07/17/2013 4:54PM

Q & A: New NYRA chief sets out priorities

Barbara D. Livingston
Christopher Kay

On July 1, Christopher Kay began his job as the President and Chief Executive Officer of the New York Racing Association. Kay, 60, had previously been COO and general counsel at Toys 'R' Us, managing director Universal Parks and Resorts, and COO at Trust for Public Land. Despite this limited background in racing, Kay was chosen to lead NYRA into the future, one that includes re-privatization by October 2015. On July 6, Kay sat down with Daily Racing Form's David Grening to discuss the challenges that lay ahead.

[SARATOGA 2013: Complete meet coverage, exclusive DRF videos]

DRF: Having limited experience in racing and before ever meeting anyone associated with NYRA what piqued your interest about this job?

Kay: There were a couple of things that piqued my interest. One was what NYRA is. NYRA is an organization that has the best tracks in the country, the most passionate fans in the country, and the governor put together a tremendous board so that was of interest to me. In addition, you had this whole concept of re-privatization, which was this unique opportunity in time to create a new structure, get your revenue streams fixed so that you could have successful racing in New York for decades to come.

And, I also love sports. I've been playing sports since I was a kid. I think I mentioned when we first met I enjoy going to the track, and so here was a chance to help a sport.

What do you bring to the table for this job?

I think there are a number of things the board felt were valuable. . . . What the chairman of the board said was we needed to have a leader who provided leadership and management and I've done that. I've done that at Toys 'R' Us, at Universal, at Trust for Public Land, three entirely different organizations. I think when the board looked at the opportunities and the challenges for the new NYRA they went well beyond just the operation of the racetracks. So they had somebody in me who had a business background, a legal background, an appreciation for regulatory issues. . . . And I've been blessed in my career to have been involved in a number of situations that were totally new and different -- where there was no precedent, no playbook to follow, and if you made a mistake there was no safety net. In all those instances I was part of a team that worked together to come up with a solution that worked. When you look at the opportunity and challenge for NYRA today it's essentially to do the same thing: To work with the state and various stakeholders to come up with a new solution for horse racing.

What would you say is your biggest or proudest achievement in your career?

Well, working with the CEO at Toys 'R' Us and a variety of people that were there and a variety of people that I recruited we had a fairly dramatic turnaround at Toys 'R' Us. When John Eyler and I joined, the stock was about $10 a share. Subsequently, when we sold it, it was around $27 a share. When we joined there were a lot of inefficiencies that we were able to correct. We were able to remove a lot of debt, and when we joined we had a certain level of customer satisfaction -- we called it guest satisfaction -- and we increased it dramatically during the period of time that our team was together.

How do you feel the experience of running a national chain of stores translates into running a racetrack?

When you look at our three racetracks, there are a couple of things we need to look at. Number one, is there flawless operation on a daily basis, which I think is exactly what you try to do at a retailer. I don't know if you're going to come in on Saturday or Tuesday, 10 a.m. or 9 p.m., but it has to be the same kind of experience. The same thing holds true in racing.

Number two, there are all kinds of ways for people to spend their money. There are all kinds of competitors. What can we do to enhance the guest experience so you'll want to come spend your discretionary time and dollars with us as opposed to somebody else. That's also a key factor. Third is a sense of delight. One of the things we tried to do at Toys 'R' Us and we did at Universal Studios is to make this a special time for you and your family. How do we do the same thing here at our racetracks? Clearly, when you think about Saratoga, that already is a very special time. It's magical. It's a place where core fans, casual fans, families all go. We've got to do more of that in New York City.

During the interview process what was portrayed to you as the main focus of this job?

The re-privatization effort, working with the state, is going to be a critical component of this job and take a great deal of time. And that's where my track record of success in various efforts was particularly attractive to them.

How much do you feel you need to learn about racing, and how important do you deem racing knowledge for someone whose focus is on, as you say, a little bit bigger picture?

Well, you can never learn too much about your business. So, when I first started at Toys 'R' Us I'd never been in retail before. I learned a great deal about it, and helped implement a number of changes, because I was at stores at 9:30 at night or 10 in the morning and because I brought a different perspective to what people were looking for. Same thing holds true at Trust for Public Land. I'd never been involved in land conservation before, although I had a real estate background. I identified new revenue streams for that organization that will help it for decades to come as well as helping people in the community.

Racing fans, perhaps more specifically bettors, are probably wondering what someone who hasn't attended the track in a long time, let alone place a bet, can do for them. What can you do for them?

First off, I have attended a number of tracks in the recent past to the extent that I mentioned where I started at Cahokia Downs. That doesn't mean it was the first and last time I d ever been to the racetrack and I have placed bets. The biggest way that I can help those core fans is never to tell them what I think would be the right bet to place.

One of the things you try to do to enhance their experience is to provide them with information. There are a number of things we will look at. But one of things we've already done is that our website received a national award for its remake. We've done a couple of website redesigns and there's always someone that complains about it. Here, there have been no complaints. Instead, this national recognition and award is for providing more data, easier-to-follow, easier-to-get format for our core fans.

Have you begun the process of seeking a COO or general manager to run the racing operations of NYRA and when would you like to have someone in place by?

There are various steps to the process. This is my first week. The first couple of weeks are going to be devoted to spending time with my new team of executives and also with the board of directors. As I said the day I was selected, this is going to be one of my priorities -- sooner rather than later.

There has been a lot of talk at recent board meetings about long-term planning for NYRA. Determining the future of Aqueduct would seem to be the key component to making any long-term plans. How do you go about determining Aqueduct's future?

That's a great question. The process is going to be: Number one, evaluate all the data objectively as possible and get input from various stakeholders. What I'm thinking about is our primary goal is by October 2015 we have a structure in place that will give NYRA a chance to be successful and provide great horse racing for the people in New York for decades to come. If that is the goal, how do you go about doing that? What kind of revenue streams do you have now? What kind of revenue streams can you create? What do you do with the facilities? And we'll work in that process, backwards as opposed to saying here is what I'm going to do today. We have to have the end in mind and the end has to be well designed.

Is it a realistic time frame, 27 months, to be able to say here's our plan, we know what we can do with Aqueduct when you have all those things that you just mentioned to do?

Only time will tell. But I have worked on other types of projects, the development of theme parks and attractions and so forth that have occurred in less period of time. The turnaround at Toys 'R' Us occurred in less period of time. So it's a matter of focus, clarity and concerted effort. It's going to require people to work together as opposed to reiterating prior arguments. I hope that by virtue of coming in without that scar tissue we can get to the solution. Though I don't know how it's going to work out, one of the things that's encouraging to me is the fact I think we have a partner in terms of the government wanting to make sure we have a structure by this date.

Hand in hand with determining Aqueduct's future is how to make Belmont more efficient either in its current state as a five-month racing facility or as a year-round racing facility. Would Belmont have to be completely remodeled to accomplish that?

I don't know if it has to be completely remodeled or not. That's one of the things I'm going to look at. So it's basically what do you have to do with the existing structure, how much does it cost? What do you do with the new structure if you were to do that?

Is year-round racing in New York good for the sport?

Different people have different points of view. Is it something that is really going to be successful on a wintry day in February? I don't know. We have to look at that. Is there a way to provide racing on a full-time basis but yet not every day of the year, maybe not every day of the week in certain months? And it's a function of the amount of interest, plus the number of horses. There are a variety of factors behind any one person's opinion.

How does your experience in the land conservation/preservation area help determine what to do with these two facilities?

I would say my experience with the land conservation organization is most pertinent in terms of how to work well with government. Plan ahead, how to expand parks or create new parks and what it means in terms of racetracks. It's about having a long-term vision and working with government and other supporters to make sure that long-term vision becomes a reality. With respect to what about this or that piece of real estate and how you develop it, actually my experience at Toys 'R' Us, where we had over 1,700 stores, and with Universal Studios, where you developed theme parks and hotels and entertainment/restaurant areas, would be more akin to what would happen here.

NYRA lost obviously a big part of its handle when New York City Off-Track Betting closed in December 2010. At recent board meetings officials have discussed getting back into that market by running its own OTB. How will NYRA go about doing that?

I'm in the process of learning a lot about the past and about the present in terms of the recent casino bill and figuring out what is going to make sense as far as the process to address that. It could be a great opportunity for NYRA, and it is right up there in terms of potential new revenue streams that I want to look at. But I can't tell you today that I know enough to articulate the process we'll follow.

You talked about working well with government. Historically, NYRA has had a contentious relationship with Albany. How can that be overcome?

The way I'm going to try overcome it is to be very forthcoming with here is what we're trying to achieve and see if we're on the same page and open a dialogue. I don't know all that's transpired in the past behind closed doors and never will, and I don't know if I need to. Put that behind us. We together, state and NYRA, have a goal by October 2015 to create a new structure and have it be re-privatized. Let's focus our efforts on the best way to do that.

Now, I am also fully aware whatever I say is going to be nice, but I have to back it up. I have to earn their trust and I intend to do so.

Aside from the potential reopening of OTB, what are your preliminary thoughts about new revenue streams for NYRA?

The last board meeting we had a discussion about one potential new revenue stream [Global Betting Exchange] and that's one thing we're going to go back and redo. That's one of those things over the next couple of months I'm going to delve into.

NYRA has plenty of competition from alternative forms of gaming, including right at its own footstep with Resorts World at Aqueduct. As the state tries to expand gaming further, how does NYRA remain a stockholder in that process?

That's a great question and that's part of the dialogue we'll have with the state. This is one of those questions where you really have to say what are your plans and how do we fit in and find common ground? The state has a wonderful opportunity and responsibility, and it doesn't want to see horse racing compromised, so how do we do this in such a way that creates the opportunity for horse racing to be successful as part of the overall gaming portfolio.

There is a thought from some, maybe from people who have been around too long, that the state doesn't necessarily want to see racing succeed. Why are you sold on the fact that the state does want to see racing succeed?

The horse racing business in this state is very significant. When you look at it from the agribusiness standpoint the economic impact is a $4.2 billion business. Governor Cuomo is one of the best governors in the country. He is trying to create more jobs and expand the economy. I don't want to speak for him or anybody else in state government, but I can understand they would want to see more jobs and more growth in agribusiness, more success in industries, particularly this industry, which has a very definitive New York flavor to it and recognition around the country - we're the authority in the field. Let's do it in a way that doesn't have embarrassments. I'm going to do the best I can to make sure we're able to come up with a plan that will actually expand this very significant piece of our New York economy and do it in a way that people will be proud.

From what you understand, does re-privatization mean that the franchise gets put up for bid in the fall of 2015?

It could.

What is the main thrust of making this attractive to a potential buyer?

I'm not going to come at it with the idea of making it attractive to a potential buyer. I'm going to come at it with what works best. This structure is one where the governor may say, I want to bid it out. He may say, I want to keep it for the folks of New York. That's obviously going to be something he'll want to make a decision about once he sees what we've done. My goal is to be able to come up with something that is of value to the people of New York, of value to NYRA. If the governor says, well, I also want to see if it's of value to somebody else, that will be up to him. And that's where you have a real balancing act. There may be a short-term benefit of a sale but a long-term detriment to agribusiness to New York. I don't know. None of us would know until we get to that point. My process is to consider every option, and the governor presumably will do the same thing, and that will be one of the options to be considered as you move toward the end of the process.

Going back to Genting, there appears to be a bit of a contentious relationship between NYRA and Genting. Is it important to fix that and have you been brought up to speed on that?

It's always important to me to try to repair any contentious relationship. You're not the first person to tell me there's been a bit of a contentious relationship. I don't know what the nature of that contentious relationship is. At some point I want to see if there is one and if there are ways for us to resolve it. I don't believe having contentious relationship between Genting and NYRA is going to be beneficial to Genting or to NYRA.

There seems to be some dissension between NYRA and its employees. On June 26, five days before you started this job, a letter was sent to you by the head of the New York Gaming Association asking you to negotiate contracts with NYRA employees to provide middle-class wages and appropriate benefits. What was your reaction to that letter?

I sent him a letter saying thanks for your letter. Obviously, I'm aware with what's going on with our negotiations with certain unions. As I understand, we have a very good working relationship with some unions. In some instances, there's room for improvement. I can't tell you I know every fact. Having lived on this Earth for a while, I've come to the point of view that there is probably opportunity for both sides to improve that relationship.

How does NYRA plan to address unfunded pension obligations that I believe are in the range of $55 million?

I think unfunded liabilities are an issue across this country for a wide variety of companies, organizations, governments. If I had the solution in my first week of this job I'd probably be somewhere else. It's a significant issue.

NYRA's chairman, David Skorton, has talked a lot about transparency with the new NYRA. Is that important to you, and how do you go about being transparent?

The whole idea of corporate government and transparency is something that is a major part of my career. I intend for it to be a major part here. What I intend to do is work with various people in state government candidly. I'm not going to tell you what I'm doing. If they want to tell the press what we're doing, fine. The way to establish trust is to be able to have conversations with them and then don't go out and repeat it to the press. There is a means of having transparency but it just may not always include the press. If the state wants to repeat what we discussed, I'll give them that prerogative.

Saratoga starts soon, a baptism by fire if you will. Looking forward to it?

I am. There are number of really qualified people that know how to conduct racing in this organization, and that was proven at the Belmont Stakes, and I think it's going to be proven again at Saratoga. They've put together a great group of events, we have some great horses and I'm very excited as a fan. I don't view it as being a baptism by fire. I view it as extremely fortunate to come in this role right as we're going to celebrate the 150th anniversary of Saratoga.