03/01/2013 2:55PM

Steven Crist: NYRA offering little pay for big job

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Can the New York Racing Association secure the right person as its next chief executive at a discounted price and with no job security beyond the next two years?

That was the most interesting question to emerge from the latest meeting of the new state-controlled NYRA Reorganization Board, which held its third meeting last Wednesday.

The issue of executive compensation has been a perpetual bone of contention between NYRA and its critics in government, reflecting two radically different views of the organization. The base salary for the position for NYRA’s previous CEO, Charles Hayward, had risen to $460,000 by the time he was dismissed by the NYRA board last May. A variety of politicians had criticized the salary as excessive in comparison to the heads of other state agencies, while NYRA pointed out that the equivalent position at privately held racing companies such as Churchill Downs were worth more than double that.

What the argument really was about was the definition of NYRA: Should it be viewed as an equal and competitor with those private companies, and its employees compensated as such despite its not-for-profit status, or as a state agency with salaries more in line with those of civil servants?

The new NYRA board, according to Vincent Tese, a board member and the chair of its compensation committee, hired a consultant who told them the job was worth $600,000 to $1.1 million annually. The consultant then offered three schemes, and the NYRA committee chose and tinkered with what Tese called “the most aggressive” (that is, the cheapest) one of them: An annual base salary of $300,000, with an as yet undefined set of incentives that could add up to $250,000 in bonus pay.

“There seems to be a disconnect here,” said Len Riggio, a board member, citing the gap between the $600,000-to-$1.1 million recommendation and a guarantee of only $300,000 in base salary. Other board members wondered whether the fact that the NYRA Reorganization Board’s final mandate – to return control of NYRA to private hands in under three years, with no guarantee that this operator would retain the chief executive – would be a further hindrance.

Tese and David Skorton, the board chair, responded that those were legitimate concerns but that they thought the numbers were appropriate for attracting the right person while remaining sensitive to the perceptions of what the head of a quasi-public entity should be paid. Skorton called it “in the sweet spot for where this organization is right now” and added that “we’re turning the ship on an interim basis.”

Between the lowball base pay and the emphasis on the transitional nature of NYRA, the board seems to be saying that it is looking more for an operational leader to keep the tracks running while the board plots the future of racing in New York, rather than a visionary leader to steer that ship. The rumored candidates for the position are all former executives at private-sector tracks who could probably seamlessly take over for Ellen McClain, who is resigning her position as president and chief operating officer at the end of April.

Perhaps that is the right way to go at the right price if the new chief executive is going to be a relatively short-term choice, but the emphasis on incentives is somewhat troubling. By making up to 45 percent of the next chief executive’s compensation dependent on certain targets, the board may be encouraging short-term results at the expense of long-term goals and planning.

For example, the targets presumably would emphasize NYRA’s financial performance in a given salary year, numbers that rely heavily on total handle and retention rates. Would a chief executive with those incentives have recommended the sensible reduction in winter racing dates implemented this month? Would he embrace a reduction in takeout rates even if it took a year or two to grow handle and offset short-term losses? Would he enthusiastically court a return by the Breeders’ Cup to New York, an absolutely vital step for New York racing after an absence of nine years and counting, even if the event were a financial loss leader?

In a more perfect world, the board would find what it considers the ideal candidate and pay him what it takes to get him, rather than having an artificially low salary number to appease politicians who think a competitive salary by industry standards is too high. In the absence of that, the board must make sure that it is encouraging the kind of management and policies that will have lasting value beyond allowing a single executive to earn a bigger bonus.

 

bill bailey More than 1 year ago
you mean to tell me that Charles Hayward made all that salary and (MEGA perks) to not be involved with the Breeders Cup for 9 years ?? what an abortion....
Bruce Epstein More than 1 year ago
This is all BS . . . there are only 3 people who qualify for the job. The old boss of MD racing who has "moved" around a bit, (mabye due to his lack of ability) the old NJ boss who left to Parx, who might be too old now and recent presiden of GP who is most qualifed. However, the pay is range is too "civil servant based". The new boss of NY tracks, needs to be just that / a boss, not ansering to a "board" with litte true race track experiecne. Seems like true civil servants on the board, always low balling to get a mediocore job. Just like the post office.
Robin Dawson More than 1 year ago
With all due respect Bruce, you are living in the past. The Kilroes and scions of the horse racing industry are long gone. For the last 30 years horse racing has been run by dynosaurs and their sycophants and, like many things today (the excesses of Wall Street, Government stubborness, Church fallibility), this general incompetence is now having to be confronted. For what its worth...the problem is and always has been the people running (mismanaging) our sport, not the sport itself. And I have laugh when I read that the Jockey Club, after failing miserably with their latest half-baked internet-based iniative (again run by ignoremi) have now hired ' PR ambassadors ' to go out and preach the word!!! The trouble is that they have no message that anyone is prepared to listen too anymore, and, until they do, they will just be whistling in the wind and wasting more time and money, while horse racing as we know it goes down the drain. The solution is simple...and I've been saying the same for the last 17 years since meeting with Ted Bassett of the Breeders' Cup, back in 1995...present the top two tracks in an exciting fan-friendly, simple, interactive manner each day (on which the lion's share of the handle is wagered) and the sport will gain context, which will make TV coverage and trips to the track relevant. Right now, the spin-doctors are putting the cart in front of the horse with silly, esoteric games that only hardcore experts can figure out. The answer is making horse racing a simple, fun, free-entry daily game that will capture today's attention-deficit-afflicted youth. I call this copncept Real Racing...and given half a chance to explain it, I know it will re-introduce America to ' the track '.
Bryan Waters More than 1 year ago
How right you are, Robin. For 17 years now. I would only add, make it three tracks: One on East Coast, one in Midwest or South, and one on West Coast. The locales can change, but only 3 tracks, one from each section of the country, would run 365 days a year. First post time at 10 a.m., last race go off around midnight.
Riddle This More than 1 year ago
The Board needs to hire a person who knows and has been successful in dealing with a wide range of tasks, not just horse racing. The ideal person would have a balanced knowledge of the horse racing industry but not necessarily employed by it. A person with successful experience with facilities planning and capital projects, budget and finance, housing, event organization and control, wagering, public relations (both marketing and customers), personnel, Board relations, and the ability to deal effectively with local and state government, and finally have enough vision to realize serious changes need to occur to grow the sport such as one wagering facilitator statewide (good bye OTB Corps). Place to look for such a person....at the local government professional management level....you all might be surprised at who you find.
Sal Carcia More than 1 year ago
Steve does hit on an important point in this column. That is that the takeout needs to be lowered. Increased real and effective takeouts have been the top reasons why handle is down and why fans have been driven away. I will add though that the silent killer is has been the raising of effective takeout by allowing the pools to be unbalanced or unfair. For example, allowing computer-aided betting into the pools raises the effective takeout by a 1% point or more. It's a silent killer. My recommendation is to not only lower the takeout but also get rid of the computer-aided betting sites. Finally, my last recommendation is the game should create more affordable and fairer bets for all bettors. The 50c pick5, 10c rainbow pick6 and the 10c superfecta are good examples of bets that are leveling the playing field. When the playing field is leveled, the small to mid-sized players start coming back.
russell More than 1 year ago
Sal I'm not sure I follow. Are you saying that rebate sites up the effective takeout? Please explain.
Sal Carcia More than 1 year ago
Russell, right now I am only talking about the computer aided offshore betting. I would have to dig a little here for links. The 1% effective takeout increase was the reason given by the Oaklawn simulcast manager when they shut down the offshore sites from betting into Oaklawn's pools. Also, a few years ago Peter Berube (GM of Tampa) made a presentation showing that the computer assisted value wagering sites were winning at a unusual higher rate than any other simulcast sites. He also pointed out that the churn was much less coming out of this sites. In essence they were skimming the pools. If you need references, I will track them down.
russell More than 1 year ago
It is very interesting. Thanks for the feedback.
Sal Carcia More than 1 year ago
Russell, here are a couple of links on the subject: http://www.drf.com/news/two-tracks-plan-block-rebate-shops-2nd-year http://www.paceadvantage.com/forum/archive/index.php/t-14987.html
Mike Doak More than 1 year ago
I guess that nobody will ever get it on the topic of reducing the takeout.... As long as the numbers represent free money to the payee, it will NEVER be lowered!! Also, the takeout after the pool gets distributed as cashable ticket revenue; it will be re-taxed above 32%, and also in the very next race, representing the "churning" of all wagered revenues.... No taxes, not even fuel taxes, approach the taxes paid out for the right to gamble.... Add in the cost of a Racing Form, a race-day program, parking, valet services, and food and beverage purchases, black out the sun!!!
russell More than 1 year ago
Lawrence- it makes perfect sense but it doesnt work in the usa.. Keeneland would fail w/o the yearling sales money. NYRA would fail w/o Saratoga CD would fail w/o Oaks and Derby Day The FG would be a swamp w/o Casino money. The few tracks that are capable of surviving on their own due to their handle is SA, Del Mar, Tampa, and GP. The rest are in trouble. And they probably should be.
Lawrence Redding More than 1 year ago
The state has no business operating a gambling enterprise . Put NY racing on the market & sell it off.
Nathan More than 1 year ago
the board? political hacks, all of them. should all be fired. start with a brand new slate that will be put together by an independent consultant agency with absolutely zero ties to n.y. politics.
Bruce Epstein More than 1 year ago
You are correct, the board is full of political "do gooders" who know little and think they are protecting the poor.
jim vella More than 1 year ago
A suggestion to the esteemed board: Find us a "savior" and pay him or her what they require to take the job as NYRA CEO. Establish clear goals. Dangle the prospect of continued employment as golden handcuffs. Evaluate their performance at proper intervals and always keep their "walking papers" at hand. That's not the hard part. The hard part is identifying and vetting candidates. Butwait, that's done everyday in the business world, with much success and also frequent failure. Still no big deal. But I think we're not set up to succeed at this chore because our fish stinks from the head down. Have you watched or listened to the board meetings or read written accounts of them? Its like watching a bad, formulaic TV sitcom comedy or, worse, watching an idiotic "reality" show. Where did some of these clowns come from?!
michael More than 1 year ago
In NY, everybody is overpaid. Brokers, execs, Arod and Jeter. It's a sin. Give common folks a shot at box seats at Saratoga. Muscle out tge blubloods on the jockey club. TuRN the game around.
John Nicoletti More than 1 year ago
Unfortunately, Michael, it IS, the blue bloods, that keep racing alive. It involves a ton of money to purchase,own,train, and keep a racehorse. You do not do that on an hourly wage. Sad, but true.
Sal Carcia More than 1 year ago
Quite honestly, why would anyone want this job for any salary? In NY, whenever new gambling licenses are going to be issued, it ends up being a bloodbath. Whoever takes the job must figure that it could be his/her last one. And that is not even the worst possible outcome.