Wednesday, December 10, 2008

Hayward: NYRA Has Big Plans, Wary Eye

by Tom LaMarra


The rejuvenated New York Racing Association has big plans for its new 25-year franchise, but president and chief executive officer Charles Hayward said Dec. 9 the organization has to plan wisely should revenue sources dry up.

Hayward, who spoke during the University of Arizona Symposium on Racing and Gaming in Tucson, Ariz., said NYRA would not be “overly cautious” and would make “bold, innovative moves” when it realizes revenue from a video lottery terminal casino expected to open in the second quarter of 2010 at Aqueduct, one of three racetracks operated by NYRA. But he tempered that with a prediction the money could disappear in a decade.

“I don’t think this VLT revenue to purses and NYRA is going to be there 10 years from now,” Hayward said. “I think the pressure will be on state government to subsidize racing will be too great.”

Hayward’s view is shared by others in the industry that fear state legislatures eventually will question the amount of money horse racing gets from gaming subsidies when other state programs are suffering from funding deficits. It already has played out in West Virginia, where tens of millions of dollars in purse money was used to support a statewide workers’ compensation program.

Racing’s share of Aqueduct VLT revenue is as follows: 6.5%-7.5% for purses, 4% for capital expenditures, 3% for NYRA operating expenses, and 1%-1.5% for breed development. Hayward said that based on a win-per-machine of $300 per day, purses would get another $32 million a year for a total of $150 million at Aqueduct, Belmont Park, and Saratoga.

How that money will be spent remains to be seen. There could be $100,000 maiden special weight events at Saratoga, or maybe a $2-million purse for the Travers Stakes (gr. I). Hayward said “strategic options” must be studied given the chance the VLT revenue could be diverted at some point.

The key, he said, is to use purse increases to bolster field size, which in turn would hopefully increase pari-mutuel handle—racing’s committed funding source.

“We will be studying this and working with horsemen to take purse money and do something good with it,” Hayward said.

NYRA this year hired Turnberry Consulting to develop a strategic plan for improvements at its tracks. Hayward discussed three aspects of the plan, one of which is keeping dirt surfaces at the tracks.

Hayward said there is no current plan to install artificial surfaces for training or racing at Aqueduct, Belmont, and Saratoga. He said there is “insufficient empirical data on safety” thus far and no definitive information on whether soft tissue injuries have increased on synthetic surfaces.

The plan includes major improvements to stable-area living quarters, and it’s possible NYRA tracks could be eligible for state and federal loans or subsidies because many workers qualify as low-income, Hayward said.

NYRA also has plans to provide “upscale for major events” and add “festivals of racing,” Hayward said.

On a related note, Hayward said he believes stakeholders in New York will succeed in improving the off-track betting system in the state. The goals, he said, are to maintain the six OTB regions but have one tote provider, one advance deposit wagering system, and one television strategy, all of which could add up to more revenue for the state and racing.

“There’s no agreement as to how we’re going to do it, but we know we need to do it and we’re going to get it done,” Hayward said.

Keeneland vice president Harvie Wilkinson spoke on the panel along with Hayward. He outlined a master plan devised by HOK Sports, which was hired by the Lexington racetrack earlier this year.

Customer surveys reflected a desire for convenience, comfort, entertainment, and more opportunities for business and social networking. Wilkinson said Keeneland would like to double or even triple the number of special events it offers each year, primarily in the off season.

Ideally, box seats would have wagering terminals and food and beverage service; corporate suites, of which there are 23, would be doubled in size and have more amenities; more sports bars would be added—“We could have six sports bars at Keeneland and that might not be enough,” Wilkinson said; and more tailgating and outdoor green space would be added.

“Hopefully, we’ll be able to do this over the next five to 10 years,” Wilkinson said.

Keeneland currently has seating and dining for 11,000 people. Its average daily attendance is 14,000, but there have been crowds in excess of 30,000. Wilkinson acknowledged the track sometimes can’t property accommodate patrons, which drives them to arrive late and leave early.

Overall, a Keeneland renovation and expansion would produce an environment “similar to what you see at a new sports stadium,” Wilkinson said.

When Keeneland announced the master plan, there was talk about the track making a bid to host the Breeders’ Cup World Championships. Officials said that’s not out of the question, but the project is really needed to handle regular race-meet crowds and to expand opportunities to host special events.

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