NYRA audit: Effect on Horse Racing
The sport of horse racing has been feeling the financial pain of a stifling economic climate in recent years and even more so, in recent months. What really marks the reality of the downward spiral of horse racing are the complaints coming from the New York Racing Association (NYRA).
As all horse racing companies, as well as horse racers, struggle to survive, the long-standing, credible NYRA’s damning report reveals a need for genuine concern. The New York Racing Association is a not-for-profit corporation that exhibits the largest thoroughbred horse racing tracks in New York. It also runs South Ozone Park’s Aqueduct Racetrack, Elmont’s Belmont Park and upstate New York’s Saratoga Race Course.
An official report released by the New York State Controller spells the end to NYRA stating that unless NYRA can manage a complete revamp, it is unlikely to escape the insolvency created by last year’s disastrous year of debt. Some have proposed setting up Video Lottery Terminals (VLT) at the Aqueduct track to make up for these financial hard times.
NYRA has been in financial trouble before, filing for bankruptcy back in 2006 and only being salvaged because of an agreement in 2008 that reassigned all the rights of every track over to the state. The state went ahead and erased most of NYRA’s debt and also made additional payments mounting over $100 million.
Luckily, the only bet to save NYRA is the implementation of VLTs, an execution that, according to the bankruptcy agreement, the state should have acted on already. Upon any exhibit of delay, the state is forced to provide the funds required to support the construction of these machines that may or may not save the NYRA from extinction.
It could be too late and many hold more internal personnel responsible for the possibility of NYRA’s economic plunge. The state failed to produce the promised funds on time, but NYRA’s controller must have seen long ago that money was running out and that it was time to start cutting costs since the VLTs had not even begun construction.
External factors, like the declining attendance at the tracks due to the tight economic climate and New York City’s Off-Track Betting Corporation’s inability to repay a $17 million debt to NYRA, also played a part.
But a report blames the NYRA controllers, stating that “operating expenses with its actual net revenues; implement the plan; monitor NYRA’s adherence to the plan; and promptly take corrective action if the operating expenses routinely exceed the net revenues.”
So why have the state officials delayed the construction of the long-awaited VLTs? So far it has allegedly been a matter of not finding the right bid. Last week, however, a Malaysian casino operator presented an electronic slot machine parlour bid to the state that was finally accepted. If constructed, it will be called a “racino” and it will include over 4,000 video lottery terminals and other facilities at Aqueduct Race Track in New York.
Aqueduct controller, Thomas DiNapoli told the Bloomberg BusinessWeek that without the speedy set-up of said machines, Aqueduct faces certain insolvency: “The fact is NYRA can’t make it long without significant restructuring and revenues from VLTs.”
This being said, DiNapoli has a justified scepticism regarding the actual implementation of the accepted bid. He shared his suspicions with Bloomberg BusinessWeek: “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.”
According to the Associated Press, NYRA has already cut operation costs and spending by over 2% since 2008, has garnished salaries and is laying people off. The Association is also looking for further steps to take in order to keep itself and its counterparts alive. Hopefully, DiNapoli’s scepticism is just paranoia and the VLTs will be up and running before insolvency wipes out NYRA’s future. Otherwise, fingers are crossed for the success of plans B, C and D.
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