Report Says NYRA Posted Lost $11.3 Million in 2001
Updated: Friday, August 2, 2002 4:10 PM
Posted: Thursday, August 1, 2002 7:56 AM
Despite growing revenue from increased simulcast handle, the New York Racing Association completed 2001 with an operating loss of $11.3 million, the largest in its history.
NYRA provided a copy of its 2001 annual report Wednesday to the Daily Gazette
in Schenectady, N.Y The newspaper requested the document from the New York State Racing and Wagering Board under the state's Freedom of Information Law.
In a story in its Aug. 1 editions, the Daily Gazette reported that NYRA's expenses grew from $153.7 million in 2000 to $171.9 in 2001. Meanwhile, the association's revenue increased from $155.3 million to $160.6 million. NYRA's total handle for 2001 was $3.5 billion.
"To make a profit is very important to us," NYRA president and chief operating officer Terry Meyocks said, citing obligations to the state and racing industry.
Under changes enacted by the Legislature in 1997, the first $2 million in NYRA profit goes into purse accounts. Any remaining profit must be used to pay down NYRA's debt to the Capital Investment Fund. The CIF is a state authority developed to help racetracks finance improvement projects. NYRA did not make any payments to the CIF in 2001 and owes $64.6 million.
NYRA, which has a state franchise to operate the Saratoga, Belmont Park and Aqueduct racetracks, lost money between 1991 and 1995. Under now-retired president Kenny Noe Jr., who became chairman of the board of trustees and CEO, NYRA returned to profitability in 1996. Hired to replace Gerard J. McKeon in Oct. 1994, the year NYRA lost about $10 million, Noe aggressively cut personnel, especially top executives, as well as association expenses. The state Legislature approved a takeout increase and a reduction in the pari-mutuel tax, measures that produced more revenue and helped NYRA become profitable again.
In 2000, NYRA won a real estate tax settlement from Nassau County of approximately $16 million that enabled its to pay for capital improvements at Saratoga Race Course and show a profit.
Without the settlement on the assessment at Belmont Park, NYRA would have ended that year with a loss, too.
NYRA officials said Wednesday that the combination of legislation enacted last year to lower takeout has spurred a surge in handle and budget cuts may put the association back in the black. They said that spending is at 1995 levels. Business was strong during the first half of the year.
"Our gross revenue -- we're up $3.4 million," said John Giombarrese, NYRA's treasurer/controller. "We're $129.5 million versus $126.1 million in 2001."
At the end of the six-month period on June 30, Giombarrese said that NYRA had reduced expenses by $800,000 and was operating $3.5 million under budget.
NYRA officials said legal fees, higher costs for pensions and other retiree benefits, depreciation and expenses related to hosting the World Thoroughbred Championship Breeders' Cup in October. And Belmont Park was closed for five racing days following the Sept. 11 terrorist attacks, an interruption of business that \ Giombarrese estimated cost NYRA approximately $2.2 million of profit.
Giombarrese said the association spent approximately $3.2 million on legal fees in 2001. The majority was spent, he said, on NYRA's unsuccessful attempt to purchase the New York City Off -Track Betting Corporation, which was put up for sale by the administration of former Mayor Rudolph Giuliani. Magna Entertainment Corp., owned by Canadian businessman Frank Stronach, was named the successful bidder, but the sale was not completed by the end of Giuliani's term. NYRA also incurred legal expenses during the state investigation into money laundering in the mutuels department and the federal probe into income tax violations by several mutuels clerks.
Formed in 1955 by the merger of independent racing associations, NYRA has a franchise that runs through 2007. Under an agreement approved by the state Legislature, the franchise will be extended until 2012 if NYRA has the video lottery terminal facility at Aqueduct open by April 1. As part of the legislation, NYRA's obligation to the CIF will be subordinated to make it easier for the association to obtain for private funding to construct the VLT location at Aqeduct.
The cutbacks have not had an impact on the current Saratoga meeting, Giombarrese said. Marketing and promotion budgets are slightly larger than last year, when the meet set record for attendance and handle The only employees cut from the payroll were in the facilities department when capital projects were completed.
Meyocks said that none of NYRA's department heads have received pay raises in the past year.
In an attempt to stimulate wagering, NYRA won legislative approval last year to lower the takeout and increase payouts on winning bets. New NYRA chairman Barry K. Schwartz pushed that change, believing the greater returns to bettors, now in excess of $38 million, would attract more business.
In every meet since the change effect at Saratoga in July 2001, NYRA has had a growth in handle, especially in simulcasts.
"Given the quality of our race cards and the value of the wager, we figured that over time, our interstate handle would really begin to take off, and it really has," Giombarrese said.
Accoring to Giombarrese, the interstate simulcast handle through the end of June was up $85 million, or 13 percent, over the same period last year.
Even though it did not make the $2 million contribution to the purse account, NYRA has used revenue from increases in betting handle to raise purse levels twice this year. Giombarrese said the total of the increases may exceed $2 million by the end of the year.
Meyocks said the daily average purses at the spring Belmont meeting and the current Saratoga meet are the highest in the history of those tracks. He noted that NYRA has not cut purses in the past eight years and the total purses have grown from $79 million in 1994 to $115 million last year.
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