06/16/2005 11:00PM

Hevesi takes the cake


NEW YORK - Since being elected New York's state comptroller in 2002, Alan Hevesi has issued more than 300 audits of state agencies, many of them turning up the same kind of violations of accounting procedures for which he lambasted the New York Racing Association in an audit released last Wednesday. In NYRA's case, the lack of corporate controls that led to laxity in bidding and procurement procedures from 2002 to 2004 have been exhaustively examined and largely remedied under a new management team and the relentless on-site presence of a court-appointed monitor.

If Hevesi's genuine ambition was to correct past poor business practices, he would have filed his latest NYRA audit for the historical record and complimented the company and the monitor for its corrective actions. Instead, he called in the television cameras for a press conference at which he hurled inflammatory charges at NYRA that went beyond the scope of his audit and twisted his findings into charges and implications with little relation to the truth.

"NYRA takes the cake," was one of his sound bites. "This is the worst agency of all. NYRA is the poster child for mismanagement and corruption."

Current NYRA management - obliged to answer each new politically motivated assault by saying, essentially, "Thank you, sir, may I please have another?" - officially responded by thanking Hevesi for raising these issues and pointing out that they have been largely remedied. Only Barry Schwartz, the former NYRA chairman, responded viscerally, asking about Hevesi, "How does someone this dumb get a job in this state? He's lying."

Hevesi's true agenda, to raise his profile as a crimebuster with higher political potential than mere accountancy, emerges in the absurdity of some of his charges. Nothing plays as well in the tabloids as characterizing NYRA's unpaid trustees as a bunch of martini-swilling country-clubbers lining their own pockets, so Hevesi made three references at his press conference to NYRA's paying part of the costs of vanning "trustees' horses" between NYRA's three tracks. Never mind that tracks and owners share vanning costs almost everywhere, or that fewer than 1 percent of the horses vanned happen to be owned by NYRA trustees.

Hevesi also fulminated about a "$1.6 million public relations contract," implying the amount was excessive and improper. In fact, the fee to the uniquely qualified firm that has done a widely praised job of promoting Saratoga, was under $250,000 and the rest was actual advertising payments to media outlets.

Hevesi isn't done. He has two more NYRA audits scheduled for the coming months. The next blockbuster, likely to be released at the height of Saratoga, will focus on NYRA's franchise-fee payments, which Hevesi will surely contend would have been higher if NYRA didn't fritter away funds by vanning horses from Saratoga to Belmont to help fill races.

As disturbing as Hevesi's disingenuous charges is his underlying assumption that the sole purpose of racing is to generate the highest possible fees for other state agencies, an insidious and short-sighted approach in which he sadly has plenty of company. Last month, at a far less publicized event than Hevesi's press conference, the state's Senate and Assembly racing committees held the first round of hearings on the future of racing in New York. This was the first step in the process leading to what the state will do about the NYRA franchise, set to expire in 2007.

Various constituents made presentations at the hearings. NYRA and its shadow public-interest group, the Friends of New York Racing, spoke about the need to re-examine the entire regulatory and legislative atmosphere in New York and to consider new models of private or joint private-public ownership. It was an interesting and thoughtful way to begin a long debate.

When it came time for New York City Offtrack Betting to weigh in on the future of the sport, its president, Ray Casey, articulated a single vision: takeout and breakage rates on bettors should be increased so that more revenue would flow to his agency.

"The only way we can adjust our pricing to meet inflation-increased operating costs is to raise our takeout percentage," Casey said. "It's time for takeout to be taken out of the exclusive control of the tracks. It's time the OTB's had a say in the decision-making."

Casey has said repeatedly that he thinks his customers do not care about takeout rates and, contrary to all logic and research, that lower takeout does not increase handle. Fortunately, there is a mechanism that would allow him to test his unusual hypotheses: net-pool pricing, which allows different bet-takers to charge different takeout rates in the same pool. Casey could double the takeout to a blended 40 percent or so for NYC OTB customers only. They might get $4.40 instead of $6 when a 2-1 shot wins, but if he's right and loses no business, money that would have gone back to the betting public will instead flow directly to OTB - a "Public Benefit Corporation" - and his profits will soar.