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Tuesday, May 01, 2012

Sorry Charlie

As they say, the cover up is often worse than the crime, and man, is it ever in this case for NYRA. The 1% takeout snafu was made into a big deal by politicians and the press with the attention-getting "$8.6 million taken out of horseplayers' pockets," but truth was it consisted of dribs and drabs that most horseplayers - including this one - didn't notice and haven't to this day.

But now, the Racing and Wagering Board (which surely has its own incentive to pin the blame on somebody else) has determined that NYRA knew far more than it was letting on. And once you get to the cover-up part, the question is always "What did he know, and when did he know it." In the case of NYRA President Charles Hayward, it's apparently spelled out in black and white. He knew everything. And he had for quite awhile. If you haven't seen the email exchange between Hayward and Steven Crist:

“Later on August 1, 2011 Hayward responded to Crist: “This gentlemen [who contacted Crist to alert him to the takeout error] is correct. Off the record, we have been working on this for some time. We originally had thought that we would announce this for Saratoga but political forces intervened. Since we are showing substantial losses in 2010 and 2011 and we have been smacked around by Cuomo (and he could check the SRWB from approving), we decided to wait. Also, the regional OTBs who collectively lost money in 2010 will scream like stuck pigs and that would provoke Skelos who is very tight with the guys who run Nassau OTB to introduce anti-NYRA legislation for the benefit of the OTBs. Finally, we are quietly working on a plan to open 10 or so restaurant/bars in the city and we did not want the politicos to block this effort. We have some internal debates on how much to lower each pool and how we would present this to our simo customers, the consumers and the politicos. I would appreciate it if you could keep these details confidential. I would also welcome a further discussion on this topic with you before the meet is over.

 “On August 1, 2011 Crist emailed Hayward: “Will keep it confidential and would love to discuss possible reduction schemes with you off the record whenever the time is right.” [Capitol Confidential]
At the time, last December, when the error was revealed to those of us other than the sharp guy whose query to Crist precipitated all of this, NYRA explained that the sunset of the temporary takeout increase "was unintentionally overlooked due to the complexity of the takeout provisions in the Racing Law." But that was...simply not the case. [Going to stop using "allegedly" or "apparently" as long as nobody disputes the existence or accuracy of the reported emails, not going to happen.]

Look, as I've written before, I think Charlie Hayward is a great guy who genuinely loves the game. He brilliantly maneuvered NYRA through the franchise process when everybody, including this occasional blogger, counted them out...and continued to successfully guide the association through subsequent financial and political pitfalls to get to this point where the slots money is finally flowing. Whatsmore, given the constant criticism and scrutiny from Albany, I can't even really blame him for retreating into the kind of bunker mentality that led to the tactics and thinking described in his correspondence to Crist. But no doubt this is the end of the road. The unpaid administrative leave that he and Sr. VP Patrick Kehoe have been placed on by the NYRA Board of Directors is merely the first step out the door. No way in the world that he survives this. NYRA's very existence is in peril at this point, as Franchise Oversight Board chairman Robert Megna has made quite clear.
"This is not an isolated instance." Megna continued: "A failure to meet this most fundamental obligation puts into doubt the continued efficacy of the state's franchise agreement with NYRA."
So you can be sure that the NYRA Board will soon distance itself from those responsible as quickly as possible.

As for Steve Crist, the consequences are less dire, though surely embarrassing. He explained to the Daily News that he didn't quite grasp the fact that NYRA was overcharging contrary to the law. Whether or not you buy that, the fact is that he was surely put in a tough position here by a former colleague. Off the record is off the record; so whatever Crist did or did not understand, I don't know what else he could have done. Unfortunately, his credibility on matters pertaining to New York racing, which he has reported on so expertly and admirably for so long, is unquestionably compromised at this point.

 - Little surprise to wake up yesterday, the Monday kicking off Derby week, to find yet another damaging front page article in the NY Times on equine breakdowns courtesy of Joe Drape. Big Purses, Sore Horses, and Death. Maybe they need a new headline writer there at the Times....that's the kind of thing I might resort to for a blog post when I just can't think of anything more clever or succinct. However, I have nothing else to criticize; it's a pretty solid piece; quite disturbing as you might imagine. Drape however...apparently...had nothing better to do late last night than to parse through Twitter posts from earlier in the day, take one completely out of time context and reply sarcastically in an...apparent... attempt to make the poster look stupid. And that's pretty pathetic.

- Thanks to all who have written to see if I'm still alive. 


Anonymous said...

Welcome back, Alan. I hope you will be giving us your thoughts on the Derby. I do appreciate the blog posts about the NYRA and horse racing in general, but I really read your blog for the racing discussion. There is a real shortage of interesting writing about horse racing and your blog is one of the few places that can be counted on.

jk said...

I am pleased to report I received an $18 credit in my NYRA Rewards account for the takeout overcharge. Thanks Charlie!

If Heyward gets the boot over this some of the regulators have to as well. Where was the NYSRWB, the oversight board etc. while this overcharge was going on. The were certainly on the ball when the takeout was increased and asleep at the switch when it was sunset time.

A simple phone call from the regulator to NYRA at the time of the sunset would have saved the customers from being ripped off for $8 mil. This is the regulators job, to make sure the customers are not being ripped off.

I view all of this as another step in the closing of the Big A for Cuomo's convention center. NYRA's self inflicted wounds have cleared the way for it to happen.

Dan said...

I thought Charlie has done a decent job at NYRA but this really looks bad. Everyone dropped the ball on this however Charlie & NYRA's attorney will end up out of work because of this.

I wonder if the guy who wrote Steve Crist emailed the NYS Racing & wagering board? They also dropped the ball but again they will just blame Charlie.

I hope NYRA can get a new CEO & get things in order.

I'm sure NYS is trying to reduce the subsidies to the tracks- see Ontario Canada...

Charlie Davis said...

"$8.6 million taken out of horseplayers' pockets," but truth was it consisted of dribs and drabs that most horseplayers - including this one - didn't notice and haven't to this day."

I disagree. 8.6 million, churned 5 times(industry standard is 7), is 43 million dollars of handle. You might not realize it, but it affected you just as it affected all horseplayers whether they play NYRA tracks or not.

Dan said...

The good news is now the takeout is 24% instead of 25%. The coverup is always worse than the crime.

Anonymous said...

Great stuff as always, Alan.

"Apparently" Joe Drape is a dick.

Anonymous said...

'Ali Baba and the Forty Thieves....that's Charlie and his crew. Thus far the most corrupt administration NYRA has ever had. This isn't the only wrong doing the State and the Racing Board are aware of. There is more to come stay tuned this story isn't over. To all of you who praise CH for doing a great job with the Federal Prosecution open your eyes it was a pay off job @ $125,000 a month so Getnick would get them out of it. CH made it look like he was saving NYRA but it was only in the best interest of himself and his Forty high paid thieves. Integrity they have none!!

Anonymous said...

Hi Alan,
THe part that interests me is

"We originally had thought that we would announce this for Saratoga but political forces intervened."

Is this saying they were going to announce the take out issue and they were told not to? That is how I am reading it. I wonder if Hayward will have more info on it.

Figless said...

Where was Getnick during this debacle, weren't they still on the job? And their independent accounting firm?

No surprise NYRA is running advert for new CPA firm....

Anonymous said...

No Getnick is gone, they originally awarded them the contract without first bidding it out. Once that was uncovered they had to get rid of them and bid the contract out. Now they have some other law firm in Manhattan.

Waiting for Saratoga to announce it? Really? Why wait for the most important race meet to do that? Charlie is full of it. It's been how long that this has been going on? He wasn't telling anybody anything, he just got caught!!!

Figless said...

If not Getnick then someone was being paid to monitor this....are they going to return their fee.

Anonymous said...

How do you get a refund if your owed money and filled out the W2G form but do not have an account they owe me $1950.00

Anonymous said...

Ask Howard Foote as the external audit partner. Great guy. Stands for integrity and honor.