NYRA Budget Passes, But Not Without Debate
Date Posted: 12/4/2013 8:00:17 PM
Last Updated: 12/5/2013 8:54:10 AM

by Teresa Genaro

The reorganization board of the New York Racing Association met for the first time a year ago, but it wasn't until its eighth meeting Dec. 4 that its members offered any significant disagreement to a proposal made by board chairman David Skorton.

On the agenda was NYRA's 2014 budget, one of the most contentious elements of which is a proposal to raise admission prices at Saratoga Race Course and Belmont Park from $3 to $5 for the grandstand and $5 to $8 for the clubhouse.

Due to legacy expenses for pensions and insurance and unexpectedly high federal tax liability as a result video lottery terminal revenue from the Resorts World New York City casino at Aqueduct Racetrack, the Association is facing a $1.8 million deficit for 2014. The increased admissions are proposed in order to carve out a slim surplus of $250,000 next year.

In the most vehement debate in the short history of the board, a number of directors, including Earle Mack, Barry Ostrager, and Bobby Flay, expressed concern about the proposed increase. While it was suggested a $5 fee is significantly less than the price of admission at most entertainment venues, particularly in the New York area, Ostrager noted those venues aren't seeking gambling dollars from their patrons.

"Lost in the comparisons (to entertainment venues) is that our guests are here to gamble," he said, suggesting higher admission fees could have an adverse effect on pari-mutuel handle.

Saratoga Springs, N.Y., resident John Hendrickson, a special adviser to the board without voting privileges, was unequivocal in his opposition.

"I think it's the wrong thing to do, 100%," Hendrickson said, noting the prospect of competition for gambling dollars should New York State approve a full-scale casino in Saratoga Springs. New York voters in early November passed a referendum approving casinos at four yet-to-be-determined upstate sites.

Flay voiced his reservations in the context of his experience running restaurants.

"Whenever I need to raise prices in my restaurants, I just don't do it," he said. "If we're going to raise prices, then we have to give (customers) a different kind of experience."

Skorton said the opinions of proponents and detractors are based largely on impression and speculation; NYRA president and chief executive officer Chris Kay admitted that no market research had been done to assess public reaction to the higher fees. As a result, Skorton suggested the board pass the budget as is, leaving Kay and NYRA management to conduct research in the next few months and report back at the board's March meeting, at which time it would decide whether to accept or reject the proposed fee hike.

That suggestion apparently mollified the proposal's opponents, as the budget passed, though as Flay pointed out it's unlikely that any market research is going to yield support for higher admission prices.

Another revenue-generator in the approved 2014 budget is a planned increase in simulcast fees for the NYRA signal. While Kay said specific rates have yet to be determined, he suggested the rate would vary depending on the simulcast partner, and that he doesn't expect any outlets to decline to carry the NYRA signal.

"I don't think that people will not carry NYRA," Kay said. "But when you have a business product and you say, 'Here's the value of it,' some people may say, 'OK, we'll buy it,' and some people may say they won't.

"I think instead, we're going to have a negotiation. 'If you raise yours by X percent, NYRA, we're going to raise ours by X percent.' "

Similarly, a plan to close Aqueduct for training during the Belmont and Saratoga meets is in its nascent stages. New York Thoroughbred Horsemen's Association president Rick Violette expressed some opposition to the proposal.

"We've had significant discussion," he said. "We're doing some analysis on the numbers on the revenue generated by the horses that are stabled there. They run frequently, and their starts-per-stall are multiple times the average start at Belmont."

Violette said he's concerned the reduced number of stalls will lead some horsemen to take their horses elsewhere, which he suggested could lead to a decline in revenue that would offset the savings realized by closing Aqueduct.

"I think we could lose a significant portion of our racing product," he said. "The best way to increase our bottom line is to increase starts-per-stall, and the best way to do that is to have more product on your own property and not chase them away." 

Violette said he's working closely with NYRA management to ensure that a variety of perspectives are considered as the details of the proposal are determined. "We're supposed to make it a win-win," he said. "Make sure the right horses are on the grounds, and try to increase our field size."

In non-budget news, NYRA vice president of corporate development David O'Rourke announced that a long-delayed contract with Global Betting Exchange had been approved. He said it would enable NYRA to enhance its advance deposit wagering platform, and that the new interface should be available to patrons this summer.

Download The New York Racing Association, Inc. 2014 Operating and Capital Budget document here.
 
Download The New York Racing Association, Inc. Management Discussion and Analysis document here.


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