NYRA Projects Profit, Budgets for Improvements in '16

Chris Kay | A Coglianese

The New York Racing Association Reorganization Board of Directors approved a $158-million total operating expenses budget and a $44.1-million capital spending budget for 2016 at its December meeting in Albany on Wednesday.

With three weeks left in 2015, NYRA chief executive officer and president Chris Kay said NYRA is projecting about a $4-million profit this year. When the 2015 profit projection was announced a year ago, the forecasted amount was $2.2 million.

In 2014 NYRA also finished in the black, with a $1.6 million operating surplus.

Kay explained that the consecutive annual profits marked the “first time the organization has achieved back-to-back operating profits in 15 years, going back to the years 1999 and 2000.” He added that “for the second consecutive year, this surplus was achieved exclusive of the

designated operating funds we received as a result of the transfer of our real estate holdings to the state a few years ago.

“Employing the same business disciplines and rigor we have instilled over the last two years,” Kay continued, “we expect a third consecutive year of operating profits, a modest one of $2.3 million.”

But despite a “conservative operating plan” outlined in a budget report that was published for the meeting, two major components of profit projection remain out of NYRA's control: Whether or not another Triple Crown bid will be on the line at Belmont Park in 2016, and whether Saratoga Race Course can top its record-setting 2015 meet, at which all-sources wagering spiked 13.5% over the previous year.

“Total handle for 2016 is intentionally budgeted conservatively,” the report explained. “The 2016 handle is projected to decrease approximate[ly] 1% compared to the prior 4-year average.”

With respect to how it budgeted handle for 2016, the NYRA report outlined key projections for each meet:

Aqueduct winter: “This is expected to decrease by 7% over the 4-year average, but perform 9% better than the 2015 actual (forecast) results…We have competitive challenges with Gulfstream (particularly with the 2015 Stronach/TVG television deal), but potential upside with the planned Parx closure.”

Belmont spring: “We are not assuming a Triple Crown opportunity in 2016. Consequently, we are projecting a number…roughly equivalent to what we had budgeted for 2015 (again, assuming a non-Triple Crown year), and 3% over 4-year average.”

Saratoga: “We do not anticipate the kind of results we experienced in 2015. Instead, we are projecting a 6% decrease in handle compared to 2015, but an increase of 2% over the 4-year average. We believe the significant improvements at the track and related television warrant a projected improvement over the 4-year average.”

Belmont fall: “We are projecting an increase in the 2016 budget as compared to the 2015 budget. This is largely due to the fact that the 2015 budget was extremely conservative, based upon a difficult and uncertain Belmont fall meet in 2014. Looking at it from a broader perspective, we are budgeting the Belmont fall meet handle at 1% less than the 4-year average.”

Aqueduct fall: “Based upon the performance to date, we are projecting that the Aqueduct fall meet will be consistent with the actual and forecasted performance in 2015, but roughly 6% behind the 4-year prior average.”

As for capital improvements, $44.1 million is budgeted, but NYRA expects to receive $32.9 million of VLT revenue dedicated to capital spending in 2016 and also expects a cash carryover from 2015 in the amount of $16.0 million, meaning a total of $48.9 million will be available.

In addition to new and continued backside dormitory and stable updates at all three NYRA tracks, specific capital improvements include:

Aqueduct: Security cameras throughout the building, large exterior roadside signage to alert potential customers to the property, and a new track cushion and rail posts.

Belmont: Widening and resurfacing the training track, continuing the replacement of the track cushion on the main track, and the installation of irrigation pump controls for the turf courses. The frontside will get new video boards for use in the picnic areas, upgrades to the public announcement system, and the first phase of the permanent installation of a trackside tent located on the east end of the clubhouse.

Saratoga: Design work for the At the Rail pavilion, installation of a new elevator and escalator, additional backyard video boards, restroom upgrades, and disability compliance upgrades. New roofing will be installed for the saddling shed, upper carousel, and grandstand. Rubber pavers will be installed on some horse paths, and the irrigation systems of the Mellon and inner turf courses will continue to undergo extensive renovations.

In addition, NYRA's television production department will invest in equipment that will allow it to send out two simulcast feeds at the same time, allowing for different experiences for on- and off-track viewers. The ability to produce multiple video feeds will also allow NYRA to fully support the company's new national advance-deposit wagering system and to be able distribute targeted marketing messages.

On the cost-cutting side, one significant change will be the earlier seasonal closure of the Aqueduct stable area during non-racing months. In 2015, the Aqueduct barns were closed July 20-Sep. 3, more or less in sync with the Saratoga season. In 2016, they will close May 8 (nine days after the Belmont spring meet opens) and will be dormant through Aug. 31.

 

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