New York's Three-Legged Stool Has Collapsed - By Dick Downey

(Originally published in the July 17, 2010 issue of The Blood-Horse magazine. Feel free to share your own thoughts and opinions at the bottom of the column.

A three-legged stool will tip over if one of the legs isn’t solid, but what happens if all three legs are cut off? In a nutshell, you have the funding, operation, and governance of racing at New York’s three historic tracks.

In mid-May the New York Racing Association said it was broke, sent out a closure-warning notice to its employees, and asked state government for $25 million to keep operating. This happened only 20 months after NYRA emerged from Chapter 11 bankruptcy. So not only was NYRA broke, it was broke again.

At the time of its emergence from Chapter 11 in September 2008, here’s what the head of the NYRA board, C. Steven Duncker, said: “It’s a historic occasion. Our debts are gone, our management team is stronger, and we have a clean run at running racing, which is a big deal, in a managerial sense.”

One part of the plan that was approved by the bankruptcy court settled a dispute about ownership of the NYRA tracks. The State of New York emerged as the owner of the properties where Belmont Park, Aqueduct, and Saratoga sit.

In exchange, a 25-year lease to operate them was granted to NYRA, the state gave up about $200 million in debts and liens it held against NYRA, and it gave NYRA $105 million to pay off other creditors and cover operating expenses pending the arrival of video lottery terminals at Aqueduct. The award of a VLT franchise, which had been pending since 2001, was an integral part of the survival plan.

In other words, a solution was designed for the tracks to operate on the come. Duncker himself estimated that NYRA had two years to subsist without VLT revenue—which would get it past the 2010 Saratoga meeting—before its finances would once again be in trouble.

To complete this recipe for disaster, three months before NYRA emerged from bankruptcy, ownership of the financially-strapped New York City Off-Track Betting Corp. was transferred from New York City to, guess who, the State of New York.

Last December, with nothing done by the state to install VLTs, other dominoes began to fall. NYCOTB filed for Chapter 9 bankruptcy protection and quit paying NYRA its cut of the handle. NYCOTB listed $83 million in debt, including a $17-million tab to NYRA that remains unpaid.

There’s a lot of blame to go around, but it’s obvious that three things are significant parts of the problem. There are rotten politics in New York; there is a nepotistic and bankrupt NYCOTB; and poor management, as evidenced by its bankruptcy case filed when economic times were still good, is part of NYRA’s recent history. The three-legged stool has no legs.

As a result, the people of New York are left holding the bag, and “saving NYRA and NYCOTB” is not high on their list of priorities. As of this writing, the state still has a multi-billion-dollar budget shortfall, it doesn’t have legal authority to print money, and it has a ridiculed governor.

It’s time to throw out this old, broken stool. It’s time for well-run, publicly-listed businesses to be allowed the opportunity to buy these tracks. There have been several racetrack acquisitions made in the last few years, some of them after the economy began backtracking in 2008. But first, the State of New York has to allow NYRA to default on its 25-year lease, which would free up the state to sell the track properties.

Even if doing that means state government would again delay millions in prospective VLT tax revenue, it’s revenue that its politicians have done almost nothing to generate for nine years now. I’d give odds that a private enterprise, particularly a company with gaming operations experience, would make up the difference for the extra time lost.

As for NYCOTB, the new man in its top spot is embroiled in controversy over his hiring and his salary. What a joke. Put NYCOTB up for sale, too, and get the government of New York, which has no clue about fiscal responsibility—not to mention ethical conduct—out of the racing business.

Dick Downey publishes The Downey Profile and is an attorney based in Bowling Green, Ky.


Leave a Comment:


I agree if NYRA can't make money with the Saratoga Track especially - they can't run racetracks. I'm not sure why NY is letting them run everything to the ground.

13 Jul 2010 3:18 PM
Alan people just don't get it, do you?  NYRA is as qualified as any company - private, public, or run by God - to run these tracks.  There's not an entity in the world that can make this work with OTB structured the way it is in this state if there are no slots subsidies.  How is NYRA responsible for that?  Seriously...have you made any effort whatsoever to research the background of this situation?

13 Jul 2010 5:05 PM
C. G. Dean

Raising takeout and distribution prices is the only solution to NYRA's financial woes.  Bettors will always bet on NY racing no matter what the price is.  It's a circuit that people grew up betting and will keep betting.  They should hurry up and make these changes for Saratoga as that will show them it will have no effect on handle and will raise revenues astronomically.

13 Jul 2010 6:03 PM

Oh, yea...and Magna has done such a great job in a state without slots, haven't they?

We don't buy the "government is bad" bandwagon

13 Jul 2010 11:34 PM

Charlie Hayward is the smartest racing person in the business, bar none!!!

Charlie understands there is a horse shortage and knows the industry needs to coordinate stakes races and begin to down size.

VLT's on the horizon and the failed Monmouth experiment will raise NYRA back to the top by default.

14 Jul 2010 5:28 AM

As a western NY state resident, and breeder vested in the NY Breeders Fund, I am DISGUSTED and OUTRAGED.

Not only am I supporting this joke government thru my exorbitant taxes on property and wages.  Now, the NYS Breeders Fund cannot pay the full amount owed breeders and owners as they have not received NYC OTB's money owed them.

The straw that broke the horses (camels) back?  

NYC OTB, Bankrupt, hiring someone at OVER A MILLION DOLLARS A YEAR!!!!!!  

New York state stinks, We are waiting for my opportunity to leave this suck hole behind!  Soon!!

14 Jul 2010 7:31 AM
Dick Downey

The essay calls for a "well-run, publicly-listed business" to buy the tracks. I do not consider Magna to be a well-run company--after all, it also filed Chapter 11 bankruptcy. But there are profitable companies in the racing and casino business.

The NYCOTB bankruptcy denied NYRA $17 million in revenue, but NYRA asked for and received $25 million from the state of New York to stay in operation. Question: Why was the extra $8 million needed, and if that sum was designed as a money cushion, how long will it last?

14 Jul 2010 10:15 AM

Everyone in NY is at the mercy of State Government.  This same story can be said about every racing jurisdiction for that matter.  Because Government regulates our industry and deciphers how we are structured, our race dates, how agencies are employed, therefore we answer only to them.  The irony, we put them in Government.

This common misconception about NYCOTB, is entertaining.  Why is it that the media cannot see past the paper they write on?  Rayburn is a 4 month man as CEO for NYCOTB.  Why? Because he was put in place to clean up the corruption.  Hence his "monthly" contract.  Actually as Bill Finley pointed out, this is the best move NYCOTB has made, thankfully via Larry Schwartz the new Chairman.   NYCOTB paid $2M in the last year for reorganization consultants, let me ask what we have to show for it?  Nothing.

Because NYCOTB is stiffing the industry on out of state handle, they are essentially breaking NYRA and the horsemen/breeders.  This will end soon, because it has too.  Government now knows they cannot afford to keep it going.

In terms of VLTs, it’s anyone's guess, yet again, Government in NY has never needed revenue like they need it now. So in reality the tides have turned in NYS, because the Government which controls racing, needs it more than we need them.  I for one am optimistic NY's industry has more hope than any other jurisdictional at this point.  2011 may look very different.

14 Jul 2010 10:28 AM

Downey hits it right on the head. There is a ton of blame to go around. It is time for a new way of doing business. But in New York that just might not be possible.  

14 Jul 2010 10:45 AM

The State of New York has no interest in horse racing. It has made that perfectly clear. Let the workers in the industry, the trainers and owners and horses etc go somewhere that considers the sport a valuable asset and supports and promotes it accordingly. There's no "magic" to Saratoga under the presently existing regime. Send everyone to Churchill Downs and run there all year. Or better yet, replace the fake at Keeneland with dirt and run there all year.

14 Jul 2010 4:56 PM

Same 'ol same ol @ NYRA.  The "NOT" for profit organization. Racing in NY needs fresh blood. I find NYS to be as much at fault as NYRA itself. With many documented cases of fraud, tax evasion, and misappropriation of funds..How in gods name did the state give the franchise back?  It's summer..and that means it is past due for spring cleaning!!

16 Jul 2010 5:37 PM

To the guy who said, "Raise the takeout, bettors will always bet on NY races"  You obviously don't realize that it's the takeout that is killing this game.  With modern technology, gambling is competitive as ever.  You don't have to go to Vegas or Atlantic City to play what they offer.  Now honestly, if they had a match race and half the money was bet on horse #1 and half on horse #2, you could say the race was a coin flip.  The true odds would be $1.00 to $1.00.  But what would the track pay you?  .60 to the $1.00.  40 PERCENT OF YOUR PROFITS WOULD BE ABSORBED BY TAKEOUT!  I can bet any track in the country through youbet, if NY tracks raise the takeout, i'll bet more on monmouth instead and close my Belmont racing form for good.

17 Jul 2010 9:28 AM

All NYRA plants on here:

1. Charlie Hayward does not have sufficient business accumen to be CEO of anything.

2.Present NYRA managemnet and board need to be terminated in favor of individuals that have bold ideas and G-A-M-B-L-I-N-G expertise, which the game is about DUH!

3.The State must stay out of racing as much a s possible.

18 Jul 2010 9:04 AM

It will be interesting to see how racing fans respond to this years watered down,  extended Saratoga meet. For me, it will be a long ride to bet Monmouth.

20 Jul 2010 11:20 AM

The Final Turn article by Dick Downey in the July 17th issue was excellent;I completely concur. When are people going to wake up, how could anyone with common sense finance either NYRA or NYCOTB;they both belong in the comic strips.How can you hire someone for 100M a month to tell you what you are doing wrong, how sad. Politics and racing do not mix and unless the tracks are privatised, sadly they will close because they will have to. I would have thought the people of New York would have had enough, they are paying the bill.

01 Aug 2010 5:08 PM

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