NYRA Releases Executive Salaries
The New York Racing Association, which has long resisted revealing salaries of its top executives, has furnished the information to a top state regulator at a time it is warning of running out of cash later this summer.
In a letter to the head of a government financial oversight board, NYRA chairman C. Steven Duncker defended the salary structure as lower than most racing corporations – and at levels that put NYRA “at a serious competitive disadvantage when competing to hire top racing executives.”
The top salary at NYRA belong to its president, Charles Hayward, who makes $460,000 annually. Chief operating officer Howard (Hal) Handel makes $440,000.
In releasing the salaries to the state, NYRA included a comparative analysis of compensation by executives at other racing corporations that shows the NYRA salaries “are at levels on par with the industry as a whole and are far below the levels paid by NYRA’s comparable top competitors.”
The comparisons, using data from three outside consulting companies, shows only the most senior of positions at Churchill Downs, Magna Entertainment Corp., and Penn National -- which were revealed from federal Securities and Exchange Commission filing -- and Keeneland and Del Mar, whose salary levels could not be obtained because those private companies do not release salary information, NYRA said.
Robert Megna, chairman of the New York State Franchise Oversight Board, which oversees NYRA’s finances, at a recent board meeting pushed NYRA to release the salary data. NYRA, claiming it is owed at least $15 million by the New York City Off-Track Betting Corp., a state entity, says its cash flow problems are being exacerbated by delays by the state in opening a long-awaited casino at Aqueduct Racetrack, which would provide revenue-sharing proceeds to NYRA.
Megna declined comment on the NYRA salary information. Matt Anderson, a spokesman for Megna, who is director of Gov. David Paterson’s budget division, said the franchise oversight chairman had just gotten the NYRA salary information and wants to review it more closely before commenting.
But a Paterson administration official lashed out at the salary levels as excessive.
“There’s a lot of concern over the exorbitant salaries that we’re just learning about now after years of asking them to release this information,” said a Paterson official who spoke on condition of anonymity.
The official noted the information comes also after state comptroller Thomas DiNapoli threatened to subpoena NYRA for the financial information.
The official said NYRA is preparing to seek a state bailout at the time the government is facing an $8.2-billion deficit and everything from schools to parks are in line for massive cutbacks.
“This is an organization that had to file for bankruptcy two years ago. It’s an organization that taxpayers of the state of New York had to bail out to the tune of more than $100 million,” the official said of NYRA. “This is an organization that continues to run in the red, and it’s an organization that continues to not only be inefficient but is also secretive. Every time they’ve been asked to release information they have resisted, and now you know why. Now they public will begin to know why they don’t want to be transparent, and don’t want to open their books. They don’t want people to know who much they are getting paid.”
The official said there are concerns whether NYRA has done an “apples-to-apples” comparison of its executive salaries to other racing entities.
In his letter to Megna, Duncker said NYRA – a not-for-profit corporation – sought to keep the salary information secret for competitive recruitment reasons. “It is for this reason, and this reason alone, that NYRA has been reluctant to release the enclosed salary information to the general public and by extension to our competitors,” Duncker wrote. “We are releasing this information to you now, however, because we recognize the political pressure you are under to make this information available to the press and to the public, regardless of the propriety of doing so given NYRA’s status as a private corporation.”
NYRA said its executives do not receive stock options or performance bonuses like some counterparts at publicly traded racing corporations. Also, in 2006 it froze its pension plan for employees.
NYRA said Hayward’s $460,000 compensation compares to an industry range of $550,000 to $696,000, according to salary survey data NYRA said was compiled by Economic Research Institute, Watson Wyatt Executive Compensation Calculator, and Hanna Resource Group.
The NYRA salary analysis said total compensation for chief executive positions at other top racing companies includes $7.2 million at Penn National Gaming, $4.1 million at Churchill, and $1 million at Magna.
Handel’s $440,000 compensation compares to an industry range of $467,000 to $481,000, NYRA said, and to the $1.4 million paid by Penn National and $741,000 by Churchill Downs to its CEO posts.
Other top NYRA salaries include $325,000 to chief financial officer Ellen McClain, $413,000 to senior vice president and general counsel Patrick Kehoe, $260,000 to chief information officer Tom Thill, $295,000 to chief administrative officer John Ryan, and $255,000 to David Smukler, senior vice president for human resources and labor relations.
NYRA said its system of determining executive salaries abides by an agreement with the state two years ago when its franchise was renewed for 25 years to run Aqueduct, Belmont, and Saratoga racetracks.
Duncker, in his letter to Megna, called executive recruitment “fierce” in the national racing industry. “The ability to pay nationally competitive compensation rates and the ability to retain a highly qualified management team is crucial for NYRA to maintain its national leadership role in the thoroughbred racing industry,” he wrote.
He said salary levels are “rigorously” overseen by the compensation committee of NYRA’s board and includes several approval levels.
In an interview, Duncker said NYRA competes against both racing and non-racing corporations for executive talent. He said NYRA did not want its salary information falling into competitors’ hands. “We want to be transparent. The oversight board asked for it, and we gave it,” Duncker said of the salary information.
Duncker said NYRA can attract executives willing to work for less than other racing corporations, but also does lose talent because of pay. He cited the departure a few years ago of Bill Nader, the second-in-command who saw his salary doubled, Duncker said, when he was hired away by the Hong Kong Jockey Club.
The salary release comes at a time when NYRA could be looking to Albany again for some sort of financial assistance. NYRA’s franchise agreement included language that it could seek some sort of fiscal help if the state was unable to get the Aqueduct casino – and is revenue-sharing proceeds – operating by March 2009.
The Paterson administration and state legislative leaders recently selected Aqueduct Entertainment Group as the Aqueduct casino winner. The award, though, has come under increasing scrutiny over how the bidding process was conducted; federal prosecutors are among those reviewing the bidding, leaving open the possibility the award could fall apart.
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