Horse Racing: New York City Off-Track Betting Corp.
The New York City off-track betting corporation (NYCOTB) runs 68 off-track betting parlours, three tele-theatres, numerous restaurants and telephone accounts to collect in excess of one billion dollars in bets every year. The NYCOTB takes more bets in the United States than anyone else. The corporation was established in 1971 to counter illegal bookies and divert those profits to back to the state. Emphasis here was on profits, but as it turns out the parlours somehow managed to lose more money than their gambling clientele. Perhaps it is not entirely inaccurate when they say that the OTB is the only bookie in the world capable of losing money.
The Parlours have been unable to cover the cost of operation by the profits it generated for a while now. Given the situation, the New York City Mayor made it clear that state funds would not be used to keep the parlours operating and it was voted in early 2008 to shut down the parlours. The parlours employed almost 1500 people at the time.
The parlours were spared a shutdown when Governor David Paterson authorized the state to take over the corporation. The inevitable though was not averted. A year later NYCOTB, which never failed to lose money, filed for chapter 11 bankruptcy. Governor Paterson was of the opinion that the corporation’s lack of accountability was to blame for the consistent losses.
Since 2008 the NYCOTB has been trying to find ways to survive and has been failing. The previous chairman of the NYCOTB, Meyer Frucher, spent hundreds of thousands of dollars in consultant fees to devise a plan to rescue the NYCOTB. When finally the culmination of all that effort and all those dollars, a plan for OTB, was presented to the Governor, key points were rejected. Frucher (who was not even working for a salary) quit the effort and for the most part, the money invested, almost two million dollars over a two year period, into saving OTB went to waste.
It is time for another round though. Maybe more of the same but the NYCOTB has hired Greg Rayburn of Magna Entertainment fame to restructure the corporation. Rayburn is a specialist and specialists do not come cheap. NYCOTB’s latest effort at survival is costing the money losing experts another 1.5 million dollars a year at the rate of 125,000 dollars a month (as opposed to his predecessor 175,000 a year), salary. Rayburn has over 25 years of experience as a consultant, providing operational improvement leadership and he is a member of the American Bankruptcy institute. He was the man in-charge through Magna Entertainments bankruptcy, dubbed “turnaround pro” by the Wall Street journal.
The hiring still came under intense fire as soon as it was announced and not because his accolades pale in comparison to his Pay or anything else to do with Rayburn. Recently a plethora of employees were let go to save around 2 million dollars so, predictably, when 1 man is hired at those costs, heads would turn. OTB has cut around 30 percent of its workforce and Rayburn is expected to cut even more in order to streamline the corporation. It does not pay to be liked in his line of work.
It was proposed by NYCOTB board member Steven Newman that Rayburn and his restructuring plan be evaluated over a period of two months before his employment is made permanent. That suggestion was struck down though and adds ammunition to the anti OTB stockpile. However, to Greg Rayburn’s credit, he would not be bundled with other presidents of OTB who have historically been political appointees. Rayburn actually brings a lot of value for money, if only the critics believed OTB was worth the money and effort to save.
There is also a legal issue plaguing the appointment. According to two lawmakers it is outright illegal and they have made it known that they would not stand for it. Richard Brodsky, Chairman of the Assembly Corporations Committee, said that Rayburn’s appointment violates a law governing public authorities. The state must approve appointments in all cases when salaries exceed 1 million dollars, as Rayburn’s does. An investigation has been called in to look more closely at Rayburn’s hiring as lawmakers alleged that the state owned NYCOTB’s actions were clearly “out of compliance.”
The Comptroller’s office said that it was investigating the claims and reserved comments until further information about the structure of the OTB is reviewed.
Even before he could start, Greg Rayburn is facing opposition and fighting off dishearteningly low expectations of him. The fact of the matter is that the OTB in its current form is a mess and if he cannot fix it, at least when Rayburn fails we would know that the OTB is beyond help.
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