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Fired NYRA execs seek payouts

Two want severance after scandal outing; total demand $900K

January 25, 2013
Updated 10:04 p.m.
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— Two fired top executives from the New York Racing Association are requesting almost $900,000 in severance.

The new state-controlled board of NYRA met on Friday in New York City and decided to delay any payments until a state investigation into the firings concludes.

The conflict started last year when the state Inspector General’s Office began an investigation into a takeout error that cost bettors millions and led to the firing of Charlie Hayward, president and CEO of NYRA, and Patrick Kehoe, a senior vice president and general counsel of NYRA.

Hayward is requesting a $460,000 severance payout and Kehoe is requesting $413,000. In a statement before the NYRA meeting, Hayward said he has been waiting since May 2012, when he was terminated, for his concerns to be addressed.

“I had an employment agreement with NYRA and met all of my obligations,” he said. “I expect NYRA to do the same.”

As president and CEO of NYRA in 2011, Hayward made $475,000. Kehoe made $423,000 that year.

NYRA board member Joseph Spinelli said at Friday’s meeting that he would look into the status of the report from the Inspector General, which has been working on it for 10 months. “It would behoove use to wait until the final disposition of the inspector general’s report,” he said.

On Friday, Ellen McClain, who took over day-to-day operations last year when Hayward was fired, announced she would be leaving her roles as chief operating officer and president. She will stick around at least until March 31, and maybe April 30, as she helps the transition to her successor.

McClain makes around $400,000 in her current roles.

No reason was given for her decision to leave and no questions were asked by the board about her decision. Last summer after Gov. Andrew Cuomo initiated a state takeover of NYRA, his office criticized McClain’s elevation to president, since she might be implicated in the takeout scandal.

On Friday, NYRA Board Chairman David Skorton thanked McClain for her service and predicted a smooth transition to a new CEO. A search committee was formed to find a CEO, a post that has been vacant since Hayward was fired. This was described last May by Cuomo as the number one priority of the new board.

“We’re going to do this in an expeditious fashion,” Skorton said. It will involve a compensation consultant and the help of a search firm. He is the head of the search committee.

The next CEO will be tasked with reviewing the senior management structure of NYRA, according to a three-year plan the board reviewed at its meeting. That plan includes implementing new safety procedures, improving customer experiences and preparing for the return to private control after three years.

The board then considered various health and safety recommendations that were made from the safety committee. These recommendations included limiting the number of racing days in the winter meet at the Aqueduct Race Track to prevent horse deaths.

This conversation prompted celebrity chef and NYRA board member Bobby Flay to decry the quality of the winter meet and suggest the number of racing days wasn’t at fault for recent deaths. “We have bad quality horses running for inflated purses,” he said “We’re going to have issues … always and forever.”

Purses for NYRA went up last year with an investment of video lottery terminal revenue that was generated at Aqueduct. NYRA has been criticized by state oversight officials for raising purses too high in an attempt to get more horses in races, which would drive up betting handle. Last year the state imposed certain restrictions that were designed to curb this problem, as fears rose that injured or weak horses were being raced.

Flay’s solution was to scrap the Aqueduct meet, arguing the quality was below what NYRA should produce.

NYRA board member Rick Violette, a trainer, president of the New York Thoroughbred Horsemen’s Association and member of the previous NYRA board, pushed back against Flay’s critique of Aqueduct. “We’re always going to strive to have better racing, whether it’s in February or August [at Saratoga],” he said.

Making an analogy between the quality of racing and food, Violette noted that Flay owns a burger restaurant because you can’t afford to eat “steak or lobster” all year.

Flay also drew the ire of NYRA board member Michael Dubb, a former member of the previous board, when he proposed a complete overhaul, including retail space, at Belmont Park. “I think Belmont is our biggest opportunity,” Flay said, adding that the Saratoga Race Course is the supermodel that “keeps getting prettier.”

In response to Flay’s suggestions for Belmont, Dubb noted that these ideas weren’t new and that the previous board even had drawings done of an upgrade. He said there were numerous issues keeping them embracing radical plans, like the role of the state in any changes and the fact that NYRA wouldn’t own its investment, as it leases the property.

Skorton rejected the idea that something big couldn’t happen now because of issues in the past. Particularly because of VLT revenues, which were only briefly available to the previous board, he said NYRA could try new options.

The next NYRA meeting is scheduled for Feb. 27.

 
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