10/07/2005 12:00AM

Solving a $20 million problem

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NEW YORK - The New York Racing Association would have celebrated its 50th birthday last Wednesday, but there wasn't much to celebrate. Instead of noisemakers and balloons, there was a grim announcement that the outfit might be insolvent before the end of the year. A day later, Joseph Bruno, the majority leader in the state Senate and once NYRA's staunchest ally in Albany, called for an acceleration of the franchise-renewal process in hopes of preempting a 51st birthday party.

Under a current statutory business model that has not worked for years, NYRA is running annual losses of $15 million to $20 million, the amount it needs to get through the next 12 months until slot-machine revenues start pouring in from the new racino at Aqueduct. NYRA has proposed selling off some unneeded parcels of land at Aqueduct to cover the shortfall, but this has proved an inflammatory issue, forcing a resolution to an ancient debate over whether NYRA or the state actually owns the land. Selling the parcels seems like the easiest solution to sustaining New York racing for the next 12 months while deciding who operates it after that, but politics may prevent that painless remedy.

If the money has to come from somewhere else, there are two obvious places to consider. When people talk about NYRA's losing as much as $20 million a year, in a sense they are off by about $130 million. Looked at another way, NYRA actually "makes" $110 million a year, but then pays out about $120 million in purses to horse owners and another $10 million to the state in parimutuel taxes and other statutory fees.

If the state is unwilling to sell off some unneeded land to produce a badly needed one-time infusion of $20 million so that it can begin reaping hundreds of millions annually from the racino, why not suspend the parimutuel tax for a year? A one-time shortfall of $8 to $10 million will not break the state budget, and it could easily be repaid later from racino profits.

That would only solve half the $20 million problem. The remainder could come through a one-time reduction in some purses for 2006, making two overdue changes that might continue on a percentage basis even when total purses reach giddy new heights thanks to racino supplements in the years ahead.

The first area worth considering is the premise that New York purses should be the same whether it's February at Aqueduct or August in Saratoga. Even raising this issue brings torrents of protest from horsemen's organizations and charges of elitism, but the current policy of year-round parity is indefensible on either sporting and economic grounds.

Why should a first-level allowance race be the same year-round when both the level of competition and the betting that funds the purses is so much higher in August than February? To argue that they should be the same is to argue that purses at Finger Lakes should be the same as at Saratoga. If the horses are of lesser quality and the handle is lower, the purses should be lower, too. It is especially absurd that purses at Aqueduct in the winter are substantially higher than the ones offered for much tougher races at Gulfstream, where the top New York stables bring their better horses for the winter.

There's also room for some frugality at the top of the scale in New York, especially amid a state of emergency. Over the last decade, some of New York's top stakes races have enjoyed massive boosts in value, some necessary for competitive purposes but others indefensible, especially in the current climate.

Last weekend, Belmont offered a sumptuous day of Grade 1 races previewing the Breeders' Cup, including $750,000 purses for both the Beldame and the Flower Bowl. In 1995, the Flower Bowl was worth $250,000 and the Beldame was worth $200,000. It seems unlikely that either race would have lost a single entrant had their purses been a mere $500,000 instead of $750,000 this year. The competitive events, Keeneland's Spinster and Winstar Galaxy, offer respective purses of $500,000 and $400,000, partially subsidized by corporate sponsors, with the rest coming from a track that is swimming in money from its lucrative bloodstock sales. Why does an insolvent NYRA need to spend an extra $600,000 on its two races?

Horse owners have a tough enough time making money, but a one-time reset of winter purses and some judicious trims from top-end stakes are not going to threaten anyone's livelihood. Considering the chaos that would ensue from a bankruptcy filing and a state takeover, such changes may eventually seem like a tiny short-term sacrifice if they are the only way to get New York racing to a 51st birthday party - perhaps at its new racino, which will shortly thereafter send purses through the roof.