NYC OTB in Financial Crisis

[philcski]

Originally Posted by blackthroatedwind

It's 6% Phil.

They're enormously profitable.

Correction, 6%. They've had 4 straight years of operating losses though (according to Bloomberg). It almost seems unfathomable but the results are in print (they do have to publish a 10K)

[blackthroatedwind]

And if I ran a store that made enormous profits but, even though I only needed three employees, decided to hire 25 of my friends, and overpay all of them, I would " lose money " as well.

[Riot]

Seriously - what are the current odds that these bozos will indeed shut down racing while they root for pork. They don't care about racing.

[philcski]

Originally Posted by blackthroatedwind

And if I ran a store that made enormous profits but, even though I only needed three employees, decided to hire 25 of my friends, and overpay all of them, I would " lose money " as well.

BLACKJACK!

You nailed EXACTLY why I have no qualms about them dumping the state (city?)-run system. Hell I'd rather go to Vinny Boombotz Greasieri than play at their garbage pits. At least with him you get track prices.

[Kasept]

Originally Posted by philcski

Correction, 6%. They've had 4 straight years of operating losses though (according to Bloomberg). It almost seems unfathomable but the results are in print (they do have to publish a 10K)

Except it takes someone like Matt Hegarty to decipher what's actually in that print... NYC OTB is making money after including the city surcharge they write as an expense... Profitable by +$11 million in 2006 according to Hegarty when sifting through the filings.

Over the weekend, Hegarty and Steve Crist utterly debunked the gross fallacy announced by Bloomberg Thursday. In fact, it turns out that NYC OTB's problems can be largely traced to their own miscalculation 4 years ago when they pushed for night thoroughbred action. After lining up Mountaineer and Penn National and making a deal to stipend the harness tracks, the geniuses discovered there was little income in the TB evening sessions. Oops. Of course now they're paying a premium back to the harness tracks on business that existed before their tactical error. But somehow it's Albany's fault. I'm no fan of Albany and their inept meddling in racing, but here is one case where they are a somewhat innocent bystander.

HEGARTY: OTB finances a complex equation
http://www.drf.com/news/article/90395.html

CRIST: Bloomberg way off base on OTB (DRF Plus subscription required)
http://www.drf.com/drfNewsArticle.do?NID=90405

And for those that decry the lack of mainstream media coverage of racing? Don't decry yourselves a river. As brought up by Crist in his searing column, The NY Times, when reporting on Bloomberg's yapping Friday, included the assessment that "OTB is saddled with payments to the beleagured racing industry." That's rich. Can you imagine the nerve of the beleagured racing industry "demanding" to be paid their cut on the OTB handle that only exists because of their product? Too funny. In this case, having the mainstream media report on racing can only do more harm than good.

[Bobby Fischer]

they are making big money

its so obvious

places like gulfstream are obvious when they raise expenses in accord with the profits, but nyc otb is uber obvious. (thank you nyc otb for finally allowing me context for the word "uber")

these otbs are rough places lol , but no better spot to cheer on a $2 show bet as if you just hit powerball!

also: don't lump the rastas in with the haitians who have dred locks ...

[pmacdaddy]

I say give the City a $10M+ annual garauntee (call it whatever you like) and let the track operator run the sites.

Can you imagine how much they would value that Billion dollar handle? How much they could grow it integrating their Internet platform with offsite locations.

I'm sure the City would pass, even though they are "losing".

[Kasept]

Paul Moran gets it right in his "How to fix it" riff on the NYC-OTB wolf-crying... (I'm confident Paul will not mind it being copied here..)


FIXING OTB IN NYC
By Paul Moran (http://www.paulmoranattheraces.blogspot.com)

Six off-track betting corporations conduct business in the state of New York, five profitably. The other, which happens to be the nation’s largest legal purveyor of pari-mutuel wagering, is insolvent.

Is something wrong with this picture?

Mayor Michael Bloomberg, astute businessman that he is, must be aware of the reasons for the difficulties that weigh upon New York City OTB and he also must be aware that they are not beyond repair. Bloomberg is inclined to rail against the things to which he objects – smoking, junk food and, alas, gambling and it is more likely that his personal opposition to gambling more than any other factor is behind the shutdown threat he issued last week.

Perhaps the sight of a clutch of people standing outside an OTB parlor, smoking cigarettes and eating fast-food burgers -- actually exercising the right of personal choice -- moved Bloomberg to threaten closure of the city’s staggering OTB enterprise, which would end a three-decade reign on mismanagement that would be studied for decades to come in the nation’s business schools as an example of the chaos resultant from a slushpot of political patronage that with fermentation and age, inevitably begins feeding on itself.

NYCOTB has endured the leadership of Allie Sherman, a retired and befuddled football coach without a minute of background in the gaming business but strong political connections; Hazel Dukes, who combined inept management with unprecedented fiscal irresponsibility, and is led currently by Ray Casey, an appointee of former mayor now presidential candidate Rudy Giuliani, his cousin.

Bloomberg’s threats notwithstanding, OTB will not soon be closed in New York City. It is part of the culture. Its proprietorship should be joined with the racing franchise but that is sensible beyond hope. It could be sold into the private sector, but the immediate transition would be both effective and embarrassing to three decades of politicians who have used it as a jobs program and real estate boondoggle. Yet, it would take all of an afternoon to right this ship.

Here’s how.

Close every OTB parlor in the five boroughs leaving only restaurant-based facilities and teletheaters.

Fire everyone.

Expand the network of restaurant/bar-based facilities throughout the city and open more teletheaters, following the example of those in Nassau and Suffolk counties as well as Albany and Niagara Falls. They work.

Install a CEO with background in gaming and hospitality regardless of political affiliation. Permit that person to staff his organization with professionals, particularly in the area of simulcasting.

Do not renew simulcasting contracts with tracks that are of no interest within the New York marketplace and replace those with international signals from tracks in Europe and Asia.

Implement Internet wagering.

Lobby for changes in the statutory structure under which OTB operates. Apparently, this is the only state in the nation in which it is possible to be taxed on more than 100 percent of net profit, which is simply wrong.

All this before happy hour.

[Bobby Fischer]

Originally Posted by Kasept

Paul Moran gets it right in his "How to fix it" riff on the NYC-OTB wolf-crying... (I'm confident Paul will not mind it being copied here..)


FIXING OTB IN NYC
By Paul Moran (http://www.paulmoranattheraces.blogspot.com)
....

Expand the network of restaurant/bar-based facilities throughout the city and open more teletheaters, following the example of those in Nassau and Suffolk counties as well as Albany and Niagara Falls. They work.

I think he is on to something here. There is a lot of potential in the restaurant/bar market.

I don't know that expanding to Asia / Europe in place of the non-profitable tracks is an urgent issue. Sure any horse player likes top class racing regardless of venue, but sometimes less is more when a product is in transition.

[Kasept]

Originally Posted by Bobby Fischer

I think he is on to something here. There is a lot of potential in the restaurant/bar market.

I don't know that expanding to Asia / Europe in place of the non-profitable tracks is an urgent issue. Sure any horse player likes top class racing regardless of venue, but sometimes less is more when a product is in transition.

B/F,

Makes sense utilizing the Asian/Euro/Latin American simus to draw the specific ethnic trade that has interest there. (Much like the Latin and European soccer cafes you find in NY, Montreal, Chicago, etc.). As an example, in Montreal at the Hippo Clubs, they began operating midnight-8am playing Hong Kong, Australia and Japan, and drew huge Asian crowds... But as Paul Moran suggests, the facilities need to be sumptuous.. or at least comfortable.

[Linny]

Clearly someone in the NYC Mayor's (and at the NYT) office needs a bit of a lesson in the economic structure of the racing environment. In simplest retail terms, the tracks produce a product (racing) and the OTB's and assorted simulcasts distribute and sell the product at the retail level. The distributors PAY for the right to retail the product. A man as successful as Bloomberg simply cannot be so idiotic as to not see this.