04/08/2016 3:17PM

No radical changes expected on NYRA reorganization plan


The board of directors of the New York Racing Association is expected next week to discuss a reorganization plan that is designed to set the association’s course and structure for when the state’s control over the board is taken back later this year, and indications so far are that the plan will not contain any radical changes.

According to officials who have worked on the plan, it will call for a smaller board of directors than the one that was mandated by the state when it took over the board more than three years ago at the behest of Gov. Andrew Cuomo. The plan will also contain sections describing NYRA’s outlook for its operations over the next five to 10 years, and will perhaps urge legislators to make some revisions to the state racing law to give NYRA tax breaks and a greater rein over its racing dates and hours of operations, the officials said.

Because details are still being worked out, it is unclear how far-reaching the plan will be, or if it will be far-reaching at all. What seems to be most likely, at this point in time, is that NYRA will look largely the same as it did prior to the takeover, with the exception of the smaller board and the turnover among its staff and management. That turnover included the hiring of Chris Kay as chief executive, a racing outsider who has made a fair number of alterations to how NYRA conducts its business over his three-year tenure, none of which could be called revolutionary.

The reorganization plan is a requirement of the takeover engineered by Cuomo in 2012 after he expressed dissatisfaction with the management of the association. At the time, the Cuomo administration was considering elements of a plan to expand the number of casinos in the state, as well as a separate plan for the state to bankroll a new convention center, possibly on NYRA’s Aqueduct property.

The statute authorizing the formal takeover of NYRA’s board said that NYRA “shall be returned to private control, remaining in the form of a not-for-profit corporation” three years after the takeover date, or October of 2015. The legislation was amended last year to make the return effective in October of this year, though Cuomo officials never offered a reason for the extension.

The takeover statute itself was equally vague about what NYRA would need to accomplish under the reorganization. When Cuomo signed the bill, he said the reorganization would “restore public trust, accountability, and transparency to the racing industry in our state.” Officials in his administration had earlier said that the new board should determine whether NYRA’s operations should be bid out to private operators, and, if so, to lay out how that process would go forward.

In a recent interview, Kay, who was selected for the chief executive job by the new state-controlled board, acknowledged that the management and directors who have worked on the reorganization plan had little to guide the process, as far as fitting elements of the plan into criteria laid out by the law or the Cuomo administration.

“It’s hard for me to speak with any definitive language,” Kay said. “The statute is silent on that.”

Kay said during the interview that he and members of the board were “engaged in dialogue” with racing constituents and government officials over the plan. He declined to provide much detail on the plan, other than to say it would dovetail with the elements of recent presentations he has made to the board during their public meetings. During those meetings, Kay has focused on operational changes his management has made at NYRA and the association’s recent profits, which reversed more than a decade of losses. 

Michael Dubb, a longtime NYRA board member who is the chairman of the board’s Long-Term Planning Committee, said several weeks ago that the reorganization plan contains “nothing fancy, nothing schmancy.” Instead, it will focus on the size and structure of the board and the long-term goals for the association’s three properties, he said, including some recommendations for the development of parcels of the Belmont and Aqueduct properties.

“At the end of the day what is going to be proposed is what will be in the best interests of New York racing,” Dubb said.

Stuart Janney III, also a longtime board member, said that the plan will focus on the structure of the board and the “the future” of NYRA’s three tracks. That future, according to officials, does not include a recommendation to close Aqueduct, as some have speculated, though the recommendation to allow NYRA more freedom to determine its racing dates could result in fewer racing days at the Queens property in the winter.

The plan will also demonstrate how NYRA’s current management has been able to restore profits to the association, Janney said.

“I think a lot of good has happened in the last three or four years, especially when you look at the management team,” Janney said. “And that’s not just Chris Kay and the other top managers, but also the second-tier management, which is in many ways much stronger than it has ever been in the past.”

Kay said that if Albany had sent one message to the reorganized board at the time of the takeover, it was that NYRA needed to show a profit without relying on the paper figures generated by the annual receipt of tens of millions of dollars of statutorily required payments from a casino located adjacent to Aqueduct. He referenced a meeting early in his tenure in which a top Cuomo official, Robert Megna, lectured NYRA managers about its persistent losses.

“I do know that Megna told us, ‘You guys should be able to break even regardless of the casino money.’ So I think that was important to them,” Kay said. NYRA is currently structured as a non-profit, and the takeover statute requires it to remain a non-profit.

While Dubb and Janney referenced several recommendations for statutory changes that would be beneficial to NYRA, it is unclear if those recommendations have been discussed with legislative leaders. As late as Friday, Sen. John Bonacic, the chairman of the Senate Racing, Wagering, and Gaming Committee, said he had yet to discuss elements of the reorganization plan with either Cuomo or NYRA officials. Several weeks ago, Bonacic’s Assembly counterpart, Rep. Gary Pretlow, also said he had not had those discussions.

Cuomo’s office has not responded to requests for comment on the plan.

Even if the plan has not been communicated to legislative leaders, that does not mean it will face an uncertain reception. In New York, the governor’s office and party leaders often hash out agreements over legislation without involving broad portions of the legislature. Because the reorganization was a Cuomo project, the legislation may even be handed down from the top and summarily approved by the legislature, as long as it does not contain any controversial elements.

Janney said that one benefit of operating under the thumb of the state over the past 3 1/2 years has been the establishment of better ties to the governor’s office.

NYRA and the state “have learned in large part how to get along, and they have learned the importance of getting along,” Janney said. “That relationship has changed in a very important way over the past three or four years.”