NYC-OTB: Understanding the phony 'crisis'

[Kasept]

ORIGINAL "Crisis" orchestrated by Bloomberg




http://www.drf.com/drfNewsArticle.do?NID=92494

You may need DRF Plus to read Steve Crist's Sunday editorial on the nonsensical NYC-OTB crisis being orchestrated by Mayor Bloomberg. If you can't read the piece, you can listen to Crist from last Wednesday on ATR (Hour 2: 5:30-5:45) for a similarly clear explanation of the situation.

http://www.thoroughbredracingradione...y=20&Itemid=35

Or go back to November and catch Matt Hegarty's segment debunking the whole phony posture when it first started. It was Hegarty who forensically blew a hole in the city's claim that it was 'losing' money with City OTB.

http://www.thoroughbredracingradione...y=29&Itemid=35

THEY'RE LYING... It's an outrage... And the mainstream press swallows it whole. And the bettors will end up paying for City OTB's own mistake in overpaying for night flat racing...

[philcski]

The fact that OTB has to pay at ALL for the 'priviledge' of showing Retama Park and Evangeline Downs, et al makes little sense anyways, especially now that the track that supposedly would lose handle with the increased competition (Yonkers) no longer cares what their handle numbers even are!!! Not to mention, harness players vs. flat players are somewhat mutually exclusive groups.

[mes5107]

UPDATE: Bankruptcy filing 12/09




From the DRF

Originally Posted by DRF

New York City Off-Track Betting Corporation will file for Chapter 9 bankruptcy protection on Thursday afternoon and seek to cut the amount of money it pays to the racing industry as part of its restructuring.
....
The company estimates that it will have a $40 million deficit by the end of this year, Frucher said, and will run out of cash in March.

How about installing an OTB with a profitable business model?

[freddymo]

Originally Posted by mes5107

From the DRF



How about installing an OTB with a profitable business model?

A lot of people would be it in a heart beat. They pay the employees (full timers) a lot relative to the job function and the benefits are sick and costly.

[philcski]

They have the only legal betting operation in the country's biggest city, charge EXTRA takeout, have incapable employees and mostly horrible facilities (outside of the restaurants and teletheaters) and are finding a way to lose money. They should be shut down and rebuilt from the ground up. There are so many corrupt hands in the NYCOTB pot it makes me want to puke!!! Maybe bankruptcy will add some transparency to their ever growing list of wasteful line items that will be purged in bankruptcy emergence.

[Stall Mucker]

Be interesting to see how a bankruptcy judge handles state legislative mandated payments that NYC is supposed to pay NYRA.

[freddymo]

Originally Posted by Stall Mucker

Be interesting to see how a bankruptcy judge handles state legislative mandated payments that NYC is supposed to pay NYRA.

This really takes the cake:
As for whether the legislature will embrace OTB's plan to change the statutes governing the company, Frucher said that the state or New York City will face a $600 million charge to completely fund the company's liabilities if they do not agree to a plan that will restore the company to financial solvency. With New York facing an estimated $9 billion budget deficit next year, it's likely that the legislature will agree to most of OTB's demands.

NY State BROKE
NY City BROKE
OTB BROKE
NYRA BROKE

Better get the SLOTS churning soon so everyone is BROKE together..

How does OTB lose money it's insane?

America BROKE

[pointman]

Maybe the real problems can be addressed such as the end of putting people in positions at OTB based on political connections instead of merit (how can any of us forget the highly qualified Hazel Dukes' tenure?)

Maybe the State can take less or no money and stop using it as a piggy bank and allow OTB and the racetracks to run as a profitable model.

Maybe the State can allow customers to get simulcasts of racetracks across the country at home even when NYRA is racing so OTB can shut down parlors and concentrate more on on-line betting, or better yet, maybe shut down OTB altogether and allow the racetracks to run off-track betting on-line while giving customers access to tracks around the country and take another hand out of the racetracks cut and possibly even reduce takeout to some extent.

Just a few ideas off the cuff that the legislators should consider.

[Kasept]

Do not be taken in by Sandy Frucher's ploy in this. As with their bogus claims last year, NYC OTB is NOT bankrupt or in any short term danger of collapse. They are using a phony accounting charge off which Matt Hegarty identified a year ago, to make it look like they are in far worse shape than they are.

This is a political dodge Frucher is utilizing to try to re-position NYC OTB's obligations to Albany and NYRA in advance of the VLT parlor at Aqueduct.

The key elements from Hegarty's piece:

Frucher said that he expected to ask the legislature to scuttle provisions that require OTB to pay distributions to the racing industry and state and local governments off its gross revenue.

Frucher also indicated that the company would seek to change its relationships with state racetracks by negotiating with the tracks for the rights to their signals, instead of having statutes determine how much the tracks get paid.

Note that NYC OTB is current with their payments to OUT OF STATE racetracks and have been withholding their payments to NYRA. And they have blatantly been ignoring any directives from the State Racing and Wagering Board on any matter. Frucher is going to try to screw NYRA over the rake and will use his political connections and relationships with editorial boards to garner support.

But do not for a minute believe NYC OTB is bankrupt, because they aren't... other than morally at least.

[gales0678]

Originally Posted by Kasept

Do not be taken in by Sandy Frucher's ploy in this. As with their bogus claims last year, NYC OTB is NOT bankrupt or in any short term danger of collapse. They are using a phony accounting charge off which Matt Hegarty identified a year ago, to make it look like they are in far worse shape than they are.

This is a political dodge Frucher is utilizing to try to re-position NYC OTB's obligations to Albany and NYRA in advance of the VLT parlor at Aqueduct.

The key elements from Hegarty's piece:

Frucher said that he expected to ask the legislature to scuttle provisions that require OTB to pay distributions to the racing industry and state and local governments off its gross revenue.

Frucher also indicated that the company would seek to change its relationships with state racetracks by negotiating with the tracks for the rights to their signals, instead of having statutes determine how much the tracks get paid.

Note that NYC OTB is current with their payments to OUT OF STATE racetracks and have been withholding their payments to NYRA. And they have blatantly been ignoring any directives from the State Racing and Wagering Board on any matter. Frucher is going to try to screw NYRA over the rake and will use his political connections and relationships with editorial boards to garner support.

But do not for a minute believe NYC OTB is bankrupt, because they aren't... other than morally at least.

someone will go to jail for cooking the books steve?? who goes how much time?

[Kasept]

Originally Posted by gales0678

someone will go to jail for cooking the books steve?? who goes how much time?

They aren't cooking the books in that fashion Mart... I'll find the details from last December that Matt Hegarty uncovered, but they are including a charge ($10-12 million annually) that amounts to putting money from one pocket to another. They are showing it as a liability when in fact it isn't. (I have to dig out my notes/file on it from last year. I think I saved it but can always get it from Matt.)

(HERE IS CRIST'S COLUMN FROM 2/22/09: From Steven Crist's 2/22/08 column: OTB makes plenty of money for the city, even beyond all its jobs, but its accountants state its complicated revenue streams in a disingenuous way that makes profits appear to be losses. It collects over $10 million a year alone in "surcharge revenue," the dimes and dollars it filches from horseplayers by paying only $3.80 on a $4 winner, and that money goes straight to the city. Yet OTB categorizes this windfall as an expense, and then the city claims OTB is not giving it any money.

More from Crist's piece below...

And I asked Hegarty last week on air about the $600 million in 'obligations' of the benefits and pensions. That's only at the current level of employees. If they cut the 50%+ in union dead weight, that figure of course plummets. Everything they're doing in this phony 'reorganization' could have been done without the Chapter filing. The shuttering of useless storefronts, etc...

But now they get to hang up NYRA further on what they owe them, and will try to get the weasels in Albany to back them up. Frucher will then see to it that he is hailed as the guy that came in and 'saved' the OTB... And mark my words, when NYRA requires the state or the designated VLT Parlor permitee to make the payments they will need next fall, Frucher will point at NYRA and say how it was their fault all along. The guy is Snidely Whiplash.

[Kasept]

Here's some of the '08 coverage of NYC OTB's 'Sky is Falling, Part I'...

[Kasept]

Bloomberg's fraudulent OTB crisis
By STEVEN CRIST

February 22, 2008

NEW YORK - The state motto of New York is "Excelsior," Latin for ever higher or upward. Perhaps it should be changed to "Aedificare Crisus," which would translate as "to create a crisis," the current modus operandi of state government, especially when it comes to racing.

The state had years to resolve the New York Racing Association's franchise but only did so on Feb. 13, the day before the tracks would have shut down. Now New York City Mayor Michael Bloomberg is trying to negotiate a better deal for the city's Offtrack Betting Corporation with a similar threat. He has orchestrated a series of theatrical announcements that NYCOTB will close down June 13 unless more money is funneled to the so-called public benefit corporation.

"The only way you can get Albany to act is to create a crisis," he told reporters Tuesday, shortly after arranging for his appointees on NYCOTB's board to vote unanimously to approve a shutdown plan.

That plan will never be executed. Government is not in the habit of needlessly shuttering operations that employ thousands of union workers and dozens of political-patronage appointees. Bloomberg would be a prime candidate for impeachment if he simply closed the nation's largest bet-taker and drove $1 billion in annual handle to outlets beyond the city's borders, costing New York not only jobs but tens of millions of dollars in annual revenue he falsely claims does not exist.

If only to honor the concept of "Aedificare Crisus," however, we are probably in for a few more months of posturing, the inevitable rally by employees on the steps of the state capital, and perhaps even an appearance by the giant inflatable rat that is a staple of political rallies in the state. Then, eventually, a few dollars will be thrown OTB's way and life will go on as before.

Bloomberg's case for shutting down OTB would be a sham even if it were realistic. He claims that the company loses money which will have to come out of taxpayers' pockets and that the evil racing industry, in league with the state, is seizing an outrageous share of funds that would otherwise be used to feed hungry schoolchildren.

Both are attractive talking points that have been unquestioningly reported as fact by the city's four biggest general-interest newspapers, all of which have applauded the mayor's bravery and endorsed his plan. Both points are also largely fictional.

OTB makes plenty of money for the city, even beyond all its jobs, but its accountants state its complicated revenue streams in a disingenuous way that makes profits appear to be losses. It collects over $10 million a year alone in "surcharge revenue," the dimes and dollars it filches from horseplayers by paying only $3.80 on a $4 winner, and that money goes straight to the city. Yet OTB categorizes this windfall as an expense, and then the city claims OTB is not giving it any money.

The idea that the racing industry is getting an unfairly large slice of the pie is similarly fanciful. OTB uses its size and power to pay the lowest simulcast rates for out-of-state signals in all of American racing. The higher rates it pays in-state tracks are fair compensation for its encroachment on those track's live-market areas, and it has negotiated and agreed to those rates. The tracks still get far less from a bet made at OTB than from one made onsite, which ultimately is why New York has over 20 percent of the nation's racing handle but pays out only 10 percent of its purses.

Whatever financial setbacks OTB might currently be undergoing stem from a bad business decision to overpay regulatory and other fees in exchange for adding evening Thoroughbred simulcasts to its menu in recent years, not from any new or onerous payments to the people who actually put on the races and maintain the racetracks.

The best way to improve OTB's finances would be to combine it with NYRA, the state's five other regional OTB corporations, or both. The redundancies among these seven entities is staggeringly wasteful. (Consider the cost of seven in-state phone-betting platforms alone.) That of course would mean eliminating many of the regional patronage jobs, not a proposition on which you should take a short price.

Short of such sensible reform, the last-minute answer to the current crisis is likely to take one or both of two forms: a reduction of OTB's payments to the purses of the NYRA races that are its most popular product, or a takeout increase on its customers. Those would be two bad solutions to two non-existent problems, an unhappy but likely resolution to an entirely fraudulent crisis.

[freddymo]

Originally Posted by Kasept

Bloomberg's fraudulent OTB crisis
By STEVEN CRIST

February 22, 2008

NEW YORK - The state motto of New York is "Excelsior," Latin for ever higher or upward. Perhaps it should be changed to "Aedificare Crisus," which would translate as "to create a crisis," the current modus operandi of state government, especially when it comes to racing.

The state had years to resolve the New York Racing Association's franchise but only did so on Feb. 13, the day before the tracks would have shut down. Now New York City Mayor Michael Bloomberg is trying to negotiate a better deal for the city's Offtrack Betting Corporation with a similar threat. He has orchestrated a series of theatrical announcements that NYCOTB will close down June 13 unless more money is funneled to the so-called public benefit corporation.

"The only way you can get Albany to act is to create a crisis," he told reporters Tuesday, shortly after arranging for his appointees on NYCOTB's board to vote unanimously to approve a shutdown plan.

That plan will never be executed. Government is not in the habit of needlessly shuttering operations that employ thousands of union workers and dozens of political-patronage appointees. Bloomberg would be a prime candidate for impeachment if he simply closed the nation's largest bet-taker and drove $1 billion in annual handle to outlets beyond the city's borders, costing New York not only jobs but tens of millions of dollars in annual revenue he falsely claims does not exist.

If only to honor the concept of "Aedificare Crisus," however, we are probably in for a few more months of posturing, the inevitable rally by employees on the steps of the state capital, and perhaps even an appearance by the giant inflatable rat that is a staple of political rallies in the state. Then, eventually, a few dollars will be thrown OTB's way and life will go on as before.

Bloomberg's case for shutting down OTB would be a sham even if it were realistic. He claims that the company loses money which will have to come out of taxpayers' pockets and that the evil racing industry, in league with the state, is seizing an outrageous share of funds that would otherwise be used to feed hungry schoolchildren.

Both are attractive talking points that have been unquestioningly reported as fact by the city's four biggest general-interest newspapers, all of which have applauded the mayor's bravery and endorsed his plan. Both points are also largely fictional.

OTB makes plenty of money for the city, even beyond all its jobs, but its accountants state its complicated revenue streams in a disingenuous way that makes profits appear to be losses. It collects over $10 million a year alone in "surcharge revenue," the dimes and dollars it filches from horseplayers by paying only $3.80 on a $4 winner, and that money goes straight to the city. Yet OTB categorizes this windfall as an expense, and then the city claims OTB is not giving it any money.

The idea that the racing industry is getting an unfairly large slice of the pie is similarly fanciful. OTB uses its size and power to pay the lowest simulcast rates for out-of-state signals in all of American racing. The higher rates it pays in-state tracks are fair compensation for its encroachment on those track's live-market areas, and it has negotiated and agreed to those rates. The tracks still get far less from a bet made at OTB than from one made onsite, which ultimately is why New York has over 20 percent of the nation's racing handle but pays out only 10 percent of its purses.

Whatever financial setbacks OTB might currently be undergoing stem from a bad business decision to overpay regulatory and other fees in exchange for adding evening Thoroughbred simulcasts to its menu in recent years, not from any new or onerous payments to the people who actually put on the races and maintain the racetracks.

The best way to improve OTB's finances would be to combine it with NYRA, the state's five other regional OTB corporations, or both. The redundancies among these seven entities is staggeringly wasteful. (Consider the cost of seven in-state phone-betting platforms alone.) That of course would mean eliminating many of the regional patronage jobs, not a proposition on which you should take a short price.

Short of such sensible reform, the last-minute answer to the current crisis is likely to take one or both of two forms: a reduction of OTB's payments to the purses of the NYRA races that are its most popular product, or a takeout increase on its customers. Those would be two bad solutions to two non-existent problems, an unhappy but likely resolution to an entirely fraudulent crisis.

Arent you surprised Crist and Bloomberg havent met face to face to come up with a concept that works for all? To brilliant guys should be able to roll up their sleeves and get something done.

[Kasept]

Originally Posted by freddymo

Arent you surprised Crist and Bloomberg havent met face to face to come up with a concept that works for all? To brilliant guys should be able to roll up their sleeves and get something done.

Well, Bloomberg is out of this now of course having dumped the elephant on Albany's front lawn...

[gales0678]

Originally Posted by Kasept

They aren't cooking the books in that fashion Mart... I'll find the details from last December that Matt Hegarty uncovered, but they are including a charge ($10-12 million annually) that amounts to putting money from one pocket to another. They are showing it as a liability when in fact it isn't. (I have to dig out my notes/file on it from last year. I think I saved it but can always get it from Matt.)

(HERE IS CRIST'S COLUMN FROM 2/22/09: From Steven Crist's 2/22/08 column: OTB makes plenty of money for the city, even beyond all its jobs, but its accountants state its complicated revenue streams in a disingenuous way that makes profits appear to be losses. It collects over $10 million a year alone in "surcharge revenue," the dimes and dollars it filches from horseplayers by paying only $3.80 on a $4 winner, and that money goes straight to the city. Yet OTB categorizes this windfall as an expense, and then the city claims OTB is not giving it any money.

More from Crist's piece below...

And I asked Hegarty last week on air about the $600 million in 'obligations' of the benefits and pensions. That's only at the current level of employees. If they cut the 50%+ in union dead weight, that figure of course plummets. Everything they're doing in this phony 'reorganization' could have been done without the Chapter filing. The shuttering of useless storefronts, etc...

But now they get to hang up NYRA further on what they owe them, and will try to get the weasels in Albany to back them up. Frucher will then see to it that he is hailed as the guy that came in and 'saved' the OTB... And mark my words, when NYRA requires the state or the designated VLT Parlor permitee to make the payments they will need next fall, Frucher will point at NYRA and say how it was their fault all along. The guy is Snidely Whiplash.

steve i don't see any deadweight in the parlors i got to , where is the deadweight at corporate hq?

[pgiaco]

Dead weight are all the "managers" installed as political favors by the city and state hacks.

[gales0678]

Originally Posted by pgiaco

Dead weight are all the "managers" installed as political favors by the city and state hacks.

are they on the payroll and have a no show job , is that what you are talking aobut?

[pgiaco]

Originally Posted by gales0678

are they on the payroll and have a no show job , is that what you are talking aobut?

Absolutely, or they have jobs but know nothing about what they are supposed to be doing. (see Hazel Dukes)