by Brian de Lore
Published 4 January 2020
Hope springs eternal is an expression coined by poet and writer Alexander Pope in 1732. The adage is relevant again for this, the first week of the new decade, as we exit a very forgettable decade for many aspects of the thoroughbred racing and breeding business.
It wasn’t that New Zealand didn’t produce some great horses, and we didn’t see some great racing, because we did. Our horsemen and horsewoman never faltered and upheld the great Kiwi tradition characterised by a display of eternal passion for horses, but in the end, they were failed by an industry declining economically under incompetent administration.
Consider the quality of the racing at both N.Z. Cup week and Boxing Day, and New Year’s Day at Ellerslie. It was outstanding racing, good-sized fields, big crowds, and top-class horses.
The decade (2011-2020) started with a violent earthquake that killed nearly 200 people in Christchurch and has finished amidst a worldwide pandemic that has impacted New Zealanders far less than the rest of the world. In that same period, the fortunes of the horse business have declined alarmingly through a series of irrational appointments of people capable only of disastrous decision making.
Equity of $85 million a decade ago
The decade started in 2011 with an annual report that said we had equity of $85 million, which was $5 million down on the budget for the year. It was a substantial decline in the equity of $104 million just a few years earlier.
The decade started with Stiassny (Chair) and Brown (CEO) and finished with McKenzie (Exec Chair). It also ended with zero net tangible equity and a debt to the ASB bank of $45 million. A long line of failed characters came and went in the middle, with each playing cameo roles with performances the equal of a Shakespearean tragedy.
Pause for a moment and take the helicopter view. Over the 10-years, how can this administrative fiasco have happened, let-alone been allowed to continue, to the point we have reached today where the racing industry in New Zealand is insolvent and in virtual Government led administration.
Racing is morally owned by the stakeholders – the owners, the club committees, the trainers, the breeders, the jockeys, the vets, the farriers, the punters, the horse lovers, the strappers and stable hands. They once ran the game represented by Haf Poland in Wellington with 20 employees who did the lot.
The stakeholders and participants are the people in racing for a lifetime and are the heart and soul of what makes racing tick. So why have these outsiders with no racing industry knowledge been allowed to infiltrate, like thieves in the night, take massive salaries, and leave with the dirty dishes still in the sink?
Government set about using racing as a punching bag
The devastation from their comings and goings is visible to all. In my view, they came because the Racing Act of 2003 set the door ajar and allowed them in as the Government set about using racing as a punching bag for its own devices.
Some of you will be saying, ‘he’s written all this before and is repeating himself,’ and you would be right. Two reasons currently exist for the repetition, and continuing to say it:
(1) Our administrators have known about this for years and have done little to turn things around – they are dumbstruck. It’s like the Titanic heading for the iceberg, but the Captain refuses to change course.
(2) The new 7-person board of TAB NZ is about to be chosen with recommendations to the Minister by a panel of three. If they pick more of the same ilk of people of the last decade, then kiss the game goodbye.
This could be our last big chance because, as John Messara has said many times in the past: “In the end it comes down to the people in charge. One person can change the world. The wrong people in a good administrative system will fail. Good people in a bad administration will change the system and succeed.”
“True ignorance is not the absence of knowledge, but the refusal to acquire it.”
Perhaps New Zealand racing in the past decade can be summed up in the Karl Popper quote: “True ignorance is not the absence of knowledge, but the refusal to acquire it.” The proof is offered in the complete dismissal of the Deloitte Report of 2017 and only the partial acceptance of the Messara Review a year later.
Messr Galbraith and Medames Dawson and Irlwin – they are the three making the recommendations to the Minister – are under a considerable amount of pressure to come up with the right people. Racing needs a board with industry and wagering knowledge above the corporate slant upon which boards were selected in the past – those boards have failed.
Alan Galbraith has a wealth of racing and breeding experience and is a Queen’s Councillor to boot. Liz Dawson and Anne Irlwin are both professional directors, with the former having been on the NZRB board in 2011 and RITA since 2018 – neither of those boards improved racing’s position. Anne Irlwin is a professional director with nothing on her cv to say she knows racing.
How much wagering experience do the latter two have between them to know who’s who? If they pick like for like, we are in trouble, and now with the Government boards and committees requiring 30 percent female content in their boards and committees, it means the best candidates may be passed over to satisfy gender quality rules.
The DIA itself doesn’t know what would constitute a good TAB board.
The DIA itself doesn’t know what would constitute a good TAB board. The Candidate Information sheet talks more about corporate governance, conflicts of interest, and gambling harm minimisation than it does about the real issue – understanding the workings, structure and trends of betting from a global perspective. Wagering experience is not about placing weekly bets on the NZ TAB.
We also need a board with some entrepreneurial flair that knows the need for massive changes and the vitally important role of good leadership. How else do you recover from a $45 million debt that nobody wants to talk about, get back into the green, and increase stakes? If the new TAB board doesn’t understand wagering globally, it will join other boards as a statistic on the long list of fails, and racing will further decline.
The NZ TAB, in its current form, is hopeless. The product is inferior; the FOB platform was poorly designed and was a wasted $50 million. Every corporate betting site in Australia has better navigation and more information and offers better odds. Despite this, our TAB gets business by default and has increased its turnover by about seven percent with the help of COVID-19.
Two and a half years ago when Messara delivered his ‘Review’ to the Minister on July 27th, 2018. Winston Peters had his chance, but after some people of influence read the Messara Review and got into the Minister’s ear, he went down a different path.
Peters then put the management of racing in the hands of RITA and the Viking (Johansson), and afterwards provided racing with only lip service, preferring to concentrate on the more critical matters such as running the country as Deputy PM and Minister of Foreign Affairs. No one would blame him for that; it’s just that racing didn’t want to be at the mercy of a Viking devoid of racing knowledge.
With the new Minister, Grant Robertson, it will be more of the same
With the new Minister, Grant Robertson, it will be more of the same. The workload with Finance and Deputy PM will be massive, and his involvement will be superficial with Internal Affairs (DIA) calling the shots with a TAB in administration
So what are the chances of getting a TAB Board that will do a ‘Lazurus’ for racing? On both previous form and the pace the DIA operates, you would have to say ‘remote.’ It’s two years since the DIA was appointed the designated authority, but they still haven’t set a POC rate (Point of Consumption) charges, let-alone collected any money.
In an article that appeared two weeks ago in ‘Politik’ written by Richard Harman, Minister Grant Robertson summarised the effect of COVID-19 so far. It unveiled the immediate economic outlook from Treasury’s viewpoint.
Robertson corrected Treasury’s predictions made at the start of COVID while declaring the high quality of the job he had done. He also said the pandemic was now estimated to be costing $50.1 instead of the original estimate of $40 billion.
In detailing some of those costs, he highlighted six areas where risks to the fiscal projections existed, and racing, or more specifically TAB NZ, which received a $50 million bail-out, was one of them.
Robertson said: “Under provisions of the Racing Industry Act 2020 that came into force on 1 August 2020 TAB NZ may now be deemed to be controlled by the Crown and therefore become part of the Government reporting entity. Until the accounting treatment is resolved, forecasts relating to TAB NZ have not been included in the fiscal forecasts, but may need to be included in future fiscal forecasts once the accounting treatment is confirmed.”
…the TAB was set up by the racing clubs in 1951 but the Government in the legislation made it a ‘body corporate’…
The problem with that statement is threefold. Firstly, the TAB was set up by the racing clubs in 1951 but the Government in the legislation made it a ‘body corporate,’ which by definition can’t be owned by anyone or a company but instead is a collective of unit-holders. In the mid-1990s, a Q.C. handed down a judgement that decreed the racing industry was the beneficial owner.
Secondly, the Racing Industry Act 2020 clearly states that TAB NZ is a body corporate and a legal entity separate from its members, officeholders, employees, and the Crown – yes, separate from the Crown.
Thirdly, if the Crown or Internal Affairs or Treasury (in other words, ‘The Government’) is running the TAB, then history tells us we are stuffed! The appalling record it has carved out through interfering with racing and using it for its own purposes, knowing nothing about the business, and not being interested in it, speaks for itself.
In a 10-minute sit-down chat with National Party and opposition leader Judith Collins at Ellerslie on Boxing Day, Ms.Collins told me that the Government has a poor record of trying to run or buy and sell businesses, and the relationship between the racing industry and the Government should be at arm’s length.
Judith Collins would reinstate Trackside Radio
As a by-the-way, she also said that if it were up to her, she would reinstate Radio Trackside and that it was a mistake to have discontinued such a service to punters. Ms.Collins and her husband, David Wong-Tung, appeared to be having a very relaxed, enjoyable day having a flutter from race to race.
So, what happened between the time the legislation was written and then rewritten for a second reading and the time the $50 million bail-out was announced. Did the Government agree to the money on the proviso it would steer the ship while RITA sat quietly in the background?
It doesn’t matter which party is the Government; they’re all the same, and the Ministers of Racing as a collective group have been a bunch of failures. Does anyone expect Deputy PM Robertson, who is up to his ears in work with Finance, etc., like Winston Peters before him, will devote any time fixing a racing industry he knows precious little about?
The Racing Industry Act 2020:
54 TAB New Zealand established
(1) This section establishes TAB New Zealand (TAB NZ).
(2) TAB NZ—
(a) is a body corporate; and
(b) is a legal entity separate from its members, office holders, and employees, and the Crown.
The above is part of clause 54 of the Racing Industry Act 2020. It says the TAB is both a body corporate and separate from the Crown.
The bottom line is, if the Crown is now assuming ownership of the TAB because it’s in administration, then racing is going nowhere fast based on past performances.
‘The racing industry has previously stated it considers it owns the TAB.’ – DIA brief to the new Minister
In the briefing papers on the racing portfolio given to Minister Robertson, a footnote appears on the bottom of page four, stating: “Although TAB NZ is a Statutory Entity, the Racing Industry Act does not define its ownership. The racing industry has previously stated it considers it owns the TAB.”
Minister Winston Peters received the documentation last March, which proved the TAB was started and underwritten by the thoroughbred and harness racing clubs of New Zealand to the tune of £50,000 in 1951. Instead of taking the opportunity to correct the mistake, he kept the proof to himself and left the TAB as a body corporate in the new legislation.
When $72.5 million came to racing in last year’s budget, of which $50 million was to bail-out a debt-ridden TAB under the management of RITA, the Government grip tightened on racing. The question is, what did RITA agree upon to get that money? What was the deal – handing over the reins must have been part of it?
We need knowledge; it’s too complex and global to have anything less
In summary, who in reality understands the business of racing? We need knowledge; it’s too complex and global to have anything less. If you don’t understand it and how to drive it and develop it, you will end up with people like John Allen who was doing no more than guessing and getting $680,000 annually for the privilege.
The pure corporate/government model doesn’t work. Where’s the business development, the people with entrepreneurial skills with a passion for racing who won’t walk away from the game and leave behind a trail of devastation?
If you appoint people without a racing passion, all you get are the mercenary graduates from the Institute of Directors who come for the dollars. They provide no transparency along the way, offer nothing, and leave with no accountability – that’s a snapshot of the history.
Racing needs to reinstate the moral compass it had in the past and address the real issues for the benefit of the people who work in it and not a few at the top. The decay of sporting bodies, such as cricket and rugby, is due to the same issues – selling out to the corporate world in favour of dollars and ignoring the grassroots.
For those who question Brian’s comment about the decay of rugby and cricket;
Forty years ago I was honorary treasurer of the local cricket association. We had seven teams competing. In 2021 they scramble to get one competitive team. Forty years ago we had four rugby clubs; Old Boys, St Joseph’s, Kereone and Northern. Now there are two and one of them, Kereone, struggle to put a competitive team on the field. Matamata, 40 years ago, had Waharoa-Walton, Matamata, Hinuera and Patetere. Only Matamata and Hinuera survive.
Thirty years ago the winner’s stake for the Matamata Breeders’ Stakes was $63,000 when training fees were about $40 per day. Fast forward to 2021 when training fees are about $92 per day and the winner’s stake is $54,000.
Rugby, cricket and racing have all sold out to the corporate dollar and the grass roots is left in abeyance.
So true, Stephen, we have sunk to new depths in rugby, racing and cricket – it annoys the hell out me that we can no longer watch test cricket on TV. They have it right in Australia where legislation decrees that cricket must be available free-to-air on TV.
I’ve got to disagree with you about the cricket coverage, Brian.
Like you, I’m filthy that I can’t get to see, on Sky or a free-to-air channel, local test cricket — especially given the way the national team is currently playing.
But to whom the television rights are sold is a matter entirely for the board of NZ Cricket. They chose Spark. That was a commercial decision that was theirs and theirs alone to make. Whether it was a wise move, time will tell.
I don’t have Spark and don’t intend to get it. That was my commercial decision.
If NZ Cricket has made the wrong move, the market will tell them soon enough. But let NZ Cricket be the body to decide how they run their business, not some bureaucrat or populist politician out to get some easy Brownie points.
A government that is encouraged and allowed to control the minor areas of your life will in short order develop a taste for controlling the major areas.
When I first came into racing, the maximum number of races per meeting was, by law, set at eight. And in my lifetime, people were prosecuted for working on Sundays.
The freedom to live our lives the way we want to was long fought and hard won . . . but it could disappear in a heartbeat.
Gil, we don’t know what the deal was, but whatever it was we can assume Spark offered more money than Sky. Cricket has been contracting like many other sports, so cricket lovers who subscribed to Sky for racing, rugby and cricket are now asked to pay an extra $28/month to Spark for cricket, and many like you and I have refused. As the players’ remunerations have increased so has the corporate influence to pay for them, but how do you grow the game or even retain market share if you keep making it harder and more expensive for the grassroots to view it? Doing the deal with Spark may have solved some immediate financial issues for NZ Cricket, but where is cricket heading in the long term?
You’re right, Brian. We don’t know the deal and nor we should. It’s a commercially sensitive area. And if Cricket NZ have made a mistake then they will find out, via the market, how big that mistake is.
One thing that can be guaranteed to not solve any problems arising from Cricket NZ’s administrative decisions is inviting the government in to pass legislation intended to correct the stuff-ups. Down that path lie more stuff-ups.
And we can’t ask the government to step aside from interfering in racing’s administration while at the same time pointing to government interference in cricket as being a “good thing”.
Just keep government out of all sport. In fact, keep government out of as many areas of life as possible.
What a reality check
You are spot on Brian.
It is going to take some major changes to save racing in New Zealand. We are fast running out of time!!
As there is a very limited supply of gambling dollars in New Zealand, the TAB was and continually is brainless about how to counter the competition with Casinos, Lotto, and Pokie machines
Instead of producing a quality product, they went into a blind panic and have continued on a path to destruction.
Less is more, maybe we do not need to have racing every day here, and surely the races taken from overseas should be quality rather than quantity.
This would enable Trackside to give better coverage of the races they do show and provide more background into the horses and people involved.
With the industry in such disarray is it any wonder that main stream media do not want to be involved.
Racing use to be an event that people looked forward to, unfortunately for the small time owner The hierarchy continually expect them to keep forking over their hard earned cash with the prospect of little or no return. Winning a $10K race will be luck to cover training costs for 6 weeks. Sadly the small punter is treated so badly that is it any wonder they are disappearing so quickly or opening overseas betting accounts.
Can the challenge get any harder??
David, both NZTR and NZRB/RITA/TAB spend a lot of money on employing marketing people but they only ever preach to the converted. One of the best horses we’ve had in recent years was Te Akau Shark but his retirement didn’t get a mention that I saw on the general news. Yet, the same day, Lydia Ko finishes equal 17th in some American tournament and is splashed everywhere on sports news. Racing gets no promotion!
I caught the interview Dean McKenzie gave to Michael Guerin on the latest edition of Weigh In. Boy, if ever a guy looked out of his depth it was McKenzie . . . and you’d have to say it was a very friendly interview.
I don’t know what the final platitude count was but it would have been up there with Auckland’s humidity reading — with the fact quota lower than the basic wage.
Towards the end, McKenzie mentioned the ads the TAB has been running, urging Kiwis to bet with his organisation rather than overseas operators . . . and then gave a hint that he’d be pressuring the government to close off New Zealanders’ access to online casinos.
If that includes online poker sites — specifically PokerStars — then my first act will be to close my NZTAB account and open one with an Aussie bookmaker. The NZTAB will not get one more cent in turnover from me. Not sure when I first opened a phone account but my first day on a racecourse came in 1960 or ’61 and I’d have been hooked up before the decade ended. Take away the seven years I spent in Australia and the NZTAB has had me on their books for somewhere around 45 years. Interfere with my freedom to spend my own money in the way that I choose and you’ve instantly lost my custom.
I dunno how old McKenzie is but surely he was around in the 1980s when the Roger Douglas economic reforms kicked in . . . subsidies abolished, monopolies quashed, the dollar floated, all manner of financial manoeuvres made to shake New Zealand out of its handout mentality, to make businesses competitive both locally and internationally, and to put some real thrust into the economy.
Only a dyed-in-the-wool leftie greenie sucking on the government teat would dispute that Rogernomics did not change New Zealand’s financial position for the better, and by some degree.
And now we have a leadership guy in racing — a professional sport that for the entirety of its existence has thrived by being financially red in tooth and claw — who wants to introduce a form of fiscal nincompoopery that only a cardigan-wearing socialist bureaucrat buried in the bowels of Social Welfare would consider a workable idea.
Try this for a thought, Mr Executive Chairman. If you want to improve your position, raise your game. Get out there and compete. Do a better job. Build a better mousetrap, as Ralph Waldo Emerson explained a hundred and fifty years ago, and the world will beat a path to your door.
Go down the other road, that of bringing in the government to deny access to your competitors and under that protection set up a cosy monopoly, and you’ll maybe get a short-term boost. But further down that road, and it won’t take long, you will hit the potholes of inefficiency, featherbedding, corruption, nepotism, jobs for the boys, political favours . . . everything that will flatten your tyres and seize your engine.
Be a businessman, not a bludger.
Gil, that Guerin-McKenzie interview was an orchestrated litany of cover-ups. If Mick was serious, he’d ask the questions I’ve raised, but Mick is paid to do the interview by the TAB which McKenzie runs – just a slight conflict of interests. Anyone who hasn’t seen the interview can find it on Youtube here: https://www.youtube.com/watch?v=ha3TjRz7-c4
Fast-forward to 41 minutes so you can watch McKenzie say absolutely nothing for the next 12 minutes.
Exactly, Brian. It had all the hallmarks of a Pravda reporter interviewing the Minister of Agriculture in the Soviet Union of the 1970s; the Minister insisting that the harvest was bountiful, the warehouses would soon be groaning under the weight of produce and shops stacked to the rafters . . . while in reality the farms were overworked dustbowls and the general populace were living on scraps.
That’s my biggest gripe with these people – it’s fantasy, living in a world of denial. We’ve had no transparency, and what’s wrong with some honesty and saying how it really is so we can do something positive. McKenzie was saying he wanted the support of the industry and we were all in this together, but we’re not when he’s evasive and covering up the true situation. He needs to be gone.
Hello Brian,
I compliment you on your insightful comments on the current state of our industry.
Can I refer you to your paragraph just above “The Racing Industry Act 2020.”
Quote “It doesn’t matter which party is in Government they are all the same and the Ministers of Racing as a collective group have been a bunch of failures—-.”
I am not in a position to comment on any of the Ministers of Racing except for Hon John Falloon.
In defence of the first Minister of Racing, Hon John Falloon, he set up the Ministerial Committee of Inquiry into Race Betting Systems. This committee called for and received a large number of public submissions on the state of the Racing Industry in 1990. Subsequently this committee produced a report that contained seventy recommendations. One of the recommendations was to set up the Racing industry Board. The RIB implemented almost all these recommendations of the Ministerial Report with the support of Minister Falloon. As inaugural Chair of the RIB I would exempt John Falloon from your comments. He was a very supportive and effective Minister of Racing.
Tom Williams.
Tom, Hon John Falloon was the first appointed Minister in 1990 and during his six years in office, did make a real effort to support and improve the racing industry, and it is useful to note that you, as the Chair of the RIB, also made a useful contribution. However, I did say ‘as a collective group’ and given the others were Denis Marshall, Tau Henare, Clem Simich, Annette King, Mark Gosche, Damien O’Connor, Winston Peters, John Carter, Craig Foss, Nathan Guy, David Bennett and Winston Peters for the second time, I stand by my claim that as a collective they were ‘useless.’ There can’t be any denying that the Government interference in racing has been detrimental but in all my writings I have continually criticised the Ministers of the new millennium and particularly Nathan Guy. The basic point I am making is that racing with the Government in its life has gone backwards. Winston was the best Minister but still sold out on us, as he changed political direction whenever it suited him, for his own benefit.
Brian as usual you have said it all. After 70 years actively in the ‘game’ in NZ & UK in all manner of different guises – all I can truly say with feeling is good luck to you all you’ll need and thankm the Lord I’m 84 years old!!! We should have gone on strike when we had the chance – Governments do understand when the money supply dries up!!
John, you’re right we should have gone on strike. But strike action needed to be led by the NZTR and the Trainers Association and both those organisations have been weak and indecisive – no leadership.
Brian 20 years ago living in Auckland I would go to a service station in Takinini on a Friday to get the Waikato times ,it had great racing coverage for the Saturday meetings this week after a great lot of racing at Ellerslie there was a small article about the winner of the railway .
I believe we have lost a generation due to lack of promotion of racing ,I know nothing about advertising but if you look at the likes of Harvey Norman with the amount of money they spend to sell their product it must work .
I suppose now they have to pay to get articles in the media ,NZTR should be talking with the new owner of the Waikato times, forget about what happened in the past and strike up a deal and promote the industry that will benifit owners ,punters trainers and studs .
I just find i hard to comprehend that with the amount of people involved in our industry here in the Waikato that Joe public in general is pretty ignorant of how big it is
Paul, you raise a good point. We have NZ Thoroughbred Marketing which is funded by the breeders through the yearling sales, and both NZTR and TAB NZ have marketing divisions. What are they all doing about promoting the industry to people outside the industry to attract new blood – nothing as far as I can see. Your comment that Joe Public is pretty ignorant about the industry and how big it is, is spot on. This industry is sitting on its fat bottom waiting for something to happen, with no plan in place. No planning to market racing or leadership to drive it, but the incumbents keep doing the same thing while hoping for an improved result – a practice that Einstein described as the definition of insanity.
John Richardson , Thankyou !
We should have existed NZTR , TAB , and left them jobless, with no one and no industry to control,
as I suggested mid covid . (what an opportunity)
Its a funny fact that the Stakeholders have the wealth to start up on our own.
Minus the $45,000,000 debt and the people running it.
Quote me in years to come as you will watch OUR RACING INDUSTRY continue its usual direction.
The SAD part, is that most of the passionate racing people and on this forum are OLD.
Do any of you expect any change to the status quo in your own lifetime ?
I,m off to golf , where I call the shots
Steve, you say you call the shots in golf? Does that mean you’re always in the middle of the fairway? My golf is like NZ racing, a long way from being out of the woods!
Haha, lol
Love your research and keeping us up to date with OUR industry.
I have rang NZTR and asked for dates for any road show plans over the last couple of weeks.
Havn,t heard back yet.
Its not going to be pretty, especially if I,m on the road following them to each and every meeting.
Thanks again , have a great week.