Tuesday, September 25, 2012
Should NY racing fans buy selling NYRA?
By Bob Ehalt
As reports swirl that New York Governor Andrew Cuomo is about to become an auctioneer and sell off the New York Racing Association’s holdings to the highest bidder, allow a moment or two to go back to a different time in a neighboring state.
Specifically to Connecticut, where in 1993 the state sold its off-track betting unit.
Among the bidders was one company that offered $20 million.
Another offered $1. Yes, a dollar.
Believe it or not, the state took the $20 million. Go figure.
Certainly privatization can work. And certainly it can also worsen deep-rooted problems.
When later asked why such a ridiculous sounding bid was tendered, a representative of the company willing to fork over a box of Chicken McNuggets -- a small box, mind you -- for the OTB had an interesting response.
He basically explained his company was a business, and like all businesses, conducted its affairs to turn a profit. They believed the facilities in Connecticut needed so much work that it could not afford to pay the state and make the proper renovations. They wanted to pour the money into their business and create a better product for the fans. Their primary interest was not in lining the state’s pockets.
This is offered amid talk that the state will bring in someone like Churchill Downs to take over NYRA and all will be well with New York racing until mankind walks on Pluto.
We’ll see about that.
Certainly privatization can work.
And certainly it can also worsen deep-rooted problems.
Just remember from the Connecticut model that whomever is handed the keys to Aqueduct, Belmont and Saratoga will have to make back the money it pays the state just to break even. If it was the casino at Aqueduct that was up for sale, then recouping the initial investment would be a piece of cake with the $12 million a week it nets.
But we’re talking about a racing franchise that has bled red ink for years. What will a new owner do to recover that investment? What changes will the day-to-day operation of the sport undergo? Will a simple change of management reverse the financial tide in a stagnant industry?
Perhaps. Yet there’s also a school of thought that in switching from a not-for-profit structure to a bottom-line conscious mentality the sport will be scaled back dramatically and long-suffering customers will feel the squeeze of the new penny-pinching owners.
In addition, it will be interesting to see how much a gaming company would be willing to pay for NYRA’S assets. A business outside the industry might be fooled by the hype, but an entity like Churchill Downs or Magna should be able to figure out that one of NYRA’s biggest problems was the new partner of the new owner: the state.
The very same state that dragged its feet for more than eight years before a casino was built at Aqueduct. The very same state that passed legislation to give NYRA revenue from the casino and then threatened to suspend payments in a dispute.
NYRA certainly goofed on numerous occasions over the years, yet the restrictive framework the state provided for conducting business and the numerous attacks politicians launched on NYRA over the years should send up a red flag to gaming companies.
Once they sign over a check and are handed the keys, will the state continue be as warm and fuzzy toward them as it figures to be in the courtship? It’s a fair question.
And how much is all of that potential angst worth to a Churchill Downs?
The new business model should provide some protection from state interference, yet laws can be re-written as quickly as they are written and racing’s limited influence and the nature of the sport will always make it an inviting target. A Churchill Downs, which is a kingpin in the Bluegrass State, will no doubt find its clout in the New York sports/gaming fraternity to be somewhere on a par with the sad-sack Islanders. That could be culture shock for Churchill Downs, which will find out that in New York being home to the Kentucky Derby doesn’t hold a candle to winning the World Series 27 times.
And how much is all of that potential angst worth to a Churchill Downs? Perhaps not as much as the Governor might believe. Remember, he’s dealing with folks looking to make a buck, not caretakers of the sport like NYRA’s founders were.
Time will indeed provide an answer and it’s far too early to a hazard a guess on how everything will turn out.
Yet for now, if the state does indeed put up the for sale sign, there’s something else it should consider adding to the deal. It’s been offered in countless clandestine Big Apple sales for decades and seems a fitting part of this transaction as well: the Brooklyn Bridge.
And what are your thoughts on privatizing New York racing? Good, bad, indifferent? Are there any bridges you want to buy?