NYRA President Considers Benchmarks

The New York Racing Association can agree to new performance benchmarks for its operations as part of a franchise extension

The New York Racing Association can agree to new performance benchmarks for its operations as part of a franchise extension deal, but state officials must be more flexible to take into account future changes in the racing industry that could affect those new standards, according to the president of NYRA. 

NYRA President Charles Hayward, however, said NYRA cannot afford to give up its simulcasting business – which accounts for 88% of its total handle -- as the state Legislature’s top Republican is seeking in closed-door negotiations at the state Capitol.

In a wide ranging interview Dec. 15, just two weeks before NYRA’s franchise with the state is set to expire, Hayward said he is “very frustrated’’ by the pace of the talks, though he noted that some movement has been made in the past several days.

Hayward also defended the NYRA board, which Senate Majority Leader Joseph Bruno has called for replacing as part of any franchise extension deal, and sounded concerns about NYRA’s 1,300 employees who have been living with uncertainty about their jobs for months.

The Blood-Horse has previously reported that Bruno wants a series of new “benchmarks’’ for NYRA to meet in order to hold onto the franchise to run Aqueduct, Belmont, and Saratoga racetracks. They include minimum handle performance, racing dates, and components such as backstretch conditions, among others.

Bruno also wants to create a new state authority to award other aspects of the franchise now run by NYRA, including the simulcasting operation. Capital Play, an Australian entity that has been meeting with Bruno, has pitched a similar plan, arguing that it should get the non-racing components of the franchise. Capital Play officials have argued NYRA’s many past legal and ongoing financial problems should prod the state to involve other entities in running the franchise.

Hayward called it “ridiculous’’ to propose that NYRA just “muck out the stalls and keep the track in order.’’ Letting Capital Play do everything but racing is “completely nonsensical,’’ he added.

The NYRA chief also criticized proposals to provide a franchise extension of fewer than 30 years, which is the deal NYRA worked out with Gov. Eliot Spitzer in September. Bruno has said that is too long, and has floated a 15 to 20-year extension. NYRA officials, however, say the deal calls for them turning over the deeds of the three tracks to the state, and the longer extension is a fair trade. (The Spitzer plan also envisions the state giving NYRA $75 million to get it out of bankruptcy court, and to forgive $120 million in past loans.)

“And who would want to go through another three to four year process like we’ve done only 15 years from now,’’ Hayward said.

Hayward said NYRA has told Spitzer’s negotiators, who it has been in regular contact with in recent days, that it can agree to some of the operating benchmarks being talked about involving track safety, environmental conditions, and backstretch operations. 

But he said some of the benchmarks could cause problems. “What we want is the same thing I’d think the state would want, which are benchmarks that reflect a continued leadership position for New York racing in context with the rest of the industry,’’ Hayward said.

One plan calls for NYRA meeting certain on-track attendance schedules. But he said racetracks with VLTs don’t keep track of patrons entering a casino, which would be the case in a future Aqueduct-based facility, thereby possibly skewing future attendance figures. He noted that Churchill Downs doesn’t release daily attendance figures anymore.

Another benchmark calls for attaining on-track handle goals. But he said an increasing number of bettors at the track are calling in bets to NYRA’s phone account, and NYRA is also planning a new system in which people could place Internet bets via their cell phones or other hand-held devices. Such bets, however, count as off-track wagers, and so wouldn’t be included in the benchmark even though the patron is at the track.

Hayward said any benchmark involving things like handle should be counted over a five-year period, not one year. He said a single year could be thrown off by outside events, such as additional bets going to Pennsylvania tracks when they are fully up with all the planned VLT facilities.

Hayward said NYRA could back handle performance benchmarks looked at over a longer period of time than one year. He said NYRA now has nearly 17% of the nation’s handle, though it offers about 4% of the races.

NYRA could also agree to a benchmark involving minimum racing dates in a year, as some state officials want, he said. It is now scheduled to race 255 days next year; he said NYRA could set a minimum racing benchmark of 250 days over the next five years, with a renewal period after that in case it wants to change the racing calendar.

Negotiators are also discussing a benchmark to ensure a minimum number of annual New York-bred races. NYRA this year will have run about 780 such races. If the state’s breeding program or other outside factors affecting breeding don’t change, he said NYRA could agree to a benchmark of 500 to 600 New York-bred races annually.

The benchmarks would be amendments to the memorandum of understanding signed in September by NYRA and Spitzer. They have been worrisome to some NYRA officials because violating them in the future could give the state an out to immediately cancel the franchise.

Hayward said NYRA is comfortable being held to certain standards. “We just don’t want any trick questions, as it were, or things that could have an impact unwittingly,’’ he said.

NYRA has made some contingency plans if there is no agreement in Albany by Dec. 31. Under one plan, racing would shut down, though facilities would be made available for trainers as a way to keep them from moving to other states during a temporary closing of racing.

On Dec. 17, a state panel that has been overseeing NYRA’s finances is set to meet. It is expected to back a move to set in motions the oversight board taking over the legal control of running racing on Jan. 1. By law, the state panel, headed by a onetime aide to former Gov. George Pataki, officially becomes in charge of racing on Jan. 1 if there is no new franchise holder in place.

But NYRA, if it is not satisfied with any proposed deals, has another option: going back to the bankruptcy judge overseeing its case and let him decide the track ownership issue. In the interim, Hayward said, oversight panel could not permit any other entity on the tracks to run racing.

Hayward said NYRA could accept a short-term extension with the oversight board in place in which it controls racing while NYRA runs the actual product. But he said the arrangement could not jeopardize NYRA’s land claims if it has to go back to court. Moreover, he said there would have to be signs of real progress in Albany.

“We’d have to be convinced that we’re on our way to somewhere,’’ he said. “Because, say we do 90 days from now, if there’s no more progress then on March 15 we’d be doing what we’re doing today. And it would be more detrimental for racing to stop then, right before the Wood Memorial, than it would on January 1.’’

Hayward said there have been no discussions between NYRA and the oversight board on the length of any possible extension. Spitzer administration and legislative negotiators say the oversight board will be necessary on Jan. 1 even if a deal is struck before then. That’s because the Legislature is not expected to return to Albany before Jan. 9.

Under the most optimistic scenario, Spitzer and legislative leaders would complete a handshake deal by the end of the month and the oversight board legally is in charge of racing until lawmakers return in January.