Wednesday, September 11, 2013
Through the Looking Glass? Hardly
LOS ANGELES, September 10, 2013 -- Is the promised transparency at the "New NYRA” headed down the rabbit hole?
Lucky for me blogger Tom Noonan has the constitution to sit through entire NYRA board meetings. I dozed off shortly after NYRA’s CEO started his statement.
That also seems to happen to me at the sound of Bo Derek’s voice when I listen to California Horse Racing Board (CHRB) meetings. Maybe if they had video as well as audio, like New York …
As usual, Noonan pulled no punches.
‘"…we first had to sit through Chris Kay’s reading of a prepared statement for almost 40 minutes. …
… Then, with only about five minutes left in the meeting, Skorton asked if "everyone was comfortable" with operating as if there were no VLT revenues …
… I wondered; was I hearing correctly? The Chairman of the Board allows the CEO to drone on for 40 minutes about a host of inconsequential matters then prods every other speaker to move quickly so the meeting can end on time.
Then he drops a bombshell leaving little time for discussion.
Fortunately, not everyone was comfortable with this approach. After several Board members raised legitimate concerns, Skorton allowed "these subtleties are important," and that a "fuller discussion" was warranted.
But he also wants to have that discussion in private while simultaneously stating his commitment to operating in public.
It is a discussion that is necessary and important, which is why it must be conducted in the open. "’
Listening to the replay, it seemed as if much of what was presented to the board could have--and should have--been read beforehand for public discussion.
For example, CFO Susanne Stover’s reporting of 6-month figures included such stats as NYRA’s accounting for 16% of total handle nationwide while paying 12% of U.S. purses over 5% of live racing days. During that period, "every dollar paid in purses generated $15.29 in handle compared with $10.93 industry-wide."
Average field size declined to 7.39 from 7.78, but average betting handle per betting interest increased 6%. Interestingly, none of the preceding stats for any reported period elicited any questions from the board.
Why was there no dialogue as to how these figures relate to NYRA’s net operating loss for the associated period, as well as who were the top three performers according those metrics, to provide needed insight?
Or as Fred Pope posited in his open letter to NYRA: "… As the leading producer of live racing ... [NYRA] has sufficient handle to make a lot of money and restore purses, marketing, staff for live racing and infrastructure.
“But, it cannot achieve its mission to maximize revenue from its races without changing the amount it receives from off-track wagers.
“NYRA exports 5 times more than it imports. Last year the races generated over $1.8 billion in off-track handle. Every 1% increase NYRA earns on its exported races is worth $18 million to its bottom line. … In the short term, NYRA can earn over $100 million in new revenue by solving this distribution problem.
“The huge demand for NYRA races can drive partnerships with other major producers, direct distribution to customers and revised distribution agreements. Anyone saying it cannot be done has the mindset of a bet taker, not a producer …"
Indeed a common internet wagering platform operated by a consortium of tracks could increase revenues for all through lower operating costs, quicker settlements, and a higher share of revenue to each host. Absent a
National Horse Racing Commission (NHRC), however, it seems highly unlikely that such a cooperative venture will emerge.
Suppose either Twinspires or Xpressbet were to become NYRA’s new provider of ADW services. Would that improve the chances of their parent companies becoming the new franchise holders?
One has to wonder whether any NYRA investment in an ADW upgrade -- collective or independent – would be premature prior to privatization.
Near the end of the Board Meeting, one of the "uncomfortable" directors pointed out that the VLT revenue was contractual payment for NYRA’s giving up the land to the State.
Would privatization legally terminate that contractual obligation? Would the same be true of union contracts? If so, no current contractor/service provider should be qualified to bid. The sweep must be clean and the franchise operation entirely separated from State government.
Per usual, Pope left horseplayers out of the equation:"As a non-profit, NYRA returns everything back to the sport, racehorse owners and breeders. As our largest, most-sophisticated market, New York is and always has been Thoroughbred racing’s True North."
A "New North" is needed so that something goes back to bettors as well in the form of a more attractive racing product for all pari-mutuel participants.
Fat chance, of course, but VLT revenue in the next three years should go to fund lower takeout initiatives so that legislators will get the message that parimutuel price-points matter, that less equals more.
So far, the “new NYRA” has been transparent in name only. What’s everybody afraid of?
Full fields with familiar foes featured more frequently is a future racing fans could look forward to.