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TheNewYorkRacingAssociation,Inc.2009BudgetN
arratlve
PresentationtotheFinanceCommitteeOftheBoardofDirectorsNovember24,2008
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The.NewYorkRacingAssociation,
Inc.
2009nudgctNarratlveNovember24,2008
The
proposed
2009operatingbudgetprojectsgross
revenues
of$285
million
andnetincomeof$2.5million.Thelast
profitableyear
forNYRAwas2000.NYRApostedaprofitof$1.6millionofwhich$11millionwasrelatedtoa
property
lax.settlementwithNassauCounty,
Revenue
ThestateoftheUnitedStateseconomyhasnegativelyimpactedNYRA'soperationsduringthelastsix.monthsof2008.Daily
average
handleonNYRAracesduringtheBelmontandAqueductfullracemeetingdeclined8%and13%,respectively,year-over-year.Similarly,casinooperatorssuchasHarrah'sandMOM
report
wageringdecreasesof7·]0%overthesameperiod.ChurchillDowns,Inc.andMagnaEntertainmentCorporationhaveexperiencedsimilarhandledownturns,Naturally,NYRAhastakenthecurrenteconomicsituationintoaccountinpreparingits2009revenuebudget.
Handle-GeneratedRevenue
OverallNYRAhandlefor2009isbudgetedtodeclinebyapproximately
5,51%,
however,handlederivedrevenueisbudgetedflatyear-over-year,Thisisaresultofobtainingincreasedfeesfromoutofstatesites.NYRAisamarketleaderinthoroughbredsimulcastingundiscurrentlyreceiving
the
bestpricingintheindustryforitsproduct.
On-fmc"Handle
On-truckhandleisbudgetedtodecline4%in2009,Thisprojecteddecreaseisaresultofbothapooreconomicoutlook
fOI'
2009andacontinuationoftileeconomicheadwindsfacingtheracingindustry,Thisdecreaseinhandleisoffset
by
the
1%
take-outincreaseinallpools(implementedSeptember!5,2008)resultinginanet
J
,3%declineinon-trackgrossrevenue,interne!revenueisbudgetedtoremain
flat
year-over-year.WhileNYRAcontinuestoexpanditsNYRARewardsprogram,management'scurrentoutlookisthatthegainsachievedthroughthisprogramwilllikelybeoffset
bya
challengingeconomy.
Ollt
oDs·tate
commingled
ami
internationalftolt"cmmu
iftlJ.ledHandle
Interstatehandleisbudgetedtodecline7%ascomparedtothe2008forecast.However,thehandledecreasesareoffset
by
aprojectedeffectiverateof5.2YYoversusaneffectiverateof
4.75%1
in
2008,
N()I'~s
I
NYRAherebyrequests(hilt\'hi.~
dOC\lI111mt
andits
attuchrrcnt
beexceptedfromdisclosureundertheNewYork
FreedomofJuformationLawbecausetheycontainproprietnryITHdcsecretinformationofNYRAthedissemlnatlonof
whichwillharmNYRA'scompetitiveposltion.
,The2009budgetdoesnotassumeanyproceedsfromanyassetsales'The2009budgetdocsnotassumeaTripleCrowncontender,
2
 
COI\lFU)ENT~AJ.,
TheNewYorkRacingAssociation,
Inc,
2009BudgetNarrativeNovember24,2008
OTB'saiulJIt~St(lteRacetracl(s
The2009budgetedhandleonNYRAracesderivedfromDownstateandUpstate
01B'$
isprojectedtodecrease4,6%and1.2%,respectively.This
decline
inhandleisaresult
of
thecontinued
trendawayfromOTB
bettingin
favorofADWoutlets,
The
2008
budget
also
assumes
thatIn-Statehandle
will
decrease
by
4.4%ascomparedto
the
2008forecast..
Thel'el'e!lI((!
budget
does
!wtassume
tl
J%
f(I"e~Qut
lncrease
011
out-of-state
imports.
NewstatelegislationcurrentlyscheduledtotakeeffectinMarch2009
will
increasethetake-out
I
%
onallout-of-state
races.NYRA
believes
thatthis
1
(X,
take-out
increaseonout-of-state
imports
willput
NYRA
and
theotherIn-Statesites
(OTSs,
FingerLakes,
harness
tracks)
at
acompetitivedisadvantage
versusOut-of-State
pari-mutuelwagering
entities
andADWs,
NYRA
isdiligentlyworkingtochangethislegislation;however
there
arenoassurancesthatNYRAwill
be
successfulinthisregard.NYRAbelievesthatthe
loss
ofhandleresultingfromthetakeoutincrease
willoutweigh
any
benefitthatmaybederivedfromsame.
OtherRevenue
On~TracARefutedRevenue
NYRAhasbudgetedfreeadmissionandparkingforall2009AqueductRaceMeetings.
Although
NYRAhasbudgetedarevenueshortfallbecauseofthis
new
policy,NYRA'snetsavingsbygoingtofreeadmissionandparking
will
beapproximately
$250,000.
Flea
Market
oftheflea
SponsorshipsandGroupSales
The2009sponsorshipbudgetis
$4,2
million,whichrepresentsan6%increaseas
compared
tothe2008forecast.ThisincreasereflectsNYRA'.scontinuedfocusonincreasingitssponsorshiprevenue.
It
shouldbenotedthatNYRA'ssponsorshiprevenuewas
$1,5
millionin
2007.
Approximately66%or
$2,7
million
ofNYRA's
$4,2
millionsponsorshipbudgetisalreadymemorializedinwrittenagreements,Theadditionalbudgeted$1.5millionhereinisbailedontheassumptionthatNYRAwillsuccessfullycompletewrittenagreementswithrespectto75%oftheitems(worthapproximately$2.3million)thatarecurrentlyin
process,TheGroupSalesrevenue
budget
3
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