Charlie Hayward had reminded the Times Union's Jim Odato that it's "political season" when asked about the impending release of Comptroller Tom DiNapoli's audit of NYRA's finances (pdf file). And sure enough, there was DiNapoli, up for re-election this fall, in full campaign mode on Monday as he announced his shocking findings that NYRA Faces Insolvency Without VLT Revenues!
Of course, since many media outlets reflexively portray NYRA as a hopeless and incompetent money sucking void, most omitted the "without VLT Revenues" part from their headlines... like this, or this, or this, or even in the three major racing dailies: the Thoroughbred Times, the Daily Racing Form, and Bloodhorse; all of whom should know better and should be ashamed of themselves. That's like ESPN.com running a headline which reads Yankees Pennant Hopes Tenuous if CC Sabathia, Mark Teixeira, Derek Jeter, Nick Swisher, and Mariano Rivera suffer season-ending injuries
Indeed, it's common knowledge that VLT's are essential to the industry's survival in the state; we didn't need a third-rate politician to tell us that. DiNapoli was going to extract his pound of political flesh no matter what; and this farce of a report shows to what lengths he would go. (Not to mention his grandstanding announcement that auditors will be on site at Saratoga to provide a “real time” picture of NYRA’s finances. Seriously, gimme a break, what are they going to do, pat down the admission clerks and keep a watchful eye on the Chinese food deliveries?)
The report acknowledges that the lack of VLT's has cost NYRA $30 million since April 2009, and that the association is owed $17.1 million (now closer to $20 Million) by NYC OTB. (But it doesn't bother discussing the devastating effect on the industry of OTB which is singular to New York State....nor the arcane laws such as the one which prohibits NYRA from streaming its own races.) Yet, along with some unspecified notions regarding saving on personnel costs (and recycling the already-debunked idea that NYRA's officers are overpaid) and the 20/20 hindsight idea that NYRA should have acted as if it knew there would be no VLT's in the specified timeframe even immediately upon emerging from bankruptcy, the Comptroller, for all his efforts, could only actually identify some $1.2 million that he says NYRA could have saved on an annual basis. Even an untrained accountant like myself (well, and like DiNapoli for that matter) can tell you that that's not material to the question of NYRA's survival when we're talking about nearly $50 million in revenue going missing each year. And that's if even that relatively insignificant amount was valid.
Because it's not. DiNapoli states that NYRA spends $900,000 a year on transporting horses among its three tracks. However, as NYRA points out in its response, that's merely a normal cost of doing business, especially given the keen competition among jurisdictions, many if not most of them flush with slots revenues, for horses. That service is also provided in California, Maryland, between Churchill and Keeneland (competing tracks), Arlington and Churchill, and at Gulfstream Park (from Palm Meadows). The balance of the supposed waste is $320,000 in "potential savings" from its $125,000 per month contract with Getnick and Getnick for its services as its Integrity Monitor (as required and approved by the bankruptcy court). That idea is debunked point by point in a response by NYRA board member James Heffernan. It's just not enough money for me to spend the time going into the details here; you can read his letter if you're interested.
Besides, I wonder how much less than that $320,000 this whole idiotic political exercise has, and will (with the Saratoga Audit Squad turning in their Shake Shack receipts for reimbursement) cost taxpayers.
- One point on which I actually agree with DiNapoli is his observation on the latest round of the Aqueduct racino selection process.
“It looks like the selection of a VLT operator for Aqueduct is still an open question....When you start with six potential bidders and end up with only one, it begs the question of how the process was handled and whether the state can actually close the deal. [Troy Record]Indeed. The former Aqueduct Entertainment Group (now known as Aqueduct Entertainment Company) is looking to further complicate that matter with its lawsuit against New York State and the individuals involved in that company's DQ after "winning" the previous bidding round.
The suit's central argument is that the Lottery Division, at Silver's request, changed the rules "in the middle of the process" by requiring "passive investors" to be subject to the same level of disclosure as AEG's managers. [Albany Times Union]Of course, AEG didn't complain when Senator John Sampson changed the rules by giving them the details of their rivals' bids. The fact is that the rules were changing all the time. I don't think that this lawsuit will ultimately prove to be worth anything more than DiNapoli's report.