“It is naïve to think that any outsourcing deal for TAB NZ would not enjoy the usual protections in transactions of that sort.” – John Messara AM
by Brian de Lore
Published May 14th 2021
Charles Dickens summed up racing in New Zealand best, when he said: “IT WAS THE BEST OF TIMES, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on being received, for good or for evil, in the superlative degree of comparison only.”
How come Charles Dickens 200 years ago knew more about the state of New Zealand racing today than our current lot of Zombie administrators? He looked out and saw wood to harvest; they look out and see nothing because the trees are in the way.
Four years ago, we thought we were in the age of wisdom when the racing industry voted in a minister of racing who promised the spring of hope. He promised the best of times and gave racing an epoch of belief. He commissioned a world-renowned authority to review, and for a time, all thought we were going direct to heaven.
But light has since turned to darkness. The wisdom was ignored, and Chinese whispers heeded. Belief has turned to incredulity, hope to despair, and whatever we imagined we were going to have before us has turned into nothingness – a vacuum in which the noisiest authorities have insisted on being received, for good or for evil.
…they have bailed out the TAB and now without any consultation have assumed ownership, and therefore control of the racing industry.
The whole world has gone mad. The PC brigade has more than taken control; every day, our Government takes another step left; freedom of speech is under threat; they want to control everything, including a segregated health system, the Reserve Bank, Air New Zealand, St John’s Ambulance; they want to control our lives and eliminate privacy; they have bailed-out the TAB and now without any consultation have assumed ownership, and therefore control of the racing industry.
St John’s Ambulance is 70 percent Government funded but needs to resist them handing over the other 30 percent because the trade-off is Government representatives on the board and control. They have to keep their independence with the shortfall of funds coming in the form of donations.
Racing has no such choice – the TAB was insolvent and about to go into administration. Winston Peters threw $50 million at the problem to pay a massive pile of bills after trading illegally as insolvent for a considerable length of time. No one was admitting to insolvency, but when your debt to the bank vastly exceeds your net tangible assets, you can be only one thing – insolvent!
…can’t fix itself when it can’t confess to the skeletons in the closet.
Racing’s inability to speak openly about its shortcomings has been the biggest problem. It’s a dishonest administration that can’t fix itself when it can’t confess to the skeletons in the closet. Denialism has been rife; transparency zero, and accountability non-existent. The architects of all racing’s disastrous decisions have all walked freely away from the carnage they created.
None of this has changed because the advice to change the structure and outsource/partner the TAB in the Messara Review has been ignored. They have merely picked the low-hanging fruit and claimed they were operationalising the Messara Review – well, they’re not.
John Messara said recommendation seven was the key, and if you didn’t operationaise seven (outsourcing), then forget the rest. At the launch of the Messara Report, Winston Peters openly stated that he didn’t commission a review by an Australian expert to ignore the advice, but he did ignore it. Some lesser form of intelligence afterwards got to Minister Peters.
The administrative mindset is closed; we have replaced like with like – doing the same thing over and over again and each time promising a different result, to requote Einstein’s clarity of thought.
In an earlier blog, I said someone had to be in Racing Minister Robertson’s ear because he was short on knowledge on the history of the problems. Soon after, a reliable source confided that RITA Executive Chair Dean McKenzie had told her he’d comply with any course of action required by the Minister (how subservient of him). On April 14th, the Minister appointed McKenzie the new CTO (Chief Transitional Officer).
How you give out practically nothing in 16 minutes is an art form perfected by McKenzie
Last Monday, McKenzie appeared on the Trackside program Weigh-In and was interviewed on the state of the industry for about 16 minutes. How you give out practically nothing in 16 minutes is an art form perfected by McKenzie – that was the result.
McKenzie did talk about the TAB as an asset to the industry, which it should be, but isn’t when it owes the bank $35 million, which didn’t rate a mention. He talked about the pandemic when asked how much would be returned to the codes for stakes next season, but then enthused it might be $15 to $20 million subject to a plethora of caveats.
Where the interview fell down completely was McKenzie’s fantasy-driven fear of what outsourcing/partnering of the TAB might bring, suggesting that one plus one might not equal two. This cryptic answer was drawn from interviewer Mick Guerin’s suggestion that outsourcing might tie up the TAB for 25 years and be full of hooks and disadvantaging traps – none of which could have come from any factual precedence.
It was cringe viewing, and after I sent the Youtube link of the Weigh In program to John Messara in Australia, he responded by email this way:
John Messara: It is naïve to think that any outsourcing deal for the TAB NZ would not enjoy the usual protections in transactions of that sort.
“Brian,
I watched the Weigh In program yesterday where reference was made to my Review. The “sale” of the New Zealand TAB was mentioned. As you know, that was an option which the Review dismissed, instead recommending the pursuit of an outsourcing (partnering) of the TAB’s commercial activities to a major overseas operator to take advantage of the benefits from the scale that such an operator would bring to the table.
Obviously, any such deal would include numerous protections for the NZTAB, including the standard one relating to change of control of the incoming party. If that party happened to be the TABCORP, it should be noted that a 10% maximum shareholding exists under the Act in NSW, and that will not be able to be breached without Government and Industry approval.
It is naïve to think that any outsourcing deal for TAB NZ would not enjoy the usual protections in transactions of that sort.
JM”
Further to the Weigh In episode, unjustified was Guerin’s assertion about the bid from corporate bookmakers to take over Tabcorp (or become a shareholder) and, by doing so, present a substantial risk to TAB NZ. You only need to read the TAB Act of New South Wales to know the concern is groundless. Ownership of Tabcorp requires both Industry and Government Approval, and any agreement with Tabcorp would contain numerous get-out clauses and safety valves – it would not be a factor.
Tabcorp is a $4 billion entity. Partnering would be a mutually beneficial arrangement that would overcome New Zealand’s lack of scale and enable TAB NZ to plug straight into Tabcorp’s computer/IT development for a fraction of the cost the TAB is currently committed to paying Paddy Power and Openbet – $17 million annually.
…formation of the TAB in 1951 was the singular most important thing that has ever occurred in racing history.
McKenzie has always been against a partnering arrangement for the TAB, but he has never come out of the closet and publicly stated it or given a reason why. Privately he would continually say to me that the formation of the TAB in 1951 was the singular most important thing that has ever occurred in racing history.
What he meant at the time was as cryptic as many of the answers he gives interviewers today. Retrospectively I would now interpret that to mean the TAB was a New Zealand innovation that has served the industry well, and we’re not sharing it with anyone, even though it’s broke and the Government has assumed ownership.
What he should be saying is, the TAB could be expanded and enhanced significantly in value for the benefit of the race clubs, owners and participants by investigating and entering into a partnering arrangement that will give us $50 to $100 million up-front for stakes and provide the industry’s futureproofing. And in addition – that we owe it to everyone in the industry in New Zealand to thoroughly investigate it.
The board is merely custodians of the percentages taken from punters to be used to enhance racing’s sustainability.
Perhaps they should try and remember who they are? The board makes decisions on no money of their own; they are merely custodians of the percentages taken from punters to be used to enhance racing’s sustainability.
New Zealand would have to go global to do it, but no appetite for thinking outside the insular square in which they operate has ever surfaced. It’s known as the No.8 wire mentality that’s succinctly summed up in the book ‘No.8 Re-wired.’
The book states: “Kiwis have been resting on their laurels while other countries have cranked up their race up the innovation ladder. We have a culture where we don’t just do things everyone else does. But in the modern times, as technology goes on and the world changes, that is not enough anymore. It can’t just be one guy in a shed anymore. There needs to be a lot more deep science, deeper research and collaboration to develop a brand new idea”.
We also know self-interest has featured very strongly in racing’s decision-making. For NZRB/RITA/TAB NZ board members to investigate and approve a partnering arrangement with the likes of Tabcorp would mean the board at the TAB level would become irrelevant and no longer be required. Has any reader out there recently met a turkey that voted for Christmas?
In Victoria, the betting turnover on racing for the same period was $5.07 billion, increasing 32.6 percent
COVID 19 has benefitted betting agencies all over the world. Betting turnover on racing for the half-year ended January 31st was $964,485 – an 11.7 percent increase from the previous year. In Victoria, the betting turnover on racing for the same period was $5.07 billion, increasing 32.6 percent. New Zealand has a population of five million compared to Victoria’s 6.7 million.
Racing Victoria Chief Executive Giles Thompson was reported in ANZ Bloodstock as saying: “We’d have to be fools to think it’s totally sustainable. I hope that we don’t go back to pre-COVID levels, but I am realistic that people engaged with us while there was very little else on.”
When Mick Guerin threw a similar question to Dean McKenzie on Weigh In, the response was cryptic again, but eventually, he concluded that COVID may go on for some time yet. It sounded like he was hoping. The difference between the two responses was the honesty of delivery.
The danger for racing will be coming inflation which the former Minister of Finance Steven Joyce was predicting this week on Newstalk radios Mike Hosking Breakfast Show. He thought New Zealand might be heading for sustained inflation and higher interest rates which would correct the housing market and tighten up the economy.
Less available cash will affect discretionary spending and, therefore, TAB betting
Less available cash will affect discretionary spending and, therefore, TAB betting. Negotiations to partner the TAB should commence immediately, or is it too late?
No, it’s never too late. That’s why I keep writing this stuff and, hopefully, you keep reading it.
To watch Weigh In on Youtube click on the following link: