Change is in the air at NYRA
Reform preceeded scandal
CAPITOL The New York Racing Association has needed an overhaul for some time, according to board member John Hendrickson. NYRA, which for decades has run the state’s thoroughbred racing industry, was due for reform well before the December exposure of an incorrect takeout percentage that cost winning bettors more than $8 million.
Hendrickson, the Saratoga Springs philanthropist and husband of socialite Marylou Whitney, was appointed by the state Senate to serve on the NYRA board of directors in 2008; at that time it was reconstituted along with the state’s decision to award it a new contract to run horse racing at Aqueduct, Belmont and Saratoga. Hendrickson’s appointment came just a few years after he and Whitney were part of a group trying to take the franchise contract away from NYRA.
NYRA has run the three race tracks since 1955. The organization has been under fire for being unable to turn a profit since 2000; it filed for bankruptcy protection in November 2006. Hendrickson said the fresh start NYRA was looking for in 2008 failed to end the organization’s contentious relationship with the state and didn’t address NYRA’s problematic culture with its “private club” mentality and penchant for high spending. A new reorganization plan, with a state-controlled 17-member board running NYRA for three years, is intended to finally change that culture.
Arguing that Gov. Andrew Cuomo has known for years that this day was coming, Hendrickson downplayed the role of the takeout scandal, which he characterized as a “terrible, terrible mistake.” He said NYRA is trying to atone for this chapter in its history, but stressed the NYRA board is being replaced because of institutional problems, not one mistake.
“It wasn’t about Charlie Hayward or Patrick Kehoe,” he said, referring to the two top executives who were fired in early May after the takeout mishandling. Hayward was NYRA president and CEO; Kehoe was general counsel.
Because a majority of the new board members will be appointed by state officials, including eight by Cuomo, the racing industry and NYRA should benefit from the state having “skin in the game” and a renewed desire to see racing succeed, Hendrickson said. At the very least, tensions should ease as everyone is clearly on the same side now, with NYRA transitioning from a “quasi-government” nonprofit business to a “government-run business.”
vlts and casinos
The most pressing long-term challenges for the new board are NYRA’s reliance on video lottery terminal revenue from Aqueduct and how racing will survive if non-Indian casinos are approved by the Legislature.
The state has criticized NYRA for relying too heavily on the projected $93 million in VLT funds NYRA is using this year for stakes and purses, capital expenditures and its budget. Hendrickson rejected the over-reliance critique, noting that it is a revenue source contractually owed to NYRA and that track operators across the country use VLTs to support racing.
He conceded, though, that spending could be reined in, especially considering NYRA hasn’t shown a profit in recent years. This doesn’t necessarily mean cutting the controversial salaries of top executives, which he said are comparable or less than the pay for executives in similar situations. Ultimately, when it comes to reforming spending practices, he said, “Everything is on the table.”
In defending NYRA’s use of VLT funds, Hendrickson said it is helping grow racing, with about $45 million of the pool going to higher purses. This investment has been questioned by some state overseers, but increased gambling on Aqueduct, Belmont and Saratoga races was cited as evidence of the experiment working.
He was mostly focused on the potential for VLTs to become obsolete with the creation of non-Indian casinos, saying, “Racing is looking forward to having a partnership with the casinos ... or at least the same type of agreement that we have with the VLTs.”
Hendrickson added his own preference is against giving live table games to the Saratoga Casino and Raceway, so as not to mess with the popularity of the thoroughbred racing there.
In addition to planning for non-Indian casinos, he said the new board will also take a look at whether horse racing should continue at Aqueduct, which political and racing observers have speculated might become the site only for a casino in the future. “I think they’re going to look at everything,” he said of the new board.
NEW OUTLOOK NEEDED
Under the new board, Hendrickson hopes its operations will be more open to the public so they can show there is nothing to hide and improve faith in the industry. “I’m for open meetings,” he said. “The perception is that NYRA does things behind closed doors and it is a club. We need to get rid of that perception ... That solves a lot of problems.”
One thing that shouldn’t be impacted by new leadership is NYRA’s commitment to improving housing conditions for backstretch workers in Saratoga Springs. He was angered by the state’s harsh words about NYRA’s history on this issue, as Hendrickson and his wife have dedicated a lot of their time and energy to this cause, in conjunction with NYRA’s support. Fixing the housing needs to remain “no less than the number two” priority for NYRA at Saratoga under the new board, said Hendrickson, who said it will be his mission as long as he is alive.
As for the future staffing decisions, the most controversial one is the fate of acting President and COO Ellen McClain, whose elevation to president was questioned by the state and racing industry professionals. He said she has done a great job considering the circumstances, but said her fate is essentially in the hands of Cuomo.
Hendrickson’s continuation as a NYRA board member will depend on whether he is appointed when the new board is formed. He said he is at peace with leaving the board as long as the interests of Saratoga Springs were well represented.