in the process. Hopefully, he and his organization has learned something from all this. The two sides will either learn to swim together or sink separately. Good faith is a two-way street.

Written by John Pricci

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