Wednesday, March 5, 2014

NYRA's 2013 Financials: A Glass Half Empty?

A year ago, I thought that NYRA's 2012 financials, reflecting the first full year of slot-machine revenue, signaled at least the possibility of better days to come. Last night, ahead of today's regular quarterly Board of Directors meeting, NYRA released its unaudited financials for 2013. While the 2013 figures show the largest profit in many years, there's much in the data to elicit, as Tom Durkin memorably said in the stretch run of the 1994 Breeders Cup Classic, cause for concern.

First, the big picture. NYRA's gross revenue for 2013 was $377 million, up almost 4% from 2012, and net income, after all expenses, was $42.8 million, compared to $25.6 million back in 2012. That's an increase in profits of almost 68%, apparently not bad for a company that's in what's supposed to be a declining industry. And, for the first time in living memory, NYRA has a positive figure on its balance sheet for shareholers' equity. In other words, its assets finally exceed its liabilities.

But a little closer look at the figures tells a more complicated story. The increase in gross revenue was due entirely to bigger payments from the Resorts World Casino slot machines; all other sources of income for NYRA declined from 2012 to 2013. NYRA's operating loss (i.e., before counting the slots revenue) actually increased from $5.6 million in 2012 to $12.3 million in 2013. Those figures suggest that NYRA Board Chair David Skorton and new CEO Chris Kay may be shouting into the wind when they talk about turning NYRA around so that it earns a profit without relying on its statutorily-mandated share of casino revenues. That $42.8 million profit, which included the NYRA share of the casino income, would have been a $12.3 million loss without it. That's a lot of money to make up from increased admission charges and more food sales at the track, especially in the face of the long-term national trend of declining attendance. I'm not saying it can't be done, but to expect that much of a turnaround in the next 12 months, which is all the time NYRA has before it's supposed to present its privatization plan to the Governor, requires a set of extremely rose-colored glasses.

Like many, I'm not sure why Skorton and Kay continue to press for a break-even operation without any reliance on the slot machines. Back during NYRA's bankruptcy litigation in the last decade, NYRA and the state struck a deal under which NYRA gave up its claims to the land the race tracks stand on, in return for a share of the casino money. That deal was embodied in state legislation, so it's not as if the state is "giving" NYRA something. The two sides made the kind of deal that's made all the time in litigation, with the state agreeing to the casino payments in return for NYRA's giving up its  legal claim. That was a bargained-for exchange, not a subsidy. True, Governor Cuomo, who has yet to set foot in a NYRA track, appears to dislike racing so much that he might want to renege on the deal and grab the slots money to help balance his  budget (instead, say, of getting the same amount of revenue through an almost unnoticeable tax on the state's all-too-numerous billionaires). But one would have thought that those charged with directing the racing industry would have the interests of their stakeholders -- the bettors, horsemen, backstretch workers and breeders, who pay for and put on the show -- in the forefront of their thoughts.

To the best of my knowledge, no race track makes money without some sort of income stream from other types of gambling. Certainly not Churchill Downs, Inc., which these days is more a casino and online betting platform than a racing entity. There's the new reality, and it's a delusion to think otherwise.

Overall, NYRA took in some $110 million from its share of casino revenue. Half of that went to fund purses for horsemen, and the other half to NYRA, divided between operating and capital accounts. Much of the proposed capital expenditure, discussed below, will be funded by those dollars. Foregoing them means that we will be hearing more and more comments like those at today's NYRA Board meeting from Gotham winner Samraat's owner Len Riggio, who said Aqueduct's state of disrepair was so bad that he didn't really enjoy being there. If you don't enjoy being at the track when you win a major Kentcky Derby prep, then something's wrong with the track.

Now for the details:

NYRA ran six fewer days of racing in 2013 compared to the previous year, a combined effect of going to a four-day week for part of the winter and of additional weather-related cancellations. That's a 2.4% decrease in race days, although there was a smaller decrease in total races, only 1.4%, due to the proliferation of 10- and 11-race cards at Saratoga. Live attendance at the track -- a focus of CEO Kay's "enhancing the guest experience" policy -- declined even more in percentage terms, from 1,784,000 to 1,658,000. Probably about half that decline resulted from the lack of a Triple Crown on the line for Belmont States day in June, but the other half is a real loss in attendance -- an average of 250 missing bodies at each operating track, every racing day of the year. That's not a good sign for a NYRA management focused on making the race track an attractive destination. It's particularly troubling that attendance at Saratoga continued to decline, as it has for the past decade, despite the best weather of any Saratoga meet recently.

Average field size at NYRA tracks declined from 8.1 horses per race in 2012 to 7.8 in 2013, largely as a result of out-of-state horsemen staying away when NYRA and New York State introduced new medication rules at the start of the year. Now that the other mid-Atlantic states have joined new York in adopting uniform drug rules, that factor should disappear, but there's an increasing threat to field size nationally, resulting from the sharply lower foal crops of the past few years. As these horses reach racing age, competition among tracks will intensify, to nobody's benefit. The sensible economic solution would be for some of the minor-league tracks to drastically cut back their racing days, but, with no centralized authority in racing, that's not going to happen.

Despite the reductions in race days and in field size, on-track handle at NYRA's three tracks (which includes bets made on the NYRA Rewards platform) decreased by only 1.6%, to $664.2 million. When the reduction in race days is taken into account, average daily handle actually increased by 0.9%. In easier-to-comprehend figures, the average NYRA patron pushed $201 through the windows each day in 2013, a modest rise from $198 in 2012.

Including simulcasting and off-track betting, total NYRA handle in 2013 was $2.5 billion, less than $1 million below the 2012 total. In addition to the aggregate drop in on-track handle, there were also declines in revenue from the remaining OTB operations in New York State and in simulcast revenues from other in-state locations (mostly harness tracks). These were more than offset, though, by significant jumps in out-of-state betting and international wagering, which rose more than 75%. If new NYRA Racing Director Martin Panza is successful in his goal of attracting more foreign horses to Belmont and Saratoga, the international betting market could be a bright spot for NYRA in the future.

In all, three-quarters of NYRA's handle comes from off-track. NYRA's simulcast signal is by far the most popular in the country. NYRA had 5% of all US race days last year, but accounted for 20% of total US thoroughbred handle. (and 14% of purse money). It's not impossible that Chris Kay's efforts to promote on-track attendance will bear fruit, but the numbers suggest that there could be equal, or even greater, gains from emphasizing the televised product. NYRA's current efforts to renegotiate simulcast contracts to secure a larger percentage of the takeout are a good first step in that direction.

One mystery in the financials is what happened to the $12 million tax liability that was discussed at the last regular NYRA Board meeting back in December. The year-end NYRA financials note that the final tax liability for 2013 has not yet been determined (remember, these are unaudited financials), but the balance sheet has no item for potential tax liabilities; rather, there is a credit of $17.4 million in the non-operating expense  Nothing in the footnotes that really explains the shift, but every little bit helps.

The new management team at NYRA has made some significant savings. Payments to outside lawyers and consultants declined sharply in 2013, and pension payments also declined, in part because of a shift to a new way of calculating NYRA's future liabilities. That may or may not hold up in the future, but for now it's a plus. NYRA also seems to have tightened up on fringe benefits, since its salary expense went up by 5.9% while its benefits costs dropped by 1.4%. With all its union contracts expired and in need of renegotiation, it may be tough to replicate that divergence in the coming years.

From the horsemen's point of view, things are looking up. Purse money for the year was $159.1 million, of which $55.2 million, or more than one-third, came from the slot machines.That's an average purse of well over $65,000 per race. At those prices, the old rule of thumb that horse owners earn only about half as much in purses as it costs to keep their horses in training is no longer valid. Now we earn three-quarters of what it costs. Guess we should be thankful for small favors.

The capital projects carried out in 2013 and planned for 2014, largely funded by casino revenue, have already been well documented. At Saratoga, there will be 750 new high-definition TV monitors, and 125 new picnic tables in the backyard; perhaps that will abate some of the death-defying 7 am race for tables when the gates open.At Belmont, work is supposed to finish on new dorms for backstretch workers, about a century overdue, and at Aqueduct the mythical Longshots bar and TV lounge, on the site of the long-shuttered Man O' War Room, is rumored to be opening any day now (well, perhaps any month). Still, despite the delays, it's good to see things actually being done. Barn roof repair has been ongoing, the Environmental Protection Agency has been satisfied with concrete wash pads and a manure facility that dominates the training track infield, and Saratoga continues to be, along with Keeneland, one of the best places in the country to go to the races. Let's hope NYRA can keep those capital projects moving.

Overall, then, NYRA's financials look healthier than they have been in a long time. But the source of that good health is, entirely, the addition of the tracks' share of the Aqueduct casino's slot-machine take. If that goes away, so does the financial health of the entire NYRA enterprise, Would more fans at the track and a better "guest experience" help? Sure. But it won't solve the financial problem. All of us -- fans, bettors, horsemen, those who work for NYRA and on the backstretch, upstate breeders -- we all need the state to keep its word and continue to follow the law that allocates a (small) portion of casino revenue to the racing industry.






Tuesday, January 21, 2014

Looking for a Partnership?


Lots of action on the racing partnership front, at least in New York. Lots of recent Facebook controversy about the ubiquitous Drawing Away Stables, and whether its partnership model contributes to the likelihood that its horses might be over-raced and under-retired. And a couple of interesting new partnership initiatives, from trainers Gary Contessa and Abigail Adsit, the latter a former Linda Rice assistant who's recently gone out on her own. And my own Castle Village Farm is looking to put together new claiming and two-year-old partnerships in the new year. At the same time, the failure of the well-known Karakorum Racing Stable, which once occupied Drawing Away's place as the New York partnership with the most starters, and which took with it a good deal of partners' and employees' money, reminds us that there are indeed risks in joining a thoroughbred partnership. (For a sanitized version of that story, see here.)

Overall, the rule of thumb for many years has been that purse earnings amount to about 50% of the cost of keeping all those race horses in training. With the advent of higher purses in New York, and relative stagnation in trainers' day rates (except perhaps at the stratospheric level of Todd Pletcher et al.), one can guess that a thoroughbred owner in New York might now lose only 25-30% of the cost of keeping an average horse in training. Still, that's a loss, and it doesn't count the cost of acquiring the horse in the first place, whether it's a $12,500 claimer or a $500,000 yearling purchase at Keeneland. Sometimes, your horse gets claimed for more than you paid for it, or you can sell it as a broodmare or stallion prospect. Far more often, you sell your horse for only a fraction of its purchase price or give it away (to, I hope, a good retirement home).

So don't go into a racing partnership expecting to make money. If you do, great. But more likely, you won.t. And if you don't, you'll still have the thrills that go with thoroughbred ownership -- watching your horse develop, hanging out at the barn, getting your picture taken in the winners circle. For most partners, a good result is having a good time while not losing too much money and not feeling that you're being taken advantage of.

So what should you look for in a partnership business plan or contract -- whether you're in one now and thinking about changing or whether you're thinking about getting involved for the first time?

Let's deal with the non-monetary issues first.

At the top of the list is what kind of involvement does the partnership provide? The high-end partnerships -- Centennial, Dogwood, Team Valor and West Point, for example --  have superb customer service, with staffers providing tours of the barns and meeting partners in the paddock. Of course, one pays for that kind of service (see below). At the other end of the scale, some partnerships bar partners from the training track and barn area, at least during training hours, and provide minimal information and partner support.

Questions to ask: Can I go to the barn and the training track to see my horse? Will the partnership help me with licensing? Does the partnership let me know what's going on, with phone or email notification of workouts, plans for races, entries, results and more? How can I be in touch with my fellow partners; is there an email list for the partnership? Will my opinion be listened to? Who makes decisions about which races to enter?

One goes, or should go, into a racing partnership knowing that the primary purpose is not to make money. Because that's true, the intangibles become all that much more important.

Next, What does your partnership do to make sure that its horses have a safe and secure retirement when their racing careers are over? Does the partnership have a clear retirement plan, and the financing to carry it out? Does the partnership contact successor owners of its horses, making it clear that the partnership is there to help if retirement becomes necessary? You'll feel better about your involvement if you know that the horses that give you so much pleasure are being taken care of.

Okay, now let's talk about the money. Basically, partnerships come in two flavors: those where the partners pay the ongoing training costs and those with a single up-front charge and no additional fees. The former is the more common and, in my opinion, makes more sense, for reasons that will become apparent.

So let's look at that model. The first question to ask is: how does the partnership manager or promoter -- who may be the trainer as well -- make money? There are really only three ways:

1. By marking up the cost of the horse. For example, West Point may buy a horse for $100,000 at the yearling sale, then syndicate it for $25,000 for a 10% share, effectively marking up the horse by 150%. Nice work if you can get it, and that markup does pay for a lot of customer service and advertising. Toward the other end, my own partnership, Castle Village Farm, charges a 15% markup on the initial capital in each partnership, whether that capital is then used to claim horses or to buy babies.

How do you know what the markup is? Easy. If a horse is purchased at public auction, that information is available on the website of the auction house, Fasig-Tipton, Keeneland or Ocala Breeders Sales Co. If the horse is claimed, you know what the claim price is. If it's a private purchase, the patrnership manager should be willing to tell you what the cost was. If not, that's a warning sign.

There's some justification for larger markups if the partnership manager personally bears the early risk. After all, if West Point buys a horse at auction and that horse breaks a leg before ever getting into training, it's likely that West Point will have to bear at least some of the initial cost. On the other hand, how much is too much? There's no one-size-fits-all answer, but a prospective partner should know what the numbers are.

2. By taking a piece of the purse. Often, partnership managers retain a 5% or 10% interest in the horse's earnings, without being liable for an equivalent share of the cost of keeping the horse in training. That's probably fairest to the partners, since an unsuccessful horse at least doesn't generate added charges.

3. By charging an ongoing management fee (or, as in the case of the late, unlamented Karakorum), a monthly training fee that far exceeded the actual training cost). That fee can be zero, it can be actual cost (of maintaining and office, tending to partners' needs, etc.), or it can be much more. The partnership agreement should spell out how much, if anything, the monthly or quarterly fee is.

Most partnerships charge a combination of these three items. I ca't say what's the ideal mix. Sometimes you get what you pay for, in service and support; sometimes you get more than you pay for; often you get a lot less. In all cases, though, if the partnership won't tell you up front what the costs are, including all forms of management compensation, beware!

Next,  how does your partnership share and distribute financial information? Are there monthly or quarterly reports to partners that spell out purse earnings and costs, breaking out training fees, vet bills, van bills, etc.? Does the partnership respond to your questions about the bills? And, a related point, does the partnership provide you with K-1s (the income tax form for your partnership share) in a timely fashion, so you can file your taxes on time? The less financial information you're getting, the more likely it is that the partnership manager is a gonif.

What about those one-time-only partnerships, where you put up some money at the start and then "never, ever" pay any more bills? Could be a good idea; there's not much that's more depressing than paying bills month after month for a horse that never makes it to the race track or that never earns enough to cover its training bills. But there are lots of pitfalls with this kind of arrangement. If you don't pay the bills, who does? Generally, it's the trainer, and that can lead to a variety of undesirable results. First, the most common version of the one-time-fee partnership is where the trainer gets to keep a majority or more of the purse, instead of the trainer's customary 10% That's the deal that Drawing Away Stables has with trainer David Jacobson, and it sets up some unfortunate conflicts of interest. From the trainer's point of view, it's better, in this sort of arrangement, to run a horse often and cheap, where the trainer has the best chance of picking up a purse. But that can often mean running the horse for a claiming price below its original cost. If the horse wins and gets claimed, the trainer keeps most of the purse, while the partners bear the capital loss on the claim price.

Alternatively, in the one-time-fee partnerships, the trainer or partnership manager could keep all the purse money until the horse has paid for all its training costs. For roughly 90% of horses, that means never, so the partners never see a return on their investment.

In either case, if you're tempted by the thought of never having to pay training bills, be careful. Make sure you understand the entire financial structure before you get involved.

And above all, look for transparency. Make sure you understand the deal, and that the partnership gives you all the information that you need. There are many that will; you don't have to go with the ones that won't.

Wednesday, January 15, 2014

Jockeys and Health Insurance

Recently, the Jockeys Guild has been making a strong push for someone, anyone really, other than the jockeys, to provide health insurance for riders and their families. In New York, the Governor's Office has convened a Task Force on Jockey Health and Safety to consider that issue, among others. The Task Force is chaired by NYRA Director and thoroughbred owner Anthony Bonomo and includes jockey John Velasquez, retired rider Ramon Dominguez, Jockey Club staff member Nancy Kelly and attorney Alan Foreman, who represents a variety of horsemen's groups, including the New York Thoroughbred Horsemen's Association ("NYTA").

Disclosure: I've been a member of the NYTHA Board of Directors since 2002. I also have some knowledge of health care issues at the track, through my involvement as a Director since 2009 of the BEST Backstretch health care program, which provides basic health care and substance-abuse services for backstretch workers at NYRA Tracks.

I've been told that a major item of discussion at the Task Force meetings has been: who should pay for health insurance for jockeys and their families? As I understand the Jockeys Guild position, it's that either the race tracks or the owners and trainers should bear this cost, and not the jockeys themselves, except perhaps to the extent of a very limited contribution.

Seems reasonable, right? After all, owners, trainers and track executives aren't the ones taking the risk of riding a 1,200-pound animal at 40 miles an hour in close company and under sometimes less than perfect conditions. Jockeys literally put their lives on the line every time they ride, so shouldn't they get our help?

But a closer look at the situation, at least in New York, raises some questions. Is financing health insurance for jockeys and their families really the best use of money from tracks' budgets, when many needed repairs are still waiting on limited budget funds? Is taking yet another slice off the top of owners' purses to pay for that insurance wise at a time when, despite slots-enhanced purses, most race horse owners still lose money? Why provide health insurance for jockeys when trainers, many of whom earn less than jockeys, have no insurance plan from the track and have to buy their own personal or family coverage?

In some racing jurisdictions, where purses are low, jockeys don't have coverage for on-the-job injuries, and jockey income flirts with the poverty line, perhaps there's an argument to be made for assisting jocks with health insurance premiums. But in New York at least, that argument doesn't apply. Here's why:

First, jockeys in New York already have two forms of insurance coverage for work-related injuries. The Jockey Injury Compensation Fund provides workers compensation coverage, including ongoing medical care, for on-the-job injuries to jockeys and exercise riders. The Fund is financed by owners, through a deduction from purses, and by trainers, through a per-stall fee that is probably usually passed along to owners as part of the trainer's day rate. In addition, NYRA pays for an accidental death and injury policy that pays those jockeys who sign a waiver (agreeing not to sue NYRA) 10 times their annual earnings, up to a maximum of $1.3 million, if the jockey is paralyzed and up to $956,000 if the jockey is permanently impaired. Those payments are on top of the workers compensation payments through the Jockey Injury Compensation Fund.

Second, jockeys in New York make a pretty good living. Using statistics available from Equibase, it's possible to calculate the gross earnings of most regular New York riders. In New York, jockeys generally get 9.17% of a win purse, 5% of second-place money, and 7.5% of third-place money. Because win purses are the major element in any jockey's income, this works out to a blended rate of about 8% of total purse money won.

Using those parameters, and using the Equibase data for 2012, the first full year of slots-enhanced purses in New York, one can calculate that 22 jockeys made over $100,000, just from their rides in New York, not counting anything they earned out of state. For example, the now-retired Ramon Dominguez had purse earnings of over $19 million in New York, of which his share was in excess of $1.5 million. Other jockeys who earned over $400,000 just in New York include Cornelio Velasquez, Junior Alvarado, Javier Castellano, Irad Ortiz Jr., Jose Lezcano, David Cohen, Eddie Castro, Alan Garcia, John Velazquez, Rajiv Maragh, Joel Rosario, and Rosie Napravnik. Using the same methodology, we can conclude that the following riders made between $100,000 and $400,000 just in New York in 2012: Jose Ortiz, Wilmer Garcia, Mike Luzzi, Samuel Camacho Jr., Edgar Prado, C C Lopez, Jose Espinoza and Corey Nakatani. Adding in jockeys who earned less than $100,000 in New York but who had earnings elsewhere that would lift them above the $100,000 threshold would add the following to the list: Jose Rodriguez, Kent Desormeaux, Dennis Carr, Joe Bravo, Shaun Bridgmohan, Pablo Morales, Luis Perez, Jose Valdivia Jr., Chris DeCarlo, Pablo Fragoso, Alex Solis, Jaime Rodriguez, Mike Smith and Kevin Navarro.

Update (1/16/2014): I just ran the 2013 numbers, using the same methodology. They show that 24 riders likely earned over $100,000 just in New Yoerk. In order: (a) over $400,000 -- Javier Castellano, Irad Ortiz Jr., Junior Alvarado, Jose Ortiz, John Velazquez, Cornelio Velasquez, Joel Rosario, Jose Lezcano, Luis Saez, Rajiv Maragh; (b) $100,000-$400,000 -- David Cohen, Edgar Prado, Alex Solis, Mike Smith, Manuel Franco, Eddie Castro, Rosie Napravnik, Mike Luzzi, Joe Rocco Jr., Guillermo Rodriguez, Keiber Coa, Abel Lezcano and Angel Arroyo.

That's a lot of riders with incomes that many racegoers wouldn't mind having. True, jocks generally pay their agents 15-25% of their earnings, and their valets get 5-10%, but still, these are solid, middle-class incomes, and well above the national average.

Moreover, jockeys in New York have received a substantial pay raise as a result of the increase in purses since 2011 fueled by slot-machimne revenue. Still using our 8% methodology, we can calculate that aggregate jockey earnings at NYRA tracks increased by some 40% from 2011 to 2012, right in line with the increase in purses in that period.

In the past, jockeys had a strong argument for having the tracks and/or owners supply health insurance, because most riders would have "pre-existing conditions" that insurance companies would cite in order to deny coverage. But, under the Affordable Care Act ("Obamacare"), insurance companies can no longer use that excuse; they must make standard policies available, regardless of pre-existing conditions.

Jockeys are independent contractors. With rare exceptions, they are not employees of a particular trainer or owner (for a taste of the bad old days, when they were, listen to Slaid Cleaves' song "Quick as Dreams," about Jockeys Guild founder Tommy Luther.) Like solo practice lawyers, free-lance writers or, for that matter, horse trainers, they're responsible for themselves. Unlike those other categories, though, at least jockeys have pretty good insurance coverage for work-related injuries.

Given that on-the-job coverage, given that insurance companies can no longer deny them and their families routine health insurance, and given their level of income, at least in New York, it's hard to make a case that jockeys should be treated differently from other independent contractors and sole proprietors. Those that have high incomes -- and I was surprised by how many there were in that category in New York -- can buy comprehensive health insurance for themselves and their families in the market. Those with lower incomes can use the Affordable Care Act's insurance exchanges to obtain very acceptable policies and, if their incomes are low enough, can get tax credits and subsidies to cover part of the premium cost.

The New York Task Force on Jockey Health and Safety can do a lot of good things. Improving vests, helmets and other protective equipment would help. So would stiffer standards for licensing riders, to make sure they're up to the level of competition in New York, and ongoing continuing education programs. So would providing nutrition advice so riders can keep their weight down without destroying their bodies. So would tougher penalties for dangerous riding. Health insurance for jocks and their families? Not at the top of the list.

If you feel the same way, you might want to let Anthony Bonomo, chair of the Jockey Safety and Health Task Force, know. You can reach hiom at A.Bonomo@medmal.com.


Tuesday, January 14, 2014

Taking Care of Our Horses: Make the Pledge

Thanks for all the comments on my recent post about saving thoroughbreds from the kill auctions. It's clear that there's a huge community of horse owners and racing fans who believe, as I do, that we have an obligation to take care of the horses that give us so many thrills on the track.

Much of the discussion in the past few days, here and on Facebook, has been directed in particular at public racing partnerships -- groups that own horses and that seek funds and partners from the public at large. These partnerships differ from those like Sackatoga Stable, the owner of NY-bred Kentucky Derby winner Funny Cide, that are formed by a group of friends and that don't solicit widely for new members.

Since Dogwood's Cot Campbell invented the public partnership concept way back in 1969, partnerships have become an important force in the industry. From the high-end groups like Dogwood, Team Valor, Centennial or West Point, where the minimum partnership share is $25,000, $50,000 or more, down to the blue-collar groups that focus primarily on claiming horses, like Drawing Away Stable and my own Castle Village Farm, where a minimum share may be $1,000 or less, these partnerships have filled a gap caused by the falling-away of other, more traditional forms of individual and family ownership.

To give some sense of the importance of these partnerships, here are the partnership groups that have run at least two horses in New York since the start of the Aqueduct fall meet at the beginning of November, 2013:

In a class by itself, with 119 starts: Drawing Away Stables.

10-19 starts: West Point, Epona and Final Furlong (often as co-owners), Nassau CC, Parting Glass and Funky Munky Stables.

2-9 starts: Castle Village Farm, Hibiscus, Magdalena, Little Red Rooster, Winter Park, Starlight, Eclipse, Dogwood and Team Valor.

Many of these groups, especially the more expensive ones, are active all over the US and internationally, and so their New York starts are only a small piece of the picture. And many other groups are active in other regions. So the New York statistics are only a part of the whole, but they're the part I know and feel able to comment on.

Individual horse owners often commit to take care of their retired horses or find them safe retirement homes. Because racing partnerships are so visible, it would be an important advance if all partnerships would commit to a code of conduct with respect to their horses. Here are the elements of a code that, based on my experience, I believe to be affordable and fair, both to partners and to or horses:

FIRST, set aside a portion of the partnership's funds for equine retirement. (At Castle Village Farm, we set aside 3% of each partnership's initial capital and 1% of purse money.)

SECOND, if a horse owned by the partnership needs to be retired, commit to finding that horse a safe, secure placement -- don't just "give it away to a friend."

THIRD, if a horse is claimed away from the partnership, let the new owner know that you're always available to take the horse back if it needs to be retired.

FOURTH, follow your former horses' careers and, if they look like they're in trouble, take the initiative and go rescue them.

It can be done; I've gone to Finger Lakes with $4,000 in cash to get a horse away from the track before he broke down, and both Castle Village Farm and the horse's breeder, Meg Carrothers, followed our old warrior No Bad Habits as he reached the lower claiming levels, with Meg eventually claiming him for $4,000 at River Downs. And here he is just last week, enjoying retirement in Florida at age 20:


Most partnership web sites don't talk much about thoroughbred retirement. That doesn't necessarily mean that they don't have a policy, but it's discouraging that the issue isn't mentioned. 

So, if you're a partner in any of these public racing partnerships, or if you know someone who is, let's step up the pressure and get all those partnerships to commit to decent retirement policies. If other partnerships will join us in to the four points listed above, I'd be delighted to do whatever I can to make their good works known.

Thursday, January 9, 2014

Some Thoughts on the End of the Road

Hmmm, it's been a long time between blog posts. Guess that's what an overdose of Twitter can do to you. New Year's resolution for 2014: don't try to do in 140 characters what takes 800 or more words to get right.

Hence, this piece on how to prevent the thoroughbreds we love and who run their hearts out for us from ending up dead on the race track or in the "kill pen" at auctions for horses bound for the slaughterhouse. Thanks to the efforts of a dedicated band of volunteers, many thoroughbreds have been rescued from the auction pens at New Holland, PA,  and throughout the country. The horses that aren't rescued, though, go through some pretty hellish ordeals. A good description of the process is available from the Humane Society of the US, an organization that I disagree with on many issues, but am in total agreement on this one.

On the way to slaughter

For those of us in the thoroughbred racing world, perhaps the most abhorrent aspect of horse slaughter is the way that so many hard-working, previously successful race horses eventually make their way down the racing ladder, in some cases from Grade 1 stakes to $4,000 claiming races. These horses have more than earned the right to a second career, or just to a comfortable retirement. Whether we pay $5,000 or $5 million for them initially, we all have an obligation to see that they are decently cared for.

Horse slaughter for older horses that can no longer pay their way on the race track is only part of the problem. When horses die on the track, or are vanned off and put down out of public sight, that also reflects on all of us in the business. Sometimes, the death of a horse on the track is just an accident, but sometimes, it's the result of pushing a horse too hard, trying to get just one more race out of him.

So, how to get a handle on dealing with these two separate but related issues? Let me start by telling a story.

Last August, my little partnership, Castle Village Farm, claimed a five-year-old chestnut NY-bred gelding, East of Danzig, at Saratoga. We took him for $20,000 out of a turf race for horses that, among other conditions, hadn't won on the turf in the past six months. East of Danzig still had his NY-bred N2X allowance condition available, but hadn't run quite fast enough to be competitive at that level, which is why he was in for a claiming tag. We, like all owners eternally optimistic, were hoping we could get that allowance win. But in fact, East of Danzig was exactly what he looked like on paper -- a solid, hard-trying horse that ran ultra-consistent speed figures and tried every time, but that was just a step too slow to move up. So we entered him back at the same $20,000 level three times, earning a third, a second and, on October 13th at Belmont, a win. But in that October 13 race, he was claimed by trainer David Jacobson, who in the past few years has come to dominate the New York claiming scene. Seemed to me to be a not-so-smart claim, since East of Danzig is a pure turf horse and the turf season was winding down, and since his speed figures clearly showed that it was unlikely he'd get faster at age 6 and get that NY-bred allowance win. But Jacobson has made what seemed to be pretty silly claims from us before, taking Castle Village Farm's stakes winner Introspect for $50,000 (we later retrieved him and raised $10,000 so we could retire him) and taking our stakes-placed sprinter Southern Missile for an absurd $75,000, both in 2008.

In any event, after Jacobson claimed him, East of Danzig disappeared from the workout tab for over a month, only to appear in the entries at Laurel in a $5,000 claiming race on the dirt on December 11th. Our partners were ready to claim him back out of that race and either rest him over the winter for the 2014 turf season or, if necessary, retire him. As it turned out, he was claimed by Maryland-based trainer Mary Eppler, who appears to understand that for $5,000 she got a pretty good and always hard-trying grass horse. I expect to see East of Danzig in the entries, on turf, this coming spring, at a level that more accurately reflects his value.

East of Danzig at Belmont

So what's the point of that story?

First, it illustrates a well-documented pattern in which Jacobson and other claiming trainers ship horses out of New York to lesser tracks, where it's harder for the horses' former owners to keep track of, and, if needed, rescue them. For Jacobson, these dumping grounds are Laurel and Suffolk. For other trainers, they may be PARX, near Philadelphia, Finger Lakes in upstate New York, or Charles Town and Mountaineer in West Virginia. Once, we even found one of our former horses running for $2,500 at a place called Mount Pleasant Meadows in Michigan (fortunately, a rescue was arranged there as well). Many of the horror stories of stakes-quality horses falling from grace and ending up breaking down on the track come from these lesser ovals, where perhaps veterinary supervision is less stringent than, say, at NYRA, or where purses are so small that trainers feel compelled to run their horses every 10 or 14 days, even if the horse in't sound enough to stand that workload.

Second, it illustrates a pattern of perverse incentives that can reward a trainer for dropping horses in class, even as the drop penalizes the owner. To my knowledge, Jacobson's arrangement with his principal owner, Drawing Away Stable, has these perverse incentives. Here's how I'm told it works: Drawing Away partners provide the funds to claim horses, but pay no ongoing training bills. In return for taking care of the horse, Jacobson gets something like 65% of the purse (I'm not sure of the exact percentage; Drawing Away partners should feel free to correct me with accurate figures.) In contrast, the more normal arrangement, at least on major-league racing circuits like New York, is for the owner to pay the training bills (in New York, $90-125 per day, plus at least several hundred dollars per month in vet bills), and for the trainer to get 10% of the purse. Thus, because Jacobson, and those like him who make similar deals with their owners, bear the cost of feeding and caring for the horse, but bear none of the capital loss if the horse is claimed away for less that its purchase price, and because Jacobson and similar trainers keep a large percentage of the purse, there's every incentive to drop a horse to a level where it's (relatively) sure to get a big chunk of the purse. And there's an incentive, again based on the cost of caring for the horse vis-a-vis the purse, to run a horse as often as possible. So, most of the time, that's how Jacobson and similar trainers play the game, often to the detriment of the horses in their care.

I'm not trying to limit this problem to Jacobson; other trainers have similar deals and therefore face similar perverse incentives. But Jacobson has the most horses, and the most reported problems, so he is the face of the issue. Two of his horses, in particular, have produced a firestorm of comment, some rational, some not, on Facebook and Twitter in the past few days.

First, well-know horse owner and lawyer Maggi Moss raised questions about Toque, a horse claimed by Jacobson last March for $25,000, then raced at Monmouth for $5,000 in May and Suffolk for $4,000 in June and then vanished from sight. Ms. Moss's tenacity uncovered the fact that Toque then appeared at the New Holland kill auction in September, only to be "bailed out" by the rescue broker AC4H, but subsequently died.

Second, the 7-year-old gelding Uncle Smokey, a horse with a history of unsoundness,  broke down and was euthanized on the track at Aqueduct on January 2, after making his third start in 15 days and sixth in 61 days.According to some who were at the track that day, Uncle Smokey was definitely sending signals that he didn't want to race.

Most trainers don't race horses that often, but the drop in claiming price and/or a series of races in rapid succession is a familiar pattern for Jacobson. Just looking at the Aqueduct cards for today and tomorrow, he entered three that fit the pattern: (1) Rift, entered in today's 7th race for $12,500, but scratched by the NYRA vet, was dropped from the $25,000 that Jacobson paid for him last month; (2) El Oh El, entered in Friday's 3rd race for $20,000, was claimed by Jacobson for $35,000 at Saratoga, has raced as low as $12,500, and will be making his 8th start in 12 weks; and (3) Force Multiplier, in the same $20,000 race, was claimed for $25,000 at Saratoga, eventually dropped to $12,500, where he won, and now has to run at the higher $20,000 N3L condition.

Other trainers send out horses that probably shouldn't be racing, and other trainers have had horses die on the race track. But when a trainer who has just set a new record for wins at NYRA in a calendar year, and whose horse fill more spots in NYRA starting gates than any other starts seeing horses die or end up at the killers, it's appropriate that the spotlight shines in his direction. The same thing happened to Bob Baffert when his barn experienced a spate of cardiac arrest deaths. Leading trainers are big boys; they should be able to bear public scrutiny.

Jacobson, like virtually all other trainers, has lost horses to accidents that probably couldn't have been avoided. The stakes winner and crowd favorite Saginaw took a bad step at Saratoga and was euthanized after breaking down on the track on August 20th last year. There's no hint that he was over-raced, or that Jacobson gave this high-performing horse anything but the best of care. Similarly, the lightly raced 4-year-old colt Coronate threw his rider at Aqueduct on December 26th and fatally injured himself trying to jump a fence. Bad things happen in racing. Not all of them are a trainer's fault. 

For those of us who love horses, it's beyond upsetting when a race horse dies on the track, or when a thoroughbred that has given years of effort to its owners ends up in the kill pen at New Holland. So what can we, as owners and fans, do to mitigate the problem?

First, we can all support the burgeoning efforts within the industry to provide second careers or dignified retirement for horses that are no longer on the track. The Thoroughbred Aftercare Alliance is an industry-wide group, whose Board includes important owners, breeders and trainers, devoted to funding thoroughbred retirement and ensuring that retirement facilities meet basic standards. Numerous groups already exist to provide retirement options, including CANTER, New Vocations and New York's own TAKE2 program (disclosure: I'm a member of the Board of Directors of the New York Thoroughbred Horsemen's Association (NYTHA), which sponsors the TAKE2 program, and NYTHA President Rick Violette is on the Board of the Thoroughbred Aftercare Alliance.)

Second, if one owns horses, even as a partner in a large group, it's important to do whatever one can to protect their welfare. Don't let them slip out of sight.

Third, put pressure on race tracks and regulators to enforce existing rules. NYRA and other tracks have rules that bar trainers who let their horses go to the slaughter auctions. But those rules seem rarely to be enforced. Writing to track executives and state regulators urging quicker, more consistent enforcement of the rules will certainly help move the issues up on those folks' agendas.

My apologies for the length of this, and for the unusually personal tone, but the spate of bad news about horses over the past few weeks just struck a nerve.




Saturday, July 6, 2013

Backstretch Health Care & the Affordable Care Act

The recent federal government announcement that employer responsibility for providing health insurance to their employees under the Affordable Care Act (aka “Obamacare”) will be delayed for at least another year is not good news for backstretch workers.

In most of the US, grooms and hotwalkers – the lowest-paid workers on the racetrack – have no health care coverage at all. If they’re injured on the job, they get workers’ compensation payments – and may or may not have a job to come back to when they’ve recovered. And in some states, jockeys and exercise riders who are injured on the track are covered under separate workers comp. pools, like New York’s Jockey Injury Compensation Fund, paid for with a combination of trainer per-stall charges and a percentage of owners’ purse winnings.

But, apart from those job-related injuries, backstretch workers are pretty much on their own when it comes to health care. And, if they have spouses and children, their families are out in the cold as well. With weekly salaries of perhaps $300 to $500, hotwalkers and grooms can’t afford health insurance on their own, and they generally earn just too much to qualify for Medicaid. And few trainers provide health coverage for all their workers.

In at least two states, California and New York, there’s a comprehensive effort to provide at least the basics of a health care system for backstretch workers.

On the West Coast, the California Thoroughbred Horsemen’s Foundation (“CTHF”), founded by trainer Noble Threewitt, operates full-time clinics at Santa Anita and Golden Gate Fields, and also provides once-a week or thereabouts mobile clinics during race meetings at Del Mar, Hollywood, Pleasanton and San Luis Rey Downs. In addition, the CTHF provides assistance with referrals to specialists for injuries or illness that are beyond the scope of the clinics and pays some, though by no means all, of backstretch workers’ hospital costs.

The CTHF is funded by the proceeds of unclaimed pari-mutuel tickets (a declining funding source in the age of internet wagering), and by contributions from the tracks and from the Thoroughbred Owners of California. It recently received a $200,000 anonymous donation, brokered by trainer John Sadler.

Back on the East Coast, the Backstretch Employee Service Team (“BEST”) operates clinics at Belmont and, in-season, at Saratoga. Like CTHF, BEST has a plan for paying backstretch workers’ costs for specialist referrals, medical tests and, within limits, hospital visits. BEST is funded principally by contributions from the New York Racing Association (“NYRA”) and the New York Thoroughbred Horsemen’s Association (“NYTHA”), representing owners and trainers who race at NYRA tracks. BEST also receives significant support from a variety of government grants and from John Hendrickson and Marylou Whitney. You can read more about BEST here, here and here.

Both California and New York also offer at least some dental care to backstretch workers, in California directly through CTHF and at NYRA tracks through NYTHA and the donation-financed dental clinic at Saratoga.

[Disclosure: I’m a member of the Boards of Directors of both NYTHA and BEST and am involved in BEST’s efforts to adjust its programs to the requirements of the Affordable Care Act.]

Because so few racetracks around the country offer any access to health care for backstretch workers, and because working on the track is still something of a gypsy life, with trainers moving their horses from track to track and state to state, workers sometimes save up their medical needs until they’re somewhere that does offer treatment. So, when trainers ship in to Saratoga from, say, Kentucky, or when barns return to Belmont from a winter in Florida, it’s common to see workers lining up at the BEST clinic with a year’s, or a lifetime’s, worth of medical problems. There’s probably less of that in California, just because it’s farther from other major-league racing venues, but in New York it’s a big issue. And it's still unclear how Medicaid or insurance coverage under the Affordable Care Act will work for people who move from state to state.

Under the Affordable Care Act, employers with more than 50 full-time workers will eventually have to offer health insurance. That’s the requirement that was just postponed for a year. But, in any event, there aren’t all that many trainers in the US who have more than 50 employees. Most stables are a lot smaller than that, so their workers wouldn’t have the option of employer-provided health care anyway.

Apart from employer coverage, the Affordable Care Act makes a number of changes that are still scheduled to take effect January 1, 2014, and that will have a big impact on the backstretch.

First, at least in participating states, which include New York and California, there will be a significant expansion of Medicaid, so a number of backstretch workers who now make a little too much to qualify will become eligible for this state-run and federally funded program. Eligibility will now extend to workers making up to 133% of the federal poverty level of income. For 2013, those eligibility limits are $15,282 for a single individual and $31,322 for a family of four.

Second, for those who earn too much to be eligible for Medicaid, the “individual mandate” of the Affordable Care Act will apply, and those folks will be required to obtain health insurance coverage through the “exchanges” that are being set up in participating (read Democratic) states; workers in states where Republicans have blocked implementation of the law will be able to go on a national exchange to find coverage.

The cost of that coverage will be limited to somewhere around 3-4% of gross income for most backstretch workers, depending on their earnings, with tax-credit subsidies available to offset a portion of the premium costs. Even so, it’s safe to predict that many backstretch folks will decide that $60-80 a month (their premium cost after subsidies) is just one expense too many and will decide to forego signing up for coverage and instead take their chances with the imposition of penalties when or if they file their tax returns.

Third, the Affordable Care Act provides no coverage for undocumented non-US citizens or residents and in fact makes it illegal for them to obtain health coverage through the exchanges. That undocumented group makes up a significant share of the backstretch workforce, though no one knows exactly how big a share.

And finally, the Affordable Care Act requires that any health insurance plan, whether offered through the exchanges or by an employer, meet certain minimum standards, including the scope of its coverage and its dollar limits. Unless waivers are granted, that may mean that so-called “mini-med” plans like those now offered by fast-food and retail employers, with low dollar limits and many coverage restrictions, will not be permitted. But, in any event, a “mini-med” plan offered through the CTHF or BEST would not relieve individual backstretch workers of the obligation to sign up for their own health insurance through the exchanges.

So what does all this mean for backstretch workers, and for CTHF and BEST? For certain, the coming into force of the Affordable Care Act won’t eliminate the need for these workers to have some help in getting decent health care. Even for those who qualify for Medicaid or who decide to obtain insurance through the exchanges, there will be co-payments, deductibles and incidental costs that, on the typically low salaries paid at the track, they won’t be able to afford. And for those without a legal immigration status, there won’t be anything at all.

So, at a minimum, backstretch workers will still need access to on-track clinics like those operated by BEST and CTHF, and even, to the extent the clinic sponsors can afford it, to an expanded range of services, including more medical tests and more specialist services.

And backstretch workers will need education to help them take advantage of the expanded care available under the Affordable Care Act, to enroll in Medicaid, for those eligible, and to navigate the online insurance exchanges that are being set up.

Beyond that, there will be economic gaps that need filling in under the Affordable Care Act, to pay premiums, co-payments and deductibles and, especially, to find mechanisms to ensure that undocumented workers, who are ineligible for Medicaid and for exchange-provided insurance, have some kind of safety net that goes beyond showing up at the nearest hospital emergency room.

Because New York and California already have strong organizations -- BEST and CTHF -- providing backstretch health care, there's a good chance that these gaps will indeed be filled in a timely fashion. But things are less sanguine in those states without on-track health programs and where political leaders are actively opposing implementation of the Affordable Care Act. One can only hope that all the stakeholders in the industry will join together to take advantage of the opportunities offered by the Affordable Care Act and to continue to meet the needs of the largely invisible folks who work on the backstretch every day to keep the game going.



Friday, May 17, 2013

NYRA's Financials: Turning the Corner


The latest financial results for the New York Racing Association (NYRA) show that, after years of financial travail and uncertainty, the nation’s leading racing circuit has achieved some much-needed financial stability. While nothing in horse racing is certain, that’s very good news for New York horsemen and the thousands of people they employ, for race fans, for the thoroughbred industry as a whole and, not least, for the State of New York.

NYRA’s audited financial report for the year ended December 31, 2012 (full report available here and summarized in the Daily Racing Form here) is the first annual NYRA financial report that includes a full year of “video lottery terminal” (a.k.a. slot machine) revenue, and the first produced under the auspices of the “new NYRA” legislation passed at New York Governor’s Andrew Cuomo’s urging last fall. Under that legislation, NYRA has become, as the notes to the financial statement point out, “a governmental entity engaged only in business-type activities.” As a result, the financials look somewhat different from what one would see for a for-profit corporation like Churchill Downs Inc. (whose most recent annual report is here). Still, the basics are fairly easy to discern.

The big news in the financial report is that, for the first time in many years, NYRA showed a “profit.” In fact, a healthy profit of $25.6 million. In government-accounting-speak, the report describes that as a “change in net position,” but for all practical purposes, it’s a cash profit. Lots of qualifications to that number, discussed below, but still, it’s a huge, and positive, change from prior years.

Two major reasons for the turnaround: first, a full year of VLT revenues. NYRA gets 3% of the Aqueduct casino’s net revenue to use for operating expenses, plus another 4% that goes into a separate fund for capital expenditures and maintenance of its facilities. For 2012, the 3% operating income from VLTs was approximately $20.2 million, while the VLT contribution to capital expense was another $26.9 million. Without the contributions from the VLTs, NYRA would have recorded an overall operating loss of $20.5 million instead of the reported $25.6 million profit. Still, compared to other “racino” tracks, NYRA is significantly less dependent on slot-machine income than the norm.

Second, in contrast to the nationwide trend in betting on thoroughbred racing, which was flat or slightly negative in 2012, NYRA’s handle increased significantly in 2012. All-sources handle on NYRA races was $2.2 billion, up from $1.96 billion in 2011. In addition, bettors at NYRA tracks and on its NYRA Rewards betting network wagered $294 million on races from other tracks, up 7% over the previous year. Overall, total handle reported by NYRA was $2.5 billion, up 12% from the previous year. Some of the increase is undoubtedly due to NYRA’s getting in five extra racing days in 2012, thanks to good weather, but that accounts for only a small part of the increase. Evidently NYRA’s racing product is still attractive to the bettors.

NYRA has also made some progress in increasing the amount of each dollar bet that it keeps for operating purposes and for funding purses. When simulcasting was introduced a couple of decades ago, tracks basically gave away the simulcast signal, often getting back as little as 3% of the amount bet at off-track locations., even though takeout was a total of 20%. For 2012, NYRA reports that it retained an average of 9.86% of total handle. To do that, considering that over 80% of the handle is generated from simulcast sources, shows that NYRA has been appropriately aggressive in dealing with simulcast operators.

Wagering on all US thoroughbred racing was essentially flat in 2012 as compared to 2011, increasing just 1%. In fact, without NYRA, total national handle would have declined. Of the $10.9 billion bet nationally, NYRA, with just 4.6% of the country’s race days, accounted for 20.1% of all betting. Despite the continuing decrease in the US foal crop, now down by nearly a third since its peak in the early years of this decade, there are still too many race days at too many tracks nationwide. The total number of US race days actually increased by 16, to 5,315, in 2012 as compared to the previous year. NYRA may be doing well with its racing product, but many smaller tracks cannot maintain their existing programs. Something has to give, though it may not be NYRA, where field size actually increased slightly in 2012, averaging just over eight horses per race.

The long-delayed advent of VLTs at Aqueduct, coupled with the increased handle, has been a boon for horsemen. Total purses at NYRA in 2012, with a full year of the VLT supplement, were $147.7 million, up 44% over 2011, which had included a couple of months of partial VLT operation. Those numbers make it almost worthwhile for an owner to run in New York. The old rule of thumb had been that the average horse earned about 50% of what it cost to keep the horse in training; with the new VLT-enhanced purses, it’s likely that the average horse can now earn somewhere around 80% of its training cost. That means a lot more horses can break even or turn a profit, and the losses from the rest won’t be as big as they used to be. A huge collective sigh of relief from horse owners.

Returning to the NYRA financials, while NYRA’s operating expenses increased by 18.4%, to $339.2 million, most of that increase reflects the VLT-enhanced increase in purses, which was offset dollar for dollar by VLT revenues. NYRA appeared to do fairly well at controlling its actual non-purse operating expense, holding employee compensation, benefits and retiree expenses essentially flat. The only major expense increase was in “facility operating costs,” which included nearly $3 million in legal costs related to the infamous Pick Six takeout scandal, $1.1 million to the state for incorrect sales tax payments on program sales, and $1.2 million for badly needed new marketing initiatives.

On the capital-expense side, NYRA spent $1.8 million toward a master development plan for Saratoga (a process that’s still ongoing), $734,000 for “patron area improvements” at Aqueduct and another $428,000 for similar front-side work at Belmont, plus $1 million to install wi-fi networks at all three tracks. There was significant spending on the Belmont backstretch, including $1.3 million to install concrete wash pads at the barns, as required by environmental laws, and another $1.2 million for fixing and upgrading the Belmont barns. Still lots more to do, including new dorms for backstretch workers at both Belmont and Saratoga, but it’s a start.

In the wake of its emergence from bankruptcy in 2009, NYRA had borrowed $25 million from casino operator Genting, to help pay operating costs until the VLTs began generating revenue. With a full year of VLT operation in 2012, NYRA was able to pay back $7.9 million of that loan, with the balance expected to be paid in full by mid-2014.

A danger signal in the financial report concerns the state of NYRA’s labor relations. Half of NYRA’s employees are covered by 25 different union collective bargaining agreements, of which 10 had expired as of the end of 2012 and more are expiring in 2013. A strike by, say, the 16 active members of the assistant starters’ union could quickly cripple operations. NYRA has set aside funds for retroactive wage and benefit increases that might need to be paid retroactively under new contracts, but uncertainty still remains.

Similarly, the precarious financial position of various OTB operations in New York State raises concerns. Suffolk OTB owed NYRA some $3 million when the OTB filed its most recent bankruptcy petition, money that NYRA is unlikely ever to see. The sensible solution to New York’s OTB wars would be to bring all the remaining OTB operations under NYRA, but, given the patronage and political forces behind the various regional OTBs, that’s likely to occur around the same time that we have flying-pig races at Belmont.

Still, despite the uncertainties, the 2012 financial report offers a glance at what could be a relatively serene future at NYRA, or at least a future in which the financial building blocks are in place, and the soon-to-come new management may be able to move away from crisis-reaction mode, the general state of things over the past decade, and focus on improving the racing experience for fans and horsemen alike.