TDN Q & A: NYRA CEO & President David O’Rourke

[Wandering Eyes]

David O’Rourke was named the CEO and President of the New York Racing Association Mar. 26, a short time after he was named interim CEO and President following the resignation of Chris Kay. Prior to his promotion, he was a Senior Vice President and generally considered the No. 2 person among NYRA’s management team. He takes over at an interesting time for NYRA, an organization that has several unresolved issues on the table, including the futures of Belmont Park and Aqueduct, figuring out the optimal number of dates to race at Saratoga and how it can try to take advantage of the inevitable legalization of sports betting in New York.

TDN: Since your promotion, what has surprised you most about the challenges you face as the head of a major racing organization? And in what areas do you feel you still have things to learn?

David O’Rourke: I don’t know if I’d use the word surprised. I’ve assumed the position at a time when there is as lot going on with NYRA. I don’t know if the right term would be change, but we have the Belmont Development going on. We have sports betting on the horizon. There are a lot of balls in the air, which is, really, an opportunity. I don’t know if I’ve been surprised by any particular thing, but I needed to get up to speed on areas that historically might not have been my primary focus. Like sports betting, like Belmont Development, the issues in terms of equine safety. These are areas that–thankfully–we have a lot of depth here in terms of management, but they’re areas that I haven’t historically had to focus on. It’s more trying to get my arms around some of these issues.

TDN: The latest on sports betting in New York is that the State Senate is about to vote on a bill that would allow stadiums, arenas and racetracks to open sports betting kiosks in partnership with casinos. It appears the NYRA racetracks would qualify for such kiosks. Would that be a good thing for New York racing?

DO’R: They altered the legislation to allow for affiliates, and NYRA would fall into the classification as an affiliate, to take sports betting. This would allow NYRA and other racetracks and OTBs and stadiums to have basically kiosks that are tied back to the servers based at the casinos. It gives us an opportunity to participate at some level, which is a good thing. But there are a couple of things to consider. If you have a sports betting license, you have to end up going into an agreement with a sportsbook operator because they have the background. There’s a payment stream right there. The affiliate model that we’re seeing right now in this current bill would allow us to participate at some level. But, economically it wouldn’t be as advantageous as having a license yourself.

TDN: Having your own sports betting license might have meant that your ADW, NYRA Bets, could have taken both sports bets and bets on horse racing. That, no doubt, would have been a home run.

DO’R: You have to start to think about not only the New York marketplace, but the national marketplace in general. How does that fit into the new landscape that’s emerging? Is an ADW a stand-alone product or is it a product that is incorporated within a sportsbook? These are questions that we’re going through right now. The question you asked was, would NYRA Bets be allowed to offer sports betting? But I’d almost reverse the question back to you. Should NYRA Bets be the ADW provider within several different sportsbooks? Because what is our end game as an industry? We’re content producers. What we want is a bigger store to sell our content in, and sportsbooks, with all these other products on the shelf, potentially offer us a bigger store, a larger demographic, customers that we wouldn’t be able to get to without unbeknownst amounts of marketing dollars that we don’t have access to.

TDN: The New York Islanders will soon break ground on a new arena on the property of Belmont and the arena is expected to open for the 2021-2022 season. Already, there have been announcements made that, due to the arena project, Belmont meets may be shorter, the post time for the first race at Belmont may often be extended to mid-afternoon and the construction was the reason given for extending this year’s Saratoga meet to eight weeks. It cannot be easy dealing with a major construction project going on literally in your own backyard. How are things developing and what is NYRA doing to make sure the construction can coincide as well as possible with a race meet?

DO’R: Good question. As always, safety is the number one concern. It’s really when they’re digging a hole, they have dump trucks dumping the material and then they’re driving steel pilings into the ground. That kind of loud construction could cause a safety concern for us. We have to work around that. There are different levels of construction. It’s the noise that is the primary concern. It’s how close are they to the paddock and how loud is it? Once they close in the building, they can pretty much work whenever they want without causing us any problems. There will likely be some adjustments to post times. We might run a little later during the week. We might move over to Aqueduct in the fall a little bit earlier than normal. In the next few weeks we’ll probably have a definitive answer for what the fall meet at Belmont will look like. During the fall, as things play out in what will likely be an abbreviated Belmont meet, we’ll figure out what’s going to go on next spring. It will be a logistical challenge. Belmont Park is going to be a construction site to a certain degree. The arena partners have been great in terms of trying to understand our business. It’s a unique business obviously. They’re wrapping their arms around it, they’re getting a very good understanding. As they’re building the arena and as we start to phase into our construction of our own project here, we’ve already started by moving up to Saratoga a little bit earlier and running five days. We’re likely to be at Aqueduct for a little bit longer, but we do intend to run the spring and fall meets here. They just might be slightly shortened.

TDN: Because of the arena project, the Saratoga meet has been altered for 2019. The basic changes are five days of racing a week with no racing on Mondays and eight weeks of racing. Will that be the new normal for Saratoga or might NYRA revert back to what was the 2018 schedule after the Islanders arena is no longer an issue?

DO’R: It’s likely that the 2020 meet will look the same as the 2019 meet because the construction will still be going on here. It’s easier for us to get out of their way so they don’t have to condense their work window each day. But this is a great question to ask me Labor Day (closing day at Saratoga). How did the five-day change impact the community up north? If everyone’s happy and it worked well for everyone, it’s an easy answer. If there are competing issues, then its not such an easy answer.

TDN: But what about 2020 and beyond or whatever year the Islanders arena is no longer an issue?

DO’R: That’s tough to answer until the numbers have come in because you have to take a look at them and how they affect all the constituents. There are the horsemen, how does it impact their operations up north? There’s the town itself, how does it impact the people living there and how does it impact the business community there? Then you come back to us at NYRA. From our point of view, while we believe that running five days a week will help us on things like field size and handle and possibly food and beverage numbers, until we actually play it out, I can’t definitively answer that. If I had to guess, I’d say it would work well for us. Our modeling suggests such, but we are just one stakeholder out of four or five I have just mentioned.

TDN: You have a unique situation in New York that is really a throwback to a very different era, where you have two racetracks [Aqueduct and Belmont] eight miles apart, which in this modern age doesn’t appear to make any sense. Everybody’s been asking for years, ‘Will this continue?’ What is NYRA’s thought currently about having two racetracks so close together, where one can easily make a case that only one track is needed?

DO’R: Now, you say two race tracks don’t make sense. Well what about two facilities when one’s in Nassau County and the other is on the A train in Queens. Aqueduct is a valuable asset for us for a few reasons. One of question I get asked more than a lot of others is, ‘When are you going to close Aqueduct?’ There’s no definitive time line on that because Aqueduct is required for our winter racing. It’s the only winterized facility that we have. Right now at Belmont, we’re working through things with architects and professionals on what are potential development plans here.

One of the questions is, if you were to race in at Belmont in the winter, what would you need to do and what would that cost be? Those are the type of balances that we need to look at if we’re going to think of anything, because we’re required to run a winter meet. In terms of Aqueduct, the other question is what can you do at Aqueduct? We haven’t really invested a ton of money in that facility in terms of amenities. Is there something you could do there? Does sports betting change the equation? There are many days that if you come to Aqueduct when Belmont or Saratoga is running it’s going to be busy. There’s going to be quite a few people that are wagering. The fact that it’s on the subway line and next to a casino does help with traffic. But to your original point, the operating overhead of two facilities, in terms of the racetrack, is significant. It’s a valid question, its just not one we have an answer for at the moment.

TDN: Just like how we talked about that in this day and age it doesn’t make sense to have two racetracks eight miles apart, it also doesn’t make sense to have a facility that was built to hold 60,000 people where you need that sort of a facility one day a year. There are so many questions about the future of Belmont Park. It’s a beautiful racetrack, but there’s certainly a sort of dreariness to it when it’s so big and has so few people there on 80% of the days of the meet. Again, the cost to maintain a facility that’s three times the size you need is probably impractical, as well. Yet, you actually do need a very large facility at least one day a year, Belmont Day. This cannot possibly be an easy problem to solve. So, what are NYRA’s thoughts about creating a new Belmont Park and if so, what might that new Belmont Park look like?

DO’R: Really, what we’re looking to do is, how do we invest into Belmont so that we can minimize our operating foot print or right size our operating footprint for the regular Saturday and then how do we have it so we can expand for Belmont Stakes Days. It’s not an easy puzzle to solve here. But that is the first question. I do not believe there is any consideration where this building would be replaced, in terms of the shell of it. Now what we’ve challenged the architectural team on, first and foremost, is we need to have a facility that can flex, let’s just call it 10,000 to 15,000 people to 90,000. The operating envelope needs to be able to condense for a regular Saturday because you are correct, it can feel a little vacant even if we have quite a few people here because it’s huge. We need a certain level of amenities that we really don’t have here. We could use some more restaurants. There are balconies that face the paddocks that would make for a nice restaurant here. Then once we have what we need, how do we create a workable facility where we could have 90,000 people at Belmont Stakes Day or 50,000 to 60,000 on a Breeders’ Cup Day? With that you will have an asset that you need to increase the utilization of. If you have a facility that generally does not have 90,000 people except for one or two days a year, you have a lot of infrastructure that is underutilized. Once we solve the equation for what we require for racing, then we start to look into the questions on what else can we do here that will increase the utilization of these assets? That would be Phase 2 of anything that we would do at Belmont, The building is huge. You could look at it as a challenge or look at it as an opportunity. We definitely have the space to solve what we require. Then the challenge/opportunity is what else would complement it?

TDN: Just to reiterate, the idea of taking a wrecking ball to the grandstand and starting all over is just not anything that’s on the table or being discussed?

DO’R: Correct.

TDN: We all know about the unfortunate situation at Santa Anita and the problems it has created for the sport as a whole. NYRA is among a coalition of tracks that has announced it will begin to curb the use of Lasix in 2020. Is there more that’s on the table, is there more that NYRA can do and is thinking of doing to make racing as safe as possible for the jockeys and the horses?

DO’R: One of the main things that we’re doing right now is working with the other coalition tracks to try to get uniformity. We think that is massively important. We’re proud of what we do here in terms of safety protocol and processes. We think we are the standard, but that standard evolves. We wouldn’t be holding onto something right now, saying, ‘Hey we believe if we did this today it would improve the safety of all of our athletes involved.’ What we would be doing is clamoring to get that done today. What we are doing is we’re investing in the people and the system, and I say system because a lot of it is data collection and processing, to basically mine out any opportunities that we can do to improve it. It is evolving. What we’re doing today will be slightly different next year. The whole idea is continuous improvement.

TDN: Unfortunately we all believe that the number of fatalities at a racetrack will never go down to zero, but how confident are you that the people that work in these areas that you hire and employ can get that number of fatalities down and get it to a number that the public is more comfortable with?

DO’R: I am extremely confident we can do that. There are slight fluctuations in timing, but over a period of time, let’s say two, three, five, six, seven years out, I’m extremely confident that safety numbers will improve. The industry is laser focused on it. We’re laser focused on it. I think undoubtedly things will improve nationally.

TDN: Another question you’ve undoubtedly been asked a few thousand times: What is the latest on the Breeders’ Cup finally returning to New York?

DO’R: It’s one of the objectives of our Belmont Development Plan. The Breeders’ Cup, the folks over there have been great. The benefit that they have is that they run at all the other tracks. They understand how to put on a high-end event. They have been very helpful with providing us with information, suggestions. That’s one of the objectives of the Belmont Development is to have a facility that would be able to host a Breeder’s Cup comfortably and put on a great event and get ourselves into the long term rotation.

TDN: Could you give us a ball park figure? How many years away might you be from having that kind of facility where the Breeder’s Cup would say, ‘Yes, you guys are a great place to have a Breeders’ Cup’.

DO’R: This is just a guess right now. I’d say possibly 2022 or 2023. I’m not sure how far in advance they have announced future locations, but, for us, 2023 certainly looks feasible..

TDN: Whether it be for safety reasons and/or the need for such a track during the winter, is NYRA still looking into putting in a synthetic track at Aqueduct or Belmont?

DO’R: Yes, that comes up quite a bit. The question would be if you run in the winter here at Belmont, you would probably need one? The track configurations obviously are dirt, turf, turf. You can’t run in the winter here at Belmont on the dirt track because of shadows. At least that’s the way it’s been explained to me. The first question I had was, ‘Well why don’t we change?’ We’re going to revisit the tracks in terms of redoing them, that’s part of the development. That’s a given.

TDN: You said you’re going to revisit the idea of making changes. I assume you mean to the track surfaces or configuration of the track surfaces?

DO’R: Yes, improving drainage, irrigate, all of that. Those tracks will be redone in the next few years. But the question is, what’s the ideal configuration? You really don’t want to tie anyone’s hands in the future so even if it isn’t a definitive that we’re going to race in the winter at Belmont, is there a configuration that would make the transition easiest for everyone involved over the next many years? That’s part of the development project. Actually it’s probably the piece that will move first, what will we do with the tracks? Do you do turf, dirt, turf for instance. Does that allow the dirt course not to be in the shadows? If you had change to synthetic would you change the dirt course? There’s also the original theory of putting a synthetic in the middle right now but that would be four tracks deep. To answer your question, yes, it’s definitely something that’s discussed. Synthetics–the science behind it is a lot different than it was 10 years ago. It’s a product that’s improving. I’m very interested in discussing it.

 

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