NYRA: Non-Profit Model is Best Option for Racing

The year's Jockey Club Round Table conference had a decidedly New York theme, with the New York Racing Association espousing its progress and commitment to Thoroughbred racing and breeding in the state, and a representative of the Ad Hoc Committee on the Future of Racing in New York saying the panel is carrying out its mandate.

The Round Table, held the morning of Aug. 20 in Saratoga Springs, N.Y., also featured updates on wagering security and medication and drug testing. But with the franchise to operate Aqueduct, Belmont Park, and Saratoga up for grabs amid growing tension, New York racing was the focal point.

NYRA president and chief executive officer Charles Hayward provided an update on NYRA, whose franchise to operate the three tracks expires Dec. 31, 2007. The association is one of 16 groups that responded to a request for proposal to operate the facilities.

Hayward acknowledged NYRA "was in deep water" three years ago because of business practices, but said it was transformed after oversight by a federal monitor. "We've changed the culture dramatically and business practices substantially," he said.

Hayward then discussed purses at NYRA tracks and how non-profit associations are among the national purse leaders. NYRA believes its non-profit status is a major positive in its bid to maintain the three-track franchise; many of the bidders or those associated with them are for-profit entities.

"You pay a lot of money to purses when you don't have to pay money to shareholders," Hayward said.

The three NYRA tracks are traditionally among the top 10 in the country by daily average purses, with Saratoga at or near the top. But Hayward said delays in installing and operating 4,500 video lottery terminals at Aqueduct is annually costing horsemen $49 million for purses and breeders $8 million in development funds at the outset.

That's about $190,000 a day in purses, while the state is losing $1.2 million per day in taxes, Hayward said.

"If you're a taxpayer, you should be pretty upset by what's happening with VLTs," he said, noting two key state approvals haven't been issued to move the project forward at Aqueduct. "The second floor at Aqueduct is waiting to hear from the second floor in Albany."

Hayward also said New York-bred purses at the three tracks have gone from $29.5 million in 2004 to $35 million this year.

NYRA in its RFP outlines $250 million in facility improvements, including replacement of two dirt surfaces with the synthetic Polytrack material. Again, he indicated a non-profit is better suited to make such improvements.

"What model is best for the franchise? The non-profit model is far superior," Hayward said. "One can disagree with how we operate the tracks, but one cannot dispute why we run the tracks."

Ownership of the land on which the three tracks sit remains in dispute between NYRA and the state, and the issue figures to impact the franchise process. Hayward touched on the situation briefly.

"NYRA is uniquely positioned to amicably resolve the land issue," he said.

After the conference, which appeared lightly attended compared with previous years, Dennis Brida, an official with franchise bidder Empire Racing Associates, said to his knowledge Empire Racing or other bidders weren't asked to make a presentation at the Round Table. Empire Racing has the backing of the New York Thoroughbred Horsemen's Association and recently named Churchill Downs Inc. and Magna Entertainment Corp., two for-profit companies, as partners in the franchise bid.

When asked after the conference if he was concerned people may question why only NYRA had the floor, Jockey Club president Alan Marzelli said: "No. They are the existing franchise operator, and they spoke at last year's Round Table. Are there any other franchise operators? This is not a bidders' conference. This dealt with the current state of the franchise-holder."

J. Patrick Barrett, chairman of the ad hoc committee that will make a franchise recommendation to the governor, described how the RFP process works. He noted the committee has "wide latitude" and "discretionary power" from the legislature, and said the group wouldn't necessarily award the franchise to the highest bidder. The important thing, he said, is that the pari-mutuel industry and state get value from the entity that runs the tracks.

On the wagering security front, the Thoroughbred Racing Protective Bureau has partnered with InCompass Solutions, which will provide information technology services to better enable the TRPB to conduct wagering analysis and investigations with real-time information. InCompass is a Jockey Club subsidiary, while the TRPB falls under the Thoroughbred Racing Associations.

TRPB president Frank Fabian said progress has been made in wagering security. A data warehouse is now in place, and the TRA can track data that flows to the server.

"The safeguards are functional, effective, and in use today," Fabian said.

As for drug testing, Keeneland director of racing Rogers Beasley said the California-based Equine Drug Research Institute, announced at last year's Round Table, is up and running and is working with Major League Baseball, a pharmaceutical company, and others to employ state-of-the-art drug-testing equipment.

The lab was created to develop tests that will be given to other labs for use.

"Drug testing must remain at the top of our agenda at all times," Beasley said. "There is simply no more important issue in racing."