New York Racing Association
Audit of the Annual Franchise Fee for Calendar Years 2000 and 2001 The New York Racing Association, Inc. (NYRA) is a not-for-profit organization franchised by New York State to conduct racing and pari-mutuel wagering at the State’s three major thoroughbred racetracks: Aqueduct, Belmont Park and Saratoga. NYRA is required to pay the State an annual franchise fee, which is to be calculated in a manner prescribed by the State Racing Law. We audited NYRA’s calculation of this fee for 2000 and 2001, and determined that the fees were understated by a combined total of at least $11.6 million and perhaps as much as $15.3 million. The fees were understated because some expenses were overstated and certain adjustments required by the Racing Law were not made. We recommended that NYRA correct the errors that caused its franchise fees to be understated, and make the payments necessitated by our franchise fee adjustments.
We also determined that, while NYRA’s net revenues have steadily increased since 1997, its overall financial condition has deteriorated, because its operating expenses have increased by a greater rate than its net revenues. As a result, NYRA’s accumulated deficit grew by 21 percent, increasing from $42.5 million at the end of 1997 to $51.5 million at the end of 2001. We recommended that NYRA improve its budgeting practices, develop a formal plan for improving its financial condition, and actively monitor the progress made in achieving the plan.
For a complete copy of Report 2002-S-31 click here.