This is a genuine crisis. The New York Racing Association is going to run out of money at some point in the next few months, unless state leaders can remedy at least one of several structural problems in the industry.
Those problems include the failing New York City Off-Track Betting Corporation; the messy situation surrounding the selection of Aqueduct Entertainment Group to run the Aqueduct racino; antiquated pari-mutuel rules; and a lagging technology in racing gambling.
The first two are the biggest, and require immediate attention.
These issues were discussed last Wednesday at the Elmont Public Library, near Belmont Park, at a State Senate hearing conducted by senators Eric Adams and Craig M. Johnson.
With NYRA’s financial difficulties as the backdrop, brought to light in December by the association’s statement that the Belmont Stakes and the Saratoga race meeting were in trouble, the senators wanted answers.
How could this happen when a new franchise, signed in 2008, gave NYRA 25 more years to run Aqueduct, Belmont and Saratoga?
How could this happen when NYRA received, in Sen. Johnson’s words, a cash settlement "bailout" payment of $105 million when the franchise was signed?
The word "bailout" has stuck in the public arena, and that is too bad, for it does not tell the whole story.
When NYRA signed the new agreement, it surrendered its land claims to the three track properties, delivering to the state valuable acreage worth many times the cash settlement.
Anyway you slice it – and that includes Sen. Johnson’s questionable insistence that the state owned the land all along – the agreement ended a dispute on terms favorable to the state.
Another unpleasant reality here is that the franchise requires the state to fund NYRA operations and the pension system, since it has failed in its implied obligations to have a VLT operation up and running by Mar. 31, 2009.
The pertinent sections of franchise law are very clear on this.
NYRA president Charles Hayward and the executive team made exhaustive explanations of its spending at the hearing, much of it in response to questioning by Sen. Adams.
I found Sen. Adams to be sincere in his appreciation of racing, wanting to learn more about the industry, all the while strongly defending the economic impact of the game.
And I enjoyed his self-effacing humor, which frequently helped ease the tension in the hearing room.
The economic impact is major.
In the Saratoga region alone, it is more than $200 million and 2,500 jobs.
During testimony, NYRA said it had 1,300 employees.
There is more.
NYRA handles nearly 20 percent of all thoroughbred race betting in North America, and its top-class racing is directly related to thousands of jobs in other states involved in breeding, training and betting.
While awaiting VLTs the last two years, the franchise settlement cash has dwindled.
On top of that is $15 million owned by NYCOTB to NYRA.
It is critical that state leaders, in the next couple months, work on a solution.
Even if it is sustaining payments, a pari-mutuel tax break, or a resolution of the off-track betting problem, the solution will be incomplete until VLT’s are in operation.
If no structural changes are made, VLT revenue is likely to be enough to cover NYRA’s operating expenses and taxes, and also increase purses for owners and trainers.
If not, then the NYRA racing we know is going to suffer badly.
You may have noticed the association has yet to publish its stakes schedule for the last eight months of 2010.
We’re talking Belmont and Saratoga here.
That is because the ability of NYRA to maintain its stakes program is in limbo amidst this financial uncertainty.
Belmont and Saratoga will race, but they might not look like the meetings to which we are accustomed.
So our state government – if we have one – has got to deal with its obligation to racing, even if most elected officials don’t care about it.
Sen. Adams appears to be the exception, although his indication that more public hearings are coming will only delay the inevitable.
He can help by closing the knowledge gap between racing leaders and political leaders.
We need this, you know, because racing is a far more complex endeavor than other major sports.
With all its risk and uncertainty, however, it is also more rewarding.
Since the mid-17th century in New Netherland days, American thoroughbred racing has often reached its best expression in New York.
But if state and racing leaders fail to get moving quickly, the consequences for New York racing are going to be awful.