Give That Man A Raise!

I've been wrong about a lot of things here on this blog.  But never more so than in this post.  There, I pondered the potential fallout of the widely reported problems on Belmont Stakes day on a CEO who was not hired for his familiarity with the racing industry, of which he had none.  Indeed, his area of expertise was hospitality.  The customer experience.  Precisely the areas in which many people felt that NYRA had failed miserably on their biggest day of the year.  I also felt he showed indecisiveness regarding the idea of cutting off general admission sales at a certain number.  "People lose their jobs over things like this, man," I wrote.

Well, Chris Kay is hardly in any danger of losing his job.  Quite the opposite.  As announced at Wednesday's NYRA Board Meeting, he got a $250,000 bonus and a 3% raise.  As reported/tweeted by the Form's  David Grening:

Not surprisingly, the Albany Times-Union's James Odato - initially barred from entering the board meeting, more on that later - voiced skepticism that I imagine that others, like those in the NY Fan Advisory Council, may be feeling as well.

The rewards were bestowed on Kay despite mixed reviews for NYRA's management of this year's Belmont Stakes, an event that drew a critical report from a state fan panel, and its sometimes shaky handling of the Open Meetings Law. [Albany Times-Union]

Kay did address the Belmont in his letter to the Board for the meeting book.

To the extent people contacted us during the day, we apologized and corrected the problem, often providing our guests with better accommodations. To the extent they contacted us after the event, we apologized and offered them tickets to other big events at Belmont and Saratoga. As for our governmental partners and vendors, we have immediately taken measures to address those issues. We are already planning for an improved 2015 Belmont Stakes Day.

(Here he echoes some comments by Martin Panza a few weeks ago in targeting the vendors and "governmental partners" - a reference to the traffic patterns utilized after the races by the local police - for their share of the blame.)  And, to his credit, Kay noted during the meeting: "We're working in the right direction, but we're human."

Belmont day aside, it's hard to say how much the guest experience has been enhanced, if at all. But there have surely been capital improvements at the three tracks.  They are detailed in Kay's letter, and include new TVs, Trakus, improving the sound at Saratoga (so that the bell can better shatter one's nerves), new video boards at the Belmont paddock, improving the WiFi at Saratoga (uh huh), and the opening of the Longshots bar at Aqueduct (where, Kay informs us, attendance and betting has been
"particularly strong" since the end of the Big A meet; over 30,000 visitors since it opened in April). Those are all good improvements.  But we have a right to expect such (overdue) enhancements considering that 4% of VLT revenues are earmarked for them.  So NYRA gets credit where it's due, but no extra brownie points here.

NYRA was indeed profitable - without Resorts World revenue - in the 2nd quarter of the year; to the tune of $5.049 million.  That is as opposed to a loss of $10.2 million in Q1, and a loss of $1.7 million in Q2 last year. Anyway you cut it, that is a significant accomplishment considering the prodigious operating losses that NYRA has posted over the years; not to mention the closure of NYC OTB which seemed so ominous at the time. However, it's important to put it in perspective and consider the role that California Chrome's Triple Crown bid had on the bottom line.  Fortunately, Steve Zorn did the hard work, so I don't have to calculate the effect of all that increased handle.  Steve figures that this year's Belmont handle contributed an additional $4.4 million to the bottom line as opposed to last year's race.

That's just from betting of course.  Then there are the "Other revenue" and "On-track racing related revenue" lines.  I figure that all the admission and parking fees and ticket sales accrued from the 102,199 "estimated" to be in attendance on Belmont day have to be in there somewhere.  Those figures combined come in at $10.8 million, as opposed to $1.6 million in Q1, and $7.3 million in Q2 2013.  (And remember that grandstand admission was increased to $5 along with some parking fee hikes.)

So, has NYRA truly been restored to profitability?  Or is this a one-shot deal?  NYRA's press release says, a bit vaguely, that they are "on-track to achieve its first operating surplus since 2000 - a period of 14 years." NYRA is still in the hole by $5.2 million through June 30 however (again, separate from VLT's).  Q3 of course includes Saratoga, certainly a good time of the year, and admission and parking rates are up there too (even if they did sell too many of those too cheap season passes).  But I suppose it remains to be seen if they can truly be profitable for the year.  I hope so. It's obvious from my recent writings on casinos that I think it's crucial that this industry be able to stand on its own in this state.  (And actually, I've been saying that at least as far back as this post from 2008.)  If NYRA can achieve that this year - even before implementing an OTB strategy in NYC -it would be quite an accomplishment, and Kay can get another bonus.

As far as Kay having created a strong management team, I think that definitely remains to be seen.  As I've said, I like the way that Martin Panza has moved in aggressively to implement his vision, though I don't necessarily agree with his idea of what constitutes "quality" or a "big day." Other hires lack a racing background, including the Chief Experience Officer Lynn LaRocca, Chief Counsel Joseph Lambert, and the Communications Director John Durso, Jr., who we've discussed recently (and who we will again in a moment).  It's simply too soon to evaluate their effectiveness.

And regarding 'transparency?' Well, that seems like a notion that is, at best, ill-timed coming just a few days after the revelation, as exposed by Paul Post in the Saratogian, that NYRA is padding attendance figures by adding in all 6,370 season pass holders every day, whether they are there or not. Kay actually addressed the controversy.  Well....he kind of addressed it.

"This will be my last answer to your question," he said. "What I tell you is this: We pay people in cash; we employ several hundred people in this area — not on attendance; we pay them based on revenues we generate. The most important number is the fact that we are able to employ a lot of people, and an independent study that concluded our 40-day meet generates $200 million in economic impact in the Capital Region." [Times Union]

If anybody knows what the heck he's talking about, please fill us in.  Look, when push comes to shove, it's not that big of a deal how they count attendance.  It's just a number, subject to random events.  It would be nice to be consistent from year to year; but whatever, it's not the end of the world.  The real issue here is credibility and, yes, transparency.  I think that NYRA is making a poor decision in sticking to its guns here, and by issuing defensive explanations ranging from insulting to incoherent. Nobody is buying it, anymore than anyone is buying that Andrew Cuomo didn't try to interfere with his Moreland Commission.  If anyone in this country actually cared about horse racing, it could be fodder for late night talk show hosts. The president is under fire again for failing to meet his enrollment goals for Obamacare.  But, did you hear?  They've called in The New York Racing Association for some help with increasing the count.

And the fact is, nobody is going to believe any of their attendance pronouncements from here on in. Attendance is up 10% at Saratoga so far, we're told.  Yeah, right, eyes roll. Over 30,000 at Longshots? Does that include people who use the bathrooms on the second floor?  I imagine that they really don't want have to announce a decrease in attendance after having raised the admission prices and taking flak for doing so.  But it's just not worth it.  Once you lose credibility in one area, people can reasonably question most anything you say.  I think they should reconsider their position, and be transparent about how many people are in the place.

As mentioned earlier, there was an incident at the board meeting involving members of the press who were initially denied entry into the meeting.  I'm honestly not sure exactly what transpired.  It was reported by Odato and others as if it was some kind of departure from past policy.  On the other hand, I'm told by somebody who regularly attends the meetings downstate that RSVP's are indeed required, and that IDs are checked at the door.  So I don't know; maybe the upstate reporters such as Odato - and also those from the Albany NBC affiliate WNYT, who were also amongst those not admitted - are used to just walking in.  Kay and the other board members seemed to be genuinely surprised that they were kept out.  But one thing that does not seem to be in dispute is that it was John Durso, Jr. who made the decision to keep them out....and then, after about 40 minutes, to let them in.

John Durso, the recently hired director of communications, who had turned down pleas from reporters seeking to enter the meeting despite not being on the RSVP list said he thought about it during the course of the meeting and decided to belately allow the journalists to come in. Asked why he changed his mind he said: “I made the decision. End of story.” [Capitol Confidential]

That brusque manner is already part of a pattern.  When Paul Post questioned the questionable logic behind Durso's defense of the attendance counting, Durso wrote: “I disagree with your premise and have provided my response.”  Oh.  Really?

Now, to be fair, WNYT reported that Durso later apologized, and called it a "miscommunication." Let's hope that that is closer to the tone that we'll be hearing out of NYRA's Media Relations department. Because they are supposed to have relations with the media that is covering the sport. Doesn't seem to be any point to take a hostile posture towards people trying to do their jobs; don't understand what he would be going for there. (Though Odato is another story....he's been a dick to NYRA for years.  But, still.) It's also way out of character for the position of Director of Communications there.  I've always known those with the title to have been affable and open.  (And remember, NYRA was amongst the first of racetracks to issue credentials to bloggers.)  So let's hope that an adversarial communications department is not what Chris Kay has in mind.

 - Marc Holliday is the newest NYRA Board member, replacing Jane Rosenthal, who never really seemed interested.  Nobody seemed to know that he was the replacement until his name plate was spotted at the meeting. Maybe the board is just a bit sensitive that the addition of Holliday makes it an all-white male one?

Holliday is the CEO of SL Green Realty, and he at one time had designs on the Aqueduct racino.  SL Green made a bid in partnership with Hard Rock Cafe.  His name pops up twice when searched for in the Left at the Gate archive.  From Sept 14, 2009:

“Hard Rock is the right balance,” [Pres/CEO Marc] Holliday said. “Its recognized brand and quality entertainment will attract younger and older players across the stratum. People flying in from JFK will say, ‘I hear there’s a Hard Rock, I want to see it.’”

There was a lot of talk like that back then, and it was all a bunch of smoke; just like the talk we're hearing from casino hopefuls now.  I don't at all get the feeling that Genting is relying on younger players, people from JFK, quality entertainment, nor anything other than its hypnotizing slot machines (more on that soon).

 - Just another reminder that I'm writing about racing at Saratoga over at the TimeformUS blog, in my Today in Racing column here.