A Year of Adapting for NYRA and O'Rourke

The Belmont Stakes Presented by NYRA Bets (G1) will indeed take place June 20.

Not even the COVID-19 pandemic could stop it.

It will be contested at 1 1/8 miles, the same distance as the Wood Memorial Stakes (G2), as opposed to its grueling traditional 1 1/2-mile test at Belmont Park.

It has also been delayed by two weeks and will be the first of the three Triple Crown classics for 3-year-olds instead of the last. Yet on a positive note, there will be a $1 million purse, and the talk of the 3-year-old crop, Sackatoga Stable's Tiz the Law, will top a field of 10 in the centerpiece of a card with four grade 1 stakes.

"It's obviously a unique year with extraordinary circumstances," New York Racing Association CEO and president Dave O'Rourke said. "It's different, but I think people will have fun with it because it's the first Triple Crown race and will be run at a different distance. So we're excited, and I think the horsemen are geared up for it."

The card will be contested without fans in a facility that once jammed in 120,139 spectators for Smarty Jones in the 2004 Belmont Stakes, which serves as a highly telling statement about the challenges facing O'Rourke and NYRA in a world combating the coronavirus.

"We all have to pitch in and do what we can to keep the industry going, and then once we get to next year, we can get back to tradition and have people on track," O'Rourke said. "But for now, this is the year of adapting."

In a typical year, even with a rash of wintertime cancellations, NYRA could rely on the Belmont Stakes and the 40-day Saratoga Race Course meet to save the day like John Wayne and the cavalry and carry the circuit's financial bottom line into the black.

But that will not happen this year as NYRA attempts to bounce back from an 80-day period when its tracks were closed, and it cannot count on on-track wagering and hospitality spending as well as revenue from the Video Lottery Terminals at the still-shuttered Resorts World Casino New York City. Even the upcoming Saratoga meet faces the prospect of having a limited number of spectators on the grounds—if any are allowed at all—during the July 16 to Sept. 7 meet in upstate New York.

Given all that, after a string of several years in which NYRA was able to generate a yearly profit, it seems an odds-on proposition the organization will end a highly forgettable year in the red.

"When we began laying out worst-case scenarios, we said, 'What happens if there is no racing the rest of the year and the casinos stay closed? What do we need to do so we can come back?' With the ability to come back (June 3), we can cut into that," O'Rourke said. "We're not going to be in the black this year. We've been profitable the last five or six years, and it will take something miraculous for that to happen, but because of the way we have operated the company, fiscally we are in a position to get through this and come back like normal next year, and that's an important thing for us. 

"Saratoga is a better meet than Belmont in terms of generating handle and sponsorship, and without fans on hand and hospitality, the economics are a lot more difficult, but we're going to get through it."

Since the June 3 resumption of racing—a first for NYRA since March 15—NYRA's handle at Belmont Park has been booming. Through June 14, with a boost from expanded airtime for its "America's Day At the Races" shows on the MSG and Fox Sports channels, the first nine days of the meet produced a total handle of $124.8 million, generating an increase of 88.7% over the April 26-May 10 first nine days of the 2019 meet that took in $66.1 million.

The average field size for those nine days was also solid at 9.5.

"It's been a great start, and we're up higher than our forecasts," O'Rourke said. "We've had a good response to our television products pushing NYRA and Churchill Downs, and the horsemen have been great. The field size has been 9.5, and if we can keep that up, it would be a phenomenal racing product."

While handle figures are often viewed as a barometer of financial success for a racetrack, in this instance, NYRA is hurt by the lack of on-track wagering, where it collects a lion's share of the takeout. Though the popularity of its NYRA Bets platform has helped to offset that loss, NYRA gets a smaller share from revenue from outside ADWs than on-track handle.

On Belmont Stakes Day, the loss of on-track handle is particularly acute. Last year, the all-sources handle of $102,163,280 was a record for a non-Triple Crown Belmont Stakes Day, with $11.8 million of that total coming from on-track wagers.

Aside from the handle, the 2019 Belmont Stakes had a paid attendance of 56,217, with admission starting at $15 and some upscale seating packages going for $1,000 or more. There were also parking fees and long lines at concession stands, none of which will be a part of Saturday's races.

"Obviously, the Belmont Stakes is our one big downstate event," O'Rourke said. "We expect between 50,000 and 90,000 people, and the hospitality side of the equation is gone. But we knew that coming in. Working with our horsemen, we made a conscious effort to get back to racing to support the ecosystem.

"The buildup this year will be more about watching and betting from home. It will be an exercise in a different reality, and we're not the only sport facing this. We're just the first so far."

NYRA asked the New York State Gaming Commission for permission to have people on hand Saturday, but O'Rourke said the request was withdrawn when it became apparent that there would not be enough time to set up the necessary protocols.

"We wound up pulling the request. The Gaming Commission was working with us, but we ran out of time," O'Rourke said. "You always have to stand back. From our viewpoint, we understand owners wanting to be here, but we're still in a pandemic, and the numbers that came out last week, while the New York numbers were great, some of the others don't look good. The reason that New York's numbers are improving is because everyone is adhering to the protocols. It's safety first. 

"We floated the question. These are busy people we approached. They have done a phenomenal job for New York in terms of new cases and hospitalizations. The last thing we want to do is get in their way or create a headache for them, so given the time and the workload they have, we backed off."

Resigned to racing without fans at Belmont Park though the July 12 end of the meet, O'Rourke said the focus has shifted to gaining approval for owners to be on hand at Saratoga for at least part of a meet that is a box office bonanza for NYRA.

At the 2019 Spa meet, $146.6 million was wagered on-track, and paid admission checked in at 1,056,053.

"The governor's office has been incredibly balanced and methodical on this, which is why it's worked," O'Rourke said about reopening regions and business sectors in New York state. "In terms of Saratoga, our first focus would be to get the owners and connections in, and then we'll work on the fans. We believe having owners there is a prudent first step, and it can be done with the protocols we have now. Once you open to the public, it's a little trickier. So you can understand the trepidation. Where we were three months ago compared to today, the last thing we want to do on a societal level is take a step back. It's frustrating at times, but 2020 has been one heck of a frustrating, strange, and, in a lot of ways, sad year."

Purses have already been affected by the stoppage of racing in March, April, and May, as well as the lack of revenue from the casino, which accounts for about 38% of NYRA's funds for purses.  

The purse for the Belmont Stakes was sliced from $1.5 million to $1 million, and virtually all the stakes at the meet took a hit. But because of NYRA's ability to operate efficiently the past few years and build a healthy purse account cushion, overnight purses have not been altered dramatically. A maiden special weight race for 3-year-olds and up during last fall's Belmont Park meet carried a purse of $75,000, and a similar race in the current meet's first condition book was worth $64,000.

"The funds from the VLTs (at the casino) are a hole that needs to be filled. Our handle has been up, but the channels have been ADWs, which have a different return to the purse account," said O'Rourke, who was named CEO and president in March 2019. "The handle has been better, but it hasn't reached a point where we are not using some of the purse cushion to keep them where they are at. We're not out of cushion, but we are trying to be prudent with it and stretch it for as long as we can."

Mindful that there will not be a quick fix for purses, O'Rourke said he was hopeful that they can return to 2019 levels at some point next year.

"The purses will bounce back. Once the casinos come back, hopefully by the fall, we'll be in a good position. We have some cushion to keep the levels where we are, but if the status quo continues, it would start to impact us in the fall. It's hard to predict, but by next year, the purses can look like 2019."

The tough financial atmosphere has also forced NYRA to limit capital expenditures to items viewed as necessities.

"Without the other channels of revenues, you have to consolidate and be frugal with your spending," the NYRA president said. "Our capital expenditures for the year were just restricted to necessities. We're not building anything out beyond that. We can do that for a while because we have invested quite a bit, especially on our tracks and backstretches, in the last year. There's been a lot of progress. Just need to buckle down."

While there will be no fans in the building Saturday, the race's visibility on television could benefit from a time when horse racing is one of a handful of sports that has been able to operate throughout the pandemic. The Belmont Stakes will be the first major sporting event in the New York City area since early March, and it could be a magnet for casual sports fans. NBC will air the 5:42 p.m. ET Belmont Stakes on a 2:45-6 p.m show, and Fox Sports and MSG will provide coverage before and after NBC's show.

Beyond that, as difficult as the past few months have been, the ability to televise horse racing on a daily basis while professional sports have been shut down may prove the key to unlocking the door to new fans.

"What's been happening in the last few months is that racing has been able to pick up some casual fans. The fan base has actually expanded," O'Rourke said. "Now we need to make that stick. The racing product has been great, but we'll see what happens when the other sports return. We'll see if those fans and bettors stick with us. I think they will. Horse racing is a fun sport, and we've had more television exposure than ever before as a sport. At NYRA, we've been focused on television the last three to five years, and through all of these challenges, this has given us an opportunity to showcase our sport to a broader audience. So we hope there's a positive dividend on that going forward."

What happens in the future is a mystery, but as O'Rourke and NYRA head into the future, there's at least a good feeling in the way the New York racing community banded together to battle the spread of the coronavirus. Though backstretch worker Martin Zapata died from the illness April 7, there are no hospitalizations and only two workers quarantined in a reflection of the way people worked in harmony toward a common goal.

"Racing has its own culture and vernacular. I couldn't be more proud of what everyone at NYRA and the rest of the industry has done. We did come together, and we kept people alive," O'Rourke said. "Every day, we have had phone calls with the backstretch community to find out what their needs are. It is a great example of how people from different backgrounds can come together and get the job done."