Thursday, December 16, 2010

Add to New York’s Troubles an Unnecessary, Mindless Distraction

SARATOGA SPRINGS, NY, December 15, 2010--With the year winding down and compilations of “the year in review” have begun to appear, one news organization dubbed 2010 “The Year of Hubris.”

So, why shouldn’t New York Racing Association executives join in on the party? However, before dancing on perception’s grave, there are other considerations that need addressing.

One of the biggest acknowledged reasons for New Your City Off-Track Betting’s failure is that in both perception and reality, the organization was a patronage haven for the politically connected. The weight of that bloat and inefficiency ultimately brought the company down.

Meanwhile, NYRA employee morale had reached its nadir in 2009 as it began addressing its own inefficiencies while it scrambled for money to keep its doors open and pay horsemen their purse money.

According to NYRA data, its unionized work force was trimmed by 160 jobs and when administrative employees are added to this total, by next year the NYRA will have seen its work force diminished by 262 workers, about 22 percent.

With 78% of the new workforce providing 100% of the labor needed to run what is still considered America’s #1 Thoroughbred circuit, a 3% pay raise, with a 5% boost for senior managers, even in these economic times, is not unreasonable over what will become a three-year duration.

Additionally, the fact that remaining employees have seen their health premiums escalate by one-third and, paid below industry standard in many cases while living in one of America’s most expensive regions, and have taken on added responsibilities, is defensible on its face.

However, the by-product of the action taken by NYRA executives to increase its salaries by 5.5 percent is a disservice to the entire racing community already reeling from an approximate $30-million hit taken by NYRA and the state’s breeders. And this excludes ancillary businesses.

The executive pay increases has led to more cheap shots from the usual places; the editorial boards of New York City tabloids and the New York Times, which after 40 years even now refers to OTB as a “failed bookie” rather than a parimutuel outlet. It still portrays racing patrons in the same stereotypical fashion, as degenerates and losers.

In a recent editorial, the New York Post referred to NYRA’s declaring bankruptcy in 2008 and collecting a $105 million “taxpayer bailout” that same year and “snagged” another $25 million this year with a state guaranteed loan.

OK, for the moment let’s forget for the that the newspaper business loses money, too.

There was no mention in any editorial I saw that the “bailout,” like the $25 million loan, were advances against future VLT revenues, not “bailouts,” a hackneyed headline grabbing buzzword.

There was no mention that the three NYRA tracks, now owned by the state, is the same state whose legislators cost New York’s citizens hundreds of millions in revenue by delaying the VLT franchise process for nearly a decade after the measure gained approval in 2001.

There was no mention of the $375 million paid to New York State upfront by the VLT franchise operator Genting Group for the privilege of conducting gaming and the construction of a new high-end revenue generating facility on Aqueduct Race Track grounds.

And there was no mention that since NYRA’s inception in 1955, horseplayers recently have contributed on average $2-billion a year to New York State’s urban, suburban, and urban economies.

This excludes revenues from the state’s regional OTBs that does about one-third of its business on the NYRA racing product.

That’s significant dollars for the people of this state; not bad for a “dying business.” And the only way this revenue stream will stop completely is if Albany kills it dead. It’s had plenty of practice doing just that.

It’s been documented that NYRA executives do not get paid an industry standard when compared to other major racetrack organizations. In the private sector, their salaries would be chump change. But those arguments would miss the point here.

“Imprudent; tone deaf; a stick in the eye; blinders on; unconscionable; irresponsible; indefensible” are just some of the words or phrases used to describe the executive raises issue a mere 24 hours after the country’s largest parimutuel retail company went out of business. To this list add the word arrogant.

Is this really the message that New York racing’s top executives want to send to the citizens of a state which itself is in a hole for a projected $9 billion in the fiscal year 2011-2012, not to mention high unemployment, rising costs, and a cut back in basic services?

Isn’t this comparable to the federal government’s extending tax cuts to the richest Americans in exchange for an extension of unemployment benefits and tax cuts for an already overburdened middle class? These pay raises might not be as disproportionate, or the situation as dire, but in the minds of many it’s certainly analogous.

Given all the issues confronting racing, even as it’s future is charted by those same politicians New York’s new chief executive has promised to eliminate widespread corruption from their ranks, did Thoroughbred racing, given recent events, really need such disheartening, boneheaded distraction?

Written by John Pricci

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Wednesday, December 08, 2010

New York Racing’s Same Old Song: It’s Either Sadness or Euphoria

SARATOGA SPRINGS, NY, December 8, 2010--This is not to minimize what happened 69 years ago Tuesday, God knows. But December 7 has another reason to add to its infamous legacy; the beginning of the end of the modern era of racing in New York.

Unknowing editorial writers at major New York dailies, most of which have been calling for the shuttering of New York City Off-Track Betting for years, are probably still dancing in the newsroom.

You can get those “good riddance to bad rubbish” headlines ready now.

The problem is they knew very little of what they were talking about, just like some Albany legislators, who look at polls and editorials but never inside themselves if they can help it.

What happened Wednesday, on balance, was not a good thing. It might be good sometime in the future. That’s if the future doesn’t run out of racetrack.

Of course, everyone knows about OTB’s past. The New York Racing Association had a chance to embrace the concept in the early 1970s, but figured it wouldn’t have the kind of impact that it did.

Who wants to bet in some seedy storefront when you can come out to the races and enjoy a day of sport? But they forgot the business they were in, a market they once had all to themselves.

Now racing finds itself in a position where without help from their competitors--off-track betting and casino gambling--it couldn’t survive without first changing the business model in a significant way. And pronto.

Create a new paradigm, lower the cost of the gambling product to effectively compete with your rivals, or die. As “Larry the Liquidator,” who knew how to use other people’s money, once instructed:

“You know the surest way to go broke? Keep getting an increasing share of a shrinking market. Down the tubes. Slow but sure.” Has anyone perused national betting trends in this brave new Millennium?

Everyone, including headline writers, knew the problems associated with the City-OTB model: Excessive patronage; gross inefficiencies; too many vice-presidents driving too many company cars; betting parlors allowed to go to seed, etc., etc.

But many of those vice presidents and most of the cars have been history for some time now; so are some of the worst, most inefficient stand-alone parlors. There have been layoffs and buy-outs. OTB was making some headway; slowly, yes, but surely.

Following bankruptcy, a plan was hatched for modernization. No plan is perfect, but elements of a new vision made sense. It isn’t right that the NYRA was left holding an empty bag that was supposed to be filled with 27.5 million dollars.

Statutory law notwithstanding, 35 cents of every dollar was bet on NYRA races at NYC-OTB last year, nearly a quarter of a billiondollars worth of handle. The contentious shotgun marriage came down to this; these spouses needed each other.

As part of the reorganization, the NYRA gladly would have let NYC-OTB off the hook for the $27.5 million in exchange for rights to OTB’s phone betting and Internet business in perpetuity.

So would have the state’s other racetracks, albeit to a far lesser degree. It might have taken some time to get even but this was going to be a home run ball grooved right down the middle.

Every track in the state depended on NYC-OTB handle. Without it, it will interesting to see how long some of the tracks can keep opening their gates. How many race days will their barn areas be able to support if horsemen can no longer make a living?

City-OTB may not be too big to fail, but they were big enough so that every track in the state that benefits from their handle can.

The New York State Racing & Wagering Board already has begun studying the possibility of rule changes to facilitate phone and Internet wagering at venues that already come under NYSRWB aegis.

The bill that would have made the reorganization of NYC-OTB possible was approved by the State Assembly, but failed to pass the Senate Tuesday.

With Democrats in charge of the Senate’s Lame Duck session until January 1, an alternative Republican bill was not put on the floor for a vote. Three Senators never bothered to even show up.

A pox on both sides of the aisle.

It is unknown what effect an 11th hour proposal made by the State’s other regional OTBs--seeking a reduction in statutory payments to the tracks while keeping their phone and Internet operations--had on the voting process. But it likely didn’t help.

The NYRA balked loudly saying that without the $20 million in statutory payments from the other OTBs, it would be forced to close. So, what are the current real world consequences?

Oh, not much. Only 800 more people out of work and the State, already $10 billion in the hole, according to State Senate Conference Leader John Sampson (D-Brooklyn),* now on the hook for $600 million in pensions due NYC-OTB employees

*updated to original post Dec. 10, 2010

Which reminds us of a song, specifically the third chorus of "Summer, Highland Falls" written by New Yorker Billy Joel:

“And so we'll argue and we'll compromise
And realize that nothing's ever changed
For all our mutual experience
Our separate conclusions are the same
Now we are forced to recognize our inhumanity
A reason coexists with our insanity
And so we choose between reality and madness
It's either sadness or euphoria.”

Written by John Pricci

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Tuesday, December 07, 2010

Life At Ten: Justice Delayed, Will It Be Denied?

SARATOGA SPRINGS, NY, December 6, 2010--It’s been over a month since racing fans lost millions of dollars on a horse that had no business entering the starting gate for the Breeders’ Cup Ladies Classic.

If it weren’t so shameful, it would be laughable that the non-effort of Life At Ten is likely to still be under investigation when the next scheduled meeting of the Kentucky Racing Commission takes place next week.

L’Affaire Life At Ten will have required more than six weeks of study when post race blood testing, which could have been performed in a matter of hours with results known in a matter of days, was deemed not important enough to solve the vexatious logistical issues of a testing barn.

We have no problem doing our jobs just as long as it’s not too inconvenient.

It was bad enough there was an utter disregard for the betting public given the inaction of officials in the minutes before the Ladies Classic. But then to insult everyone’s intelligence with self-serving, conflicting reports of the events only added to the frustration.

Fans and media are expected to believe that it will take six weeks to talk to the 11 veterinarians on the grounds during Breeders’ Cup weekend, when the need was to talk with only one, state veterinarian Dr. Bryce Peckham whose job it is to safeguard the horses, riders and betting public.

What were we all to believe? That jockey Johnny Velazquez asked Peckham to look his filly over carefully because: (a) he had just told a national television audience that his filly was not warming up properly after trainer Todd Pletcher told him Life At Ten was unusually “quiet” and to warm her up vigorously; (b) that he couldn’t follow those instructions because his filly was severely cramped and not striding normally or (c) that the conversation with Peckham never took place at all?

Was Life At Ten fit to race because when observed by the three veterinarians stationed at the gate she showed no signs of being lame and was racing sound?

Any jockey will tell you there’s more to “racing soundness” than simply the absence of lameness. And there is no excusing the stewards, after being informed what Velazquez said on ESPN by a veteran producer, for not picking up the phone and asking the state veterinarian to examine Life At Ten closely.

Unfortunately, the scenario gets worse.

Not long after the fact, a spokesman for the Kentucky Horse Racing Commission said chief steward John Veitch, a former trainer and Hall of Famer, interviewed Pletcher, Peckham, Churchill’s head starter and an outrider--but never interviewed Velazquez?

How could Veitch not have spoken with Velazquez earlier? Was it because, according to the KHRC, Velazquez did not bring the filly’s condition to the attention of the three veterinarians at the starting gate? But Pletcher said Velazquez did speak to the vets. Was the KHRC covering for the vets and chief steward? Was Pletcher covering for Velazquez? Both?

The KHRC spokesman confirmed that ESPN producer Amy Zimmerman called the stewards prior to the start and told them about the Velazquez’ horseback interview with analyst Jerry Bailey, an all-time riding great.

The spokesman also said that when the stewards watched the feed, the interview was ending and only heard Velasquez say that the filly wasn’t warming up well, and that no mention was made by ESPN to the stewards of issues that would have necessitated a post time scratch.

ESPN analyst Randy Moss, with three decades of industry experience, and Bailey were on the set interviewing Velazquez on horseback pre-race, trying to inform the audience what it all meant.

Reporting was their only responsibility. Advising the stewards on how best to perform their jobs in real time would have been totally inappropriate on several levels. This is known as shooting the messenger, only in reverse.

Zimmerman informed Moss that she called the stewards and was led to believe they were watching the ESPN feed. Moss surmised that between Velazquez’s “not really” reply to Bailey--when asked if the filly was warming up any better-- and Veitch’s response to Zimmerman’s call, that a conversation between the rider and vet certainly would take place at the starting gate. Moss was “stunned” to learn that that conversation never took place.

Veitch contradicted himself by indicating he hadn’t spoken to Velazquez when he questioned everyone else then indicated Velazquez told him the filly was dull warming up but thought she'd pick up when she got to the starting gate and the adrenaline took over.

Obviously that’s not what happened. "She didn't want to run today," Velazquez said immediately after the race. "I tried to get her to go in the warm-up and I couldn't even catch up to the pony. She was never interested in running at all." Because the stewards did not err on the side of caution when apprised of the Life At Ten scenario, we had a series of events in which many bad decisions were made. There has been so much conflicting testimony that it’s near to separate fact from fiction.

Allegedly, neither Pletcher nor Velazquez expressed serious concerns to racing officials or any racetrack personnel. Chief steward Veitch neither observed Life At Ten on the track nor did he inform Dr. Peckham what he had learned about the filly’s condition from the Velazquez interview. And it wasn’t a refund situation because, said Veitch, “[Life At Ten] got a fair start…a horse must be impeded on some way,” completely missing the point.

Three veterinarians stationed at the gate didn’t see ANYTHING out of the ordinary with Life At Ten, and can’t be held accountable because “not acting well is a gray area,” difficult to define in terms of scratching, said prominent equine surgeon Dr. Larry Bramlage.

The Kentucky Horse Racing Commission issued a statement that said it takes seriously the safety of horses and jockeys from the time it enters the track until the race is over, stating that its veterinarians and stewards “acted properly in all instances…”

Where does the betting public figure in this equation? And if the KHRC is as serious as they purport themselves to be, how does it exonerate its stewards and veterinarians before conducting an investigation that will take five weeks to compete? Makes you wonder whether this can turn out to be anything other than a whitewash.

The Breeders' Cup issued a statement explaining that its races are conducted under the aegis of the host site and the racing rules of the state in which the event is conducted. Fair enough.

But if the KHRC fails to mete out justice in this case, Breeders’ Cup Ltd. must put a framework in place for acting unilaterally, or in concert, changing protocols so that it shares responsibility should an adjudication process become necessary.

It’s too late to help the bettors of Life At Ten. But owner Candy DeBartolo should have her starting fees refunded. It wasn’t her fault, just as it wasn’t the public’s, that three strata of professionals who should be a last line of defense--the jockey, the state veterinarian and, most significantly, the state steward--abdicated their responsibility.

Fairly or not, the Kentucky Horse Racing Commission will make a jurisdictional decision that will extend far beyond its own borders. At stake is nothing less than the perceived integrity of Thoroughbred racing nationwide. The hope is that the KHRC will take a macro view, not a myopic one.

Written by John Pricci

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