Finances threaten Belmont Stakes

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The president of the New York Racing Association told a state Senate hearing on Long Island that the corporation would be forced to cancel the Belmont Stakes in June if it does not receive payments from the financially struggling New York City Off-Track Betting.

State Sen. Craig Johnson (D-Port Washington) wanted a yes or no answer as to whether the Belmont Stakes would run this year as NYRA officials detailed their finances to a joint Senate hearing last week in Elmont, L.I., but NYRA President Charles Hayward and Chairman Steve Duncker said the situation was not that simple.

Hayward said the Belmont Stakes could go on as scheduled, subject to receiving payments from city OTB.

“I’d love to give an unqualified, ‘yes,’” Duncker said, but he cautioned that running the Belmont Stakes — the third and final leg of the Triple Crown — is dependent on “things outside of our control.”

When asked if NYRA could get a short-term loan using future revenues from video lottery terminals to be installed at Aqueduct Race Track as collateral, Duncker said he did not think so.

Johnson then asked if NYRA had explored that option and Duncker said the corporation had not.

“It would seem to me that NYRA should try to do everything and anything ... to ensure the Belmont Stakes for 2010 happens,” Johnson said.

Ellen McClain, NYRA’s chief financial officer, said the corporation started 2010 with $16.4 million in funds and expects to generate $252 million in revenue and spend $266 million in operating expenses — a $14 million loss.

“It’s not pretty, but it’s a real number based on a rigorous budget process,” McClain said.

NYRA’s budget assumes that New York City OTB will make payments on time. Last year OTB stiffed NYRA to the tune of $7.2 million, Hayward said.

Hayward said NYRA gets $4 million a month from New York City OTB.

“There’s no question if OTB goes out of business in the near term, we would have a significant economic impact,” he told the Senate hearing, which was also attended by Sen. Joseph Addabbo (D-Howard Beach).

NYRA is obligated to make a so-called franchise payment to the state every year as long as it is more than $2 million in the black. But NYRA has not given the state a franchise fee since it last turned a profit in 2003.

Sen. Eric Adams (D-Brooklyn), chairman of the Senate Committee on Racing, Gaming and Wagering, asked how NYRA can turn a profit.

“Under the system that’s in place ... this franchise will not make money,” Duncker said. “Jack Welch could come out of retirement and wouldn’t make money.”

Hayward said the horse-racing business “has gone to new technologi­es,” including phone and Internet wagering.

He said while NYRA accepts Internet wagers, no state law exists to allow NYRA races to be streamed live on the Internet, which he said would draw more customers.

Hayward said NYRA makes $10 on a pari-mutuel bet at the corporation’s three tracks but only receives $1.25 each time someone places a bet through OTB over the phone.

“I think racing in the state of New York can be profitable because of the quality of racing,” he said, but “not as currently structured.”

He said there are too many entities, including NYRA and OTB, that are competing for the same dollar.

Reach reporter Howard Koplowitz by e-mail at or by phone at 718-260-4573.

Updated 6:01 pm, October 10, 2011
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