By Matt Hagerty
The New York Racing Association and the New York Thoroughbred
Horsemen’s Association have reached a settlement in a lawsuit filed by
the horsemen’s group that alleged NYRA was illegally withholding purse
funds, according to documents filed with the U.S. Bankruptcy Court for
the Southern District of New York.
Under the settlement, the
horsemen’s group has agreed to drop the suit and NYRA has agreed to
adopt practices over the next six years that will reduce a reserve fund
known as a purse cushion to $6 million by 2014. The purse cushion,
which stood at approximately $20 million at the beginning of 2008, is
kept by NYRA out of the horsemen’s share of wagering revenues.
Alan Foreman, an attorney for the horsemen’s group, said that the
agreement will end any litigation by the group against NYRA, and
require the association to maintain the cushion at the $6 million level
in the future. The agreement needs to be approved by the U.S.
Bankruptcy Court, and has been put on the docket for Jan. 23.
"This should get them to pay out more in purses in the future, and
reduces their ability to keep the cushion at such an ungodly level,"
NYRA’s chief executive, Charles Hayward, said
Wednesday that the association was glad to put the lawsuit behind it,
and said that the reasons for the ballooning balance in the purse
cushion was not well understood.
"I think there was a lot of
confusion over what the purse cushion was, and this settlement gives us
a way in which we can manage it," Hayward said.
filed the lawsuit after NYRA filed for bankruptcy late in 2006,
alleging that NYRA was violating its statutory responsibilities to
distribute the funds in order to keep a reserve of cash.
National Thoroughbred Racing Association – an industry-funded marketing
group that draws some of its revenues from dues from racetracks and
horsemen’s groups – was a party to the lawsuit, because NYRA pays the
horsemen’s group’s share of dues to the NTRA, also from purse funds. As
a result of the settlement, the NTRA has agreed to set NYRA’s debt to
the marketing group at $279,399, according to the documents.