NYC OTB pleads its case
 

NYC OTB pleads it case to the public in the NY Post as to why they are a losing operation.

http://www.nypost.com/p/news/opinion...mMb9Wih8GJI4uL

Seems to me that they are not being up front with all the facts from what has been posted on this board. By lumping the racetracks with the city and state without stating who gets what amount it seems to me they are trying to play victim by munipulating the facts.

Yup.. Frucher in a nutshell:

"We'd be making a lot more money if we didn't have to pay those damn winning bettors, those greedy racetracks where they run the races we take bets on or that pesky state that mandates our existence."

It makes you wonder how the greedy racetracks which OTB wants to give less money too and from which OTB receives its largest source of revenue, NYRA, and who has its own expenses to put on the product that OTB is allowed to show and profit from, happens to be in bancruptcy as well. Frucher seems to care less about that or what it costs to make the product he sells.

I love how he makes the numbers so simple, $1 billion taken in, 75% to bettors leaves $245 million in revenue of which $129 million goes to the racing industry, city and state leaving poor old OTB only $116 million which cannot cover its $134 million in operating expenses. No mention as to why they have that much in operating expenses or why they aren't shutting down parlors left and right at a time when the focus should be on internet gambling which could reduce their expenses tremendously, or the prior mismanagement that has gotten their operating expenses so bloated, etc.

I suppose we should just assume that $134 million figure is a legitimate operating cost for this business and feel sorry for and support NYC OTB!!!!

How about this gem:

"Some say we should just let OTB die, but they ignore the far-reaching consequences. If OTB operations ceased, the city and/or state government would be on the hook for $600 million in pension obligations. Tracks around the state might close. Nearly 40,000 New Yorkers who make their livelihood on the racing industry could lose their jobs. And the upstate agricultural industry, home to generations of horse breeders and farmers, would take another serious hit."

:eek: "Wha-wha-wha-what???"

I had no idea it cost $134 million to run 55 insane asylums, err, empty boxes that offer no other services beyond processing wagers. (The remaining eleven locations have virtually no overhead as they are covered by the restaurant/bar.)

With an average of 5 employees on staff at any given time at each location, let's say for argument's sake there's 10 per location. At an average pay level of $50k per employee times 55 locations, that's $27,500,000 in payroll.

Let's say for argument's sake the average rent per month is $5,000 per location (it's significantly lower than that in the outer boroughs.) That's $3,300,000 in rent.

Let's say for argument's sake there are 50 additional employees at headquarters, for human resources, management, etc. at an average wage of $100k per year. That's $5,000,000.

Let's say for argument's sake the cost of business supplies (terminals, website, paper, etc.) is $20,000,000.

WHERE'S THE REMAINING $60 MILLION, GUY???

That one really got a laugh out of me as well, as if the racetracks, horsemen and breeders benefit from OTB as opposed to the reality of OTB siphoning money from them!

How can racetracks possibly be profitable if OTB can't when the racetracks have the expense of maintaining the facilities, paying their own employees and paying purses with less takeout than OTB who has far less expense?

One of the main reasons I posted this B.S. is in hopes that someone who knows more than me will really call Frucher out in letter to the editor to the Post so the public that reads it is not moved by these misleading general figures.

I am 100% sure they HAVE 134mil in operating expense. Do you think the CPA firm that signs the audit can't justify the operating expense? The question that need be asked is WHY is it 134mil, and what can you do to get that below the 116mil fig.

I know OTC management is full of it ,but it is going to take a lot digging to get to the root of the issues. Maybe Steve could have them on ATR?

I don't think anyone doubts that they actually had $134 million, I am sure they can document that, the question is why? As Phil rightly points out, how is that figure so high when their likely overhead seems to not support that? Where is that $134 million going?

I refuse to accept that they need that amount of money to legitimately run this operation. Most likely a vast amount of that is waste that no profitable company would allow or would be expensed by a private for profit company. If he wants to cry poverty, than put it all out on the table. But to just simplify the numbers like that in a deceiving way, suggest that the loss of NYC OTB puts the racetracks, horsemen and breeding industry at risk of survival and suggest we should just accept that they need to spend that kind of money to operate is pure BS.

5000 a month rent in manhattan.. Phil have a heart.. Employees have benefit packages of 15 to 20k a year never mind their salaries. Once some forensic accountants rip thru the numbers will have a better clue what is BS. This story will have some legs for sure..

How long did I live in the city and frequent said locations? I think I have a good handle on what things go for. $50k would be INCLUDING a $15k benefits package. These are employees that should make little more than minimum wage, yet make $15 an hour. NYRA pays less. As for real estate, their average storefront is roughly 600 square feet. Here are a couple similar locations available RIGHT NOW:
Manhattan:
http://www.selectapartmentsny.com/in...l_detail&id=59
http://www.selectapartmentsny.com/in...l_detail&id=64
http://newyork.craigslist.org/mnh/off/1514691969.html

Brooklyn:
http://www.nestseekers.com/20422/RET...SBURG_LOCATION
http://newyork.craigslist.org/brk/off/1514797158.html
http://newyork.craigslist.org/brk/off/1514765965.html

Queens:
http://newyork.craigslist.org/que/off/1514647644.html
http://newyork.craigslist.org/que/off/1513176326.html
http://newyork.craigslist.org/que/off/1512321167.html

The best part of this is their admission that they are shortfalling about $18 million. It's already been established that they misreport their surcharges of $10-14 million annually... so they really are pretty close to being a breakeven operation with only the most modest hedge-trimming of $5 million annually. They needed a big dramatic bankruptcy for that? Frucher is so full of crap that his eyes are brown.

"misreport" what does that mean that the CPA that signs the audit committing fraud or does it mean that they are accurately reporting the surchase per GAP and you don't concur with the methodology. Do you have an experts in accounting that are willing to speak on the subject factually or are we just going to rep stuff we heard secdond hand??

Again I realize Frucher is full of it and I recognize its a ploy..How about exposing it with facts from authorities save Phil?

Matt Hegarty and Steven Crist

HERE IS CRIST'S COLUMN FROM 2/22/09:

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.

Matt Hegarty is a reporter and Crist is a publisher..How about a Forsenic accountant who understanding GAP as it relates to this "Surcharge"..

So in brankrutpcy court you figure Hegarty and Crist will be called to serve as experts on accounting practices.. I respect Crist as much anyone and I am sure he is well versed on the subject but he is not the person to rebut OTB's assertions that it is losing money

Well "its accountants" are either criminals or are doing exactly what they are suppose to under GAP. Surely their is more proof then Crist suggesting this in a column..Again, I don't doubt they are playing a game

It was Matt Hegarty who did the forensic accounting that uncovered the unusual treatment of the surcharge.

Wow the case revolves around the expert opinion of a columnist vs. partners at a highly respected accounting firm, which is paid 1/2 a million bucks to do an audit. I didn't realize Hegarty was an CPA in his past life.You learn something everyday. Which firm did Hegarty work for when he was in the accounting field, Delotte? This "unusual treament" must have escaped the teams of accountants that audit OTB financials.. Steve perhaps it would serve the community well if the facts were repped appropiately. Hear say from columnists isn't responsible even if they prove to be 100% correct in their assessment.Again, I am with you in your disdain for the ploy just think there is way more to it.

Freddy, you don't think that OTB's accountants message the numbers most favorable to OTB? Any businessman knows that just because expenses are written as off does not mean that the money is necessarily lost or unavailable for use. When Donald Trump was bancrupt, do you think he couldn't write checks to his employees, stay in first class hotel suites or ride around in limosines?

Why shouldn't people, including columnists, analyze the claims by OTB, isn't this done all the time? Don't we see columnists analyzing the proposed healthcare bill to find its hidden costs on a daily basis?

People have a right to question whether OTB is actually in a dire situation and if so, what the cause of it is. For example, OTB has been a place for politicians to stick their friends, relatives and supporters for years who were unqualified and paid unreasonable salaries, shouldn't such bad business practices be taken into consideration when they are asking others to take less to try to solve their problematic bottem line that they created themselves?

Freddy,

Hegarty is racing media's single top business correspondant. His accumen on these topics is unquestioned. Do you think Steven Crist would base his columns on the topic on faulty, shoddy or uncertain conclusions? Come on...

I don't think accountants in this day in message numbers for PUBLIC entities. My best friend is an audit partner at Delotte and on there Board..There is zero chance he is signing a public company's audit that is BS. An audit starts Jan1 and ends Dec31 on a company like OTB with constant reporting. Now private companys are completely different story.

As for if people should question OTB and there business model and practices OF COURSE THEY SHOULD. I am not an OTB supporter but I really hope there is more to story then Matt Hegarty's opinions on accounting theory..

His accumen on accounting is hardily unquestioned..Again do you suspect Hegarty will be deemed an expert on such GAP?? and I would guess that Crist didn't just take Heggarty's word for it and actually researched the "questionable issues" with people that he could rely on to factually support his column..

Perhaps when you have an expert on accounting, formulate an opinion based on GAP we can challenge these practices until then.. I am going with the guys that are professionals and sign there name on the bottom line of the return, they are the ones FIRMLY on the hook

And in alot of trouble also

Scavs you figure the CPA's screwed up? Your kidding right?

I have no idea what is going on with this, the only interest I have in NY racing is Saratoga turf racing.

Since when is NYCOTB a public company?

Since day 1:

While the concept of an off-track betting system was approved by New York City voters in a 1963 referendum by a three-to-one margin, the official history of the New York City Off-Track Betting Corporation began on April 22, 1970. That is the date that Governor Nelson Rockefeller signed into law two pieces of legislation which established the structure of off-track wagering. NYCOTB was designated to operate as a public-benefit corporation, a relatively new form of governmental entity run along the lines of a private enterprise whose profits accrue back to the taxpayers in the form of public revenue. The mission given us was three-fold: to raise needed revenue for the City and State, to combat organized crime's hold on gambling by providing a legal alternative and to help New York State's racing industry.

just like the one's at arthur anderson freddy? do u remember Enron???

A "public" company is one that has shareholders widely held and exchangeable on a public market and is required to disclose results via a 10K/10Q SEC filing. A "private" company that has one, or few, stakeholders that does not have to report results. Their accounting practices aren't necessarily required to be GAAP even if that's recommended for all companies. In this case, they have already proven to not adhere to GAAP, as they expense a cost that clearly has an offsetting revenue yet fail to realize the revenue and just claim the loss. You are confusing "public benefit" with "public". See where I'm going with this?

I am Series 7 licensed..I know what a Public company is.. Everything about OTB financial situation is fully transparent including the BS mentioned in this article:
http://www.huffingtonpost.com/daniel..._b_251567.html

Freddy. I love you man. Keep up the good work here.

It is fully transparent? Show me the books and records. Show me where they previously disclosed the 87 vehicles driven by executives. Freddy, this operation is a sham. They should all be sent to jail. There is almost no possible way a company with (hypothetically) very low overhead and a risk-free 25% cut of money handled should EVER lose money. It just doesn't compute.

What the President of OTB should be focusing on is why they don't take .10 supers on any tracks but NYRA and why you cant bet a .50 pick 4 when the tracks are offering them........

Phil do you realize I 100% agree that they are in "the Shiet" for no reason. Do you realize I think its outrageous they are criminals that have no clue how to run a business. I never suggested I am behind OTB's managaement just that the Audit and Auditors believe that what has been repped financial is CORRECT.

Steve Crist and Mat Hegarty have made the asertion that a large part of the losses are from surcharges which are deemed a liabilty instead of an asset. And that is someone either intentional made this decision and it is incorrect or a blatant accounting error.. Phil which one do you think it is? Wouldn't it be prudent to have a professional expert review the audit and render his or her opinion. What do you think is going happen in Court they are going to copy and paste Hegarty's DRF piece(Byk's indisputable smoking gun) hand it to the judge and say"here is all the proof you need"?

Fred the $600 Mil pension obligation - if bankruptcy happens , who picks up that tab the city or the state? where does ny get the $ to pay off the pensioneers? patterson says ny state is broke

the $250mm bond offering , does anyone know who is going to by the leader of this syndicate and what the interst rate will be?

anybody have a guess as to who would buy the bonds if the offering goes through?

Somewhat related

http://www.harnessracing.com/news/ny...dmillions.html

The pension obligation is a red herring.