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Faraldo responds to Gural's testing and marketing plan
Wednesday, March 14, 2012 - by Joseph Faraldo

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Editor's Note: The following is a release from SOA of NY President and USTA District 8A Chairman Joseph Faraldo in response to Jeff Gural's release this morning in which he is asking the USTA to study a funding plan for the testing of horses and the marketing of the sport. Gural's release may be read by following this link.

I read with interest the press release of Jeff Gural, which trumpets what he characterizes as “overwhelming support” for taking money from horsemen’s purse accounts and diverting it to things like TV marketing of major races. He bases this upon the results of a survey conducted by the USTA but paid for, and thus worded, by Mr. Gural. By the way, where are those major races?

To start with, the fact that the press release fails to detail that less than one-third of those who received an envelope actually responded is not at all surprising; such a truism fails to serve Mr. Gural’s interests in setting out what he wants to portray as an industry-wide mandate. When more than two-thirds of a targeted population fails to respond, results can hardly be considered very instructive or characterized as overwhelming. Also, many people did not respond because the poll was clearly a “push poll.”

What was received in unsolicited fashion by USTA members in only certain targeted districts was a malodorous “push-poll” worthy of a political campaign, but surely beneath this organization and its mission. A "push-poll" is one that is phrased in such a way that it secures the resultant answer either in a clear “yes” or “no.” An example would be:

“Do you think that the government should reduce your taxes or that someone else should pay them for you?” The desired answer is intentionally and unmistakenly given within the question. The point is that the wording "pushes" the population to answer the same in a predictable fashion.

With this understanding, it's now time for the truth about the disingenuous wording of the "examples" underlying each of the Gural/USTA survey questions:

On the marketing issue itself, why does the SOA of NY and indeed other horsemen’s associations such as in Pennsylvania (that operates a TV show) and Delaware take such offense? While we don’t know the exact particulars in other jurisdictions we know that in those other two mentioned places there is a very significant expenditure of funds by the horsemen, as well as management, on harness racing marketing initiatives.

In NY, where Mr. Gural operates two tracks (operating a third in NJ while owning a Casino interest in PA, where horsemen don’t share in table games) keep in mind that none of any horsemen-spent money on marketing gets reimbursed by the New York State Lottery Commission, but the New York Racino/Racetrack operators, including at Tioga and Vernon, get a huge 10 percent additional marketing allowance (Yonkers gets 8 percent) that they can freely spend on promoting racing. Why did the NY legislature give the racetrack/racino operators a marketing allowance reimbursement? Because they are the ones who are supposed to be doing marketing! Give the horsemen half of the track’s marketing percentage reimbursement allowance and we'll spend every last dollar of it plus and then some, hopefully on worthwhile things.

As to the insinuation that the horsemen’s groups don’t spend money on marketing or have little or no concern about it, the truth is that the SOA of New York (a slots venue) pays plenty for marketing of our sport. The difference is that we share control of how and what it's spent on. Moreover, unlike the marketing reimbursement for racino operators, it comes directly from our pockets without a state reimbursement to horsemen.

Spending money on marketing sounds quite appealing, until the details are set forth; and “push polls” never provide all the details. Need we be reminded of the efforts at the USTA in a venture known as the North American Harness Racing and Marketing Association (NARHMA) or the Thoroughbred marketing expenditure of the $35 million “Go Baby Go” branding initiative that was to turn around that game? How about the tens of thousands of dollars spent by the USTA on a Hollywood “sizzle” tape?

Horsemen shouldn’t have to hand over millions of dollars to be tossed away on beanbag horses being thrown into the back of a moving car because a track management like Tioga thinks it’s effective marketing of harness racing. Our marketing at Yonkers is done in consultation with a proactive racetrack management, not by blindly paying a monthly invoice to a racino operator or some runaway marketing group and have millions spent and wasted without our input, which is exactly what is being attempted via the Gural survey.

For example, when New York City Off Track Betting abruptly went out of business in December 2010, Yonkers' races were no longer shown on in-home television in New York City; a phenomenon that dramatically affected our handle. Why do you think the Yonkers' signal is back on NYC TV? Did it just happen without significant cost to the horsemen? The SOA, like our brothers and sisters in PA and DE, diverted from the NY horsemen’s purse account upwards of $1 million just on this expense. That single marketing expenditure represents more than double the percentage of our annual purse account that is “suggested” should come from the horsemen in the “push poll.”

The SOA has been involved as a financial participant in many marketing efforts funded in cooperation with Yonkers and the USTA, from the Metro Six Shooter Wager and the Strategic Wagering Program, to a financial participation in the World Driving competition. We have no intention of losing our autonomy because someone opines that he can spend our money better without us and, at the same time not spend his own. By taking money from the horsemen, the racino operators would simply be required to spend less of their own money on marketing racing in favor of slots; money the state reimburses to them, but not the to horsemen.

Equally disingenuous is the argument that the horsemen should pay for drug testing. Why is this, and the NY example, disingenuous? Simply, because in New York we do pay for drug testing! Everybody gets assessed $10 per starter. It's huge money; over $1.3 million annually. When the New York legislature wanted to do this, basically make horsemen pay for drug testing, we did not object; we, in fact, thought it was a good thing. Remember that this was traditionally an obligation of the track operator. Drug testing, important to our integrity, was abandoned by racetrack operators in what were clearly bad times. Funny, but the Gural push poll failed to explain any of these truths to our members.

It’s time for folks to look at facts instead of convenient fictions. It's so very easy to be in favor of picking the horsemen's pockets in VLT states; it's got that nice, knee-jerk ring to it. In most jurisdictions, the tracks get more than three times what the horsemen and breeders combined get from VLTs. That doesn't count what the tracks get for a marketing allowance and for capital improvements under the New York Lottery law. In reality, NY state tax money funds massive improvements to structures for private owners. So long as they don't divest prior to full depreciation of the structure, they keep it all. At tracks with less than 1,100 VGMs (can you guess who they include?), there's not even a dollar for dollar match. It’s all added money in the private track operators’ pockets.

How much racino money does the state match for horsemen’s investments for the construction of new training centers, equipment, etc? Match? Who is kidding whom?

The push-poll orchestrated by Mr. Gural can be summed up quite succinctly; "The horsemen are getting millions; let's take it from them for the benefit of the industry." Again, it's so much easier to absorb a single tag line, repeated over and over, until it has the scent of veracity. It's hard to read mundane sections of massive, complicated statutory provisions to find out the real truth. You just can't make a speech detailing the intricacies of New York Law and get a standing ovation...it would give people much too much truth for them to handle!

The horsemen are not tenants in a “triple-net” lease arrangement, where they are to pay their “landlord” for any and all expenses incumbent on running a racetrack. They are not paid employees of track management either. Collectively, the horsemen’s investment in the sports exceeds the $1 billion mark in virtually every jurisdiction. Horsemen have horses, farms, training centers, vehicles, equipment and the like; what they don't have is 31 percent of the net win from a slot’s parlor, or a marketing and capital improvement allowance for that matter. Yet, despite all that, horsemen do pay for marketing and drug testing, and passing off more obligations to us depletes our purse account and enriches further the pockets of some racino operators.

The USTA should never have been part of this “push poll” project because it only invites others to do the same, if for no other reason than to point to the ill-conceived notion that it may not have been subject to abuse. It should be ended at this time. The USTA has no business in the “ push poll” business where the payee like Mr. Gural or the Empire State Harness Horse Alliance now insist on equal time and have the money to pay for it.

Couldn't the money spent on polling be better spent in the game as opposed to trying to use the USTA as an entity endorsing the results for a state legislator to act upon as a misplaced reflection of “the will of the people?” Just a question for you to ponder; maybe for another USTA survey/

Respectfully submitted, Joseph Faraldo, Chairman, District 8-A


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