By Brian de Lore
Published 23 August 2019
In racing season 2008-09 in New Zealand, the thoroughbred industry distributed $58,409,592 in prizemoney which on the CPI index calculator equates to $70,675,606 in today’s buying power. Do you find it disturbing that the 2017-18 figure, ten years hence, has increased by less than $1 million and today has a 16 percent less buying power?
Equally concerning, in 2008-09, prizemoney was distributed from profits genuinely earned from the TAB while today’s figure which is practically the equivalent of 2008-09, NZRB over the past two years has borrowed $22 million to maintain the level.
It would be incontestable to say prizemoney in thoroughbred racing today has a lesser buying power comparative to the costs of getting a horse to the races than at any other time in history. Owners and trainers are feeling the pinch as they never have before.
The table below throws up some stats from the 2008-09 season and compares them with nine and ten years later (last season) and then projects where the industry is heading in ten years based on the current rate of contraction.
| T’bred | 08-09 | 16-17 | 17-18 | 26-27 |
| Number of races | 3,088 | 2,564 | 2,568 | 2,135 |
| Number of runners | 5,826 | 4,864 | 4,744 | 3,862 |
| Number of starts | 34,348 | 26,863 | 26,666 | 20,702 |
| No. starts per runner | 5.9 | 5.5 | 5,6 | 5.3 |
| Number of trainers | ? | 1.013 | 971 | 551 |
| Stakes paid | $58.4m | $58.5m | $58.3m | ? |
| Av. stakes per race | $18,915 | $23,205 | $23,091 | ? |
| Av. earnings per runner | $10,026 | $12,232 | $12,500 | ? |
| Av. earnings per start | $1,701 | $2,214 | $2,223 | ? |
| Av. field size | 11.1 | 10.5 | 10.3 | ? |
| At NZRB on $100,000 + | 57 | 134 | 144 | ? |
| Breeding Industry | 08-09 | 16-17 | 17-18 | 27-28 |
| Foals born | 4,557 | 3,457 | `3,535 | 2,622 |
| Broodmares served | 6,498 | 5,465 | 5,311 | 3,923 |
| Stallions registered | 170 | 121 | 119 | 99 |
The consistency of these contracting figures is countered only by the number of NZRB employees on the big salaries which in the ten years shows an increase of 252 percent – the figure included only to demonstrate how administratively out-of-whack the industry has become.
RITA (Racing Industry Transition Agency) has been in the hot seat for less than two months and is yet to make any visible changes to the structure while the Agency assesses how and when it can implement the Messara Report.
Chairman Dean McKenzie is staying tight-lipped and is doubtless under some pressure in his position of answerability to Minister Peters, having to work with DIA, orchestrating Racing Reform Bill No.2 by Christmas and constantly dealing with a barrage of industry stakeholders looking for faster action.
In my last conversation with McKenzie on July 25th, I raised the question of the top-heavy administration but the subject wasn’t up for discussion. He said: “The executive team is the same; I didn’t say ongoing. I don’t think it’s productive for the industry to get into that conversation. We have too much to do and don’t need to be distracted.
“The Section 14 audit is due at the end of July as required by the racing act – we had a say in the terms of that audit which is due at the end of July. That’s been undertaken by Grant Thornton which is due at the end of July.”
The five-year Performance and Efficiency Audit arrived at RITA recently but from all reports didn’t encompass all the required detail and has been returned for increased content. The Price Waterhouse Coopers Audit for the 2018-19 financial year is now underway – both will deliver a compelling read.
However, it won’t be pretty reading – perhaps a cure for insomnia? The Statement of Intent released by the NZRB about a year ago will be reclassified as a work of fiction and the FOB as a failed investment which may be headed for the scrapheap sooner rather than later. The Messara Report’s principal driver for increased revenue for stakes money – outsourcing the NZ TAB – will become more obviously necessary rather than optional.
The table accompanying this blog displays a theoretical column for a ten-year projection based on the rate of contraction in the previous ten years. But those figures are possible only if nothing changes, and RITA and a passionate Minister of Racing are in place to halt the regression and reset this ship on a new course.
The critical mass figures which racing cannot afford to fall below before it reverts to cottage industry status isn’t known precisely, but cannot be too far below today’s level. The breeding industry needs its viability strengthened to maintain international interest in the New Zealand-bred and produce a level of quality to keep its share of exports up and numbers to provide a sustainable domestic racing product.
When the Racing Act of 2003 came into being racing represented a $1.6 billion industry and one percent of GDP. Sixteen years hence and we are still a $1.6 billion industry, but the country’s GDP has risen from $160 billion to today’s level of $296 billion.
Not shown on the table is how over-regulated racing has become in ten years. Health and safety, animal welfare, anti-money laundering, the gambling harm lobby, ACC levies, and other introduced agendas have all added substantial cost increases which are ultimately borne by the owner.
Successive governments have continually increased taxes on petrol and caused horse-floating charges to rise significantly as an overall cost of racing a horse. The Cambridge-Ruakaka return trip, for example, now requires a third placing at the minimum stakes level to pay the transport fees.
Of the 17 recommendations prescribed in the one-year-old Messara Report. 15 are pending. The betting levy of 13.4 million came back to racing in the last budget, albeit only $ 4 million in the first year, thanks to some robust persuasion at Treasury from Minister Peters. The second was the Racing Reform Bill No.1. Bill No 2, however, is more complicated and it’s a race against time to have it written, jump through all the political hoops, and be passed into law by year’s end.
Industry morale will improve as RITA makes inroads and can release some positive news as the Messara recommendations are ticked off. Another boost will be the launch of a new industry publication to arm the punter with a suitable form guide which has to be a factor in driving TAB turnover.
Under RITA and what will become Wagering NZ, the TAB needs a frontal lobotomy to reprogram-in the meaning of good customer relations. Its monopoly has bred a climate of customer-loathing if you are outside the VIP or Elite groups. The attitude displayed to the average punter is not found in successful businesses which invariably treat every subscriber, no matter how small, as ‘gold.’
A new publication to replace the ill-fated The Informant would renew all lines of communication including editorial – a service now missing for almost five months. An industry-supported weekly is presently under consideration with an answer due in the first week of September.
