Workers’ comp costs hitting NYRA trainers hard

Since opening up a division on the New York Racing Association circuit in the spring of 2017, trainer Robertino Diodoro has won 69 races and his horses have earned just less than $3 million in purses.

Has that resulted in him making money?

“I don’t think so,” said Diodoro, whose commissions on those purse earnings would total about $300,000.

That’s why Diodoro, who went 10 for 43 at Aqueduct last winter with a stable of 20 to 25 head, is dramatically cutting back his New York stable this winter. He said his 30-horse string will dwindle to 10 or 12 by the new year. Ultimately, Diodoro could be out of New York by the time the Oaklawn Park meet begins on Jan. 25. Diodoro also is stabled at Delta Downs and Turf Paradise.

“It’s very expensive to operate in New York,” said Diodoro, who is currently serving a 15-day suspension for a medication violation incurred at Canterbury in Minnesota. “It’s not how much money you make, it’s how much you spend.”

Diodoro is not the only horseman seriously contemplating cutting down – or cutting out altogether – his New York operation.

Mark Casse, who went 6 for 32 last winter, said he may pull out of New York for the winter by January, though he intends to return in the spring.

“My accountant asks me all the time when am I leaving or getting out of there,” Casse said. “The only way I can explain and make any sense of it is we go up and run in the stakes.”

Trainers Brian Lynch, Barclay Tagg, and Jimmy Toner typically take the bulk or all of their horses to South Florida for the winter. Those three and other trainers, including Danny Gargan, are considering cutting down on their numbers in New York this spring.

“I want to come back but I’m going to keep re-evaluating all winter long,” said Tagg, who has been based in New York for nearly three decades.

Horsemen say the cost of doing business in New York, topped by exorbitant workers’ compensation premiums, has trumped the fact that NYRA offers some of the highest purses in the country.

Add on top of that the high cost to live in New York plus intense scrutiny from the Department of Labor, and New York racing is facing a crisis.

“It’s been a real hardship and it certainly makes it unattractive for people who want to come in and build a business here,” said Linda Rice, who said she recently settled a two-year case with the Department of Labor.

Workers’ compensation insurance is the topic most discussed among New York trainers.

There are two elements to workers’ compensation. First, trainers have to pay an annual $1,500 premium plus a fee of $1.60 per stall allotted per day to pay for a workers’ compensation policy through the New York Jockey’s Injury Compensation Fund, which covers jockeys and exercise riders. That policy costs approximately $8.4 million.

Owners also pay an annual $1,500 premium plus 2 percent of purse money earned.

That owner and trainer annual fee is actually $3,000, but half is offset by legislation that allows the New York horsemen to use as much as $2 million from the purse cushion to pay for it.

Trainers then must also have a policy for their own stable help, such as hotwalkers and grooms. That policy costs anywhere between 20 percent to 25 percent of a horseman’s payroll, depending with whom you speak. By comparison, horsemen pay 5.46 percent in Arkansas, 7.18 percent in Kentucky, and 10.8 percent in Florida for workers’ comp on their stable help, according to Wendy Komlo, an insurance agent based in Maryland who writes policies for at least 35 New York-based trainers.

Closer to home, in Maryland and Pennsylvania, the rate is about 13 percent to 14 percent, according to Komlo.

Komlo says New York trainers also are hit with a stateimposed 11 percent assessment on top of the premium, while other states’s assessments are significantly lower.

“That number is a killer for all of us,” said Kiaran McLaughlin, who runs one of the larger operations in New York and also is facing scrutiny from the Department of Labor. “You can’t charge enough to owners to cover it, so we’re using our commissions. It’s a hardship.”

Komlo says one of New York’s biggest problems is that the state classifies all employees with the same risk code. Clearly, hotwalkers and grooms are not at the same risk as exercise riders and jockeys.

In addition to workers’ compensation, other expenses are on the rise. On Dec. 31, the minimum wage is going up to $12 an hour in Nassau County, where Belmont is located, and $13.50 to $15 in New York City, depending on the size of a trainer’s workforce. Aqueduct is located in Queens, a borough of New York. By comparison, minimum wage in Louisville, where Churchill Downs is located, will be $9 an hour in 2019.

The expense of doing business in New York forced trainer Nick Esler out of the game. He is now a bloodstock agent. Abigail Adsit, who from 2014-16 won 74 races from 504 starters – mostly in New York – did not return to Belmont after the 2018 Saratoga meet.

Others are feeling the pinch. Robert Barbara, who has been on the backside of NYRA tracks for 49 years, said training horses here “is a losing proposition,” though he still fights the fight.

Robert Falcone Jr., 25, would like to make it on the New York circuit. Last winter and early spring, Falcone was based at Santa Anita, where he won 9 races from 25 starters and accrued purse earnings of roughly $240,000.

“I came out of there with money saved up and now it’s gone,” Falcone said. “The [purse] money’s a lot better in New York, but when you factor how much you put up for workman’s comp, it doesn’t make sense for a smaller guy like me to put up that much money. The money you earn commissionwise, 80 percent of it is going to workman’s comp. It’s pretty ridiculous the amount you have to pay to be in New York.”

Falcone has 15 horses in Florida this winter and three in New York.

Martin Panza, NYRA’s senior director of racing operations, said NYRA is doing what it can to help horsemen. Panza said he is constantly working on finding a solution to help reduce the costs of workers’ comp.

Also, NYRA has put in place several programs designed to help horsemen make more money – especially those who run in winter. There is the starter loyalty program, which incrementally increases the amount of purse money a horse can make based on how many starts it makes from last April

1 through March 31, 2019. There are four levels of increases, with horses who qualify for platinum status (10 or 11 starts) or diamond status (12 or more starts) running for 12.5 percent and 15 percent more money, respectively, than other horses.

NYRA also reinstituted a $300 credit for horses who finish fourth through last in races. NYRA also offers a bonus program to trainers who have 20 or fewer horses in their care.

Panza, acting on a request from the New York Thoroughbred Horsemen’s Association, raised purses in some categories for the winter. On Monday, responding to a request NYRA first made in July, the New York State Gaming Commission is expected to allow New York tracks, in some cases, to lift the 2-1 purse-to-claiming price ratio put in place in 2012. Under that regulation, the purse of a race cannot be more than double the race’s claiming level.

“We’re trying,” Panza said. “It’s not like we’re turning a blind eye and saying we can’t do anything.”

Trainer Ed Barker banked $27,000 between winning the under-20-horses claiming challenge at Belmont in the summer and the $300 per-start credit. Barker has enjoyed a career year with 20 wins, and he topped $1 million for the first time in his career. Still, he acknowledges training horses is a struggle.

“We just discourage a lot of other trainers from coming here, even though we have the highest purses in the country,” he said. “I see these small guys one by one by one, they’re leaving.

“I’ve been here 27 years. I’m a fighter. They ain’t going to get me.”

According to New York Thoroughbred Horsemen’s Association president Joe Appelbaum, workers’ comp premiums in 2019 are going down by as much as 14 percent. He said NYTHA and NYRA are exploring ways to do more. In the meantime, Appelbaum believes this winter meet is actually a good time for horsemen to make money.

“It’s a difficult environment, but the rewards are there, especially in the next five or six months when you consider the field size and the pots you’re running for, you can come here and make money,” he said. “Do we have challenges? We do. We’re working on them, we think we’re chipping away. I hope we can chip away fast enough.”