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Thursday, April 15, 2010

Now What? (Updated)

The legislature is gone for the weekend - nice working hours, eh? - and the deal to save NYC OTB is dead for now. Whether or not OTB will decide to once again delay its threatened closure until the politicians return to work on Monday is not known.

Assembly Racing Committee Chairman Gary Pretlow said he expects NYCOTB to shut down April 18. “Monday is the slowest betting day, so maybe they do something to show they can do it,” Pretlow said. “But we’ll be back (April 19).”

Pretlow said he was surprised at the level of opposition by the racing industry. NYCOTB handle about $1 billion each year.

“(The industry) opposed saving OTB, which I don’t know why, since they are their lifeblood,” Pretlow said. “I think eventually, they will see the handwriting.” []
Indeed. The proposed plan was fought tooth and nail by racetracks and horsemen (save NYRA, which supported the plan once it included a lifeline in the form of a $17 million advance against Big A slots revenue, more than enough to cover some $4 million in reduced OTB payments that would have resulted from the proposal) because of the reduction in payments from OTB which it would have entailed. That figure was reported to be 15%. Now they are facing a cut of 100%. And that doesn't make much sense. Sure, it sucks and it's totally unfair to expect tracks already receiving an unfairly low percentage of OTB's handle to swallow a further reduction in order to save the parasitic bookie operation. And the right thing to do is to merge not only NYC OTB, but all of the OTB's with the racetracks, starting with a transfer of the former's phone and internet wagering to NYRA. But, given that we know that's not going to happen, is 0% of the existing payments better than 85%? While, in the event of a closure, NYRA could pick up valuable business for its online wagering platform for which it receives its full on-track takeout, the harness tracks would be left completely out in the cold.

And is it a better alternative for the union to have zero jobs instead of the reductions being proposed, whether or not it is to receive the severance and sweeteners that they apparently had been promised?

So, maybe I'm wrong, but I do still expect something to be done when the lawmakers return on Monday, at which time all of the sides will have had time to digest the ramifications of doing nothing; and that includes the lawmakers themselves, which will have to deal with a bankrupt NYRA as well as the other tracks banging on their doors for help.

- Here's an excerpt from the latest of the totally ignorant newspaper editorials on the subject that I've seen, from today's Daily News:
After draining OTB of millions to prop up racing, after throwing it into bankruptcy court, after being warned that closure was coming, after promising to come up with a rescue plan, the bums left town yesterday without doing a thing.
In fact, OTB exists to "prop up" racing, and it is in fact OTB which has drained the sport to which it owes its existence, not the other way around. But hell, I certainly don't have to tell you guys that. Why don't we all go to the News' editorial and leave comments telling them how totally clueless they are about the subject, and to leave the editorializing to Jerry Bossert instead.

UPDATE: Interesting, Capitol Confidential has a draft of the proposed bailout plan, and the 15% reduction on payments was to apply only to out-of-state simulcast revenue, and would only amount to $1 million in total for the year. The draft also contains a provision which would have - finally! - allowed the OTB's to stream live broadcasts of the races. That would have also - finally! - freed up NYRA to do the same, which no doubt would have been a boost to their bottom line. It also would have allowed - permanently - "joint ventures between all the OTB's, tracks and NYRA for the purpose of negotiation, consolidation, mergers, acquisitions or consolidations." And, of course, the $17 million loan against future slots monies that would have, according to Charlie Hayward, would have kept its cash flow positive until the first quarter of 2011. So, I'm looking at this and wondering what exactly was the problem....and thinking that it will eventually get done.


jk said...

It is easier to shut it down and start over. All of the "stakeholders" are ignoring the fact that OTB is in bankruptcy and a major restructuring is on order. A clean slate is the way to go. Get rid off the expensive office space, bloated management and ridiculous subsidies to the harness tracks.

Anonymous said...

Alan, your reporting is again spot on in presenting the issues as they really are. Solutions and outcome? Still a longshot given the fact that Albany is in the driver's seat as always. Let's hope that something comes together soon for all concerned, especially those whose livelihoods are tied to the NY racing industry. /S/greenmtnpunter

ljk said...

I'm with jk. If you run your business into the ground, you either go out of business or reorganize under bankruptcy protection.

At least that's the way it used to be.

Anonymous said...

Me too, let it fail. The problem was the union would not sign on without those ridiculous severence packages and RAISES!!!


For what a job well done???

Get paid extra for Sunday, that are the hours, if you dont like it go find a job elsewhere.

Regarding NYRA selling its soul to survive, do you know if the "reductions in payments to to the racing industry" come out of there pockets or out of purses?

Are the horsemen at the table or are they meekly standing by begging to stay in business?

Need to play hardball, and I for one hope the deal falls apart. It will be tough short term with OTB, but NYRA will figure out a way to survive and the industry will be stronger long term down the road.

Under the Franchise agreement the state needs to fund NYRA regardless.

Anonymous said...

40+ years ago NYRA made the big mistake of letting a parasite form. It now, for the first and maybe last time, has the opportunity to rid itself of the parasite, but only if it has the will to sustain the short term discomfort and pain that always accompanies the removal of such a creature.

Charlie has a choice, let the thing continue to feed off NYRA keeping it from reaching its full postential, or take a chance and drive the wooden stake into its vampire like heart, hoping that long term the host can return to its glory.

$71,000 MSW purse at Woodbine Sunday, VLT's plus controlling the OTB's can result in the same thing here if NYRA has the guts to stand up to OTB instead of taking the easy temporary bailout.

Tell them to shut down, then hire twenty buses to bring customers from the shut OTB parlors to the track. Enlighten their lives, get them out of the rut they have been stuck in, some for 40 years.

Insist on taking over the internet and telephone accounts, bring some of them to the track even at the cost of a few bus rentals, make a big push to win back your business.

Anonymous said...

As an addendum to the above, I now recognize what a mistake it was to award the franchise back to NYRA. I was one of their supporters all along, not because I thought they did a great job, far from it, but I believed the not for profit model was best for NY.

But imagine this scenario if the Franchise had been awarded to a "For Profit" model without the percieved baggage of NYRA.

Do you not think the franchisee would be all over this, trying to take over OTB instead of enabling it? Do you think the politicians might actually allow it to happen instead of expressing concerns about the "corrupt" NYRA being handed more responsibility?

Do you not think the VLT contract would have been awarded by now?

NYRA, stop slumbering, from every crises arises opportunity if only you will recognize and sieze it.

Anonymous said...

The NYRA bashing commenters still don't get it. The pols continue to fool them despite all of the facts to the contrary. Alan has presented a graduate level seminar on NY racing, the NY racing franchise agreement, off track betting revenues and splits, etc, and clearly made the case that it is the state's failure to live up to the bargain it made with NYRA. NY racing fans should be bashing the lying pols in Albany who cannot do what must be done with the OTB's and the Aqueduct racino. Moral of story: Government regulated business fails again. /S/greenmtnpunter

Anonymous said...

GMP, we agree that govt should be out of the gambling business, trust me I am not "fooled: by any politicians anymore, but NYRA is taking the easy way out by signing on for a bailout they are entitled to anyway.

They have the ability right now to take a stand against NYC OTB and instead are signing on to the parasites continued existence, so yes NYRA is at fault in addition to the Albany criminals, plenty of blame to go around.

I truly believe that if the Franchise was being run by private entity right now they would see the pot at the end of the rainbow and invest the necessary funds to buy out NYCOTB, and it would be much tougher for the Albany crooks to deflect the blame for this calamity.

As long as NYRA exists the politicians can blame them every time something goes wrong. Not so easy if it were a private company without their perceived history.

Anonymous said...

Interesting comments from the lame duck;

Paterson said he feels sorry for the 1,300 employees who are about to be laid off and is still willing to consider bailout proposals, but they can't include taxpayer dollars.

"Everybody's solution to their problem in the recession is for taxpayers to bail them out," Paterson said. "We used to have a choice; now we can't do it."

Paterson also suggested the state's dismal finances may eventually force it to shed other-money losing ventures, including the Aqueduct racetrack.

"We're getting to the point where those are they types of decisions that we're having to consider," Paterson said when asked by Gambling if the state should sell Aqueduct. "We're now having to consider the viability of programs."

Paterson also marveled at how a gambling operation like the city OTB could lose money.

"It wasn't run properly," Paterson said. "It's a wonderful industry and it works in some places but apparently the encumbrances that we placed on it in New York City and New York State are top heavy."

Anonymous said...

Jerry Bossert wrote an important piece in today's NY Daily News:

He warns anyone with a New York City OTB wagering account to PULL THAT MONEY OUT NOW before (if) the company folds up. You may never see that money again if OTB is liquidated.

alan said...

Nice free advertising for NYRA there by Bossert!

Capitol Confidential reports that the NYSRWB is on the case. Still, I sure as hell wouldn't keep any money in there.

Anonymous said...

Finally some commenters who have been paying attention to Alan's posts on the franchise crisis! Perhaps a NYRA insider, or well connected at NYRA, trying to get the real story out.Quite agree on the private enterprise angle for the NY racing franchise but how could that ever come to pass in NY? The pols insist on extracting their pound of flesh from the hides of all enterprise but they prefer the kind regulated by Albany and therefore beholden to Albany. It never ends. /S/greenmtnpunter

Anonymous said...

Here's a fun race to watch.