Horsemen learn how NYRA's new purse account will operate

Representatives of New York's horsemen gathered on Saturday afternoon at Aqueduct to explain to trainers and owners how their purse money will be managed now that the New York Racing Association has created a separate account for horsemen.

The meeting was "informational in nature," according to Alan Foreman, the executive director of the National Thoroughbred Horsemen's Association, which counts the New York horsemen's association as a member.

The meeting came approximately three weeks after the new account was created in response to trainers' complaints that NYRA was using purse funds to cover its operating expenses. The new account will continue to be managed by NYRA, but the funds will be placed off NYRA's balance sheet to protect the money should NYRA go bankrupt. Concerns about the purse fund were first raised as part of the state and federal investigation into NYRA's internal financial controls.

Under the previous system, NYRA paid out purse earnings to horsemen under an account that was also used for NYRA's operating expenses. The liabilities to horsemen, however, had grown to about $14 million this year as NYRA faced a cash squeeze, horsemen's officials said, before trainers asked for the separate account to be created.

Foreman said the new system should allow NYRA to meet future obligations if horsemen do not seek their purse money all at once.

"Unless everyone made a mass run on the racetrack, there will be no problem covering that obligation going forward," Foreman said.

In the vast majority of states, horsemen's funds are managed as they were at NYRA, according to Remi Bellocq, the executive director of the National Horsemen's Benevolent and Protective Association. A track sets up an accounting system and hires a horsemen's bookkeeper to monitor the distribution of purse funds and claim deposits, Bellocq said.

However, in the past several years, the NHBPA has supported the establishment of three "universal horsemen's bookkeeper systems," in Texas, Florida, and Louisiana, Bellocq said. The systems put the responsibility for managing the purse fund in the hands of the state's horsemen's association instead of the tracks, and they eliminate the possibility that horsemen will be shortchanged if tracks go out of business.

Tom Azopardi, the executive director of the Texas Horsemen's Partnership, said that his office began managing the horsemen's account in 1998 following the bankruptcies of two tracks in the state, Bandera Downs in 1994 and Trinity Meadows in 1996.

"In both cases, when they went under, they took the horsemen's money with them," Azopardi said. "We started digging out from under that rubble, and we decided we wanted to be responsible from now on."

Aside from security, Azopardi and Bellocq said, the biggest benefit from the system is that bookkeeping is drastically streamlined. For example, horsemen in Texas used to get a year-end tax form for each track where they earned purses. Now, horsemen get only one form for all earnings in the state.

Under the system, Azopardi said, the racetrack deposits purse funds into the horsemen's account directly from the handle. The horsemen are then responsible for managing the money and distributing it to purse earners. The funds are also guaranteed by a bank.

On the flip side, taking on the responsibility for managing the money creates additional burdens of paperwork and manpower for the horsemen's association, Azopardi said.

"But that would be it," Azopardi said. "As long as you have a strong horsemen's organization, you'll be fine."

Foreman said that most horsemen are not eager to manage purse funds, however.

"In the majority of jurisdictions, the horsemen don't want the headaches or liabilities that go with it," he said. "If it's done properly by the racetrack, there's really no reason to be concerned. The racetrack is providing a service."