RSS Feed for this Blog

Saturday, January 09, 2010

OTB Hearing

NYC OTB Chairman Sandy Frucher, appearing at Friday's public hearing conducted by members of the state Assembly and Senate in Lower Manhattan, didn't take long to get to the yuks when, early on in his testimony, he declared that OTB had "succeeded" at its objective "To operate in a manner compatible with the well-being of the New York horse racing industry.."

Oh, really? And just exactly how has it achieved that? Yonkers Raceway VP and GM Robert Galtiero helped to fill us in on that in his testimony when he noted:

"Giving OTB our product, decimating our attendance base, destroying our revenue stream, requiring the tracks to seek relief from our heavy tax burden and, in a short time, looking for ways to keep OTB afloat."
That seems to sum the matter up pretty succinctly. Charlie Hayward noted that while NYRA "puts on the best racing in the country year round and gets $7.4 million from NYC OTB on its races, NYC OTB turns on the lights, turns on the TV sets, opens the pari-mutuel windows," and receives $39.4 million. I'd like to hear Mr. Frucher elaborate on just how that is compatible with the well-being of the sport.

Funny that the abovementioned portion of Galterio's testimony did not stop NYC OTB's PR representative, David Vermillion of Edelman, from sending out an email entitled Yonkers Raceway Testimony Supports NYC OTB Plan. A couple of points here before I move on: How is it that an operation which has filed for bankruptcy and is threatening to lay off "over a thousand workers" in a few weeks can find the money to hire a fancy public relations outfit?? Seriously, there oughta be a law! And secondly (and rather hilariously in my view), Vermillion and Edelman also once handled PR for Empire Racing. This guy is obviously not very selective about the quality or ethics of his clients; at least as far as I'm concerned.

Indeed, Galtiero did state that Yonkers Raceway wants OTB's bankruptcy plan, which includes a new formula which would slash, by approximately 50 percent over the first two years, the already meager payments it would make to the industry, to succeed (this in contrast to Hayward, who labeled it "preposterous.") Of course, unlike NYRA, Yonkers has slots and can therefore afford to take a short-term hit in the hope of profiting down the road from a revitalized OTB. Recession be damned; business at the Empire City Casino at Yonkers Raceway incredibly continues to thrive; it's virtually a straight line upward since it opened its doors in October of 2006, check it out (pdf document). In fact, the week ended Jan 2 was easily the biggest week in its history, with a net win of nearly $12.5 million. Figure they retain roughly a third of that, and I'd imagine that any change in Yonkers' share of the OTB revenues from its harness racing operation is almost immaterial by comparison.

That's indeed not the case for NYRA, whose financial woes are well-documented, or the horsemen. NY Thoroughbred Breeders Association president Jeff Cannizzo noted:
““This accounting trick will dramatically reduce revenues to those who are at the heart and soul of Thoroughbred racing, remove OTB accountability, and create a death spiral for an industry that employs tens of thousands of New Yorkers,” [Thoroughbred Times]

13 Comments:

Anonymous said...

It is just so ironic for OTB, a government entity, to demand to be taxed on its net like a private business, while the State taxes private companies on their gross handle.

What a joke.

Does anyone know the judge in this cases political history, does he have ties to anyone?

IF he is a non-political bankruptcy judge he will toss OTB's plan in the trash.

Anonymous said...

Fix the problem by merging the OTB's and then merge this organization with NYRA.

Anonymous said...

The OTB’s in New York should be merged. I heard that Pat Foye, former Empire State Development Corporation (ESDC) Chairman during the Spitzer administration, was working on this strategy. It is believed that he would then have merged this new OTB with the new NYRA.

This strategy was correct then and is still the correct solution today. However the devil will be in the details with lots of senior management heads and bloated staff required to be ditched in order to make this new entity the efficient organization the industry deserves.

Lets hope sense will finally prevail in Albany.

Anonymous said...

Foye?

Come on, he had a shot to couple restructure of off-track betting with the State racing franchise evaluation. Instead of accomplishing real reform, he punted and then bailed out.

Doesn't take a brian surgeon, or a former Chairman of Empire State Development Corporation to determine that the OTB's should be merged together and then with the State franchise.

Duh.

Anonymous said...

There would certainly be efficiencies in merging the current six OTBs which is exactly what the political hacks are afraid of since all their appointed buddies would be looking for work (or more accurately, cushy paid positions requiring no actual work).

Anyone can see the best plan is to merge the six entities and privatize the whole thing, including NYRA (which is more private today than it was before the extension and perhaps could work if management was overhauled).

It is a win win for everyone EXCEPT the politicians and the unions, so obviously it has no shot of happening.

Anonymous said...

According to Craine's, the Aqueduct decision is coming this week and there are two finalists, SL Green and AEG:

Crain's New York Business.

http://www.crainsnewyork.com/article/20100110/SUB/100119996

Stretch run at Aqueduct

By Erik Engquist and Daniel Massey - January 10, 2010 5:59 AM

The seemingly endless competition to build and run an Aqueduct racino should conclude by the end of this week, an insider says.

Two finalists remain. Commercial landlord SL Green is favored by Gov. David Paterson and Aqueduct Entertainment Group by Senate Democratic leader John Sampson, says the insider, who is not affiliated with any bids. Assembly Speaker Sheldon Silver, the third decision maker, is said not to have a strong preference for any of the five bidders.

All three men must agree on the selection.

Anonymous said...

My choice would be SLG but my money is on AEG, as is has been since day one.

Silver much more likely to side with his legislative compatriot than the unpopular governor.

Anonymous said...

I too feel the short favorite is AEG as there are four major drawbacks for SL Green at this time.

1. Given the DiNapoli incident, Governor Paterson in the end wont reward Charlie Hayward who has publicly favored SL Green.

2. The Commercial Real Estate market is shaky and SL Green is fully exposed to this market in New York City.

3. In the end the leaders wont pick an out of State Indian tribe (Seminoles and Hard Rock) to be the casino operator. There are way too many potential problems today and who knows how many more there will be down the road with The Seminoles.

4. From what I have read the Community favors AEG.

Anonymous said...

Charlie Hayward is despised in Albany.

Put your money on AEG.

Anonymous said...

I have never favored The Seminoles. We will have the Shinnecock's Casino soon, possibly even at Belmont.

Pick a non-Indian casino operator for Aqueduct.

alan said...

In addition to saying that NYRA had "a high level of comfort" with SL Green (though not explicitly endorsing them), Hayward was recently quoted as saying that NYRA had "some significant reservation about Aqueduct Entertainment Group, but we won’t comment further on that."

Anonymous said...

Charlie being despised in Albany is a feather in his cap in my book.

Anonymous said...

From everything I'm told, this Cannizzo guy is exactly what this sport needs, leadership, that's not scared to voice it. Hopefully he gets some support, NY needs it.