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Sunday, December 30, 2007

Franchise Fiasco a Team Effort

- Indications are that sometime soon, perhaps on Monday, the outlines of a deal worked out by the staffs of the governor, Sheldon Silver, and Joe Bruno to extend NYRA's franchise will be announced. I'd guess that NYRA will get its 30 year term in exchange for giving up rights to the land, albeit with periodic checkups as ordered by Dr. Bruno. And I'd surmise that NYRA will have to cave at least to some extent on a restructuring of the board. Joe Bruno will proclaim that the new NYRA will be strictly monitored and held to high standards. Sheldon Silver will take satisfaction that he blocked slots at Belmont. The governor will issue a statement talking about the importance of the racing industry to the state economy, and how he's gratified that he was able to craft a solution to have it continue without interruption. NYRA executives will raise a New Year's toast to a victory which seemed absolutely inconceivable just 18 months ago.

But those of us who keep the sport going by pumping the hundreds of millions through the tote machines will be left scratching our heads. Hey, what about what we think? Why is there no real discussion of consolidating OTB with the track operator? Where are the artists' renditions of the renovated facilities at Aqueduct and Belmont? What are the plans to make those tracks vibrant and alluring once again, even if large crowds are a thing of the past and, with the proper structure in place, increasingly irrelevant to financial success? What will be done to ensure the integrity of the sport and to prevent cheating and fight illegal medications? What, improvements are in store for backstretch conditions? (I imagine the horsemen have many of the same questions.)

The public was ousted from this process once the Ad Hoc Committee on the Future of Racing was done with its work. In the nearly three years that I've been following this process, I've been right about some things, and wrong about a lot. But I've not be more incorrect than I was when I initially mocked the makeup of that committee, noting their lack of experience and knowledge of the racing industry. I scoffed further when they displayed that inexperience with questions posed at their initial public hearing. But the fact is that if the current principals put in just a mere fraction of the time and energy that the Ad Hoc Committee did in educating themselves on the important issues at hand, we'd have been much better served. Their process may have been flawed in being too clinical, and you could argue for or against their final decision. Ultimately, subsequent events and their strict assumption that the state owned the land rendered their work obsolete.

But at least they listened. They invited the public to comment at their hearings, and the fact that they listened to, and processed and carefully considered the information was clear in their final report, which disclosed, for everyone to see, exactly what went into their decision, with hardly a detail overlooked.

Ever since the current administration came to power, the process has been a classic example of secretive closed-door Albany politics. The meetings of the Rifkin Committee were public only in that they could be viewed on the internet. We learn of the current developments only through anonymous sources. And, worse yet, none of the principals have added anything constructive - not a thing - to the debate. Spitzer has been disinterested from the start, and, whatever one thinks of his MOU with NYRA, it's clear that backing down from the land claim fight was the path of least resistance and effort. Silver hasn't shown a shred of interest, except to block slots at Belmont.

And Joe Bruno? As the only member of the trio who is not only knowledgeable of the subject, but, we're told, a genuine enthusiast, he has the most to answer for. If the Senate Majority Leader was holding out for a plan to consolidate OTB, for guaranteed investments to improve the plants, for a better cut for horsemen and breeders, for a clear stated vision on how to maintain and build on the state's status as the best racing venue in the country, well, then, we might all be behind him. With no disrespect to the horsemen for whom the winter is so crucial financially, I don't think any of us would give a shit if racing here was halted for a few weeks, if it was for a good cause. But instead, Bruno has been holding out over issues that are strictly for his own political benefit, and for who knows which suitor with respect to NYRA's simulcast rights. I mean, imagine a businessman like Bruno demanding that a company spin off one of their most lucrative assets? We've seen how he reacts when it's suggested he give up his outside business interests.

Finally, there's NYRA. Their comeback has to be one of the greatest rallies this sport has ever seen. They played their hand expertly, and I don't believe that anyone can blame them for doing so. It's business, and survival, and any person or entity in a similar position would do the same. Under NYRA, racing in New York has risen to its current position of prominence, as most recently demonstrated by the dominance of local horses at the Breeders' Cup; and I have little doubt that the sport remains in good hands. They were the only bidder that I can say with any confidence that they will treat racing, and not slots, as the top priority. However, the fact is that NYRA won their case on threats, and not by articulating a positive message and future for the sport in New York. We can only hope that they do so once the smoke has cleared.

Of course, we'll need the politicians in Albany to be willing to take the time to carefully examine the OTB's and other issues of importance. And if they didn't do so with the pressing franchise deadline looming, why would they once it's passed, especially once slots revenues start to flow? Instead of looking ahead to a bright new era, as 2008 begins, things look disturbingly the same. And everyone involved shares a bit of the blame.

10 Comments:

Anonymous said...

>>>things look disturbingly the same.
BINGO!

Who profited= LAWYERS

Who lost=FANS

We still get high takeout.

Over priced food and drinks.

poor conditions to wager.

Poor quality replays.

It was just super for the horseplayer!

Anonymous said...

The NYRA hasn't been declared a winner yet, only by Alan. This incompetent operating group may still have some more hoodwinking to do in order to preseve its existing role as NY's racing franchisee.

Anonymous said...

I agree that the process has been a fiasco, but just to play devil’s advocate:

It’s not clear to me that racing fans have anything to beef about. The bottom line is that we enjoy a form of gambling that is very expensive to produce, and what we’re paying is (in most cases) insufficient to cover the cost of producing it. If NYRA (or any other franchise operator) feels that capital or operating improvements will pay for themselves via increased revenues, they presumably will make them. If not, why should racing fans be entitled to insist upon them?

OTBs are a product of a bygone era. Now that NYRA can offer internet wagering, NYRA should be able to take care of the OTB issue themselves. I don’t understand all of the economics of NYRA and the OTBs, but I’d guess that, since NYRA doesn’t pay for its own signal, its marginal cost of accepting a wager is lower than that of the OTBs. NYRA also has a statewide market and is not saddled with the patronage and bricks-and-mortar costs borne by the OTBs. Given all that, NYRA should be able to bury the OTBs.

I’m with you on the backstretch. Name me another industry that advertises to its customers: “We don’t pay our workers enough to make ends meet, so please make charitable contributions to help them out.” I don’t know if blame should fall on NYRA or the horsemen or both, but it boggles my mind that race tracks and horsemen can ask for subsidies from slots without someone insisting that backstretch conditions be improved.

BitPlayer

Sarah said...

Alan,

Like you, I have been following the franchise process for the duration, and read the RFPs with interest, care and optimism. I, like many, hailed the new governor as the right man to do the right thing. Needless to say, I've been sickened and saddened by the entire process.

I am a Saratoga resident, an avid handicapper, a lover of thoroughbred racing, and one who has also put in a good deal of real time over the past several years on the backstretch -- yes, 5 AM on shedrows in Saratoga seven days a week during training months here. My concerns, like those you voiced in your last, are wide-ranging: racing integrity, backstretch improvements, desire for capital improvements at the downstate tracks to increase attendance (and if that entails VLTs, so be it), and firm belief that the OTBs and tracks need to be allied in the best interests of both. In the RFP season I was shocked to discover the depths of NYRA's mismanagement and, dare I say, iniquity (i.e. things that don't make the headlines, like huge executive expense accounts, etc.). I was, however, heartened by Empire, the horsemen's original choice. Empire did address all those issues -- equine and economic -- that you speak of as missing in the final discussions: everything from safety rails, padded starting gates, and turf maintenance to OTBs and VLTs, to racing and wagering integrity, to customer service and capital improvements, complete with architect's plans, not to mention an upstate equine economic development plan. By any comparison the RFPs of the other groups were superficial (Excelsior), hasty (Capital Play), or weak (NYRA, scoring lowest, I believe, in integrity). I know you are no friend to Empire, but on the merits of the thought, care and planning that was their blueprint for the future of NY racing, to my mind they won hands down. I feel that the politicians have squandered what could have been an opportunity to inaugurate a new "Golden Age" for NY racing. I blame Spitzer above all for never, seemingly, had the slightest interest in the issue beyond its being a puck in a political hockey game. As an old-fashioned "yellow-dog" democrat, I also find myself amazed at having to praise Joe Bruno . . . up to a point . . . for sticking to his guns almost to the end. He understands the issues and, rightly to my mind, has been appalled by the idea that NYRA -- with board more or less intact -- is apparently going to be given a free pass.

Whatever happens on New Year's day -- whether the horses are working their way to the post a little before 12:30 or the track is dark -- for all who have cared deeply about this issue, it will be a sad sad culmination of a process that began so brightly.

Anonymous said...

Sarah,

Your assessment of Excelsior and Capital Play is spot on, but wanted to recap the evolution of Empire.

I believe every horseman and fan was rooting for a white knight to emerge ready to implement the changes you rightfully state need to occur.

I too was enthralled with Empire, the concept of which came closest to matching my ideal.

In truth, hey had the best horse, but rode it pitifully.

First, they should have formed as a non profit.

Next they should have actively recruited a wide spectrum of resident NY horsemen, of which there are many with the means and motive to have invested the seed money in a not for profit venture.

Third, the initial investors that happened to be elected representatives of the Horseman's Group should have resigned from their positions citing conflict of interest.

Instead, they arbitrarily threw the support of the Group as a whole(this was never voted on) behind a venture in which they individually had a for profit interest. Classic conflict of interest.

The Horsemen as a group should have remained neutral, staying above the fray while representing the horsemen's interest in Albany and with whomever won the franchise, taking the high road as an "interested party".

Instead, by taking sides, and backing the wrong horse to boot, they lost their voice. Thanks a lot.

The next misstep occured when Empire accepted money from NY Racing's competitors, in exchange for the rights to the valuable simulcast signal.

This misguided attempt to claim industry support ruined any remaining chance of being viewed as the locally based entrant with the best interest of NY racing at heart.

Lastly, the hiring of questionable lobbyists and connected PR firms to do be their voice was the straw that broke this thoroughbred's back.

The anti NYRA PR campaign got so nasty that even the Albany politicians were disgusted by it, and thats a tough achievement.

Empire was 2-5 morning line, broke alertly, had control early, but ran very greenly thereafter and was eased in the stretch.

Excelsior was 4-1, broke poorly, but gathered momentum briefly to take the lead, only to break down due to questionable investors.

Capital Play missed the entry deadline, but in a last minute political maneuver, bribed its way into the gate, albeit at 50-1 ML.

Never should have been allowed to start, but nonetheless was allowed to run and finished second passing broken down horses in the stretch completing a long shot exacta.

NYRA, 20-1 ML was best of a bad field.

We all wish someone else had entered the race, but unfortunately none did, perhaps not having the stomach for the predictable Albany ugliness to come.

All we can do is hope that NYRA will use the additional revenue wisely and implement some of the excellent ideas that always seem to arise from competion.

Anonymous said...

Bit, think you are selling NY Racing short with regard to treatment of employess.

There are quite a few industries that treat workers worse than thoroughbred racing. At least in New York they do try to help via charities that provide child care and education courses that are not standard employee benefits.

Horsemen go to great length and expense to hire legal immigrants. Do you realize how much it costs to do it correctly?

And they all receive benefits, which is lot more than the illegal immigrants receive from other industries.

Hours are long, pay is low, but you rarely see any of them complaining. Most return year after year, so something must be right.

That said, backstretch conditions, especially the dorms, need upgrading and fast.

Sarah and Alan?, has anyone ever posted the details on the expense accounts?

I remember reading the total amounts over a multi year period and did not find them out of line for this type of business.

It is easy to cast totals of multi year expense reports as evil to the masses, they will always seem extreme to someone working for a living.

All expense reports are padded somewhat, but doubt very much they are out of line with the norm in the industry as compared to Magna or Churchill Downs.

If they are I will eat crow, but not willing to jump to that conclusion simply because some politician says its so, especially when they reside in Albany.

Anonymous said...

Interesting quotes from bottom of most recent Bloodhorse article.

"“This is government at its worst,’’ said Charles Wait, a NYRA board member and president of Adirondack Trust in Saratoga Springs. He said he and other community leaders are worried about the pace of the talks, and said there is anecdotal information that hotel bookings for next summer in Saratoga are down because of the franchise uncertainty.

Wait, a longtime Bruno political supporter, said the lawmaker assured him that he is not looking for wholesale changes on the NYRA board. Bruno has told reporters that the NYRA board should be replaced. “He said we have a good management team in place,’’ Wait said of Sept. 28 conversation with Bruno.

He said the board’s position is that a 30-year extension is a fair trade for NYRA giving up its land claims to the three tracks and for a re-structuring of the board that will reduce its number in half. “If I looked at this as a business deal, I would do it. It’s crazy to give up that land for a 30-year franchise,’’ he said. But, he added, NYRA is willing to go along with the deal.

Government sources said word spread over the past couple of days that Wait was preparing to take an advertisement out in a local newspaper in Saratoga calling on Bruno to settle the franchise dispute. Negotiators said talk of an ad targeting Bruno in his district helped move along the sides on some stalled issues.

“I don’t have an ad going in the Saratogian,’’ Wait said. But sources said a letter was drafted that was ready to be turned into an ad.

Wait did say the frustration level in the community is high. “This should have been resolved six months ago,’’ he said. “This is government at its worst.’’"

Mike D. said...

You will see big, positive change in New York State government one election from now if the democrats gain majority in the NY State senate.
Nothing against the republicans but NYS government is in gridlock with its democratic assembly and the republican senate--and "business as usual," meaning both sides making concessions to get anything done, and "done" often in a half-baked, no-real-solution way (see NYRA). Republicans hold 33 of the 62 senate seats, dems hold 29.

Anonymous said...

LOL at Mike D's comment -- one party rule, yeah that's what the state needs! We have an incompentant Dem Governor, a Trial Lawyer as Speaker of the Assembly and a clown as current Minority leader.

Yeah, that one party rule worked really well with Bush too, so then we elected the new Congress run by Dems which is a fiasco.

The real change comes in three years when we elect a new governor -- it may be a Democrat, but I doubt it will the incumbent.

Mike D. said...

To Anonymous LOL-man:

For a grasp of the antagonism between the gentlemen Spitzer and Bruno, which is paralyzing NY State government as well as the state's racing franchise, please check out this Dec. 10 New Yorker piece:

http://www.newyorker.com/reporting/2007/12/10/071210fa_fact_paumgarten

I've read it, and as a fan of New York racing I'm not laughing.