The New York State Franchise Oversight Board (NYSFOB), which oversees NYRA’s financial operations, recently submitted their annual report to the New York State Governor and Legislature, in which they stated:
“NYRA faces significant challenges moving forward. Vast changes in the sport, consumer preferences and technology have resulted in significant declines in the horse racing industry...The need for major strategic changes designed to reach new generations of racing fans is critical for the future survival of this sport.”
The NYSFOB reports that NYRA lost over $24 million in 2011, which compounds the $17 million loss experienced in 2010. While some hoped video lottery terminals (VLTs) at the Resorts World Casino at Aqueduct would help reverse the losses, increased operating expenses have nullified the potential gains.
“The [NYSFOB] remains focused on NYRA’s growing expense structure in the face of declining handle across the industry. The status quo is simply unsustainable,” the report reads. “If expenses are allowed to continue to grow, not even the substantial investments made by the state into NYRA through the VLT support payments will be enough to cover the losses incurred by NYRA’s operations.”
While operating costs at NYRA increased by $1.1 million compared from 2010 to 2011, administrative and general costs during the same time period jumped $20.9 million. Rising salaries and increased benefits made up the lion’s share of the 14.7 percent jump.
NYRA is in the midst of a major reorganization after investigators discovered members on the board knowingly and illegally overcharged on certain bets. The revelation prompted Governor Andrew Cuomo to seek partial public control of NYRA for the next three years. After the reorganization, 11 members of the board will be appointed by the governor and the legislature while the remaining five will be selected by the current NYRA board.
“In addition, the [NYSFOB] emphasizes the need to re-establish the credibility of the sport through efforts to improve horse safety, owner/trainer integrity and the enforcement of rules governing drug administrations,” states the NYSFOB.
While NYRA is struggling financially, the report noted the crisis would be much more severe without proceeds from the VLTs.
“Without the infusion of cash generated from VLT operations... NYRA finances for 2012 would continue to run deep in the red. According to NYRA’s own budget projections, it will achieve net income of $18.9 million only due to $20.6 million in operational support payments from VLT proceeds and $27.5 million in VLT capital funds.”
But VLTs seem to be a temporary fix as far as NYSFOB is concerned, stating, “Further, NYRA must establish a long-term financial goal to end its reliance on VLT subsidies and immediately develop plans on how it will meet this goal.”