DerbyTrail
06-26-2005, 08:14 PM
First look at what Tim Smith's group thinks.. As I've maintained, I think what we end up with here is an entirely new version of NYRA that leaves way more authority with Albany than ever before. There's too much at stake for industry WITHIN New York itself to allow an outside party to "win" the franchise...
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Overhaul of the Horse Racing Industry in New York Is Recommended in a Study
By JOE DRAPE, NY Times
Published: June 26, 2005
New York's three major thoroughbred racetracks should be run as a business for profit in partnership with the state, all off-track betting outlets should be folded into the enterprise, and video lottery terminals should be allowed at Belmont Park, according to a study by an independent advocacy group to be released tomorrow.
The group, Friends of New York Racing, said that by replacing the New York Racing Association with such a model, the state would attract capital investment of $500 million to $1 billion. It would produce more than $6 billion for education in its first 10 years and, by increasing current purses and breeder awards by more than 60 percent, assure the state's horse racing future, according to an executive summary of the report, which was obtained by The New York Times.
"No serious analyst would suggest if the policymakers and the industry were starting fresh, that New York horse racing and wagering would be organized as it is today," said the report, written by Tim Smith, the president and chief executive of the Friends of New York Racing. "Based on the current circumstances - fiscal, political, legal and otherwise - there is perhaps the best chance in several decades to create a new and better model."
The New York Racing Association's franchise to run Belmont, Aqueduct and Saratoga Race Course expires after 2007, and on Friday the State Legislature established an oversight board that could take over the operations of the tracks if NYRA does not overcome its legal problems. Federal monitors have overseen its operations as part of a plea agreement for its role in a 2003 tax-evasion scandal involving several mutuel clerks.
As early as August perhaps, they will issue a report to the United States Attorney's office on whether or not the association has carried out anti-corruption measures and good business practices. If so, the charges will be dropped against the association, which has paid a $3 million fine.
Gov. George E. Pataki will appoint a nine-member ad hoc committee perhaps as early as July to come up with a process to put the racetracks up for bid. With 4,500 video lottery terminals to be in place at Aqueduct by next summer, New York's racing franchise is expected to attract numerous bids from well-heeled racetrack operators, casino companies, private equity firms and perhaps even technology companies. NYRA handles more than $2.7 billion in horse racing bets annually.
In fact, the board of Friends of New York Racing includes some possible bidders for the association franchise, including the racetrack operators Churchill Downs Inc. and Magna Entertainment Corporation.
But the two proposed business models in the study also reflect the goals of New York horse owners and breeders on the board who want to maintain a racing product that is considered second to none in the nation and that has an economic impact of $1.3 billion to the state, provides 16,900 jobs and encompasses more than 152,000 people, including owners, service providers, employees and volunteers.
The first recommended model is a public-private partnership in which the state and participating local governments own 40 percent of the tracks and receive upfront fees totaling an estimated $150 million for the racing franchise and off-track betting jurisdictions and an equity ownership estimated to generate $695 million from 2007 to 2012. In the privatization model, the state would receive nearly $500 million up front, but no continuing ownership.
The report notes that "the creation of the New York City OTB in 1970 was perhaps the single biggest blow to NYRA's original business model, since it effectively eliminated a large percentage of NYRA's customers and revenues." It details the "persistent insolvency" of the racing association for the past 35 years, culling from audit reports by the state comptroller, Alan G. Hevesi, and a criminal investigation by state Attorney General Eliot Spitzer, who concluded in a 2003 report, "The current structure has not, does not and will not work."
With NYRA losing $10 million annually and the Off-Track Betting Corporation's fighting to stay afloat, the study recommends consolidating operations.
By installing an additional 5,000 video lottery terminals at Belmont Park, a mammoth and underused facility accessible from New York City and Long Island, the franchise would be attractive to outside investors.
"The current structures for horse racing and off-track wagering in New York are 50 and 30 years old, respectively," the report said. "Today, there is broad agreement among policymakers, industry leaders, academics and others that the current NYRA and OTB business models are 'broken' in numerous ways and should be replaced."
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Overhaul of the Horse Racing Industry in New York Is Recommended in a Study
By JOE DRAPE, NY Times
Published: June 26, 2005
New York's three major thoroughbred racetracks should be run as a business for profit in partnership with the state, all off-track betting outlets should be folded into the enterprise, and video lottery terminals should be allowed at Belmont Park, according to a study by an independent advocacy group to be released tomorrow.
The group, Friends of New York Racing, said that by replacing the New York Racing Association with such a model, the state would attract capital investment of $500 million to $1 billion. It would produce more than $6 billion for education in its first 10 years and, by increasing current purses and breeder awards by more than 60 percent, assure the state's horse racing future, according to an executive summary of the report, which was obtained by The New York Times.
"No serious analyst would suggest if the policymakers and the industry were starting fresh, that New York horse racing and wagering would be organized as it is today," said the report, written by Tim Smith, the president and chief executive of the Friends of New York Racing. "Based on the current circumstances - fiscal, political, legal and otherwise - there is perhaps the best chance in several decades to create a new and better model."
The New York Racing Association's franchise to run Belmont, Aqueduct and Saratoga Race Course expires after 2007, and on Friday the State Legislature established an oversight board that could take over the operations of the tracks if NYRA does not overcome its legal problems. Federal monitors have overseen its operations as part of a plea agreement for its role in a 2003 tax-evasion scandal involving several mutuel clerks.
As early as August perhaps, they will issue a report to the United States Attorney's office on whether or not the association has carried out anti-corruption measures and good business practices. If so, the charges will be dropped against the association, which has paid a $3 million fine.
Gov. George E. Pataki will appoint a nine-member ad hoc committee perhaps as early as July to come up with a process to put the racetracks up for bid. With 4,500 video lottery terminals to be in place at Aqueduct by next summer, New York's racing franchise is expected to attract numerous bids from well-heeled racetrack operators, casino companies, private equity firms and perhaps even technology companies. NYRA handles more than $2.7 billion in horse racing bets annually.
In fact, the board of Friends of New York Racing includes some possible bidders for the association franchise, including the racetrack operators Churchill Downs Inc. and Magna Entertainment Corporation.
But the two proposed business models in the study also reflect the goals of New York horse owners and breeders on the board who want to maintain a racing product that is considered second to none in the nation and that has an economic impact of $1.3 billion to the state, provides 16,900 jobs and encompasses more than 152,000 people, including owners, service providers, employees and volunteers.
The first recommended model is a public-private partnership in which the state and participating local governments own 40 percent of the tracks and receive upfront fees totaling an estimated $150 million for the racing franchise and off-track betting jurisdictions and an equity ownership estimated to generate $695 million from 2007 to 2012. In the privatization model, the state would receive nearly $500 million up front, but no continuing ownership.
The report notes that "the creation of the New York City OTB in 1970 was perhaps the single biggest blow to NYRA's original business model, since it effectively eliminated a large percentage of NYRA's customers and revenues." It details the "persistent insolvency" of the racing association for the past 35 years, culling from audit reports by the state comptroller, Alan G. Hevesi, and a criminal investigation by state Attorney General Eliot Spitzer, who concluded in a 2003 report, "The current structure has not, does not and will not work."
With NYRA losing $10 million annually and the Off-Track Betting Corporation's fighting to stay afloat, the study recommends consolidating operations.
By installing an additional 5,000 video lottery terminals at Belmont Park, a mammoth and underused facility accessible from New York City and Long Island, the franchise would be attractive to outside investors.
"The current structures for horse racing and off-track wagering in New York are 50 and 30 years old, respectively," the report said. "Today, there is broad agreement among policymakers, industry leaders, academics and others that the current NYRA and OTB business models are 'broken' in numerous ways and should be replaced."