Month: January 2021

The dogs have gone to the dogs

by Brian de Lore
Published 29 January 2021

A slap in the face to the thoroughbred code (NZTR) is how you would describe both the Greyhound and Harness nominations for board positions on the soon to be appointed TAB NZ board.

Recently I wrote about the ‘Decade of Disaster’ during which the racing industry endured poor administration with calamitous decision-making that has cost racing’s stakeholders a couple of hundred million dollars. This was an avoidable fall from the position of ‘cashed-up’ to technical TAB insolvency along with substantial debt to the bank.

The New Zealand Racing Board (NZRB), or the NZ Ruination Board as our leading trainer Murray Baker always described it, was crawling with incompetents who all but wrecked the industry. They collected massive salaries and board fees with no racing industry qualifications and then walked away (if not pushed) from the carnage with no accountability.

But have they walked? Apparently, not all! The Greyhound and Harness codes have decided in their infinite wisdom to align themselves with two former NZRB executives who were high up in the failed John Allen team and nominate them for positions on the TAB board to represent those codes. I’m calling it a disgrace.

…it can’t happen if the codes themselves are guilty of recidivist offending…

The New Zealand racing industry has an opportunity to put together a new board that will run this industry properly, but it can’t happen if the codes themselves are guilty of recidivist offending by regurgitating past failures with expectations of an entirely different result. I’m fed up with quoting Einstein, but he said it first.

You just don’t do it. It’s a no-no!

When former NZRB Chair Glenda Hughes was appointed CEO of Greyhounds NZ, it raised eyebrows, to say the least – did she know a Greyhound from an Afghan?. She appointed John Allen, who brought Stephen Henry with him via NZ Post and then Foreign Affairs. Jobs for the boys. Stephen Henry was the General Manager of Services at NZRB with no previous horse or wagering experience, and now he’s the nominee for the TAB board via Greyhounds NZ.

Harness NZ is even worse. Rod Croon was on the NZRB board as the harness nominee from 2012 through to 2018 and is currently the President of the Auckland Trotting Club. Their most recently appointed board member is the former NZRB financial controller Shaun Brooks, appointed by John Allen to NZRB in October 2015. He left NZRB suddenly amid some controversy about four years later, and now he’s the board nominee from Harness NZ.

Brooks was the financial controller at NZRB through the worst period of decline…

Brooks was the financial controller at NZRB through the worst period of decline and was the incumbent during the failure of NZRB to balance the books correctly when bonus bets were not accounted for in the final result.

The thoroughbred (NZTR) nominee is Jason Fleming, who has been in the racing game all his life, is an owner and breeder, a lawyer, and the director of a financial services company. He was the CEO of Hawkes Bay Racing and worked as a stable hand for John Wheeler many years ago, so he is a professional and knows the industry well from the coalface up.

It’s a given that the new board will require a diversity of skills. Is it not strange that the three codes would not have met to work together and collectively agree on the three nominees who can work together. In a perfect world, that’s what would have happened.

But it’s hard to imagine that anyone in the thoroughbred game would be happy about either Henry or Brooks, or followers of the other codes for that matter. Livid, yes, happy, no. This is a poor start in attempting to put together a TAB board for what will be a make or break couple of years with the industry in a dire financial situation post-NZRB.

The NZRB-John Allen and executives era needs to be exorcised into history

Why is this racing industry in New Zealand so inept? The NZRB-John Allen and executives era needs to be exorcised into history with no thought of looking back. What’s wrong with carefully chosen new people with new ideas?

Speaking by phone this week with a member of the board of Harness NZ, I asked the logical question of why they nominated Shaun Brooks?  The answer came back, “the board rates him.” There was no point in continuing that discussion.

The performance of the TAB is much improved in the first five months of this season, due mainly to COVID19, and $10 million of the $45 million debt to the ASB has been repaid, but there’s still a long way to go, and the worldwide explosion in betting may yet return to pre-COVID levels – no one really knows where we are heading with the economy and betting levels, but we do know that nothing stays the same.

The involvement of the Department of Internal Affairs (DIA) in this process is flawed and problematic. They don’t have a clue what skills the board needs, and the process is wrong. A panel should have been briefed on the skillsets needed and then instructed to shoulder-tap the best people.

Calling for nominations through the DIA website will not attract the best candidates available. They need to be approached and cajoled to get the best mix of the right people.

It isn’t very reassuring for horse lovers dedicated to the racing industry to see this unfolding before them.

It isn’t very reassuring for horse lovers dedicated to the racing industry to see this unfolding before them. Thoroughbred racing is bigger than the other two codes combined and therefore is underrepresented in the new legislation. It’s a level playing field in Victoria with two thoroughbred reps and one each for the other two codes.

The problem in New Zealand is a lack of wagering knowledge. I decided to contact a retired CEO of Tabcorp who resides in Sydney and when employed, was paid A$1.2 million annually, for reasons of value – and not because he was shifted sideways after failing in a government department. He was remunerated according to his worth, and success was forthcoming.

He told me: “It’s going to be a mistake not to get a wagering expert. To me, a gambling expert is essential, particularly those that understand digital. You don’t pack the whole board that way, but you want to have diversity. The world is going to move, and the market will keep changing, as will the product.

“Achieving product parity and then having the agility to adjust to new products will be essential for them when taking a five or ten-year view. Playing catch-up football is essential, but that’s only phase one, and then you need people involved in both the executive and on the board that understand the gambling and wagering markets and how things move.

“You need someone that’s able to communicate with stakeholders and have a partnership-relationship with the racing industry.” – former Tabcorp CEO

“You need someone that’s able to communicate with stakeholders and have a partnership-relationship with the racing industry, but they also need to be strong influencers in that regulatory space to achieve parity and have the agility for the product parity as you advance.

“They also need to have a strong customer lense – what they call CRM, data buying, artificial intelligence – all that sort of stuff.

“It’s naive and ridiculous for New Zealand to sit here in isolation and say we are going to be successful by offering an inferior product to the rest of the world. If they respond and say ‘no, we have a good product,’ and we recognise we have to offer a world-class product, that will mean they will have to offer something better tomorrow – you don’t get there and say it’s done – it’s never done.

“The operating environment, the regulatory environment, the executive and the government environment has to be on their minds at all times.”

New Zealand is mainly devoid of the gambling/wagering experience required for a competent, pro-active board to enter the world of global wagering. The Aussies are good at it, it’s in their blood, and on a seven-person board, there should be room for at least one Australian with the know-how.

Minister Robertson and the DIA designated a process to put this board together. It’s wrong, and they need to alter it; the racing industry’s future depends on getting the good people.

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.”

https://www.dia.govt.nz/diawebsite.nsf/wpg_URL/Resource-material-Briefings-to-Incoming-Ministers-Index?OpenDocument

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.