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Tuesday, September 30, 2014

Bonus? What Bonus?

I was looking at the Meeting Book for Monday's hastily-called NYRA Board of Directors meeting (it wasn't announced until Friday afternoon), and I noticed a pretty hilarious omission from the minutes for the last meeting, held on August 6 in Saratoga.  As you may recall, the big news coming out of that meeting - other than the attempt to bar reporters who didn't RSVP - was the $250,000 bonus granted to CEO Chris announcement which brought a mixed reaction at best.

However, you would never know that from reading the minutes of that meeting.

    2. Report of the Chair.

Mr. Wait welcomed new Board member, Mr. Holliday, who serves as Chief Executive Officer of SL Green Realty Corp to replace Ms. Rosenthal, who resigned earlier this year. Next, Mr. Wait highlighted the recent accomplishments of NYRA including the addition of new members to the NYRA senior management team, improvements in the backstretch area, payment of outstanding debts and advances in equine safety. Then, Mr. Wait recognized the senior management team and employees led by Mr. Kay for all their hard work.


b. Compensation Committee

Mr. Tese gave the report of the Compensation Committee, particularly its input on the CEO’s performance and compensation. Mr. Tese and the rest of the Committee congratulated Mr. Kay on all his achievements in creating a strong management team, transparency and enhancing the guest experience.
Yes, they recognized and congratulated Mr. Kay.  But there's no indication whatsoever that he was granted a bonus....just a small detail gone unmentioned!  I looked at the Open Meetings law, and the minutes are only legally required to mention items that are voted on by the board.  So it would seem that they are not in violation of the letter of the law, but I'd say that it surely is contrary to its spirit.  One might think that this was written by Communications Director John Durso, Jr.  I didn't know that board meeting minutes were subject to PR BS, at which Mr. Durso is quite proficient - but I guess I was wrong.

It's particularly funny that Tese glossed over the bonus while also congratulating Mr. Kay on promoting transparency!  Seems to me that NYRA has instead become increasingly insular and paranoid over the last year.  The most recent example of that is the sudden embargo on announcing Belmont attendance figures.  Maybe they didn't want to be forced to announce a disappointing crowd on Super Saturday.  (And, given their secrecy and deception when it comes to attendance nowadays, I have every right to make my own assumption that it was indeed doubt they'd be crowing if there were 25,000 people there.  I was not there myself, so I cannot venture a guess.)  Towards the end of the meeting, Chris Kay started to talk about how Churchill Downs doesn't announce attendance figures, and then seemed to catch himself and abruptly broke off.

Otherwise, I'd have to agree with Tom Noonan's assessment of the meeting; it was largely a bore.  Once again, Chris Kay got to drone on about all of the new TVs at Saratoga.  He laughingly reported that attendance there was up by 12% over last year, of course without mentioning that they counted season pass holders who weren't actually on track.  He talked about the year-over-year comparisons, and how the numbers were hurt by 16 more races coming off the grass than last year (which the Form's David Grening says is simply untrue).  And he talked extensively about how the "quality" of racing had improved at the Spa over recent years.  We heard that word tossed around without context, and I'm not sure exactly what that assessment is based on.  I, for one, would not agree.

It was a bit interesting listening to some of the breakdowns of the revenue numbers.  Of the $7.8 million increase in operating revenue through the first eight months of the year, just $1.2 million came from net wagering.  $1.7 million was from increased admission fees, $1.2 million for seat sales; pricing of both of those have been raised.  Money from sponsorships was up by $864,000, food sales by $834,000; there was $1 million in new revenue from the source fee on out-of-state ADW's.

NYRA says they still are on track to show a profit separate from VLT money for 2014.  But again, keep in mind that slots money is used to inflate purses: some $40 million in VLT purse money was distributed through Aug 31.  Without that money, NYRA would not be able to offer the purses that, in theory, help to generate increased betting revenue due to the larger fields that they attract.  And Resorts World has provided $21.5 million in VLT-fueled capital improvements this year.  Without that, NYRA would be unable to make crucial infrastructure repairs and basic improvements (such as the Saratoga TV's); nor the other 'guest enhancements' that allows it to justify all of those price increases that are so integral to their improved performance.  So, it's one thing to show a profit on a piece of paper....and it would be an excellent start in the quest to be independent of the insidious slot machines.  However, the notion that this would mean that NYRA would still be profitable if Resorts World burned down to the ground tomorrow is simply not something we can assume would be the case.

Chris Kay also hinted at further ticket and seat price increases for the Belmont Stakes, saying that they would look at the Derby, Preakness, and Breeders' Cup as points of comparison.  The problem with that is this: the Derby and the Breeders' Cup stand on its own; the Preakness is always of keen interest unless the Derby winner doesn't run.  The Belmont is very much dependent on the outcomes of the prior two Triple Crown races.  This year, it was a boom.  Next year, it could be a bust.  And while Kay pointed out that seating sold out prior to the Preakness last year, a whole bunch of other people who showed up in 2014 could be priced out of a non-Triple Crown event in 2015....and I don't care how many other Grade 1 stakes the day is stacked with.

More on the board meeting can be found here and here.


Teresa said...

Attendance Saturday was 10,239. I asked. N

Figless said...

I wonder how much of the increases in operating revenue is simply due to having a triple crown candidate?

I would like to see 2014-2013 comparative revenues from Spa, but we wont be getting those, the records were probably washed away like the mystical turf races.

Look, its certainly a good thing if they turn profitable, and the VLT revenues don't bother me as they are presumable part of the equation going forward, but I would need to see it without a Triple Crown candidate before I am impressed.

And the lack of transparency while trumpeting the same is disturbing. If OLD NYRA did this the political hacks would be screaming.

Dan said...

I felt like the attendance was more than 10K on Saturday. The place was busy all day. It was a fun day at Belmont.

Teresa said...

Figless: financials are available in pretty much all of the board meeting materials since the meetings have been subject to NYS open meeting laws:

Anonymous said...

It's particularly funny that Tese glossed over the bonus while also congratulating Mr. Kay on promoting transparency! 

Hahaha! Alan, NY Racing reminds me of the Obama administration . good stuff, it's writing like this, PTP and others on the net that makes the DRF look small.

Figless said...

Teresa interesting, thanks, but they don't break out the Spa Revenues. They mention revenues from Belmont Stakes AND Saratoga were $1.9M higher than projected but no meet to meet comparison. Perhaps they will provide in future.

jk said...

We must conclude the increase in admission prices was a disaster leading to bulk sales of season passes at the Spa and not reporting attendance numbers at Belmont where there are no season pass sales to gloss over the declines.

Dan said...

JK- I believe NYRA is not giving out daily attendance for the following reasons- They want to get away from how many people go to the track & focus more on handle. The media always focuses on attendance. NYRA should announce this change of procedure.

Alan Mann said...

Hey Dan -

I don't at all disagree that it's probably more appropriate to focus on handle rather than on-track attendance. However, first of all, as you said, announce the change instead to being so secretive and un-transparent. And, it's kind of contradictory with the whole "big day" strategy, which is specifically aimed at getting more people out to the races. Or so they've said.

Dan said...

I agree with you. Lets focus on Belmont- NYRA would like to announce attendance on the following days- Belmont Day, fathers day- Stars & Stripes, Jockey Club Gold Cup. All the others days they would like to ignore. Look, I go to the track to Bet- not buy expensive food. If I use NYRA rewards all NYRA gets from me is my $5 admission if I go to the track instead of betting at home.

jk said...

Perhaps the end of the Belmont meet will provide a clue assuming NYRA announces total attendance for the meet. A year over year comparison to last year's fall meet can be made. No distortions from the triple crown as there were for the spring/summer meet.

Alan Mann said...

Hey jk -

Agree that they can announce year over year, but now they also have a credibility problem as to its accuracy.