State oversight board faults NYRA budget

Jun 22 2011 - 4:20pm

ALBANY, N.Y. -- The state's Franchise Oversight Board, citing a lack of cooperation from the New York Racing Association and concerns about its proposed budget, has asked New York's inspector general to examine its operations.

In a letter Tuesday to NYRA President Charles Hayward, board chairman Robert Megna said there remain "significant and unacceptable gaps" in the board's ability to obtain and analyze information, including reports that senior executives and others got raises despite a projected $11 million deficit. Compensation at the association is projected to increase more than 5 percent in total, and that has to be justified in light of fiscal realities, he wrote.

NYRA spokesman Dan Silver said they had no immediate comment.

After filing for bankruptcy protection, NYRA entered into a settlement agreement in 2008 in which it conveyed to the state all ownership rights to the tracks at Aqueduct, Belmont and Saratoga in return for financial help.

Megna, also the state budget director, noted that the oversight board can recommend ending NYRA's state franchise agreement to run New York's three thoroughbred tracks for performance breaches like failure to comply with the board's requests.

"I continue to have substantial concerns about NYRA's ability to bring racing operations into the black," Megna wrote.

"Your budget assumes that overall handle on NYRA races will drop by 1.4 percent, while total operating expenses will increase by 7.9 percent. Even with VLT revenue beginning to flow," he added, referring to video lottery terminals, "it is not clear after extrapolating current trends that racing operations are sustainable without significant restructuring."

A spokesman for Inspector General Ellen Biben said "significant issues" have been raised and her office will seek answers.

In an audit report last year, Comptroller Thomas DiNapoli noted the not-for-profit association faced insolvency this year if revenue from a new racino at the Aqueduct track, still under construction, did not materialize and expenses are not curtailed.

Racino operators say they're looking at opening the first phase, with 2,500 VLTs, in late summer.

According to the 2010 audit, while NYRA finally began identifying significant spending reductions, since emerging from bankruptcy its overall payroll costs had increased by $1.9 million to $69.2 million. Also, seven executive staff had salaries from $255,000 to $460,000.

 

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