Month: February 2019

by Brian de Lore
Published 21 February 2019

In a call to leading trainer Murray Baker this week, the wily veteran summed it up in one sentence when he said, “Only a substantial increase in stakes will save racing.”

“Take the Avondale Cup which on Saturday was worth $100,000,” he continued. “About thirty years ago it was worth $300,000; that’s how far we have gone backwards.”

Checking the records to substantiate Hall of Famer Baker’s memory isn’t as easy as it once was – the internet websites are very hit and miss to find such memorabilia, and without the once very reliable Turf Register which ceased to exist many years ago, it was only after several phone calls and a chat with Maurine’s trainer Jim Gibbs that the jigsaw puzzle came together.

Maurine won her Avondale Cup in 1988 from Plume d’Or Veille and Field Dancer and collected $187,500 as first prize from the all-up stake of $300,000. She also won the following year, as well, ending her career as a nine-year-old with the second Avondale Cup victory retiring her with stake earnings of $521,760.00.

The CPI calculator converts those earnings to a buying power today of $1,056,580. But Jim Gibbs who is also a Hall of Fame inductee didn’t just have Maurine; in a short span of years in the late eighties and early nineties Gibbs he had a remarkable run of success with a high-quality team of horses whose earnings when converted to today’s buying power makes remarkable reading:

Tidal Light ($1,149,584), Sounds Like Fun ($928,368), Spyglass ($1.068,064), Field Dancer ($816,776), Regal City ($1,479,671) and Mickey’s Town ($1,332,030) – five million earners calculated on the CPI using the year each retired plus two just under a million, all in the one stable – and practically all at the same time.

“I fear for the industry today based on the stakes they race for today,” lamented the retired Gibbs who has continued his involvement as an owner in both codes but admits that ownership is a struggle even when you are getting a good strike rate of success.

This year’s Avondale Cup winner Glory Days, like Maurine, notched up her ninth win, but unlike Maurine, the six-year-old’s earnings have reached a career tally of just $235,095. So, when Murray Baker talks about the industry going backwards, he has been around long enough to have seen reverse gear being used for a considerable length of time.

When the Jim Gibbs era was in full swing, the racing industry’s administrative costs were only a fraction of the percentage of the entire turnover compared to today. Then, the Racing Act of 2003 hadn’t been concocted and the gravy-train they now call the NZRB which now soaks up a major portion of the cash-flow was only a distant nightmare.

And just as Kiwi owners compete today for such poor prizemoney propped up by borrowings of $12 million for this season and the previous, to keep the minimum stake of $10,000, Aushorse is proudly advertising Australian prizemoney has increased 92 percent over the past 10 years – the gap continues to widen.
Last week this column set the record straight on the shortcomings of both some of the NZRB leadership team and the FOB platform and predictably, it wasn’t well received at headquarters. And if you throw stones, you can expect some to be thrown back, and back they came.

But CEO John Allen’s claim in a letter to staff discounting my story by saying,” The article contains plenty of inaccuracies, fiction and critical comments about some of our people – quite frankly, much of what is written is absolute rubbish,” – didn’t appear to be well-received when it got into the hands of social media.

No fiction was written, everything is well-researched, but yes, a lot of criticism was levelled at Allen, his leadership team, the FOB platform and the direction in which this industry is heading with apparent disregard to the employment longevity of thousands of starving participants.

If you take a helicopter view of racing and examine the downhill road on which this industry has been travelling unabated over the past 15 years, it will be noted that the $106 million worth of assets the industry possessed at the beginning of that era have all gone. The Deloitte Report came and went and was followed by the Messara Report, but as of February 2019, not one thing has changed.
The NZRB Annual Report released in December for 2017-18 clearly shows the organisation continues to expand and become more expensive. Costs went up $9 million to over $213 million, the number of employees on salaries of $100,000 or more increased from 128 in 2016-17 to 143 and the leadership team of eight including Allen, Saville, and Taylor were awarded pay rises that took their average salaries up to $355,625.

This isn’t fiction; it’s factual and is available for anyone to research by reading the Annual Report. Allen is indignant about the questioning of his team’s suitability to do the job, but also a fact is that some of a core group have been previously employed at places like NZ Post and the Ministry of Foreign Affairs and Trade (MFAT) where Allen worked.

Nepotism puts the wrong people into positions of power and only alienates the stakeholders. This all happened some time ago, but the chasm between the administration and the customers has widened since launching the FOB platform which has been poorly received in-dïfference to Allen’s claim in his letter that, “the new platform is working and delivering results.”

The TAB periodically releases its turnover figures and stats with a comparative column to the corresponding meeting last year, but this practice ceased with the latest document they put out which appears to be camouflaging the downturn. However, it wasn’t too difficult to find last season’s figures from a year-old email.
In the calendar year to February 13, total TAB betting on horses and greyhounds was down a staggering $17.1 million against the same 44-day period in 2018 – that’s just under 10 percent. Sports betting figures were not available, but with Allen admitting a couple of weeks back that the margin for the first month on fixed odds betting was only three percent due to various issues including a few bets placed after a result, turnover would be needed to have been staggeringly high for racing to gain any benefit.

The usual margin for sports FOB is about nine percent and when that happens racing’s share is a net two percent. Cutting the margin to a third of normal also means racing’s cut reduces by the same percentage. From tote betting, the margin is 15 percent.

The $17 million decline in 44 days is significant and to redress the issue it may require more than just punters’ familiarisation with the FOBs new website. With Allen claiming that the downturn would last four to six weeks and the Ministerial Advisory Committee (MAC) report to the Minister due for completion by the end of next week, and the season well into its second half, an immediate resurgence of turnover is critical.

With little time left to month’s end and the MAC report lodgement imminent it is appropriate to re-examine how this committee has been briefed. The most important sentence on page one of the Terms of Reference reads:

“The Committee will be charged foremost with setting a sense of direction for the intended racing reforms with a particular focus on prioritising those recommendations that have been identified as the main drivers required for successful industry reform. This will provide the basis for a prioritised work plan for the Committee, to be provided to the Minister of Racing early in 2019.”

The TOR document identifies six core points taken from the Messara Report upon which the Minister requires analysis by the Committee. At the very top of that bullet point list is, ‘the governance and structure of racing.’
That doesn’t just mean NZRB but covers the whole governance; the entire structure including governance of the codes. Would it be a surprise if MAC came back with a priority recommendation that each and every one of these organisations be the subject of a major overhaul? No, probably not.

It would also be no surprise if another recommendation was to immediately operationalise the Performance and Efficiency Report on the NZRB which under the current law specified in the Racing Act is required to be done during 2019 anyway. Such a move would lift the lid on the industry’s true financial status and provide MAC with the necessary information for the second phase of its duty scheduled for completion by June 30th.

Trainer Murray Baker summed it up very well at the start of this story with his view on prizemoney, and his way of thinking is compatible with John Messara’s letter to the Minister which is dated 31 July 2018 and is published at the front of the Messara Report on page seven.

Messara says: “The single most effective lever available to reinvigorate the New Zealand Thoroughbred Industry is prizemoney; it rewards and supports owners, trainers, jockeys, stablehands, and the entire supply chain including breeders, vets, farriers, feed merchants, etc.

by Brian de Lore
Published 8 February 2019

Punters are generally creatures of habit and routine, and when taken out of their comfort zone it’s like throwing the proverbial cat into a flock of resting pidgeons.

The result is an instant explosion of squawking chaos which seems to be the situation resulting from the Fixed-Odds-Betting Platform launch on January 7th and the reaction to it from a vocal New Zealand betting public who seem unanimously disappointed at the usability of this new technology and website.

Punters are finicky people. They’re conditioned to the highs and lows of winning and losing. The adrenalin runs high in the quest to beat the odds, swinging from the ecstasy of winning to the lows and depression of losing and back again.

It’s a neverending cycle of ups and downs and like every other vice or gamble in life, emotions fluctuate accordingly, and a lowering of standards from the service provider, in this instance the TAB’s introduction of the new FOB platform and an unfamiliar website, has produced an inevitable backlash.

New Zealanders don’t bet the volume of dollars Australians do as a percentage of the population, but for those who do bet the passion and expectation of service from the betting medium has no lessening of standard expectancy. “Slow, clunky and lacking the essentials,” was one punter’s view of the website this week.

The TAB wouldn’t intentionally lessen the standards, but the suggestion is it’s an organisation that’s both out of touch with the customers and lacking an understanding of the punter’s real needs – casting doubt on how they would take this industry forward into a globalised future.

Apart from the TAB, bookmaking is illegal in New Zealand which domestically gives the TAB a monopoly. But the internet and highly developed overseas websites have changed gambling, and today it’s very much a globalised business with the monopoly only existing in theory.

In reality, the TAB competes with every betting organisation that operates in Australia, and that means numerous corporates, many of which individually dwarf our TAB and have us beaten on the comparative scale before we even began.

Take Bet365 as an example. It boasts 35 million customers globally, employs 4,300 people and last year made a profit of 660 million pounds sterling. Denise Coates of the husband-wife couple that founded the company, in 2018 paid herself a UK record executive salary of 265 million pounds – a salary that would fund five years of New Zealand stakes money for all three codes based on the current level.

Bet365 is just one of many. They have massive IT development budgets and a scale advantage that should have been intimidating to the NZ TAB. Does anyone reading this story believe that the decision of our NZRB board to build a $50 million FOB betting platform to compete with the likes of Bet365 was a good idea, albeit the original amount quoted by NZRB CEO John Allen was $25 million?

Western Australia, the same racing size as New Zealand in so many ways, also wanted a new FOB platform. Instead of going down the NZ path, they took advantage of the well-advanced Tabcorp IT developed FOB platform and plugged into it for a fee of A$7 million per year.

The NZRB stated before even starting to build our platform that fees to both Paddy Power-Betfair and Openbet would amount to $17 million a year. Those fees could so easily have been avoided notwithstanding the capital cost except the word ‘outsourcing’ was never to be uttered in the corridors of Petone.

The decision makers were not business people, however, and neither were they people with either skin-in-the-game or a sense of caution and responsibility that comes when spending one’s own money or exercising a considerable amount of care that would be normal when the outcome of the spending has ramifications for 50,000 plus people.

But all this is now only historical banter because the New Zealand TAB has launched its FOB; we have it, it is what it is, and according to most serious punters it isn’t much.

One high volume punter and racehorse owner of the past who is still an Elite TAB customer but preferred not to be named was willing to provide The Informant with a bullet point list of the main problems:

• Why have the ‘max bets’ become so ridiculously small.? – to drive away clients?.
• Why has Jockey challenges and premiership titles become ‘singles only’ and barred from multi’s?.
• Who signed off on the $50 million spend on the upgrade, and has he left the building?.
• Why is it impossible to do form on your new drop downs, unlike the old site.
• You promised ‘ease of use’ – well ‘hello,’ its now a confusing maze of the jungle.
• Why did you not have some punter input to ensure you got what they wanted.

The most predictable aspect of the new website is the demotion of racing to the back of the class. It’s very apparent that the emphasis is now sports which accounts for around 96 percent of the new options.

CEO Allen has continually preached the line that sports bettors would eventually convert to racing and while evidence of this happening in Australia was confirmed, it also came with a conversion stat of only 17 percent.

This is the spin doctor’s line when you have to justify spending $50 million of racing’s money (while claiming it’s only $40m) for something that has no chance of returning anything to the investor. A half-good business brain wouldn’t give it a second look.

Revenue received from sports betting for racing amounts to a net figure of only two percent whereas tote betting returns the racing codes 15 percent. You don’t have to be a mathematician to realise that turnover of sports betting needs to be 7.5 times that of racing to achieve that same net financial result.

This reprehensible hi-jacking of the TAB to cater for sports is further exemplified when the TAB’s history is taken into consideration – founded in 1951 by the race clubs of New Zealand as a vehicle to benefit all racing.

The NZRB has rewritten that history and tells you they founded the TAB despite the fact NZRB only came into being following the passing into law of the Racing Act of 2003 legislation.

Quoting facts out of context or mispresenting the story by only telling half of it was again to the fore on Saturday at Trentham when Aiden Rodley conducted an interview with John Allen which subsequently was aired on Sunday’s Weigh In program.

“We didn’t want to put at risk the Boxing Day and New Year’s Day races because there was the prospect of going before Christmas and we did think about that,” Allen replied to Rodley’s question about the FOB delay. “We just didn’t want to take the risk on those really important days in New Zealand racing.”

But conveniently Allen had failed to mention the delays had been happening since last July with at least four scheduled dates coming and going before it finally went live.

To Rodley’s question on the FOB cost, Allen replied, “Yeah, about $41 million. We have $40 million approved by the board, and we’ll go back to them for approval for probably about another $1 million.”

The word ‘about’ was the disconcerting part of that response and not very convincing. The lack of NZRB transparency in all its dealings and what will be found once the lid is lifted on its finances, which will hopefully occur after MAC delivers its interim recommendations, will be highly anticipated.

Allen further stated in that same interview, “People have been betting up a storm; they’ve been playing with the site; they’ve been finding their way around it. We had about 52,000 people in the first week. We had about 3.25 million bets in the first week, and it’s just growing from there.”

What he didn’t mention was that in the same week exactly a year ago more than 80,000 punters were actively betting.

On face value, Allen comments would have you believe all is well, but the TAB figures paint a completely different picture.

In four thoroughbred meetings held in the first week of the FOB operation, total betting was down on last year’s figures an average of 37.9 percent. Harness for four meetings was down an average of 34.1 percent with the FOB down 35.5 percent. Greyhounds for six meetings held for that same period was down 16.7 percent in total turnover and 21.7 percent on FOB.

All three codes saw reduced numbers competing in comparison to the corresponding meetings the previous year. Thoroughbreds in numbers to the races was down 27.7 percent; Harness was down 20.5 percent Greyhound numbers were down 6.4 percent.

The analysts have produced studies to say that reduced field sizes result in less wagering. The country now produces only half the foal crop of 30 years ago, and while racing is underpinned by the breeding industry, lack of reasonable prizemoney has disincentivised the domestic yearling market which in turn will continue to keep the foal crop low.

The TAB turnover has been trending worryingly downward for a few months. Field sizes in all three codes are falling away, and with the FOB platform off to a shaky start, the industry now turns to MAC (Ministerial Advisory Committee) for the remedial masterstroke of actioning the Messara Report; the activation of what Messara said over a year ago, “was simple and could be done tomorrow.”