Updated on 09/17/2011 9:56PM

NYRA chief finds himself on the hot seat


SARATOGA SPRINGS, N.Y. - A year ago, Charles Hayward was on a self-proclaimed victory tour. He was part of a group that had just sold Daily Racing Form and was taking the paper's new owners to selected hot spots of racing around the country. Hayward made it here to enjoy the last 2 1/2 weeks of the Saratoga meet as a fan.

Now, Hayward is in his ninth month as president and CEO of the New York Racing Association. And as NYRA gets set to open the doors on Saratoga's 137th meet Wednesday, Hayward finds himself on the hot seat on many fronts.

In less than a month, NYRA will find out from the government if it will face further prosecution on federal tax fraud charges levied in December 2003 in connection with cash policies in its mutuel room. As part of a deferred prosecution agreement, NYRA's business practices have been monitored for the past 18 months by the law firm Getnick and Getnick, which will submit a report to the U.S. attorney general's office. By Aug. 23, the attorney general's office will decide whether NYRA has reformed its ways sufficiently to drop the charges.

The last 18 months have spawned several critical audits of NYRA's past practices by the state comptroller, which acknowledged some improvement under Hayward.

Last December, representatives from the state police and the state attorney general's office seized records from NYRA pertaining to weights jockeys carried in races. A grand jury has been convened, and many horsemen and officials have been called to testify. Two NYRA officials have been suspended with pay.

All this comes at a time when many suitors are formulating bids to take over the franchise NYRA has had since 1955 to run racing at Aqueduct, Belmont, and Saratoga. The current franchise expires at the end of 2007.

While Hayward has worked diligently to fix the ills of previous administrations, he has created a divisive atmosphere between management and horsemen, some of whom complained about a "we-versus-them" mentality. Some horsemen felt it was facilitated with the creation of a race-day security barn at Belmont that required trainers to send their horses to a holding barn six hours before a race. A similar set-up will be in place at Saratoga. Many believe it escalated on July 14 when Hayward fired popular racing secretary Mike Lakow, who had worked here for more than a decade.

"I think we-versus-them has been here in the last six months," said one trainer who requested anonymity. "I don't think it was the holding barn, but it was punctuated by Lakow's removal.'"

"It's the first time I've ever felt it and I've been here 20 years," said trainer Kiaran McLaughlin. "It's probably not as much we versus them as much as them versus outside forces to get the franchise and the slots."

Hayward acknowledged the dissent between management and horsemen but has maintained an open-door policy with them.

"I've heard there's a little bit of this we-they, and certainly the popularity of Mike had played into that," Hayward said. "But I also know my door's open any time, and a number of trainers have taken advantage of that and come in and talked to me. They may not like the explanation and it may not be the right explanation, but they're going to get an explanation to the extent that it's appropriate."

Deferred prosecution a threat

Hayward said he believes that many people, including horsemen, underestimate the deferred prosecution agreement that NYRA entered into with the federal government. Under the agreement, NYRA had to show a willingness to alter past business practices and institute reforms. Should the government opt to further prosecute, NYRA would have virtually no chance to retain its franchise.

"I think some people have viewed this deferred prosecution and the federal monitorship as an unfortunate thing that we had to get through, but I think everyone felt it was a foregone conclusion it's not going to be that big a deal, we'll move on," Hayward said. "If people felt that way or thought that way, or if NYRA employees conducted themselves thinking that way, it's a huge mistake.

"We're under deferred prosecution - it's serious stuff," Hayward said. "At any one time, a significant, serious misstep and we're out of business. If we're out of business, I got a feeling New York's going to be not racing for a while, which would be a terrible thing."

As part of its reforms, NYRA cut off its signal to a number of offshore rebate shops, some of which were mentioned in an indictment last December involving an illegal gambling ring. Those shops produced significant handle, and NYRA's business at Aqueduct and Belmont felt the loss of those bettors. Aqueduct's handle was down 10 percent. Belmont's numbers - which have not yet been released - were also down, but not to that degree, according to Hayward.

Last summer, total handle on Saratoga was $550 million, $50 million of which came from offshore accounts. Hayward is confident many of those bettors will still wager on Saratoga through more traditional account wagerers.

"We're not going to be down $50 million," Hayward said.

Hayward did say that NYRA is projected to lose $10 million this year. It lost $10 million last year and $20 million in 2003.

Security barn a mixed blessing

One of the reasons for the decline in business at Belmont was fewer horses racing there. Though Hayward did not have official figures, he noted that in the first six weeks of the meet, field size was down by three-quarters of a horse per race, or nearly seven horses each day. Hayward noted that there were about 50 percent more horses shipping out of Belmont to race elsewhere during that same time frame.

Hayward said field size has been related to the security barn, which has made it less appealing for out-of-state shippers, especially considering that purses aren't much higher in New York for many categories than at other East Coast tracks. But Hayward said he believes the race-day security barn has been successful.

"The real goal of the security barns was to keep the private practicing vet out of the stall on raceday - and people can draw their own conclusion on why that's a good thing, but I think it's a good thing," Hayward said. "One very knowledgeable trainer who shall remain nameless was in this office a few days ago and said he was convinced the security barn was helping."

Hayward added that NYRA's pre-race blood-gas testing has precipitated a significant drop in levels of alkalizing agents in horses. Hayward said high blood-gas levels are an indication that trainers are doing something to enhance a horse's performance. The presence of alkalizing agents has been shown to help prevent fatigue.

The future of New York racing hinges on the Video Lottery Terminal facility that NYRA hopes to open at Aqueduct by Labor Day 2006. NYRA is still negotiating a deal with horsemen on revenue splits and is also waiting for a few more bids before construction can resume.

"Hopefully, the horsemen are going to get an additional 45, possibly even $50 million more in purses," Hayward said. "Although we're a little late getting going we're still hopeful we can make Labor Day 2006."

Hayward said he believes his biggest shortcoming in his first nine months at NYRA has been servicing the racing fan.

"I'm a little disappointed with myself frankly because I thought by Saratoga there were going to be some upgrades, specifically in reaching out to the racing fans in terms of customer service and marketing," Hayward said. "With the other activities that have occurred . . . some of that unfortunately has been put on the back burner."