07/20/2011 12:11PM

NYRA to undergo a third audit


Auditors for the state of New York will conduct an examination of the New York Racing Association’s financial documents, the office of the state comptroller, Thomas DiNapoli, announced on Wednesday.

The audit will be the third conducted by New York’s comptroller since NYRA emerged from bankruptcy in 2008 and reached an agreement with the state to lease Aqueduct, Belmont, and Saratoga until 2033. In a statement, DiNapoli’s office said the audit “will examine NYRA’s response to two earlier comptroller audits, which called for significant cost reductions.”

NYRA has estimated that it will lose $11 million this year, according to a budget the association filed one month ago with the Franchise Oversight Board, a regulatory body controlled by the governor and legislature. In 2010, the association lost $17 million, in large part because of the bankruptcy of New York City Off-Track Betting Corporation.

The association’s 2011 budget forecasts that operating expenses will increase 7.9 percent this year, or $10.4 million. Salaries and employee expenses were forecasted to rise by 5.2 percent, or $2.9 million, in large part because of raises granted to all non-union employees last year. Net revenue is expected to decline 3.9 percent, or $6 million, according to the budget.

“NYRA has a history of overspending,” DiNapoli said in a statement. “I want to ensure that this is one tradition that doesn’t continue.”

In the most recent audit, DiNapoli had recommended that NYRA should more closely align its expenses with its “actual net revenues” and re-evaluate its number of employees and their pay. Most specifically, the audit called for NYRA to reconsider whether it should pay for the transportation of horses between its three properties, a $900,000 expense that NYRA officials had defended in their response to the audit as a “courtesy” to owners and trainers.

Dan Silver, a spokesman for NYRA, said that the association continued to pay for transportation costs between the three tracks, but that NYRA had significantly reduced the cost of the practice by cancelling a contract with a private transportation company and taking the operation “in-house.”

NYRA will begin receiving subsidies from a casino at Aqueduct later this year. The subsidies are expected to provide at least $25 million annually to NYRA for operating costs and capital improvement projects, using conservative estimates.

The plan to audit the association comes in the wake of a dust-up between NYRA officials and the Franchise Oversight Board, which has the power to recommend that NYRA’s lease be revoked. The dispute revolved around NYRA’s reluctance to make its budget publicly available.

The audit also follows on the heels of a Tuesday announcement by State Senator John Bonacic to conduct hearings later this summer on a number of racing and gambling issues, including whether the state should support a constitutional amendment allowing for private casinos. According to Bonacic, the hearing will also explore whether the state can “legally” take control of NYRA’s racetracks.

Under a law passed in 2001, casinos were legalized at all of the state’s racetracks except Belmont and Saratoga. Gambling companies have been lobbying the state for approval to operate private casinos, and Belmont Park is considered an attractive site for a casino location. Under the current lease with the state, it is unlikely that a private casino operator could develop a casino at Belmont unless the lease with NYRA was revoked.