02/27/2013 9:00PM

Outgoing NYRA chief raises offtrack betting plan

Email

NEW YORK - The outgoing president and COO of the New York Racing Association believes the organization should attempt to reenter the New York City market by offering an upscale offtrack betting model, but believes it would require regulatory change to do so.

Ellen McClain, who last month announced her resignation from NYRA, said Wednesday at the NYRA Reorganization Board of Directors meeting that there is an opportunity to recapture about $200 million in handle lost when New York City Off-Track Betting closed in December 2010.

"We think fans in New York City are underserved," McClain said during her presentation Wednesday to the board. "New York City OTB, when it closed two years ago, generated about $700 million in handle. We recaptured a good third of that."

At the time, New York City OTB was operating about 57 branches, three teletheaters, and seven restaurants.

"We see an opportunity to go back into the market and introduce the product to new fans as well," McClain said. "There's a way to do it very profitably. It is not by opening 57 branches. It is finding the right restaurants and bars with special format and a targeted demographic."

Under a decades-old law, NYRA has the authority to operate up to eight OTBS in New York City, provided it receives approval from the city and the state.

McClain said while it would require regulatory change, she would like to see NYRA's races in 40 restaurants within three years.

"We know that five of the restaurants that had our product before are so ready for us to deliver it to them again," McClain said. "We'd like to be in 40 restaurants in three years. We think we can do that and do it well."

McClain said that such a setup could mean $200 million in handle annually "that will trickle down to $10 million in cash flow" for NYRA.

Whether that ever happens remain to be seen. One thing is certain: McClain will not be around to see that plan come to fruition.

McClain announced her resignation at last month's board meeting. She confirmed to Daily Racing Form following Wednesday's meeting that she told Chairman David Skorton on Tuesday that she would stay on until the end of the Aqueduct spring meeting, April 21. At last month's meeting, she had said she would leave either at the end of March or April.

Meanwhile, the search for NYRA's next president and CEO has begun. At Wednesday's meeting, it was announced that the salary for the new CEO would be a base of $300,000 with incentives that could bring an additional $250,000. It has not yet been defined what milestones, or benchmarks have to be met for those bonuses to kick in.

The salary determination was the lowest of three recommendations made by a consulting firm to the board's Compensation Committee, chaired by Vincent Tese.

"Only time will tell what this compensation plan will yield," Skorton, who will chair the search committee, said afterward. "But we're dealing with two countervailing forces here that Vince Tese brought up quite clearly. One is the need to give appropriate compensation to attract an appropriate leader for the organization. The second one is to pay appropriate attention to the public perception of what a quasi-public entity leader ought to be paid."

In 2011, Charles Hayward earned $460,000 in base salary as president and CEO of NYRA. Hayward was fired from his post in May of 2012.

NYRA has entered into a contract with the consulting firm RSR Partners to conduct the search for a CEO.

In other topics discussed at the meeting, board member Bobby Flay said he was asked by Breeders' Cup officials to ask the NYRA board about its "appetite" to host the 2014 Breeders' Cup at Belmont Park.

While board members said they would be interested, they would not want to host it if it required banning the anti-bleeding medication Lasix. Last year, at Santa Anita, the Breeders' Cup banned Lasix in five 2-year-old races. This year, when it again will be held at Santa Anita, it is planning to ban Lasix from all races.

"Horsemen would certainly have an issue with banning Lasix," said trainer Rick Violette, president of the New York Thoroughbred Horseman's Association. "Our fundamental position is most, if not all, horses bleed. Lasix is an effective agent in controlling it, if not stopping it."

Former NYRA chairman Steve Duncker said another hurdle for Belmont to host a Breeders' Cup is that the event now falls on the weekend of the New York City Marathon, and hotel availability becomes a serious issue.

** The board approved a $100,000 bonus award to the connections of 2-year-olds who win a maiden race at the Belmont spring/summer meet and then capture a graded stakes at a NYRA track in 2013. The plan was first implemented last year and two horses earned the bonus while the number of 2-year-old races run at Belmont did increase from the previous year.

** McClain said that construction work on Longshots, a simulcast facility/bar at Aqueduct, was to resume on Monday. NYRA has budgeted $2 million in cost overruns from the $5 million Resorts World has agreed to put up. Resorts World has sought some adjoining property to use for its high rollers.