Brian de Lore, Author at

Breeders, Owners and Trainers merge for stronger stakeholder representation?

In the UK the Owners and Breeders have pooled resources to produce this high-quality monthly magazine. Why couldn’t it happen here in NZ?

by Brian de Lore
Published 29 November 2019

The headline isn’t true, but such a merger which in principle is supported by NZTR, could give stakeholders much more grunt and a stronger voice in the future running of the thoroughbred industry.

In an industry that has contracted significantly over a long time, why would these sub-stakeholder groups not want to cut their cloth accordingly by standardising and combining the memberships and running a leaner and more efficient administration from a single base?

Speaking from his Petone office this week, NZTR CEO Bernard Saundry said there had been discussion in the past on the merging of stakeholder groups and that NZTR was not opposed to the concept.

We are living in a world of rapidly changing times that’s becoming increasingly globalised and in which amalgamations and scale of operation are the keywords and phrases for long-term survival. The common denominator for these three groups is prizemoney – the single component that would provide an incentive for members of all three associations.

After all, how many racing people crossover to two or even all three associations. Plenty of trainers, of which there are 800 members in New Zealand, are involved in both breeding and racehorse ownership. Many of our breeders also have thoroughbreds in training, and on their own, the Owners’ Association may have a less active voice but in principle should be the most influential body of the three, given the cost of running racing falls back on all owners as a collective. Racing Minister Winston Peters also acknowledges that owners are the most critical group in racing.

Membership of the Trainers’ Asociation comes each year with the renewal of the license to train, and the 800-odd members are more-or-less equally divided between A, B, and C Class licenses. The Breeders’ and Owners’ Associations memberships are, however, voluntary and that’s where changes need to occur through NZTR.

Thirty plus years ago the membership of the Breeders’ was as high as 5,000, according to CEO Justine Sclater. By 2007 it had dropped to 2,250 and today it’s only 1,289, although active promotion has increased it over the last 12 months with an annual cost of $195 which is a sub not altered in five years.

Just as ownership has evolved from single owners and small partnership teams of owners to big syndicates, the breeding industry has transformed over the years – but in the opposite direction. In the final year at Trentham in 1987, the catalogue offered 480 yearlings from 150 individual vendors. In 2019 at Karaka the Book One sale catalogued almost 700 yearlings provided by just 50 vendors. The trend towards fewer vendors results in more efficient marketing and preparation by the bigger studs plus the loss of smaller breeders who have gone from the game.

The Owners’ Association through President Bernard Hickey is actively driving membership and currently has between 900 and 1,000 members who pay only $60 each annually or $65 for dual husband-wife membership at the same address.

The Owners’ Association produces six bulletins per year which are subsidised by NZTR. But like the trainers and breeders, the income derived from membership is limited by scale and limited in achieving meaningful benefits.

In the Size and Scope Report released 18 months ago by NZRB in May, 2018, New Zealand had 3,705 thoroughbred breeders and 15,951 owners, so the potential exists for substantially increased membership for both associations through compulsory membership which would require a rule change at NZTR.

For the breeders, membership could potentially be calculated on a per mares basis – over 6,000 mares currently reside in New Zealand. If that method isn’t fair on larger breeders then a standard fee for any breeder with five or more mares or perhaps several tiered levels – collected by NZTR with broodmare returns. For owners, a compulsory membership for any single owner with five percent or more of any registered racehorse would be possible.

Idealistic? Yes, it is. How likely is it to happen? No chance at all; it would require a level of cooperation never previously known in our administrative history.

In the UK, the Thoroughbred Owner-Breeder is published monthly as a joint-venture between the Racehorse Owners’ Association (ROA) and the Thoroughbred Breeders’ Association. It goes out to 8,000 subscribers with an annual sub of 55 pounds and is said to have an average readership of 20,000

ROA in the UK is well-funded and doing all they can to encourage ownership

It’s an outstanding publication full of interesting articles and vital facts on racing and breeding; a high-quality publication in the mold of the once-prized British Racehorse and Pacemaker Magazines.

The benefits available to the UK Thoroughbred Breeders’ Association membership are substantial including a whole range of services – employer support, tax and legal hotlines, buying group discounts, guidance documents, events, regional days, training courses, seminars and race badge offers.

Racehorse Owners in the UK also get a great deal with all sorts of offerings including privileges at many of the courses, special lunches, behind the scene tours, car parking, and discounts, as well as offering dedicated facilities for syndicates.

Digital is fine, but who wouldn’t prefer a high-quality publication in their hands. Communication is everything in the horse business, and since the demise of The Informant in March and no replacement until Raceform makes its debut, the eight-month void has definitely cost the TAB a lot of turnover and lost some participants permanently.

Raceform is scheduled to go on sale for the first time on Thursday next week, replacing Best Bets which published its final issue yesterday.

John Messara: Dynamic leadership is the key

by Brian de Lore
Published 22 November 2019

The New Zealand Thoroughbred Breeders’ Association will today, Friday November 22^nd, host former Chair of both Racing NSW and Racing Australia John Messara AM at a luncheon in Cambridge where he will be the guest speaker.

NZTBA invited its members to hear Messara speak publicly for the first time in New Zealand since he completed his ‘Review of the New Zealand Racing Industry’ and presented the 82-page document to Minister Peters on 31 July 2018.

Ninety to 100 guests are expected to attend the luncheon at The Boatshed on Lake Karapiro where well-known auctioneer Steve Davis will MC the event, which includes a question and answer session following the Messara address.

For anyone not attending but interested in the topics of discussion, I consulted with John Messara to piece together the question and answer segment that follows. The idea came after reading the high-quality UK publication ‘Thoroughbred Owner Breeder,’ which in its October issue featured a ‘Talking to…’ article on English trainer Charlie Fellows.

In that article a chord struck when he answered one question with: “I wish everyone would sing from the same hymn sheet though I don’t think it will ever happen. As long as we keep fighting from our own corners the money will be divided between more and more interests. If we worked together it would be so much more beneficial…working together for the greater good.”

That statement is probably pertinent to every racing jurisdiction in the world and is one that Messara touches on in one response below.

The Charlie Fellows interview conducted by Tim Richards was so informative and well-formatted I have unashamedly borrowed the format and the Close-Up and Personal and Close-Up and Professional questionnaire at the tail of the interview:

Talking to John Messara:

From all the experience you have gained over 40 years in racing and breeding, how do you view racing and breeding today on a global basis compared to where we have been in the past?

We are in a challenging era in racing, compared to the past. The level of competition from other forms of gambling and leisure is intense, and there has been a definite evolution in community standards, all of which require adjustment for an industry that has generally resisted change. These challenges are especially in evidence in the younger demographic that all racing stakeholders are desperate to attract.

What was the single most important lesson you learned through all your years as a racing administrator?

I learned that dynamic and committed leadership and a sound management team are critical to success – in the end, it all comes down to people.

Racing Minister Winston Peters asked you to write a review of New Zealand Racing which you accepted and completed in less than three months. What struck you as the most blatantly obvious problem with NZ?

It was obvious that the returns to owners had got too low, that the industry was capital hungry, incapable of modernising itself, and struggling to offer an attractive wagering product; all these factors were driving the industry down.

What was the motivation for you to take up the challenge, without being paid a fee for your work, and how much did it take out of you to complete it in such a quick time?

I took up the challenge because I have a soft spot for the NZ industry and have admired Kiwi horses and horsemen and women for decades. I have always felt that NZ was part of our racing family and that I might be able to help. In fact, it was a privilege to be able to assist.

I threw myself into the task and I was determined to deliver the Review by the agreed time. I was fortunate to pick a great team to assist me in their particular areas of competence, which included John Rouse (past CEO of the AJC and currently a Trustee of the ATC), Darrell Loewenthal (retired senior public servant from the NSW Department of Racing) and Craig Nugent (immediate past COO of Tabcorp). I was nevertheless tired by the end of it.

The initial advice you gave was to start with a blank sheet of paper. If we had done that, would we be better off than we are two years later?

I approached the Review as if I was dealing with a blank sheet. At the time, I asked the Minister if there were any “sacred cows” and he replied that I was appointed to tell him exactly what I thought was needed to get the industry back on its feet, with no exceptions. I did exactly that in the Review….I pulled no punches!
However, what I soon learned was that New Zealand’s starting-point was some way behind where we began in NSW in 2011 – there’s considerably more organisational and legislative reform needed in New Zealand before the real work can begin.

The Messara Report had 17 key recommendations and stressed urgency and high-quality leadership, but many will argue that the process has lacked urgency with a degree of leadership procrastination. What would you say to that criticism?

I disagree; as I have said elsewhere, it takes time for government departments to carefully do their due diligence, write legislation and set up new structures. It will be worth it if we can get the Review recommendations accepted and enacted.

One of the criticisms I have heard going around race clubs, some of which are earmarked for closure, was that you only had a cursory glance at the course and didn’t consult the committees. Can you explain to those people the reasoning and the process you adopted on venues?

I can assure you that while we did not sight every course we studied the operational and financial metrics – for example, wagering figures, race meetings scheduled, profit & loss and balance sheet details and attendance numbers – of each racecourse before making the recommendations. We were also mindful of the geographical locations to ensure that each region in New Zealand would continue to have access to racing. Finally, we compared our list with that of New Zealand Thoroughbred Racing, who were also undertaking a venue review. I can say that our conclusions were very close to those arrived at by NZTR.

Today you are addressing members of the NZTBA at a luncheon in Cambridge. What is the most important message(s) for New Zealand to take on board to recover NZ’s lost ground going forward?

I really only have one message. Racing Reform Bill No1, and shortly Racing Reform Bill No.2, initiated by your Racing Minister, should provide the tools for your industry to pick up all the lost ground.

It is time to select your future leadership team and get behind it, unselfishly. There will be those who want to reject racecourse consolidation and others who will be threatened by a joint venture deal by the TAB. If those reforms don’t happen, I am afraid the industry will only have itself to blame for the consequences.

The goal to double the prizemoney stills seems a long way away. We are losing good people because of racing’s apparent long-term unsustainability, but we have a tight group of passionate racing people whose whole life is racing. Do you have a message of hope for these people?

Yes, I do. Please do not give up and allow the reforms now in the pipeline the chance to have their impact.

The question of animal welfare during your time as Chair at both Racing NSW and Racing Australia was high on your priority list, and you drew a considerable amount of vitriolic criticism from your peers in Australia, but you ultimately have been proved correct on the horse traceability issue. Can you explain how that unfolded?

Yes, I and my Board at Racing Australia believed that we needed to account properly for the Australian thoroughbred herd before horses began racing and after they had finished racing. We did not have the capacity to do that and so we set about bringing in national traceability rules enforceable under the Rules of Racing. A campaign was then set in motion by the Breeders Association to have me sacked, including signed petitions to each State Racing Minister. Regrettably, nearly all breeders ignorantly joined the call. Happily, the state governments supported Racing Australia, the traceability rules were brought in and everyone now agrees they are essential. Traceability is the foundation stone of any animal welfare program!

The wagering landscape in Australia appears to be evolving quickly with the consolidation of the Corporate Bookmakers with Sportsbet (owned by Flutter) becoming a powerful competitor to TAB Corp and recent talk of a consolidated Australian totalisator pool. What’s your view on this and where do you see it going?

This will make for a better regulatory framework and underpins my call for the NZ TAB to piggyback on one of these giants.

Could further consolidation and mergers one day see one single national body running all racing in Australia? Or am I dreaming?

Yes, you are dreaming. There continues to be significant interstate rivalry in Australia, which mitigates against the most efficient usage of racing’s resources.

Can you explain in one short statement the benefits of outsourcing (partnering) our TAB and why you didn’t recommend selling it?

The current scale of your TAB operations is not sufficient to enable it to compete with the myriad other betting products, in terms of the funding required for development and innovation in a super-competitive world. The NZ TAB cannot be competitive without continuous investment in technology and this cannot be funded without affecting prizemoney. There are so many benefits that can flow by joint-venturing the TAB’s commercial operations with one of the world’s wagering giants, not the least of which is a bottom line that will sustain a doubling of prizemoney, so necessary for the future success of racing. I agree that the TAB should not be sold and this will be clear in a joint venture agreement. But let’s make the TAB competitive and efficient by leveraging on one of these giants.

We have had ‘racefields’ and the POC levy legislation in New Zealand from the start of July this year but few betting operators have signed the contracts. Do you think we should have been better organised with the contracts at the beginning to collect those funds?

The reform agenda undertaken by Deputy Prime Minister Winston Peters is a once-in-a-generation initiative. However, government departments never move quickly, so we have to be patient. The three revenue initiatives recommended in the Review have been legislated in the first Bill, and I understand that already most of the Australian online wagering operators have voluntarily signed up to the new regime – that’s a great start.

The controversy on the use of the whip is gaining momentum. Do you think it’s inevitable it will be restricted if not banned totally? What would you do if you could make a ruling for NZ now, and why?

After a recent trip to the USA and contact with other racing jurisdictions, I am convinced that it is inevitable that the whip, or crop, will go. Community standards are changing and there are a few things we need to accept if we want our sport to remain relevant. I would, therefore, ban the whip from January 1st, 2020 and take international leadership on this issue. The new rule would require jockeys to keep both hands on the reins, but they could carry the crop for safety reasons.

Where do you perceive the New Zealand racing and breeding industry to be in five years?

If in the second Bill the Government were to put in place the structure whereby all the recommendations in my Review could be executed, and if the Industry has competent and passionate leadership, then New Zealand can again take its place among the leading racing jurisdictions of the world, with the benefits shared by all participants with consequent upside to the New Zealand economy.

John Messara AM with more thoughts on life and racing…

Close Up and Personal	Close Up and Professional
My superstition is… Don’t have one	The biggest lesson I have learned… You need to be supported by a competent and loyal team
Four dinner party guests… Friends and partners who enjoy talking racing	Racing and breeding has taught me… To be patient and accept defeat with grace
I am annoyed by… hypocrisy Favourite holiday destination… The Hawkesbury River	Horse with the most significant influence… Danehill, he changed my life in so many ways
Best book read… The Inglis and Magic Millions yearling catalogues	Best bet I’ve had… Taking the early odds on Miss Finland in the Golden Slipper
Favourite movie… Scent of a Woman I like to relax by… Fishing with close friends	My racing hero… Robert Sangster – few people know how much he promoted Australia and NZ to the world; and Dr Percy Sykes, friend and genius – he had X-ray vision with horses.
Why is your wife Kris a better driver than you…😂 Because she says so!	Alternative career… I love what I am doing!

Robbie Waterhouse reflects on racing’s problems

Robbie and Gai Waterhouse at Tulloch Lodge

by Brian de Lore
Published 15 November

The Optimist made its debut back in April and in the ensuing eight months the editorial content has often revolved around the discussion ad-nauseam of the ongoing problems confronting the New Zealand racing industry.

RITA, I’m assured, is doing its best in the limited space in which it has to move and we, the industry participants, need to be patient and wait for better days, which, I’m also assured, will be forthcoming. But many of the problems we face in Aotearoa are now universal with some surfacing during the Australian spring.

During the week, Tom Waterhouse started his blog by saying, “I fear racing is facing a looming crisis.” If that remark by itself wasn’t enough to capture your attention, then reading on would have had you rivetted:

“Racing betting turnover is in steep decline, and I believe it is just the beginning. I believe this is in large part due to sport having less takeout of the gambling dollar and racing is no longer the mainstream public focus.”

Isn’t that precisely what The Optimist has been saying since April, and was the thrust of many articles in Industry Opinion in The Informant before that? My complaint has always been that NZRB spent $50 million of racing’s money to build a FOB platform to service sports betting which was always going to result in a reduced financial return to the three codes. No public company would ever have made an investment designed to disadvantage the principal shareholders financially, but that’s exactly what happened.

In Tom Waterhouse’s blog he goes on to explain why a $100 bet on sports will cost the punter $4.00. But the same punter placing a $100 bet on a horse has a cost of $17 to the average punter. He says: “Meaning it’s over four times as expensive to bet on racing because of the way racing is taxed – with a turnover tax. No wonder turnover is collapsing and will continue to fall.”

In New Zealand we don’t have a turnover tax because we have no licensed bookmakers but it makes no difference – our betting levy of two percent which is being repealed over three years was more or less the same tax. But it applies for any Kiwi betting in Australia and regardless, makes no difference to the payout percentage to punters.

Last week this blog focused on Australia’s ugly spring with falling attendances, betting turnover declines, animal welfare issues and the effect of the POC levy. As Australia’s little brother, the problems they’re encountering only serves to paint more dark clouds on the horizon for Kiwis with the knowledge Aussie’s woes will reverberate here.

To obtain an analytical view of all these controversies, I decided to consult Tom Waterhouse’s father, Robbie, who was more than willing to project his thoughts after a lifetime of betting on the rails through the good and bad times.

Robbie wasn’t holding back in saying: “Race clubs and the government see racing as being the golden goose, but they are killing the goose. I think the reality is that the government hates bookmakers and regard them as being parasites.

“In the old days, every committeeman was a racing man and a good friend. When the latest ATC election came around I knew three of the eight. The other five I have never seen in my life. They put their photographs in the racebook so people would know them, but I still have never seen them.

“We have been infiltrated by non-racing people. Administrators pretend they don’t like betting and are there for the honour and the glory. But to get people to go to the races and party it costs $100 per head, and they go but don’t bet. Then they say, ‘we got 20,000 people to the races – isn’t that wonderful’.”

As a leading rails bookmaker, Robbie says the game has never been tougher than it is today and fears for the future of racing.

“If you have a tax on turnover, it changes peoples behaviour – totally. If you had a tax on gross profits, then bookmakers would still be trying to maximise their profits.

“On the rails, I bet to tight to margins – big turnover but tight margins. My margin might be three or four percent but if I’m required to pay three percent in turnover tax it’s a disaster for me. But out on the lawn where a bookmaker is betting on his own, he might bet to a 30 percent margin, so the three percent is irrelevant.

“A punter who bets with me came and said he had lost $6.5 million for the year, and had been losing every year. He said he was betting with eight different agencies but they had all sacked him. The trouble was that he was only losing at the rate of four percent, and the corporates still couldn’t make it work.

“Today, no one watches the races – no one is interested. When racing was going well the smallest area was the bar and the people that went to the bar were seen as degenerates. Now, the whole racecourse is a bar, and anyone in the betting ring is regarded as being a degenerate.

“Only people who like racing have a bet. In my view, you shouldn’t go to the races unless you want to have a bet. If you were a punter and had your wits about you, you might lose a small percentage on turnover, and you might even win. We have lost all those people – they have all gone.

“If you go to the races on a Wednesday in Sydney, you would be struggling to find anyone who’s brought a sportsman with them and has studied the form.”

On the animal welfare controversy, Robbie Waterhouse thinks it’s one of the biggest concerns but was just as vocal about the quality of the protestors at Flemington on Melbourne Cup Day – some of whom knew so little about racing that they believed the horses went straight from the races to the abattoir, and others who may have been paid to turn up. The Youtube link can be viewed below:

“The current big issue was that shocking ABC program,”said Robbie. “They passed a rule in NSW that no abattoir can slaughter a horse, so all those horses are going to backyard operators instead who are the cruelest and meanest and most dreadful people. I think that has made it very uncool for young people to go to the races.

“I was chatting with a friend’s daughter the other day and she had free tickets to go to the races. And because of that ABC program she couldn’t get one friend to go with her.

“The Greens are getting 10 percent of the vote, and they were running a big campaign saying ‘Nup to the Cup.’ I think it’s a big issue. People don’t realise how quickly the world has changed. Instead of dealing with it properly the race authorities are saying we are devoting one or two percent of prizemoney to look after these horses, but if you have 14,000 horses retiring every year and they live for 20 years, it will cost $200,000 for each horse’s lifetime and about $280 million a year – it can’t be done. It’s ridiculous.

“The RSPCA in Australia each year kills 250,000 pets. I don’t know if you enjoy a cappuccino but in Australia each year we kill 600,000 bobby calves at four days of age so their mothers can provide the milk for cappuccinos. We kill 12 million male chicks because they are superfluous to needs – they only keep the females.

“It’s all very well saying horses are man’s friend, but the University of Melbourne’s Dr Ronelle Welton examined hospital records and coronial records and found that between the years 2000 and 2013 horses were responsible for 74 human deaths.

“Bees and other stinging insects were the next most dangerous, causing 27 deaths, followed by snakes, which also claimed 27 lives but landed fewer people in hospital. Spiders were not responsible for any deaths during that time, the research showed.

“A lot of people say they couldn’t possibly eat horse, but I’ve eaten horse meat and it’s very good. Five million horses are consumed each year worldwide. The reason the greens see horses differently is because they say you’re making money out of horses, so it’s your responsibility to look after the horses for the rest of its life.

“My grandparents were involved with cockfighting – it disappeared. Dad’s best license was the greyhound racing at Rooty Hill with live hares and the pony racing – they went. My best license was Harold Park trots – they would get more people to Harold Park on the coldest, wettest winter night in those days than the Golden Slipper these days.

“Racing has never paid so much prizemoney, and everyone is saying “isn’t it wonderful,” and the average price at the Easter Sales is $380,000. I mix in affluent circles, and I don’t know anyone who can afford to pay $380,000 with tax-paid money. No one can do it.

“I bought a racebook at auction the other day from the 1930s, and there was virtually no horse on the card that was owned by more than one person. Today, except for a few owners like the Sheikh, every horse is owned by 20 people. I think they would be better off slashing the prizemoney and bring the price of yearlings down.”

The Tom Waterhouse blog which appeared on Twitter is shown below:

Betting guru has advice for us Kiwis

by Brian de Lore
Published 8 November 2019

The headwinds for racing which were thought to be zephyr-like at season’s start have strengthened to a steady trade wind as Australian spring racing declines in both crowd numbers and betting turnover.

Bad publicity driven by animal activists through the Australian ABC slaughterhouse program and the double-edged sword recoil from the Point of Consumption (POC) levies are the two likely causes. That double-whammy has both damaged racing’s image and reduced betting turnover.

Nearly all of Melbourne’s major spring race days have been down in crowd numbers and turnover. Yesterday’s Oaks Day Flemington was the lowest for 25 years following attendance declines on both Derby and Cup Day. Inclement weather didn’t help, but anecdotally the pundits are saying public resistance towards racing is building due to the perception that racing has been negligent on its handling of the animal welfare issue.

In New Zealand the latest release of TAB figures is also disheartening. Most thoroughbred meetings in the past fortnight show declines comparative to the same meetings in 2018. Trentham, for example, on October 26^th was 42.8 percent down, which translated to $835,462 less turnover. Ellerslie on Melbourne Cup Day was 5.5 percent or $158,006 down in turnover on the previous year.

A closer look at the figures shows increases in Fixed Odds Betting (FOB) but substantial declines in the tote. Recent TAB promotions offering up a free $50 bet (Spring Loaded) on the same day if your FOB selection didn’t either win or finish last is a contributing factor to the continued decline of the tote. The problem with that promotion is that the FOB profit margin is reduced in favour of turnover but the tote from which the racing codes get their best margin (14% to 15%) is cannibalised.

Nevertheless, overall turnover is down which highlights two more concerning issues. Firstly, it tells us that all the predictions of the FOB being the golden bullet were false and $50 million may as well have been flushed down the toilet, but we already knew that. Secondly, the FOB to maintain the status quo in its financial return to racing had to earn an extra $17 million in profit annually just to pay the fees committed in the contract to Paddy Power and Openbet.

Building the FOB Platform and expecting it to work for New Zealand racing was a bit like backing a maiden handicapper to beat Winx in a Cox Plate. But that’s what happens when you put a non-racing bureaucrat in charge of the TAB – the third one in succession.

The POC issue in Australia is justifiably sited as a cause for the decline in betting turnover. The reason is simply that when betting operators are required to pay this levy they amend the profit margin of their book upwards to cover the levy and maintain their margin. The skinnier prices offered results in less return to the punters which reduces the available funds for reinvestment – the net result is reduced turnover or churn.

Corporate bookmakers in Australia are unhappy about the POC levy because they claim they already pay it when charged GST by the government. Point of Consumption refers to the location of the customer and was introduced by the state governments of Australia.

The POC levy was first introduced in the UK when most betting operators were located off-shore and were not contributing to the racing-sporting bodies or government in the UK, and is the reason why the Australian corporates claim the levy as a domestic one is unfair.

In Australia, Betfair claim that they pay 51 percent of their wagering revenue in other taxes and fees but when the POC levy is added at the South Australian POC rate of 15 percent, their taxes rise to 66 percent. South Australia’s levy of 15 percent is the highest in Australia with both NSW and Victoria having set it at 10 percent. Whatever the bookmakers say, they will receive no sympathy from the punting public who are out to beat them any way they can.

The world of betting has been undergoing substantial changes in 2019 and more is on the horizon for 2020. Moves are afoot for a number of corporates plus Flutter Entertainment – the group that controls Paddy Power Betfair and Sportsbet Australia – to merge with The Stars Group which is TSG, the owner of BetEasy. TSG is a global leader in revenue management solutions.

The object is to create the largest online wagering and gaming company globally, based in Dublin, listed on the stock exchange and worth 10 billion pounds. The move comes as a result of the recent trend for betting operator mergers and especially after the liberalisation of sports betting in the USA.

Spokespeople for the potential merger which requires shareholder and government approvals before it can proceed are saying that with the benefits of scale the fixed costs annual savings will be in the vicinity of 140 million pounds. Negotiations are expected to be finalised and the deal done by the middle of 2020.

Our TAB and the FOB will have to compete with a scale of operator never before seen. How do you think we will fare? Imagine the potential for this group’s marketing, IT development and ability to offer punters a better deal than any rival operator.

For an overview of the New Zealand scene, I this week spoke to an Australian involved in the betting world at a high level, and who was happy to project his view but preferred not to be named.

He said: “What I would say to New Zealand is that the local consumption market is not enough to sustain the industry. New Zealand has brilliant rearing conditions for growing horses and some excellent racing – you have a very good product – it’s a solid product that can be improved. You need to think of racing like your dairy industry and think of it as an export industry and export it to the world – just like the NFL or the NBA.

“That’s the future for New Zealand where the local turnover isn’t going to be enough. Whatever you’re charging in fees, it’s not going to be enough to sustain the industry over a long period. New Zealand has a unique time-zone and you should exploit it.

“New Zealand needs to do a whole lot of stuff – when you walk into an Australian TAB outlet today, more often than not New Zealand racing goes to the second channel. There’s no audio, so punters don’t know where their horse is in the running. Every other country is doing microchipping, which shows where your horse is in the running. For whatever reason in New Zealand this doesn’t happen.

“New Zealand racing takes too long in the barrier and too long to do raceday control. The longer you take to do those things the more money you are holding back in turnover.

“It also needs to present its product better but you do have some advantages in your time-line like 10 am betting for Australians. But what needs to be realised is that in that time slot Australia is importing racing from places like Canada and from the UK and various other places like Singapore and Hong Kong. And that means that you guys need to up your game.

“Some of the mid-week races in New Zealand are pretty innocuous but are holding something like $50,000 or $60,000 a race. And that’s in pari-mutuel, so on top of that you have the fixed odds and also the corporates. There is interest in those races for what they are, but the crux is that even leaving aside the POC levy, New Zealand doesn’t even charge a racefields fee.

“Tabcorp has been losing ground every year to the corporates. From 89 percent in 2012 to 44 percent currently. That’s on total turnover. If New Zealand outsources there are other options to Tabcorp. The corporates have devised some great promotions; very innovative such as offering money back if your win bet runs second, third or fourth or paying out if your horse loses on protest.

“There’s statutory law in Australian betting that says the payout on the pari-mutuel win and place betting has to be 85 cents in the dollar. But when betting on fixed odds, they are not restricted and bet their own odds. And by our calculation, 40 to 50 percent of betting today is on fixed odds.

“They are incentivising fixed odds betting so turnover is broadly coming down. Then you have sports betting, but the margin in a head-to-head situation is only about five percent. Turnover to racing is being lost to sports.

“On top of that you are losing turnover within racing because the betting margins to bookmakers are getting larger. They are doing that to compensate for racefields and POC tax, and at the same time, you have got the TAB promoting the pari-mutuel into fixed odds, and then you have the overall scenario where the corporate bookmakers are increasing their margin share over the TAB.

“Bookmakers for years ran their books at about 114.5%. All that means is they were taking out 15 cents in the dollar. Now they are averaging about 120 to 122 percent on FOB with the addition of racefields and POC levies. Because the pari-mutuel has dropped so much the FOB is now probably betting to a book of 120 to 125 percent.

“That means that at the start of betting, they’re probably running at around 130 percent. Now that the fixed odds percentage is so high, it means that less is paid out, due to racefields and POC, and turnover decreases as a consequence.

“It’s inevitable that your FOB platform will be obsolete in a very short time. From memory, even Sportsbet has outsourced their underlying system – by that I mean product development. When they introduce exotic results for the punter, which has to be put into the system – that’s where they run into problems because they are always developing new options including addressing the online mobile site which is just growing so quickly.

“Gross Gambling Revenue (GGR) in Australia is around $3 billion per year. GGR is what the punters lose. After everything, there’s probably about half a billion dollars in profit. That just wagering.

“We supply the pricing and data platform technology, etcetera to all the major corporates. We are also helping racing bodies export their products globally, and that’s why I’m interested in New Zealand.”

Bob Morris – a life well-lived with horses

Above: Bob Morris (left) with good friends and retired trainers Don Sellwood (middle) and Royce Dowling at Bob’s Cambridge home earlier this year

by Brian de Lore
Published 31 October 2019

‘A wonderful life in horses,’ is how I would describe the life of my close friend Bob Morris, who passed away in Cambridge on October 17^th, one month short of his 92^nd birthday.

In Bob’s passing, New Zealand lost one of the very best horsemen it’s ever known. He was also one of the great characters, a great stockman, a great mentor to many successful people in horses, and in his own right, very successful as an owner, trainer and breeder.

Robert Lloyd Morris was born in Cambridge in 1927, and it was there he lived for almost his entire life. He was a man who commanded unending respect from all who knew him. He was a man of the land who had an extraordinary knowledge of farming stock and thoroughbred horses.

A quiet achiever, he avoided taking credit for anything, or for helping anyone who needed help; he often shared his vast knowledge to the thoroughbred fraternity. He was a man of decisive action who didn’t suffer fools but equally was kind of heart, a loyal friend, and a man who liked his steak medium-rare.

He bred and raced numerous top horses over a long period. His most significant success as a breeder came with the Geoff Murphy trained Abdul in the 1970 W.S. Cox Plate. Abdul also won the C.F. Orr Stakes, the Sandown Guineas, the AJC All-Aged Stakes and the Liverpool City Cup.

He also bought and raced Savoir (Sovereign Edition) which won the 1000 Guineas at Caulfield, and the VRC Wakeful Stakes at Flemington, and on numerous occasions was second to Champion Filly Surround in the 1976/77 season.

In 1956 when aged 29, Bob took Sir Woolf Fisher’s outstanding sprinter, El Khobar, by ship to America after the horse had a string of victories in both New Zealand and Australia. The son of Gabador won the BATC Doomben Ten Thousand Guineas, The Ascot Stakes, and the AJC Warwick Stakes.

Hollywood Park 1956, Bob Morris shows Sir Woolf Fisher’s four-year-old entire EL KHOBAR to American Buddy Hirsch (right) following his arrival in Calfornia.

In Brisbane in 1956, he also won a match race with Syntax by eight lengths and was the best sprinter in Australia that year. El Khobar also had a successful race career in the USA before retiring to stud, firstly in the USA, and then back in New Zealand at Sir Woolf’s Ra Ora Stud at East Tamaki.

The accompanying photo of Bob with El Khobar in the USA surfaced only after Bob’s death. Although Carol Marshall worked for Bob, and was with him for 47 years, she had never before been shown the El Khobar photos – Bob wasn’t one to promote himself, even to the smallest degree.

Bob never married and is survived by his older sister Grace and his nieces and nephews, and Carol Marshall, who worked for Bob and lived with him and his older sister Margaret for all her working life before Margeret’s passing only three years ago at age 94.

His best friend was the late Maurice Paykel of Fisher & Paykel fame. They were very similar characters, completely devoid of ego but realists, intelligent, and they shared a good sense of humour and a passion for horses. Bob was the practical horseman and Maurice was the enthusiast, and together they bred and raced many horses together over many years.

Maurice Paykel turned down two knighthoods during his lifetime, which was the measure of his humility, and Bob, like his friend preferred to stay under the radar Both were humble men to a fault, and close friends.

Together they bred and raced both the Hermes mare Sequitur and her daughter, Sequita, by Sovereign Edition. Both fillies/mares were multiple black-type winners.

When Maurice Paykel died aged 88, one obituary said: “Paykel has been described as a caring person, always adhering to high standards.” That was also Bob Morris to a T. Bob was the most punctual of men and detested latecomers and the thought of being late. When off the farm, he was a dapper dresser and always wore a hat to the races.

Bobbie, as he was known in his younger days, with EL KHOBAR in an excellent portrait study at Hollywood Park, California.

In the early days of Cambridge Stud, Bob had a significant influence on the preparation of yearlings and was a big help to Sir Patrick Hogan in getting the Stud established.

Sir Tristram’s first stud groom John White (aka Whitey) described Bob as “an outstanding horseman and outstanding with all stock, for that matter. Even with the cranky old Sir Tristram, Bob used to clip his mane, and all the yearlings manes, with a pair of hand shears. Because Bob was tall and skinny, he could stand up beside Paddy and do the perfect job on a difficult horse.

“His horsemanship was outstanding to watch,” said Whitey. “In his lunge, he had a rope across the top to which he tied to the horses, and if the horse had a go, or fell over, that rope had enough slack, and the horse wouldn’t hit his head on the ground.

“I can’t say enough about the man, to be honest,” continued Whitey. “He was a strong man, and he could fire-up if he saw any poor horsemanship. But over the years he gave me a lot of good advice, especially on buying and selling horses. A lot of the best advice I ever had came from Bob.”

My own friendship with Bob began in the late 1970s at a Trentham Yearling Sale. In the mid-1980s I went to Ra Ora Stud only on Bob’s encouragement. He was always my mentor. I viewed him as the giant who stood out from his peers, and I know I was right.

Bob’s view about looking at horses was, that you should form an opinion within 10 seconds of looking, and never go back to change your mind. He also placed a strong emphasis on how the horse’s ears were set; he liked them large enough and properly set – “the lugs are important,” he used to say.

Bob was different in many ways. He never forced his opinion on you, but he knew if you were open to learn, or closed to fail, and he acted accordingly without fuss or condemnation. He had a way about him that was special, a way not detected by many unless you got close to him.

And those that got close to him like Carol Marshall, John White and others will know that. It was a privilege to be a small part of the life of Bob Morris – he was a special man who made a difference to a lot of horse people.

Bob lived his life by his own rules, and in the end, went out by his own rules. He hated the thought of being a burden; he hated the thought of incapacitation from his deteriorating health, and in the end, he beat that inevitability by exiting on his own terms – the determination and courage he displayed throughout his life stayed with him to the very end.

RIP Bob, you were a colossus amongst horsemen (although you would hate reading this and probably deny it), and your memory is now etched into the annals of man-equine immortals.

Performance and Efficiency Audit fails to flatter

Dedicated this week to the memory of my long-time friend, confidant, and all-round good guy Bob Morris who passed away last Thursday one month short of his 92^nd birthday. He was an outstanding stockman, the best horseman I ever met, an inspiration to scores of horse people, proud, humble, highly respected, and my mentor and source of strength for the past 40 years. Bob was courageous and lived and died by his own rules – the finest man I ever knew. RIP Bob, your memory will live long.

by Brian de Lore
Published 25 October 2019

Do the research, speak to reliable people, and gather trustworthy information, and it’s not that difficult to discover the truth. It takes time and common sense and a bringing together of facts to point you in the direction of sound conclusions.

That’s all this blog is about. No delight is gained from a weekly barrage of hand-grenade tossing to administrative authorities to encourage them to act in the best interests of the industry stakeholders. Negativity is depressing in every language, but if you see something worthwhile slipping away that is salvageable, are you not morally obliged to do something about it.

Every week that passes by, I want to give up writing this stuff and do something more fulfilling with happy outcomes, but every week I receive more and more phone and email encouragement to continue the penned fight to hold industry decision-making to account.

One of the major problems is lack of industry awareness through want of a publication. Jonny Turner of the Otago Daily Times – the only major independent newspaper left in New Zealand – is perhaps the only writer left prepared to highlight these serious issues.

The loss of The Informant has been catastrophic. NZRB/RITA’s Best Bet’s is hard to find and hardly worth finding, and showed its colours last week when published on Thursday with no Caulfield form. How low does it have to sink? Do these people not correlate the formguide’s potential to stimulate betting turnover.

Boring it may be to bring back the Titanic analogy again, but this is a snapshot of New Zealand racing. The NZ First guy is on deck talking to the DIA guy, and both are oblivious to the third and fourth class passengers scurrying for lifeboats after the ship has struck the iceberg. One says to the other, “I hope this North Atlantic weather improves tomorrow so we can have that game of deck tennis.”

On radio last week Racing Minister Winston Peters claimed he was spending far too much time on the racing portfolio which is in contrast to his Chief-of-Staff and political scientist Jon Johanassen’s revelation to The Optimist about five months ago when he said that if the Boss had to spend more than two hours a week on racing matters, then it was excessive and something was wrong.

Well, something is wrong, drastically wrong. Perhaps the Minister needs to increase his input from two hours to two days a week, but we all know he won’t. That leaves his right-hand-man Johanssen at the helm and steering the course while only giving Winston the co-ordinates once a week during that two-hour session. It’s evident Johanssen is the man plotting the course.

No skin in the game, no knowledge of racing, and no consequences for Johanssen when they blow the whistle for full-time on racing. On the other hand, Johanssen is the man who will advise and steer NZ-First policy or at least enact the policy, towards the supreme goal of NZ-First getting over the five percent threshold in the election next year, and retaining Winston’s position as power-broker for further coalition deals. That appears to be his prime focus.

Racing, like it or not, will be a political football for the next 12 months and the outcome for our industry will be inconsequential to all political parties – only the election result will matter while racing gets a further battering – if by that time the bank hasn’t called in its loan.

Aspirant National Party leader Judith Collins has already started, telling members of the Gore Racing Club a couple of weeks ago a vote for National will save their Club from being victimised in the venue closure plan. Shadow Minister for Racing Ian McKelvie has been talking about ‘nationalism’ and keeping the TAB for ourselves – a poorly conceived statement, Ian, showing you haven’t grasped the most crucial component of the Messara Report.

McKelvie may not have remembered that Nathan Guy espoused identical sentiments during National’s nine-year reign during which racing received nothing in return – treated like a colony of lepers. During his five-year stint as Racing Minster, Guy paraphrased the McKelvie view and also appointed Glenda Hughes as Chair who, in turn, appointed John Allen as CEO in that John Key/Hughes sideways shift deal.

Did racing ever thank you for that, Nathan? Well then, “thank you’ on behalf of racing. It was a minus $200 million decision for racing – we got the colony of lepers sidestep. No one is going to forget National’s nine-year treatment of racing in a hurry but, then again, we have to weigh it all up against the benefits racing has derived from NZ-First, the coalition, and Winston as our Minister over the past two years.

Imagine a set of old-fashioned scales; the dish on both sides is empty. No weight either side! That’s not to say our Minister in this two-year-old stint hasn’t made an effort and put in place a multitude of things such as reviews, committees, meetings, boards, legislation, working streams, etc, etc. But the tangible benefits for the industry, so far, is zero.

Anyone adding up the benefits accrued over the past 11 years from either side of the political spectrum, may elect not to vote at all at the next election. Or as an alternative, find some obscure party with no hope, but with a leader who makes a real-time contribution by going racing or just having a punt.

The aforementioned notion of seeking the truth in a world full of fake news was further dented this week when perusing the Grant Thornton five-year Racing Board Performance and Efficiency Audit. I would describe it as shallow, soppy, non-investigative, friendly to NZRB, and a complete waste of effort and, more importantly, money.

It’s not worth reading. If a non-racing person read it independently and bereft of industry knowledge, he/she would be lulled into believing that with some minor tweaking, the racing industry is going along okay.

Here’s an excerpt that demonstrates its shallowness: “The Fixed Odds Betting Platform cost $1.1m more than in the original business case (3% overrun) and was delivered 5 months later than planned. The cost was reported as $40.8m by the CEO to the industry and to the NZRB Board (sources: RITA website “June 2019 – Industry Update” and 29 January 2019 FOB Board Update).”

Grant Thornton used the RITA website as it’s ‘source’ on claiming the FOB exceeded budget by only three percent. Yet I can produce a recording of CEO John Allen claiming at one of his industry conversation meetings at Riccarton that the cost of the FOB would be $25 million. Later, in the letter from Glenda Hughes to the Trainers’ Association, the former Chair said it was $30 million. Over time it crept up to $40 million as the overruns became more evident – why don’t we just make it up as we go?

And then the exorbitant costs of the 125 or so contract IT people that was not capitalised, hiding the actual cost of something in the vicinity of $50 million. Grant Thornton has accepted the fake news on the website just as we are all supposed to accept it. Isn’t it disrespectful of these people to think the racing participants could believe it Why didn’t they engage Deloitte who have extensive subject knowledge, and would have produced a credible document?

Here’s another example of some soppiness in fake efficiency and performance reporting: “Other than investments in the key strategic initiatives, the NZRB maintained a strict approach to cost management. Excluding strategic initiatives and turnover related expenses, operating expenses have reduced over the last 5 years from $127.8 million in FY15 to $126.5 million in FY19 (unaudited).”

No further need to quote from this painful, drawn-out poorly presented document. It needs binning rather than reading, the same bin the RIU Review should be in after its release in July. The RIU review recommended the RIU should have autonomy and its own board – the exact opposite of what we need.

The Messara Report says the codes should manage themselves, control their own finances and determine their own future. The Burgess RIU Review, written by an ex-policeman, is recommending the integrity component of racing be disenfranchised from the thoroughbred code which flies in the face of the devolvement of power to the codes, and ultimately would prove unworkable and costly. Racing needs fewer boards, not more.

In last week’s blog, I quoted from the last RITA update which included this excerpt: “We expect DIA-led workshops to get underway with the Codes and betting operators later this month.”

Information received this week suggests that meeting will occur today, Friday 25^th. It’s the meeting that could have taken place a long time ago, and it’s only about getting the DIA workshops underway and likely to be about setting the rates and collecting the levies which under DIA direction is almost sure to be a tortoise-like journey.

DIA is also writing the legislation for the Racing Reform Bill No.2 which will have to be completed anytime soon if it’s to have chance becoming law before the year is out. Information gathered suggests it’s being rushed to get it ready for a first reading – not an ideal situation if National is prepared and waiting to disrupt the process for political gain. And not ideal if you want something good set in concrete.

RITA is probably powerless when it comes to expediting the process, but on other matters, it played a part in the appointment of Malcolm Burgess to do the RIU Review, was party to engaging Grant Thornton for the Five-Year Performance and Efficiency Audit, and failed to take the opportunity to clear out all the NZRB executives including CEO John Allen on Day One, July 1^st.

But back to the subject of net tangible assets. When a company’s net tangible assets in the business world are less than its level of debt, it’s called insolvency. Perhaps, in racing it’s called something else because no one else has mentioned the word.

Racing is in a negative state to the tune of around $20 million on that score. Betting Information User Charges and Point of Consumption may be coming next year, but how about the present? This industry is closer to the cliff’s edge that most would realise, and no one is talking about it.

Result and budget released – juggling reality with fantasy

by Brian de Lore
Published 17 October 2019

The muddied waters encountered when having a glance at NZRB annual accounts in recent years stems partly from the inclusion of ‘Gaming Trust Money’ in the net profit result. It’s confusing because it’s not racing income in real money terms.

Racing benefits from Gaming, but it’s not part of the business of running racing and isn’t included in the distribution of funds to the codes. The announced results should always be viewed exclusive of Gaming Trust Money.

Gaming directly funds the Racing Integrity Unit, Judicial Control Authority, and Racing Laboratory Services which in the 2018 Annual Report collectively cost more than $9.5 million (see the table below, Gaming Distribution). In total, racing benefited to the tune of $12.77 million in 2017/18, and in the same year, non-racing sporting clubs were allocated total grants of $3,556,348.98.

Although not prohibited by the Gambling Act of 2003, an agreement apparently exists between Racing and the DIA excluding race clubs from individually applying for grants – such things as a new mower for course maintenance. The Pines Golf Club, for example, applied for a $55,000 grant for a fairway mower and was allocated $10,000.

By comparison, Ashburton Racing Club is stretched financially and lost in the vicinity of $100,000 last year but cannot apply for a mower grant. They are both sporting clubs struggling for funds to survive – what’s the difference? Perhaps it’s time to review that arrangement and give race clubs equal opportunity with all other sporting clubs.

The 2018 distribution from Gaming with more than $9.5 million having been spent on the RIU, JCA and Lab Services between them. In the past four years, the NZRB has spent $6,674,805 in both Race Form and Racing Calendar publications and yet the TAB’s best advertisement, The Informant Formguide, went broke for the sake of a couple of hundred thousand.

But I digress, the reason for highlighting the Gaming Trust distribution figure is to say the annual accounts would be more readable with its exclusion from the bottom-line profit – especially for simple minds like myself who detest unnecessary over-complication and have trouble dealing with jig-saw puzzles.

It was Isaac Newton who once said: “Truth is ever to be found in simplicity, and not in the multiplicity and confusion of things,” and Albert Einstein who backed him up when he said: “If you can’t explain it to a six-year-old, you don’t understand it yourself.”

One industry observer last week said (after the announcement of $137 million) that it wasn’t too bad and not much down on the $145 million result from last year. That’s how confusing these accounts can be unless you look long and hard.

The top left figure of $137 million shows the NZRB missed budget by a cool $36 million – predicted here five weeks ago to be $140 million but the result was $3 million worse. The $16 million shown in the Gaming Trust net profit is based on doubling the half-year result which was $8 million but the actual figure will not be known until RITA publishes the Annual Report. Distribution to the codes was $151 million but the income was only $121 million – we missed by $30 million!

So, the real loss for last season was around $30 million ($121 million income less $151 million distribution), and to pay the $151 million to the codes, the bank loan increased by $11 million and now has reached its sealing point of $35,000 million. In the season before last, the true loss was $17 million and when you add this latest result to the mounting debt, the industry has sustained a trading loss of $47 million in two years.

Of course, there could be some cost-cutting to come out when the accounts are eventually released, and the possibility of some depreciation allowance that will improve the figures and make the final result look better. But based on what NZRB has been spending annually, and not allowing for the usual replacement of items such as company vehicles, etc, the past year’s loss is $30 million in real terms.

For thoroughbred racing, the TAB results in 12 meetings between September 19^th and October 3^rd (2 weeks) collectively showed a tote decline of $1,690,653. Ironically, out of the 12 venues, the only one which showed an overall increase in betting (35.4%) and increase in tote turnover ($101,473) was Gore – also the only one of the 12 earmarked for closure.

The tote turnover is a crucial figure for racing because the returns to the code are much higher than FOB. Fixed-odds-betting increased in all but two of the 12 meetings but overall nine of the 12 had declined on the previous year. The only conclusion to be reached is that the FOB platform has missed all the John Allen projections by the same margin as from here to the moon.

The immediate problem for racing is no cash. RITA has pledged a payout of $151 million to the codes for this season to maintain the $10,000 minimum but on this past year’s result they will have to find a further $30 million profit on a declining TAB turnover.

But as well as finding another $30 million, CEO John Allen has produced a budget which says the profit will be $165 million for 2019/20, which is $14 million above maintaining the current stakes level and a one-year improvement on this past season of $44 million. Well, it’s me that’s supposed to be The Optimist.

We have all seen the John Allen budgets for the last four to five years, and not one has ever come to fruition – the previous year’s missed by $36 million (see my table). Allen is graciously bowing out of the racing game at Christmas and taking all his racing knowledge with him, but in the meantime we have another Allen budget ratified by RITA.

I don’t understand it for a second, but try as I can I still can’t do jig-saw puzzles. Further issues are arising through the debt to the ANZ which was due for a repayment of $9 million at the end of July, and which is supposed to be totally repaid by the end of this current season. Hands up everyone who believes that’s going to happen!

We have to ask ourselves where the increased income is coming from to meet the budget. Currently two Australian betting operators are paying voluntary Betting Information User Charges (BIUC) but the others won’t kick in until next year despite the legislation already having made it law on July 1^st. Point of Consumption levy agreements are still to be negotiated, put in place, and collected and it’s tricky according to some observers. It’s a wait and see how it pans out.

The problem for RITA is the lunatics are still running the asylum in Petone and the DIA makes a snail look like Winx. Here’s proof of progress with John Allen and the DIA which was published in a RITA release on July 17^th:

“A working group, to be chaired by RITA CEO, John Allen and comprising DIA and RITA representatives has been formed to progress as a matter of priority for the industry, the regulations required to give effect to the new revenue streams established under the Racing Reform Act. We are making good progress in dealing with a range of complex issues in relation to the regulations and will provide a further update in the next few weeks.”

Then in RITA’s third statement almost three months later on October 9^th:

“Introduce Betting Information User Charges and Point of Consumption tax legislation. The Board received an update on the development of Offshore Betting Charges Regulations. These regulations will be drafted by the Parliamentary Counsel Office. The DIA are leading this process but RITA has provided significant support. We expect DIA-led workshops to get underway with the Codes and betting operators later this month.”

How slow! This sort of stuff should have happened months ago. Why didn’t they just give it to the codes in the first instance? The workshops are DIA-led, which means it will happen in DIA-time which is something akin to Bula-time in Fiji for anyone that’s ever been there on holiday.

The industry will know more about the progress when the Statement Of Intent (SOI) is released soon – last year, it was 30^th July, and here we are nearly November. Cost-cutting could be an active feature of the SOI – and it needs to be.

The total cost of running NZRB from the 2018/19 accounts was $213 million. Then add the $40 million to run the three codes and the result is that 50 percent of all revenue from the industry goes on costs – that simply cannot continue.

The Fixed-Odds-Betting platform which was capitalised at $41 million but cost over $50 million, is likely to be written off by 10 percent in the RITA books at the end of July, but what its real value right now? If the TAB was to be outsourced, which it should be, its value only lies in its use up until outsourcing. The ongoing commitments to both Paddy Power and Openbet are other coming issues.

Cash has always been king, but our racing is fast running out of it. The game in New Zealand has been living beyond its means for years, and its high time it woke up to itself and stopped fluffing around. Forget the jigsaw puzzles and overcomplicated procedures and focus on the goal – get the agreements in place and costs down to the bone.

Racing in New Zealand has no assets of any consequence these days and is still exceeding its income with costs. It’s a recipe for a lowering of stakes despite the promises, or even worse – drastic action is required now!

Epsom result a significant boost for NZ

by Brian de Lore
Published 11 October 2019

The strike-rate in Group One races in Australia by New Zealand-breds has been sporadic for a couple of decades, but Saturday at Randwick erased all memory of a run of Epsom Handicap outs with a momentous result for multiple parties.

Celebrating with good cause were Waikato Stud who stand Kolding’s sire, Ocean Park, Trelawney Stud for breeding and racing the Cox Plate winner sire, Wentwood Grange who co-bred, foaled, reared, prepared and sold Kolding at the Premier Sale in 2017, Guy Mulcaster who purchased him for $170, 000, and New Zealand’s pride and joy trainer Chris Waller who made it four Epsom wins, albeit his first with an NZ-bred.

Kolding’s success broke a 27-year drought for a Kiwi-bred horse in the Epsom, the previous being Kinjite in 1992 when the Garry Chittick bred four-year-old son of Centaine and Wenona Girl’s daughter Pilmuir, by Super Gray, took the race by almost two lengths from two more Kiwi-breds in Prince of Praise (Crossways) and Palatin (Palatable).

Prior to Kinjite, New Zealand horses had enjoyed regular success in the Epsom with such names as Dalmacia, Bold Diplomat, Leonotis, Citadel, Lord Nelson and the celebrated Syd Brown-trained Triton who prevailed in 1972 in a historic win over the legendary Goondiwindi Grey, Gunsynd, trained by T.J. Smith.

Garry Chittick was new to the breeding business in the mid-seventies and was yet to establish Thornton Park Stud at Longburn when he attended the Sydney Easter Broodmare Sale. He purchased the Champion and subsequent Australian Hall of Fame inductee Wenona Girl as a 17-year-old mare in foal to Planet Kingdom (Star Kingdom).

Unfortunately for him, the mare had a mishap when unloaded from the plane upon her arrival in New Zealand, and slipped the foal. Three years later in 1978 she produced Pilmuir and ten years after that Kinjite was foaled in Thornton Park’s final season before the Chitticks upped stakes and moved the operation to Waikato Stud.

The Wenona Girl purchase gained justification with Kinjite’s success, but without the accident and with a little luck a Planet Kingdom filly would have greatly sweetened the venture. Wenona Girl won everything – the Winx of her day – with 27 victories from four and a half furlongs to a mile and a half. Fifteen of those wins are today rated as Group One races.

With Garry Chittick cheering home Kolding to his game Epsom win to give Ocean Park his first Group One victory, he was unaware his previous cause to cheer an Epsom winner had been so long ago with one he bred himself.

Others celebrating were Australian jockey Glen Boss who claimed his fourth Epsom and 83^rd Group One winner, and my personal friend in 83-year-old Sydneyite Warren Pegg, who co-bred Kolding and who has had a long and fruitful association with Wentwood Grange at Cambridge.

If not celebrating, the whole of the New Zealand racing and breeding industry would have at least been cheering home a rare Epsom Handicap NZ-bred trifecta. The result is massive boost for New Zealand Bloodstock and especially for the coming Ready To Run Sale in November, and it clearly sends a strong message to Australian owners and yearling buyers that New Zealand-breds are still very much a force on Australian racecourses.

The 2019 Ready To Run Sale is strong with 414 lots catalogued including 12 by Ocean Park, 18 by each of Per Incanto and Champion Sire Savabeel, 15 by Showcasing, 13 by the resurgent Tavistock, eight by Rip Van Winkle and seven each from Smart Missile, Pins, Shocking and Charm Spirit. The strength is both paternally and maternally, and the NZ Epsom trifecta is sure to have reignited Australian interest.

The Epsom result was perfectly timed after The Bostonian’s Brisbane winter Group One successes and only a week before his contesting this Saturday’s Group Two Alfa Romeo Schillaci Stakes over 1100 metres at Caulfield. A win in that event would likely see him contest The Everest on Saturday week.

Also enhancing NZ-breds with only a slim chance of The Everest inclusion was Saturday’s Hawkes-trained Premiere Stakes (1200m) winner Brutal, by O’Reilly, who won his fifth race from just eight starts which is inclusive of the Gr.1 Doncaster Handicap (1600m) in the autumn, and who has the turn of foot to have been a considered option for the $14 million race.

Brutal has been set for the $7.5 million The Golden Eagle (1500m) at Rosehill on November 2, and this week was to contest the Gr.3 Sydney Stakes (1200m) at Randwick. Slots for The Everest are now in short supply and Brutal may miss a start for that reason, although Michael Hawkes said an offer would be carefully considered if forthcoming.

As unusual as it would seem for a Doncaster winner to be competing against Australia’s best sprinters in the world’s richest sprint race on turf – stranger things have happened. Brutal ran his last 600m in the Premiere in 34.02 and last 400 in 22.65 and the Hawkes camp is under no illusion he has all the attributes to be competitive.

Interestingly, Epsom winner Kolding is also aimed at The Golden Eagle, so NZ-breds could be strongly represented in that rich event. Kiwi representation could materialise as the strongest seen in many years for the remainder of the spring with five-year-old Surprise Baby, by Shocking, now the favourite for the $8 million Melbourne Cup on the first Tuesday in November after the Adelaide Cup winner took out the Bart Cummings (2500m) and firmed into $9 for the Flemington two-miler.

Add Thousand Guineas Prelude winner Acting, by Savabeel – bred and owned by Waikato Stud, coming into contention for this week’s grand final at Caulfield as fourth favourite, and the representation is strong. Madison County should also run well in the Toorak this week.

Epsom runner-up Te Akau Shark who ran his final 1000m of the race in 58.61, now heads towards the Cox Plate on October 26 in which he has firmed with bookmakers to the fourth favourite at $10. Jockey James McDonald was incredulous the four-year-old son of Rip Van Winkle could run so well and not win, adding further merit to Kolding’s performance in staving off ‘the Shark’s’challenge over the final 300 metres.

Top Kiwi two-year-old of last season Yourdeal, by Dundeel, should be an improver when contesting the $2.2 million Caulfield Guineas, also on Saturday, but the Tavistock Busuttin/Young trained The Holy One is a winner at three of his five starts and is favourably drawn in barrier four, and rated a better chance according to the bookmakers.

Kolding ended his sire’s frustrating near misses in important Australian races, and with third placegetter Star of the Seas consolidating the result, the spotlight is firmly focused on Ocean Park. His progeny and other highly ranked NZ-breds in both Sydney and Melbourne should see Kiwi-breds achieve their best Australian spring in many years.

Open letter to Minister Winston Peters

The Optimist
www.theoptimistco.nz
the optimistnz@gmail.com

Rt Hon Winston Peters
Deputy Prime Minister
Minister of Racing
Minister of Foreign Affairs
Minister for Disarmament and Arms Control
Minister of State-Owned Enterprises

3^rd October 2019

Dear Winston

Re: Your letter 2019/20 Ministerial Expectations of the Racing Industry Transition Agency

I decided to write to you personally in response to the publication of your Letter of Expectation to RITA Chair Dean McKenzie which inexplicably appeared on the RITA website last week for reasons unknown despite the fact the letter was two months old.

Yes, it was receipt stamped 25 July, but no date appears on the actual letter – very strange!. Being a suspicious type which was conditioned into me through reading so many NZRB Annual Reports, I decided to ask you personally if you could clear this mystery up, and in the interests of transparency for the racing industry, I further decided to make it an open letter.

So, did you tell RITA to post that letter on their website? I’m presuming the answer will be yes because RITA would not have suddenly posted it two months after the event of their own volition, given that the contents of the letter was in-reality putting the RITA board on notice; giving them a bit of a euphemistic smack around the ear to incite some action – that’s the way I read it – how could it be anything else?

A couple of readers of my blog independently of each other, both involved full-time in the industry, claimed you were throwing the RITA board under a Wellington bus (one that was running late) and wiping your hands of the industry, and saying ‘I’ve done all I can and you’ve let me down.’ But I reject that accusation. I didn’t see it that way at all.

On the blog I posted two weeks ago, I highlighted four or five promises listed in the NZ First pre-election racing manifesto that had not come to fruition. Not for a moment would I presume or suggest the release of your letter had anything to do with that, but I find it interesting, and I’m sure that most stakeholders in the racing industry also find it so, that you thought RITA needed a stern reminder of the reasons for their existence.

And the reason for RITA’s existence, which formerly was MAC, is clearly stated in the MAC Terms of Reference released in January and confirmed in the MAC Interim Report which your office released in April. And that is to operationalise the Messara Report which at this point in time, in this writer’s view, is clearly not happening.

Why it’s not happening is very much a mystery, but in the end it probably comes back to leadership; it comes back to decision making or the complete inability to make a decision. It comes back to getting the job done, transparency, and accountability which RITA said they would have but haven’t delivered. We still have none of those attributes, so the question is, Winston, do we have another ‘wolf in sheep’s clothing?’

In a TV interview last Sunday, RITA CEO Dean McKenzie made it very clear that RITA has no appetite for a partnership outsourcing of the TAB. When questioned about the future of the FOB he said, “The betting platform is there, so the industry has invested a significant amount of money in it – the decision has been made – so we have all got to get on and make the best we can of it .”

Without outsourcing, Winston, this industry has a very bleak future and not to outsource flies in the face of the priority recommendation of the Messara Report and would deny racing its most significant revenue income stream for increased stakes money.

What we currently have is the same NZRB/RITA leadership team lead by CEO John Allen who apparently hasn’t gone on gardening leave after all, and RITA which is a board that’s met four times and therefore not involved in the day to day running of the industry. And who can RITA be listening to and gleaning advice from on the direction they take going forward – certainly not the codes. No, they can only be collaborating with the same executives who all remain employed – the same team that has cost racing $200 million in the past five years.

In your letter to McKenzie you say, “The Government remains committed to resolving key long-term challenges facing the country including sustainable economic development, increased exports, decent jobs paying higher wages, a healthy environment and a fair society and good government.”

That may be so – your commitment, that is. But the next bit you wrote is entirely wrong. You say: “The racing industry is well positioned to contribute to addressing these challenges.”

The racing industry is not well-positioned at all. Just the opposite, in fact; it’s bleeding, badly hurt and dying a slow death. Everyone knows, Winston, that you are busy with Foreign Affairs, and all that other stuff, and have only two hours per week to devote to racing – and fair enough. But in the last month I have been visiting racing people in the Waikato, Hawkes Bay, Otago, Southland, and Canterbury, and I can tell you that many are distressed or penurious or as some Aussies might say – flyblown!

One breeder in Southland said, “unless we get some good news from Winston in the next few weeks, my eight mares will not be bred this breeding season.” Also in Southland, a prominent trainer categorically stated he would retire if stakes did not increase in the near future.

Your letter also makes some excellent points to RITA including what Cabinet agreed to on April 15: “agreed to the overall intent of the Messara Report as providing the best approach to delivering a New Zealand Racing Industry that is financially sustainable, internationally recognised and competitive.”

The letter also goes on to say: It is expected that RITA will:

Change leadership

• lead a programme of change to return the industry to a well-managed and sustainable growth path

• deliver on the Government’s intentions by taking decisions in the commercial interests of the industry – considering the long-term vision for a revitalised and sustainable industry, where participants are valued and able to prosper and the industry contributes to its full potential for the benefit of the NZ economy.

• make best use of the $3.5m Crown contribution to the cost of industry change – ensuring that this funding ‘buys change’ rather than underwrite business as usual activities.

The $3.5 million mentioned above was part of the last budget, and it clearly states it’s for the cost of industry change. So, why isn’t it being used? What is RITA waiting for? RITA was MAC and between the two they have had nine months to plan and execute substantial changes – the industry doesn’t buy into the excuse currently used about RITA’s ‘newness.’

Winston, the RITA comment on cost reduction: “We expect the costs to be less,” which was conveyed last Sunday on Weight-In, is the same vernacular we heard from NZRB. What are the real cost reductions? When can we expect to see a budget for the current season? We are now into the third month of the season and no Statement of Intent. The commitment made by RITA in the Interim Report was to be inclusive and transparent with the participants of racing – it hasn’t happened.

Last week I made an error when I stated NZRB/RITA were $25 million in debt to the bank, but since then, digging around I’ve discovered the figure is $10 million higher at $35 million. Chairperson McKenzie said that RITA was not borrowing any more money from the bank, but what he didn’t say was the nothing was paid off the debt when due at the end of July. If RITA has rolled over the debt into the new season isn’t that effectively reborrowing it.

I also slipped up by saying the Paddy Power commitment was for ten years, and Openbet was for five years. On checking up, I found it was the other way around, but it doesn’t alter the commitment to pay $17 million annually which is guestimated to total $130 million over the ten years.

Overall, your Letter of Expectation was confirmation of what should be happening, but nothing tangible has so far come out of it for the stakeholders – and you sent it well over two months ago. As one observer remarked privately during the week: “We have seen a lot of hui but not much do-ey.”

More importantly, the finances don’t stack up – anyone who reads January’s Half-Year Report from the NZRB, studies the TAB figures, and has access to a calculator will soon be able to work out we are diving head-first into a large bin of wet horse manure.

In the meantime, before that occurs, on behalf of the industry we all hope you are now fully recovered from your old rugby injury procedure? Please note that on your list of Ministries at the top of this letter I have elevated Racing into first place from fourth above Foreign Affairs – more in hope more than in expectation.

Yours sincerely

The Optimist

TAB trending down as Minister’s letter of expectation goes live

by Brian de Lore
Published 26 September 2019

The downward trending TAB results has provided a double-edged sword problem for RITA in both the sustaining prizemoney aspect and the value of the TAB for any future outsourcing negotiations.

Meanwhile, yesterday a letter from Minister Winston Peters to RITA Chair Dean McKenzie which was dated July 25^th was posted live on the RITA website two months later. Why would that occur unless it had come as a directive from the Minister himself?

The introduction to the letter states: “The Minister for Racing, Rt Hon Winston Peters outlines the matters that the Board of the Racing Industry Transition Agency (RITA) are expected to address in the business planning process for the 2019/20 financial year. This Letter of Expectations is provided under Clause 3 of Schedule 1AA of the Racing Reform Act 2019 (the Act).”

The letter is well worth a read and can be located at https://www.rita.org.nz/201920-ministerial-expectations-racing-industry-transition-agency

How do you fathom the reasoning for the delayed publication? The letter strongly reinforces the said NZ First racing manifesto, the terms of reference for MAC and RITA and seems to send a strong reminder message that RITA needs to get on with it. Is the Minister, who devotes only two hours weekly to the racing portfolio and relies on delegation to get the job done, himself becoming impatient with a lack of visible progress?

Draw your own conclusions but the letter suddenly appearing two months after receipt is not standard practice. Some would suggest the Minister wouldn’t be happy with the current rate of progress and that if he looks closely at the way the TAB is trending then he may subside into semi-depression.

In the week to September 15^th the five thoroughbred meetings at Tauranga, Wingatui, Awapuni, Ruakaka, and Rotorua were collectively down 18.81 percent in tote turnover for the same meetings last year which is the statistic most critical for thoroughbred racing’s income. The tote provides the thoroughbred racing code with a net 14 to 15 percent of its income for stakes.

Fixed-Odds-Betting increased by 10 percent for the same week, but remember that when the margin on the FOB is eight percent, the net return to racing is a mere two percent. But since the FOB was launched the margin hasn’t been as high as eight – it was only three percent early, five to six percent after six or seven months with anecdotal evidence saying it’s still nowhere near eight percent.

The financial benefit to racing from FOB sports betting requires a turnover seven to eight times greater to equal what racing gets paid from the tote. Why the codes ever allowed this happen is beyond belief. Why they didn’t unify and go tear down the NZRB walls at Jackson Street Petone, is a mystery? Probably because most of them reside in the same building – very cosy!

If this isn’t proof that the unscrupulous executives at NZRB didn’t deliberately cannibalise racing’s tote betting for the benefit of sports betting and promoting its FOB platform, then what is? No one with any racing in their blood would have done that. And they used $50 million belonging to the racing codes to do it. Anyone who opens the TAB website will see that sports betting is to the forefront, and you have to go and find racing.

For that level of misuse of shareholders funds in a public company, jail sentences would result. But in racing, no one cares what happens to it, least of all a civil servant organisation such as the DIA which now has a firm grip on racing’s testicles and isn’t letting go anytime soon.

But back to the double-edged sword problem facing RITA. For instance, the deal the TAB could negotiate in a partnership outsourcing arrangement would be far less attractive today than it would have been 12 months or two years ago. No use crying over spilled outsourcing milk, but as the TAB turnover declines, so does your attractiveness to a company such as Tabcorp or Sportsbet.

Outsourcing is the big carrot. The primary component in the goal of the Messara Report is to double prizemoney with the main contributor identified as an outsourcing arrangement. RITA has stayed quiet on the subject and said in the Interim Report that outsourcing is not a foregone conclusion. A seventh member to the RITA board (Minister’s prerogative) with expertise in that area has so far failed to materialise – nothing to date which indicates a lack of desire to go down that road.

In July RITA’s CEO Dean McKenzie said that on the question of outsourcing he would look at everything from the status quo to full outsourcing. A committee was set-up by MAC five months ago to investigate outsourcing, but its appointees are nameless and findings remain a guarded secret.

Last season’s distribution to the codes was $151 million of which $40 million was used-up in administrative running-costs – $20 million for thoroughbreds and $10 million each for the other two. Why is that figure so high and particularly in the case of Greyhounds NZ which recently announced its unique version of self-harm by appointing former NZRB Chair Glenda Hughes as its interim CEO – the gravy-train continues – the only difference is it’s changed tracks.

In John Allen’s Statement of Intent (SOI) released in August 2018, it budgeted distribution to the codes of $151.6 million, but the failed strategic initiatives including the FOB will see a shortfall of around $18 million for distribution – that’s the historical figure which means that NZRB/RITA has been using-up cash-on-hand to pay for their commitment to keeping the stakemoney minimums of $10,000.

In the Half-Year Report released last January, it showed NZRB had at that point only $8 million in cash. Since then, the income to outgoings ratio situation has worsened to the point where $12.5 million per month ($151.6 million p.a.) is required to keep the status quo, but the TAB profit level has dropped to $10 million per month, a short-fall of $2.5 million every month.

When the Minister announced through RITA that the stakes would stay the same for the current season, and CEO McKenzie in July stated it would be a challenge – it was racing’s understatement of the year. It’s no coincidence that the budget for season 2019-20 which normally would have surfaced in August has not yet seen the cold light of day.

I have only hearsay evidence that incumbent but albeit resigned CEO Allen made four attempts to deliver a budget to RITA quite recently, but all were considered works of fiction and accordingly rejected.

As every week passes the perilous state of New Zealand racing worsens. Forget the arguments on venue closures because this is far more serious and it’s blatantly obvious it’s been a cover-up. The resignation of Allen should by rights only be the start of further departures including the CFO and the rest of the executive team.

These are the people that signed this industry up to committed payments of $17 million annually to Paddy Power (10 years) and Openbet (five years). Not knowing the detail of those commitments a guestimate could be a $130 million commitment in total. Add the cost of building the FOB at $50 million, plus other strategic initiative failures and all the exorbitant salaries paid over the past four to five years and you arrive at a total wastage round figure of $200 million.

And since The Optimist posted last week’s blog, CEO Allen has picked up another weekly pay cheque of $13,000, just to make the industry happy.

The cash on hand in January this year of only $8 million was by July supplemented to the tune of $4 million from the first year of the Betting Levy rebate but if the monthly deficit is $2.5 million it doesn’t take an Einstein to conclude this business is running out of cash at the rate of a good gallop. Further to racing’s woes, the economy is slowing and betting turnover will take a hit on that factor alone.

The predicament again reemphasises the cost of not having the Betting Information Use Charges agreements in place for July 1^st which should be bringing in $250,000 every week.

If the current trend continues, then sooner or later the monthly creditor payments will be slowed, or the codes will be slow-paid, and as a consequence owners stakes payments will be slow paid. But the apathy displayed by this industry to the situation has been mindbogglingly staggering. It’s a little like a community’s hurricane warning that goes unheeded.

The Minister’s letter is very stern about what he wants from RITA, and he is focused on what he sees as the end result for racing. Be aware, racing is deeper into the crises than it’s ever been before, and that predicament is mostly a man-made one through exceedingly poor governance.

Peters has passed the ball to McKenzie who he now expects to maul his way up the length of the field with the rest of RITA and get over the try line. Nothing less will save the day.

No time for celebrations; only lamenting the BBA

by Brian de Lore
Published 19 September 2019

The object of The Optimist as a weekly blog is to try and keep the truth flowing and the participants in the thoroughbred world informed on various important aspects of racing and breeding.

It gets harder when some administrators close ranks and won’t talk, but funnily enough, it then becomes more intriguing. Over the past few years, I have developed a network of informers and supporters who are reliable and more than willing to help for one reason only – they love the game and want desperately to see it recover and achieve sustainability. They are racing people who possess passion; they know and live racing.

Had it not been for them, I may long ago have curtailed this campaign of disseminating facts from the fiction and calling for justice on behalf of people at the coal-face of racing. They encourage me weekly and that’s what drives the blog. I merely write it but rest assured, it’s a collaborative effort which is mostly driven by a few die-hards who also refuse to allow racing to go down without a fight.

Communication is everything, and almost everyone I speak to sorely misses The Informant. So many people relied upon it, and I don’t believe NZRB had any understanding of how valuable its form guide has been for TAB turnover. Directly from a TAB outlet this past week I’m told the retail side of the TAB is $1 million a week down on last year’s figures which were also down on the previous year’s numbers.

It makes you wonder why the TAB denied The Informant free access to the form which necessitated the form’s purchase from Australia at an annual cost of $100,000. That was the main reason The Informant fell over, and the day it did, a spy communicated that TAB employees were high-fiving in the halls of the NZRB at Petone.

That’s how sick these people are – all in the misguided belief the TAB’s money-losing publication known as Best Bets had scored a victory and would benefit with increased sales – perhaps my continual justified criticism of NZRB may also have been a factor.

The circulation of Best Bets declined considerably under NZRB’s management; the unconfirmed talk is that it went from 3,500 down to 1,500 after NZRB reputedly purchased it for $250,000 when it was losing money and was effectively worth nothing. It continued to lose money and is yet another example of their fiscal irresponsibility.

So, I’ve written seven paragraphs and haven’t mentioned the name of John Allen (until now). By this time everyone will know Allen resigned on Monday morning and officially will depart in December. However, it will not be surprising if gardening duty becomes his main activity between now and Christmas – perhaps only punctuated by questions from RITA arising from his decision making over the past four and a half years.

It is no coincidence Allen’s resignation comes soon after RITA’s receipt of the Performance and Efficiency Audit from Grant-Thornton and the financial year 2018-19 audit by Price Waterhouse Cooper. They will be telling documents that will eventually become industry knowledge as we near the RITA AGM before the end of the year.

Much of the content in Allen’s resignation statement to the media can be disregarded. The quotes were typical of an agreement between two parties when someone is getting the shove. They always say beautiful things when the letter writer is ushered through the door.

And while I’m doing acronyms, it’s worth mentioning BBA which is a well-known one in the thoroughbred world – British Bloodstock Agency which has been a big player in the sale and purchase of horses worldwide for more than 100 years.

But BBA in New Zealand could be construed as Brown, Bayliss, and Allen. They are the all-in-a-row last three CEO’s of NZRB. History will record them as a trifecta of characters who have left the horse industry with a legacy of unmitigated disasters – I can confirm that will be recorded in history because I’m currently in the process of writing the book.

What can’t be allowed to happen is that the powers-that-be go for the First4. The cycle must be broken, and the criteria for the next appointment changed. The BBA common denominator of high academic qualifications, no skin in the racing game and no previous knowledge of the racing industry is a losing combo.

V’landys type people are rare commodities, but if RITA could come up with someone half as good it would be a vast improvement on the BBA. Allen’s departure is a positive move forward, and while it will open the door for further inroads into cost-saving, it is only the first of a thousand steps.

Below is a welcome letter of support received this week from NZ Trainers’ Association:

Hi Brian,

The Trainers’ Association wishes to record its support for the recent articles dated 5th and 13th September, you wrote and included on the blog, The Optimist. The Executive share your concerns regarding the perceived lack of progress in regards to the reforms as outlined in the John Messara Report.

It is understood that the legislation has proceeded as planned with a focus on new revenue streams. However, there does not appear to be any urgency in the actual collection of this revenue, nor addressing the reduction of overhead costs at RITA.

Dean McKenzie and Anna Stove attended the National AGM of the Trainers’ Association in August. The notes from the meeting follow this email for your information. Many of the concerns raised echo the views expressed in your blogs.

The Trainers Association is very aware of the need for urgent action as the situation is so dire. There are many trainers very close to being unable to continue as their livelihoods are at risk due to the current state of the industry.

Regards,
Wendy Cooper

Executive Officer
NZ Trainers’ Association Inc

Pace of Kim Dotcom’s extradition parallels pace of racing industry change

by Brian de Lore
Published 13 September 2019

Police raided the Kim Dotcom mansion in January 2012, and the US Department of Justice has been trying to extradite him to America ever since, to face charges relating to illegal file-sharing to his Megaupload site that earned him millions of dollars.

New Zealand’s bureaucracy has stretched the extradition into its eighth year, and we are still counting. Let it be a warning to New Zealand racing that the industry is now in the hands of like-minded bureaucrats in Wellington who have no conception of time and no care for racing’s future

The bureaucracy in Petone and Wellington has probably never heard of Charles Darwin who once said: “A man who dares to waste one hour of time has not discovered the value of life.”

Time is the one critical ingredient in very short supply for racing, and as long as the DIA is controlling the schedule, time won’t be a consideration. If the Minister doesn’t intervene and rev-up the DIA and RITA and get the Messara Report actioned then it may become another statistic and go dusty somewhere on a shelf like every other review in racing’s history.

RITA was expected to take control of racing and make a big splash but instead has barely dipped its toe in the water. If you read MAC’s interim report released in late April it talked about taking action; the actual words were, “Change will happen quickly and disruption must be carefully managed,” but no such action is has occurred.

MAC/RITA said that from July 1^st it would, “enable initiatives that will drive revenue growth and reduce the cost for the racing industry.” But the legislation that became law on that date has shown just how ill-prepared the DIA-RITA co-operative was by having no agreements in place and nothing to collect which is simply money down-the-drain as a consequence. From all accounts, the rates are not yet set.

The lack of preparation to collect racefields levies that could be supporting stakes money is a disgrace. And the complete disregard for taking action to reduce racing’s massive administrative costs is also a disgrace. The NZRB which has a new name called RITA still has a CEO earning $680,000 annually, a total of 14 employees on $220,000 or above and 144 employees on $100,000 or more.

The wastage is diabolical and is nothing short of thievery from a starving industry. For years and years, the ever-fattening NZRB has been siphoning off the cash that belongs to the owners and workers of racing. That it has been allowed to continue this long is extraordinary.

The hatchet-man needs to come in to slash and burn the costs. Tweaking, convening more meetings, continued full involvement with the DIA and the failure to be honest with the coal-face people of racing is not making the drastic changes required to salvage whatever can be salvaged of this once great industry.

Does racing need to be once more reminded about our 2006 status when the combined cash and property assets amounted to more than $106 million and interest was an income stream? Now, it owes $25 million which is the upper level of the limit, couldn’t pay back the due $9 million at the end of July and has effectively rolled over the loan and has placed itself in a tight corner with no room to move.

Racing is displaying all the signs of self-harm and needs a financial shrink. Instead of facing up to the issues three years ago when the writing was clearly on the wall, John Allen intensified his campaign of fake news and borrowed money to put the stakes up – tantamount to putting a bandaid on a severed limb.

All the while Allen was singing the praises of everything he was doing, releasing Statements of Intent that showed profits of up to $220 million and acting like the court jester. Many people believed the bullshit, and look what we have now – a FOB that has cost $50 million which is a crock.

Worse still, he’s still employed and effectively in charge and still collecting his weekly pay packet of $13,000. WHAT A JOKE!, metaphorically speaking. Yet, the Interim Report said that RITA from July 1^st “supports the Change Management Programme,” which can only mean one thing.

The cover-ups and the lying to the participants has been going on for years and has become the norm rather than the exception – same as the politicians. We have been lied to so much we expect lies and deception. Proof is everywhere between the lines in the annual reports.

A recently departed employee from NZRB has stated that if the top three executives at this dysfunctional organisation failed to get out of bed for a month or two it would make no difference whatsoever to the running of the TAB.

The gravy train rolls on at full-pace and today on the RITA website a total of 17 jobs were in the offing. A couple of months ago NZRB employed a new IT Manager and will relocate that person and his family from Australia at a massive cost and pay him $350,000 to $400,000. Where is the cost-cutting?

The scope for cost-cutting is massive. Apart from salaries, the last annual report shows they spent $58,700 each and every week on travel and accommodation. Another weekly debit of $49,000 comes in the form of hiring consultants. A further $65,000 a week was spent on items listed as ‘other operating expenses’ with no further explanation offered.

No accountability and no transparency. No broom through management to clean out the dead-wood and costs, and no apparent show of strength in the leadership of RITA to give stakeholders a glimmer of hope. RITA should seriously address all these issues and take drastic action.

It makes this paragraph which appeared on page six of the executive summary quite laughable:

“The committee also want to reverse the historical model where the stakeholders of the business get what’s left after the administrators have taken what they believed they needed to run the industry. The stakeholders can no longer be left at the end of the food chain. Their interests must sit at the heart of an efficient, responsive, future-proofed commercial model.”

Lip service at best. Too much self-interest and job protection going on and a lack of strong leadership. Someone needs to make a statement as this industry is fed-up to the teeth with the same old, same old as the inertia of the downward spiral intensifies.

Where is the accountability? Why is this industry allowing these people to write such promises, not deliver them and get away with it? The codes have displayed their total apathy and lack of grit in failing to protest in any positive way while racing is dying a slow and agonising death.

And for the lack of recent statements from the Minister while he continues his absence on sick leave, it is worth regurgitating the NZ First Racing Manifesto which included these promises:

Introduce a new (below Premium Meeting) where every race will be for a $15,000 minimum with relativity across the codes.
Restore marque racing plans and prize money initiatives in-line with NZ First Implementation 2005-2008.
Urgently review the operations and costs of the New Zealand Racing Board.
Enhance employment and export opportunities by working with the industry to improve the international status of New Zealand Group One races to attract greater international interest

Two years hence and none of these have happened. All we have to date is the promise of maintaining stakes at the current paltry level of last season – a directive from the Minister to RITA.

But on the figures shown here in last week’s blog (and those figures are correct), the prospect of keeping the status quo with an underperforming TAB looks bleak without an infusion of revenue from some unknown source.

The hole is getting deeper. The list of unfulfilled promises is mounting, and the industry morale is badly in need of a massive dose of decisive action.

Winston’s dead horse still alive, kicking and well-watered

by Brian de Lore
Published 6 September 2019

The month of September is the first anniversary of the Racing Minister’s Claudeland’s release of the Messara report where Peters, in his speech, said, “I know a dead horse when I see one,” in obvious reference to the NZRB.

But everyone in racing knows the horse isn’t dead; far from it! The despised steed is in a paddock of clover and still regularly has its snout in a trough full of nutrient-rich Dunstan’s Pasture Plus.

On the night of that speech from the Minister, NZRB Chair Glenda Hughes remonstrated with Peters immediately after the meeting’s conclusion, but here we are one year later and Hughes is still in the Jackson Street, Petone building as CEO of Greyhounds NZ.

CEO John Allen and his band of merry henchmen also remain in the building and will have new business cards in their ever-fattening wallets with the metamorphising of NZRB into RITA the only discernable change. Have a close look at the table below and comprehend that these are the very people that have guided this industry into a shortfall of around $27 million required for code funding in this current season.

In a public company environment the shareholders would be demanding blood. The CEO and Chief Financial Officer would both be down the road in quick time – remember that this result is all about poor governance and lack of foresight and consultation with the industry on a substantive scale.

The profit against budget looks to be down in the vicinity of 19 percent. Gaming is the only figure that’s risen, but overall the actual against budget are poles apart. That’s how misguided the building of the FOB has been with its $17 million in running costs payments to Paddy Power and Openbet. All advice against doing it including a Deloitte Report which stated it was the path to penury fell on deaf ears.

Unofficial figures but above is what The Optimist believes will be the approximate result when the 2018-19 Annual Report’s released around November/December. In summary, it portrays the worst result on record and shortfall of $27 million on the amount required for code funding, yet the failed CEO and his executive team remain employed despite a history of incompetent decision-making and reckless spending.

Interestingly, the budget for 2019-20 would typically be out in July/August along with a Statement of Intent, but to date no sign of it. Surprisingly, though, RITA announced that current stake levels would be maintained which by the above calculation would require a racing profit of $151 million – not $124 million.

The total profit, including the growth in gaming of $140 million somewhat camouflages what will be a lamentable result for racing. McKenzie has already said that maintaining the stakes level will be a challenge – climbing Everest in bare feet could also be described as a challenge.

The Allen appointment was a monumental mistake in the first place, and he has cost the industry tens of millions. But we are keeping him – go figure that one out. Last year’s outgoing NZRB board who were due for retirement in July, but stayed on for another year at the Minister’s behest, apparently renewed his contract for a further three years and it will cost $2 million to sack him.

Why would an outgoing board go and do that? Where is the accountability for a board that has clearly failed in both employee appointments, the industry’s strategic plan and its failure to comprehend, consult, and alter the direction of an ailing industry?

The slash and burn transition the industry needed is not happening. Change is slow and cumbersome and is ignoring Messara’s advice in his review on ‘urgency’ and is at odds with his introduction to Part One of the Review when referring to the challenges by saying, “…which protects and enhances the financial welfare and livelihoods of the many thousands of persons involved with the racing industry.”

The softly, softly approach is not endearing to the thousands of participants who are falling further behind with every passing month. The collective returns to owners the Messara Report calculated to be 22.9 percent in the 2016-17 season, compared to NSW at 48.1 percent, have fallen further behind. With rising costs, would it be a surprise to discover they are now around 20 percent?

The Minister always said, through his electioneering and post-election, the owners are the most important people in racing and need much higher stakes money. Two years ago he said it was urgent, but instead of maintaining the off-the-bit full gallop momentum of the Messara Report he has eased his charge down to barely a trot.

NZ First Chief of Staff and political scientist Jon Johansson told me a few months ago the Minister spends two hours a week only, on racing, and that if the portfolio requires more time, then something must be going wrong. I interpret that to mean that Johansson is the one conducting the orchestra and there has to be a triangular degree of cooperation between he, RITA and the DIA for this thing to move forward at any pace.

The result is a bureaucratic process that has no feel for racing’s plight. RITA will understand but is between the rock of Johansson, and the hard place of the DIA and has constraints in the terms of reference which clearly states the Minister is in charge of every decision made, i.e., Johansson.

It’s the antithesis of what occurred in NSW when after years of continuous lobbying the state government, the powers that be, gave John Messara the mandate to go and fix the problem. He as Chairman and Peter V’landys as CEO went and did just that which resulted NSW becoming the most successful racing jurisdiction in the world. They didn’t conduct reviews and form investigative sub-committees; like Nike, they just did it.

On September 3^rd, RITA Chair Dean McKenzie issued an update on the progress which sounded more like a justification for the bureaucratic pace of change more than anything else. It talked about only having existed for 60 days, the complicated process it faced, a more sustainable structure, the JCA, the RIU, harm minimisation, responsible gambling, the betting levy, off-shore charges from 2020 and industry discussions.

The update did not talk about the most critical issue contained in the Messara Report which is the outsourcing or progress of partnering the outsourcing of the TAB which could save the industry $50 million to $70 million in costs. It did not talk about the goal of doubling the stakes money but only a more sustainable structure. It reeked of DIA influence and would not have left stakeholders doing a jig after reading it.

The critical thing about this process is the involvement of the DIA. Because that body is the designated authority, it is taking forever to get the agreements in place with overseas betting operators and collect the Racing Information Use Charges (racefields) and Point of Consumption (POC) levies. They were asleep at the wheel for six months and should have had everything in place when the legislation went through on July 1^st.

The rates have still yet to be set or at least announced. The only collection of levies has been the voluntary contributors who are known to be Tabcorp and Sportsbet.

DIA’s level of inactivity is costing the codes hundreds of thousands of dollars monthly. Why the Minister appointed DIA and not the codes is a mystery – the money belongs to codes, and they should have been allowed to set it up and manage it instead of this government interference.

Racing in New Zealand has also suffered significantly through the lack of a publication since the demise of The Informant six months ago. Sorely missed is the loss of both a decent form guide along with the information-flow through the editorials, and this impairment must have effected betting turnover.

NZRB was in part responsible for the loss of The Informant by denying the use of the form which added another $100,00/year to The Informants costs, and now, under RITA, they are proving to be the stumbling block again in a plan to overhaul Best Bets and make it into something worthwhile.

It’s hard to understand why unless no news is better than getting the truth out, exposing the incompetents and the freedom of expression. Could the reason be that cynical – surely not?

John Bary ready to enhance the family legacy in 2019/20

John Bary with the 1916 Melbourne Cup won by Sasanof for his great-grandfather W.G. Stead

by Brian de Lore
Published 30 August 2019

When the Loveracing.nz webpage writer asked Hastings trainer John Bary, “How did you get involved in racing,” for the trainers’ profile page, the astute 49-year-old horseman’s response was both brief and modest.

Bary’s three-word reply: “Bred into it,” was acutely truthful but it also rates as the shortest and most understated answer in racing – in full elaboration the response may have filled half a book. In horse breeding vernacular, Bary is classically bred and is now maturing into the force associated with his illustrious forebears.

Having slowly built up the strength of his stable of 30-odd horses, Bary commences only his 11^th full season of training with firepower that should result in his best yet, notwithstanding that extraordinary 2010-11 season in which Jimmy Choux made his mark with a string of successes including the Group One NZ 2000 Guineas at Riccarton and New Zealand Derby at Ellerslie.

Following 13 years as a professional international polo player and a subsequent seven years of farming, the calling to train proved too strong, and Bary took out a trainer’s license during the 2008-09 season in which he turned out seven winners. In the early years, he would float his horses from great-uncle Bob Stead’s Sasanof Stud property to and from the Hastings track.

The Hombre was Bary’s first good horse, winning seven races which included a trip to Australia resulting in a victory in the Rough Habit Plate, albeit the final decision came out of the protest room.

By the time Jimmy Choux was a two-year-old, Bary was already transitioning his operation to his well-appointed training facility on 65 acres of free-draining pumice soils. The highlight is the 1300 metre plough on the inside of a beautifully maintained grass track with a straight of 330 metres.

The Bary stable is located in the lime works area of Paki Paki and is overlooked by a glorious hillside property once farmed by his grandfather Alec, and now in the ownership of stable client Ivan Grieve.

The property has come of age, the staff are first class, the pedigrees of his charges are now stronger than ever, and Bary has recognised the power of digital media and is servicing his owners with efficient regularity. Racing Manager Mike Sanders has been with Bary eight years, and owners receive an ample flow of information delivered via the high-tech gadgets.

“Let the owner know as much as we know as soon as possible,” said Barry on the question of his approach to owners. “In my book, the one-win horse has no long term future and horses are seven days a week including Christmas Day and Boxing Day and you don’t want to be getting up for those horses – it doesn’t matter if a reject goes to the South Island and wins two or three.

We are big on communication and ninety-five percent of our owners are businessmen – the farmers with one or two horses have dropped off. The farmers who previously did race the odd one or two have been replaced by a new generation of farmers who mainly don’t want to know about racehorses.”

In the 2018-19 season, Bary trained 26 winners at the excellent strike-rate of 6.65. With an even stronger team this season that figure could be bettered – Saturday at Hastings could finish the month of August off strongly with for Bary with10 acceptors including the highly promising On Show and The Fugitive.

John’s mother Ann, at the age of 80 and who held a permit to train before John took out his license, is still an integral part of the daily Bary stable operation, having lost none of her enthusiasm to be around the horses.

Ann’s father Alec was the brother of Bob Stead of Sasanof Stud -their father and John’s great-grandfather was W.G. Stead who won the 1916 Melbourne Cup with Sasanof – the only Cup winner in history to have won coveted two-miler on a Saturday after weather forced a postponement.

John’s great-great-grandfather was G.G. Stead who became a legend in his own lifetime. He was born in London in 1841 and arrived in New Zealand in 1866 at the age of 25. Even to this day it is acknowledged that no single person has ever done more for the racing industry than George Gatonby Stead.

G.G. Stead was the epitome of integrity and soon after his arrival was appointed an honorary treasurer of the Canterbury Jockey Club. He became the most successful owner New Zealand has ever known and made frequent trips to Australia to buy bloodstock as well as importing stallions and mares from England.

G.G. Stead was the principal supplier of winners for 2018 Hall of Fame jockey inductee Tod Hewitt, and he also employed Dick Mason as his private trainer. Mason set a long-standing record for the number of classic winners trained – due almost entirely to the success of Stead.

The original Stead was a racing partner of Henry Redwood and together they were pioneers of sending horses across the Tasman. In 1879 they jointly sent two horses to run in the Melbourne Cup. One broke down and didn’t start while the other, named Le Loup, ran but had its chances ruined when the saddle slipped.

G.G. Stead died in 1908 aged 67. The ensuing dispersal sale of his bloodstock realised the then massive amount of 50,000 guineas. One hundred and fifty-three years after the arrival of his great-great-grandfather in New Zealand, John Bary is gearing up to enhance the family tradition, and Saturday at Hastings may well be the launching pad for a memorable season.

Time for racing’s revival – it’s happening slowly

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.

Cambridge Stud making huge progress in 2019

by Brian de Lore
Published 16^th August 2019

A single day in the world of racing and breeding can bring a changing industry landscape, and while discontentment at the contracting nature of the business isn’t hard to find, you will also find plenty of positivity and passion for the thoroughbred.

These pages have continually highlighted industry problems and the plans made to overcome them, but Thursday 15^th of August was one day which re-emphasised to this writer the passion of people undeterred and determined to succeed in this thoroughbred game.

In an early morning visit to Cambridge Stud I was hosted by CEO Henry Plumptre who has has been at the helm of this famous nursery for the past year and a half. I have known Henry for over 30 years having worked with him in the eighties at Ra Ora Stud when Arrowfield Stud had a two-year involvement.

On a previous visit to the Stud as recently as April, excavators and diggers were in full cry and mud was plentiful. Fast forward to mid-August and the transformation is nothing less than remarkable, although the work is ongoing.

As most will be aware, the Sir Patrick Hogan, Sir Tristram and Zabeel established land-of-honour is now the property of the former Sistema proprietors Brendan and Jo Lindsay who are in the process of transforming this iconic piece of dirt into something one might be expectant from the ownership of Sheik Mohammad.

You have to admire what the Lindsays are doing to the Stud which is marginally against recent trends of downsizing. In the days of Sir Tristram and Zabeel in Sir Patrick’s and Lady Justine’s ownership, Cambridge Stud was always considered a showpiece property – but this is a different level – completely.

*The new Cambridge Stud yearling boxes (4 metres x 4 metres) are of German kit-set design and were imported in flat packs. The four new barns will house 78 yearlings.*

It’s state of the art, and no stone has been left unturned by its new owners in their endeavours to provide the thoroughbreds bred and reared on this hallowed land with every opportunity to continue its great history.

Of course, the one ingredient missing will be Sir Patrick’s luck of the Irish. No-one, even by Patrick’s own admission, has enjoyed more luck than he, especially when considering how Sir Tristram was purchased, escaped near death and then became the dynasty which continued with that champion’s best sire-son in Zabeel.

Following the demolition of almost all the Stud’s facilities, the completed new stallion block and three of the four yearling barns look magnificent – the front barn enclosing 24 boxes of four-metre x four-metre and the other three housing 18 boxes each – with the fourth underway to complete the square. A new office located on the site of the old car park is also impressive in keeping with the architectural theme of the yearling barns. It is annexed with car parking for 25 or 30 cars.

*Half of the largest new yearling barn at Cambridge Stud – build on the site of the old one – and accommodating 24 yearlings*

The stallion barn comprises of four boxes of 4.5 metres x 4.5 metres at each end (each with a camera and equilume lights) separated by a feed room, washing bays and a white-board room for the stallion grooms.

Henry explained: “The interiors of the barns are of German design and were imported in kit-set form in flatpacks while and steel-work and roofing was build in South Auckland. It’s been a painless way of putting things together – you give them the specifications and they ship the flat packs out.

“The building program that Brendan has been overseeing himself literally kicked off at the end of January so he’s done all that in about seven months. We’ve been helped by the weather this year which has been good but the builders who have had about 60 sub-contractors here have done a fantastic job.

“Brendan went to the Hunter Valley last year and looked at Darley and Arrowfield amongst others,” Henry continued, “to decide upon a design – but the most important thing was to have the prep-shed, the stallion barn and the covering barn all in close proximity to make the management of the mares easy.

“Currently we are building a staff canteen which we had at Darley. We think it’s important that the staff all meet once a day which for us will probably be breakfast – during the season we will probably have about 40 employed including the farm crew and gardeners

*Visitors to Cambridge Stud will be well looked after in the Stud’s new reception lounge – twice the size in area to the picture shown here*

“The museum will be built in February next year after the yearlings are gone. I think there will also be some guest accommodation built on the farm at some stage but Brendan hasn’t quite decided where that’s going yet.

On the breeding-stock, Henry said: “We have 151 broodmares which is a level we reached in antipation of having five stallions this year, especially for the support of Almanzor and Roaring Lion – we bought something like a dozen mares overseas and this year have increased the total band by around 45 or 50. The intention is that we will always be selling hard off the bottom.

“This year we will also have 16 fillies in training in Sydney and Melbourne and one in Brisbane. The intention is to give those fillies to trainers to encourage them to come to Karaka – it’s a fairly blunt form of engagement, but we live only three hours from the best racing jurisdictions in the world, but it’s also essential for us to have a local presence in New Zealand.

“We have another 10 or a dozen in training in the Waikato – if New Zealand is inching its way out of a mess which they’ve had for 20 years it’s important to give local trainers some encouragement. Some of our trainers here punch well above their weight and are world-class and it’s important we support them.”

Almanzor is highly credentialed and being well-patronised, but Roaring Lion will no longer figure in the stud’s future plans after his near-miss with death over the past few weeks. The best that Cambridge Stud could hope for is a full recovery from his colic attack, and that will be safely returned to Shekh Fahad – but without ever having covered a mare.

But the procurement of both Almanzor and Roaring Lion and the new appointments at the stud is a signal to everyone that Brendan and Jo Lindsay are more than serious about the level of success to which they aspire, and it strongly suggests they are also there for the long-haul.

Cambridge Stud, when all appointments are complete, will have 78 yearling boxes and be able to accommodate eight stallions. Fellow breeders will be grateful the Lindsays have arrived to actively boost the industry to attract overseas yearling buyers in what are difficult and uncertain times for the New Zealand industry.

___________________________________________

From Cambridge Stud, it’s a 12-minute drive to the south of the Cambridge township to the Pukekura property of Ann Browne, widow of the late Kenny Browne – Hall of Fame inductee and twice the Racing Writers Personality of the Year.

In the male-dominated arena of hurdle and steeplechase racing, Ken deservedly received numerous awards, but everyone in racing knows that the Brownes success was the result of a team effort and Ann Browne in her time has had few peers as a highly-skilled horsewoman.

Ann has now retired from training but on Wednesday enjoyed success as an owner in the Open Steeplechase at Te Aroha with Raisafuasho trained by Team Rogerson.

The Ken and Ann Browne partnership rightly gained recognition as one of the most successful husband and wife winning stories in racing history. They trained together on the 300-hectare rolling hill country property at Pukekura that had been in Kenny Browne’s family since 1872, and dominated the jumping scene for many years with horses like Crown Star who won 17 races, all over the jumps (a record).

*Ann Browne poses in front of one of the trophy cabinets that represents about a third of all the trophies accumulated by Ken and Ann over their long and highly successful training partnership*

In 1992 they were jointly recognised when awarded ‘Outstanding Contribution to Racing.” Together they prepared the winners of nine Great Northern Steeples, four Grand National Steeples, two Grand National Hurdles, two Wellington Steeples and seven McGregor-Grant Steeples.

Officially they trained 669 winners although that figure should have read 813 due to Ann’s name not being registered for training in the early years of their marriage. The Browne family home is full of trophies, memorabilia and racing books which provide a stark reminder of all the success they achieved and ensure that Ann is never far from the memory of the late and great Kenny.

Racing’s revival hampered by resistance to change

by Brian de Lore
Published 09 August 2019

Comparisons with Racing Industry Western Australian (RWWA) have often surfaced in these pages due to the western state being of a similar-sized industry to New Zealand.

Another shared feature is the geographical isolation of the two jurisdictions when juxtaposed against racing’s two super-power states of New South Wales and Victoria.

The Sandgropers as they are known are well to the west, and we Kiwis reside well to the east. Geographically Western Australia covers a far greater landmass at 2.65 million square kilometres against New Zealand’s 268,000 square kilometres – our land area would fit in WA’s almost ten times. But on the population score, we well exceed WA – 2.59 million for them while Kiwis are now up to 4.79 million (85 percent more).

Despite this seemingly distinct advantage, WA is very comparable to NZ in numbers of race clubs, racecourses, race meetings, races run but they offer higher prizemoney over the three codes – $30 million* higher due to the lower-cost administrative model under which they operate (one board against our five) and despite the high taxes they pay which we have now had removed.

All Three Codes	Western Australia	New Zealand
Attendances	823,000	614,678
Stakes Funding	$142 million*	$108 million*
Wagering Revenue	$322 million	$349.9 million
No. Administrative bodies	One	Five
Employee Costs	$41 million	$65m + codes
Senior Management	8	27
Population comparison	2.59 million	4.79 million

Thoroughbreds only	Western Australia	New Zealand
Race Clubs	54	62
Courses	38	48
Racemeetings	295	308
Races	2,212	2,568
Starts	20,942	26,666
Prizemoney Paid out	$61.2m	$59.3m
Racefields income	$58 m (WA race bets)	Nil
Economic Impact	$821m	$813.4

The NZ model is potentially superior, but they run racing efficiently, and we plod on with a clumsy, costly administrative structure. RWWA make up for their lack of population with a more intense racing industry per capita than ours, which results in the economic impact of the two jurisdictions being virtually the same.

Why? Because Australians bet more per capita, so in the end, the population has nothing to do with the size of the industry. What’s important is the revenue from betting, the administrative structure, and the quality of the people in charge – NZ has fallen off the pace in all of those three very critical issues.

The NZ TAB failed to recognise the importance of the small punter and is now paying the price for its concentration on mostly its VIP and Elite customers – many of which have also now gone to greener pastures. It ignored the idea of customer service for the average Kiwi investor in the misconceived belief that the multitude of small and aging punters were no longer needed to make the TAB fire – how wrong they have been!

Peter V’landys as CEO of Racing NSW was confronted with a similar attitude a few years ago when the NSW TAB attempted to increase the minimum bet from 50 cents to $5.00. He stayed loyal to thousands upon thousands of small punters and fought against the increase and won. Racing, in his jurisdiction, has thrived under his leadership.

Our TAB did the opposite and thumbed its nose to the small punter, closing TAB stores, sacking 70 telephonist betting operators and expecting those punters to embrace touchtone telephone betting which they had never before used. The NZ TAB has, over the years, developed an appalling customer service reputation.

It has cost the New Zealand racing dearly in both turnover and defections to Australian corporates due to its failure to know the needs of the bulk of its customers and an attitudinal problem from the top down. The anecdotal evidence is everywhere you find racegoers – it’s a far cry from the organisation for which the race clubs raised the money and inaugurated for its launch in 1951.

The TAB completely lost its way with incompetent decision making by people appointed for all the wrong reasons. Former NZRB CEO and now RITA CEO John Allen was clueless two years ago when arguing the Fixed-Odds-Betting (FOB) that he was planning was not aimed at global customers but instead for the New Zealand domestic market alone.

Nothing has changed except he will now realise the concept of building something superior with a smaller budget than overseas betting operators was always pipedream doomed to fail. The scale of IT development, the scale of the customer base, weight of money and a global mindset was always going to see any number of overseas betting operators outperform the NZ TAB

As well, sports betting is what the NZ TAB FOB platform is all about (not racing, although racing has paid for it) and the net margin on fixed-odds-betting is low at around five percent because the NZRB at the sign-up time agreed to pay $17 million per annum in fees to Paddy Power and Openbet.

Betting on the tote on horses returns 14 to 15 percent which is good for racing, but the thoroughbred turnover has been cannibalised in favour of sports betting, which is the main thrust of the TAB’s promotions.

And while Allen was building the FOB platform for $25 million which turned into $50 million-plus $17 million per year in fees, RWWA was busy negotiating the outsourcing of its FOB platform to Tabcorp for an annual fee of $A7 million (no building costs) and collecting its Racefield levies which last season returned that jurisdiction $A58 million.

Which jurisdiction is being well run and which isn’t? Imagine that; instead of building your own, simply outsource to an organisation that is technologically well-advanced, has the software in place, and then plug-in for a fraction of the cost. Did it make too much basic common sense for Kiwis?

RWWA has only one board and eight executives but gets its stuff down with committees compared to New Zealand’s five boards and 27 executives – NZRB (RITA), the three codes and the RIU. It’s blatantly over-structured, over-complicated and an overly-expensive form of administration.

Now we are into a new season, and the status quo is not an option. The industry needs some action, but you get the feeling as one-week rolls into another that the pace of change isn’t happening fast enough for most participants

New Zealanders appear to suffer from a resistance to any dramatic change, and it’s recidivous. The unconscious resistance to adopting radical change is the biggest single issue holding back New Zealand’s so far tentative move to resurrect the racing industry.

This misguided thing about sovereignty has always held us back – nothing has changed. We need to think of ourselves in racing terms as just another state of Australia from which we would benefit markedly on the score of the scale of operation.

Some stakeholders seem to believe outsourcing is akin to selling your soul, but the NZ TAB outsourcing would be more about negotiating a joint venture which might be a ten-year deal but would provide the industry with much needed up-front cash and a lower expense account for the future and much-improved bottom-line – resulting in higher stakes money.

Messara outlined a very doable plan in his review. The Minister reacted favourably last September by saying, “we haven’t engaged an Australian expert to write a comprehensive review and then disregard his recommendations,” and less than a month later he also said Messara would have an ongoing involvement which has never officially happened.

It was at that point that the Department of Internal Affairs (DIA) butted-in with too much influence and racing is now paying the price for its snail-pace, bureaucratic involvement.

The DIA was responsible for the terms of reference for MAC which stated, “…will involve the Committee gathering and analysing a wide range of inputs and carrying out engagement, investigation, and analysis about the effects of specific proposals under core areas of the Messara Report, including:

the governance and structure of racing;
finance and distribution to the codes;
new legislation to support the various dimensions of racing reform;
wagering and the TAB;
club consolidation, racecourses and prizemoney; and
any other matters that the Committee considers relevant to its work, including establishing the Racing Industry Transitional Authority (RITA).”

It was the gathering and analysing part that didn’t ring true enough – reeking of a bureaucratic takeover whereby the DIA assumed the role of scriptwriter and pacemaker. Historically the DIA knows nothing of racing and is inherently strong in its anti-gambling stance. Its wording displayed a distrust of the reviewer, so they wrote a script to review the reviewer in lieu of the Minister telling RITA to do it urgently.

As a result, we now have about 10 committees and sub-committees reviewing various aspects of the Messara Report to decide whether or not the 17 recommendations will work. It’s a hypochondriacal assessment of the expert by non-experts – the DIA.

It’s no different to going to the doctor, getting diagnosed, picking up the prescription but then developing some misguided suspicion and over-evaluation of what the side-effects could be.

The New Zealand Racing Industry has a similar mindset – it’s not generally a pill-taking industry. Kiwis have a penchant for the status quo. It’s in the DNA and has shown-up again in this reluctance or lack of speed in taking medicine which in this instance might rectify the problem.

The medicine came in the form of the Messara Report. The doctor said you must take these pills and take them quickly. What did we do; we brought home the pills, placed them on the kitchen table, and are still looking at them. Now we are looking for a second opinion.

A year ago when we received the pills our condition was dire. Now it’s chronic.

It could be psychological – a fear of change, or progress or adaption. Seemingly, we are yet to develop a level of tolerance to change that will allow us to deal with transformations without compromising too much of our psychological imbalance.

Are we doing it again- more paralysis by over-analysis? The model’s been set out before us; now let’s just do it!

Aussies the greatest gamblers on God’s earth!

by Brian de Lore
Published 2 August 2019

Australians are the best gamblers in the world. It can’t be disputed – using the 2016-17 figures they bet $23.87 billion on racing alone. Add to that $10.1 billion on sports betting and a whopping $174.6 billion on gaming (pokies and casinos) and it’s easy to understand why the Aussies are the undisputed world champs.

In total, Australians bet a staggering $208.6 million in the 2016-17 season which equates to more than $11,000 per capita for every person over the age of 18. These figures come from the 34^th edition of Australian Gambling Statistics which hasn’t yet posted stats for the 2017-18 season.

The relevance in the figures to New Zealand is the $23.87 billion bet on racing because although Australians betting on New Zealand thoroughbred racing accounts for a paltry 2.4 percent of turnover, it still amounts to $572.8 million. That’s the figure that racefields or as RITA renamed it – Betting Information Use Charge (BIUC) – would be applicable for the levy if it was up and running.

Let’s suppose the rate was set at 2.5 percent – a not unreasonable figure when compared to the equivalents in both Victoria and New South Wales. The annual collect from that would amount to $14.3 million or a weekly income of $275,000 – that’s what the racing industry is currently missing out on even though the legislation became law on July 1^st and the New Zealand industry is now entitled to collect it.

Last week in this blog, the question was raised of the failure to set the rates, and why the agreements (even interim agreements) were not in place to collect the new revenue streams in time for July 1^st. After all, the legislation went through under urgency, and everyone knew well in advance that racefields and the POC (Point of Consumption) levy were two of the most critical components in the Messara Report’s ultimate goal of doubling prizemoney and turning the industry around.

The codes and RITA should have collectively worked with DIA to set interim rates and agreements that could have been in place by July 1^st. The three codes and RITA are all desperate for cash and possessed the capability to set interim rates and agreements and could have locked themselves into a vault, ordered pizzas, and not emerged before the job was complete.

That’s the racefields side of things; the other side is Point Of Consumption levies which is the act of applying fees on overseas betting operators when residents of New Zealand use their services to place bets on New Zealand racing.

A few years ago a working group estimated that around $400 million was bet by New Zealand residents on racing and sports with overseas betting operators. Realistically, no one knows the true extent of Kiwis deserting the NZ TAB in favour of Tabcorp, Sportsbet, Crownbet, etc., but the anecdotal evidence suggests it has increased substantially in the four years since the release of that report.

Using the old figure as an example, the $400,000 million would generate an income of around $8 million annually. That figure equates to $150,000 every week, and when added to the racefields calculation, the industry is probably missing out on $425,000 per week.

In last week’s chat with RITA Chairperson Dean Mckenzie the question of urgency on these matters came up, and he responded thus: “We are going as fast as we can go to get that done – absolutely we are.

“I give you my personal guarantee that we have done everything we can – we have shortened timeframes as best we can; we have work going on in the voluntary agreement space.

“We have a workstream going of which there are two elements to it – the voluntary stream and there’s a clause in the legislation that enables us to grandfather-in the agreement. So, we are working as hard as we can on those voluntary agreements with the legislation coming into effect, and we have also got and have significant work going on in the regulatory framework so that we have the second part of the legislation ready to go by the end of the year.

“The goal is to hit the New Year with the regulations all in place, and we think that’s an achievable goal – we are utilising all the specialists we can to get it done.”

Having suggested the rates and forms and agreements posted on the Racing NSW and Racing.com websites could truncate the process and work-load, McKenzie was in partial agreement:

“We are attempting to cherry-pick the best of all the template frameworks that currently exists,” he said, “and are utilising all the specialists we can to ensure that it’s done as efficiently and as quickly as possible.

“The regulations have to be in place by the end of the year to enable formal processes to start from the next calendar year.

“The key for this is that there is a process you have to go through to put the regulations in place – we have no influence on that. And all we can do is do what we are doing, and that’s why we have put all our resources into it – and don’t forget, the betting duty has already been collected.”

The betting duty to which McKenzie refers is the repeal of the $13.9 million annual figure which Minister Peters negotiated with Treasury and announced in the budget to return to the industry gradually over three years – $4 million coming back in this financial year.

On stakes money which a year ago after the release of the Messara Report many in racing had hoped to see double in the new season, McKenzie put a sobering correction on those thoughts:

He said: “We have retained existing funding to the codes for this season, which needs putting into a positive light. There are going to challenges to us committing to that, but we have committed to it.”

The challenges that McKenzie refers to could only mean that at present the money isn’t in place, but they will find it. It’s hard to interpret that remark any differently, but everyone knows that a reduction of stakes money would be a demoralising blow for everyone concerned.

Another season has rolled over, and racing hasn’t seen anything like the radical reform it envisaged or, at the very least, hoped for after Messara delivered his Review of New Zealand to the Minister of Racing just over 12 months ago.

If you took a simple helicopter view of the progress one year on, you could safely say the majority of racing stakeholders, participants, enthusiasts or whatever you want to call them, will be disappointed.

The helicopter view defines the overview of the overall management of the business. The management of the business is the barometer for progress. The progress over the 12 months has been minimal, but RITA has existed for only one month

So far, the only tactile addition to racing’s depleted finances is a portion of the repealed annual betting duty of $13.9 million or just $4 million for the first-year portion. RITA has been awaiting delivery of the Performance and Efficiency Audit which should now be in hand, and which should have a bearing on the restructuring of the administration and a reduction in costs.

It’s been BAU for the first month, but with a full analysis of the audit, the industry will hopefully see RITA spring into stride.

Performance and Efficiency audit due but Racefields rates and POC levy not set

by Brian de Lore
Published 26 July 2019

Under Section 14 of the old Racing Act of 2003, a Performance and Efficiency Audit on the old NZRB was required to be completed every five years by an independent accountancy firm.

The previous one was completed by KPMG in 2014, and now five years later, the third such review in NZRB’s history is expected to be in the hands of RITA by this time next week. It should be a very revealing document.

Grant Thornton is ‘the world’s seventh-largest professional services network of independent accounting and consulting member firms which provide assurance,’ according to Wikipedia, although they are more of a second-tier accountancy firm in terms of their New Zealand operation.

The invoice that will accompany the audit is likely to be substantial one (The Deloitte Report was $120,000), so it’s hoped this audit will pay for itself and highlight all the areas in which NZRB has wasted industry funds to correct future wastage.

Four weeks into RITA and Chairperson Dean McKenzie is now making contact with the media, having released a written statement to the stakeholders last week, answered the questioning of Peter Early on Radio Trackside midweek and more recently spoken to The Optimist.

“We met the Minister only on Tuesday this past week,” said McKenzie on Thursday. “RITA’s final report went in at the end of June when Parliament was going into a recess, and the Minister was overseas. He arrived back only this past weekend just before Parliament came back to sit this past week.

“We had a meeting scheduled with him on Tuesday – that’s why I could go on the radio this week and talk to you today.”

The Final Report has yet to be released, but McKenzie added, “The Interim Report was tabled at the end of February, and you could say it was probably more important than the final report.

“Similarly, the final report is only a set of recommendations. There’s been nothing agreed at this point, so all that’s happened is we have discussed elements of the Final Report with the Minister. The process of getting to the second bill is no different to the first bill in that we have policy papers to contribute and then there’s Cabinet papers – the drafting and all that process – that’s underway now.”

One can’t help get the impression during the course of a long discussion with McKenzie is that everything is happening too slowly for this hemorrhaging business because progress is at a ‘parliamentary pace’ and RITA is locked into that process.

“I think your comments on DIA have been unfair,” responded McKenzie to my previous week’s comments on the DIA’s lack of urgency. “I can’t say anything about what happened before our time, but the DIA has been crucial in aspects of this including doing the legislation and continuing to do it, and we are working closely with them to deliver the second bill and the regulations that are needed to kick in the IBUC and POC levies.

“There has already been a working group that’s been underway for some time, addressing the regulations and the voluntary agreements to ensure the timeframes for that are as short as possible.”

The problem for RITA is that they appear to be locked into that bureaucratic pace and a typical example of it is is in the setting of the rates for racefields or the Betting Information User Charges (BIUC) and Point of Consumption (POC) levy. The rates should have or could have been set at any time over the past few months with the knowledge that this legislation (Racing Reform Bill No.1) was coming up by the end of June.

The Minister sets the rates according to the legislation but only on the recommendation, presumably, of the Designated Authority which is officially the DIA but by McKenzie’s own admission, this week, is a working group consisting of both people from the DIA and RITA. Those rates are not close to finalisation, and that’s the first thing that has to happen before any agreements can be drawn up and negotiated with the overseas betting operators.

“One of the only advantages of being so tardy off the blocks as we have been,” said McKenzie, “is that you can go and look at what’s working in other jurisdictions – it’s not rocket science. We have leaned heavily on what’s working across the ditch, and the expertise that’s there, and we are doing everything we can. We are not trying to do it ourselves; we are trying to use the existing formulas that are successful.”

McKenzie was no doubt referring to the Australian jurisdictions which have everything posted on their websites – inviting direct plagiarisation of the agreements and rates which was a possibility mentioned here last week. Despite that opportunity, no indication was forthcoming from McKenzie to suggest the rates decided upon are imminent.

On other matters currently before RITA, the Racing Integrity Unit Report compiled by Malcolm Burgess and now in the hands of RITA and is soon to be sent to the stakeholders, and they will be invited to make submissions.

“There has been a significant amount of interaction between Malcolm Burgess and his team and the codes and the wider industry, and this will be the third part where Malcolm’s Review has come in,” explained McKenzie.

“The MAC Final Report is going to be made public and will be posted on the DIA website but not sure what the timeframe is for that. The Minister makes that decision. We are in that short window now before release as we were in the Interim Report.

“The process to evaluate the 17 recommendations is still the same. You will see when it comes out – all the individual work plans for each of those recommendations. There’s nine or ten individual work-streams that are going on now to continue to evaluate those recommendations.”

But the question of outsourcing the TAB which is a vital part of the Messara Report delivering the promise of doubling stakesmoney does not appear to be a fait accompli if you can read between the lines of the McKenzie response to that question.

McKenzie said: “If you work through the Interim Report wording, it says that we have to look at a whole variety of things including the status quo which is the current operating environment, and that was one of the purposes of getting the section 14 audit which is due at the end of July. We can’t fully assess the current situation until we get that audit.

“I think we were quite clear that this was a 12 to 18-month process because it’s just such a complex issue and it’s a very important one. I’ve said before that the formation of the TAB in 1951 was the single most important event in racing’s history and what we do with it over the next 25 years has to be the next most important decision.

It’s very clear in the submissions made by the codes is that they are all happy to look at it (outsourcing), but the process has to be robust, and the industry wants the right decision. We have to make sure that the process to evaluate it is the right one – John’s recommendation about the intellectual property and where that sits, is an important driver of it as well – we are working through that with the codes

“I understand everyone’s desire for the reform process to be done as efficiently and as quickly as possible, and no one wants that more than us, but the reality of the situation is that the industry has been in decline for 30 years and the problems are not going to be addressed in 30 days.

Once the final report comes out and the various work streams are clear, and the timeframes are clear, people will see the size of what we are doing while we are also managing the day to day operations of the TAB.”

by Brian de Lore
Published 26 July 2019

Under Section 14 of the old Racing Act of 2003, a Performance and Efficiency Audit on the old NZRB was required to be completed every five years by an independent accountancy firm.

“We had a meeting scheduled with him on Tuesday – that’s why I could go on the radio this week and talk to you today.”

The Final Report has yet to be released, but McKenzie added, “The Interim Report was tabled at the end of February, and you could say it was probably more important than the final report.

“There has already been a working group that been’s underway for some time, addressing the regulations and the voluntary agreements to ensure that the timeframes for that are as short as possible.”

The Minister sets the rates according to the legislation but only on the recommendation, presumably, of the Designated Authority which is officially the DIA but by McKenzie’s own admission this week is a working group consisting of both people from the DIA and RITA. Those rates do not appear to be close to being set, and that’s the first thing that has to happen before any agreements can be drawn up and negotiated with the overseas betting operators.

McKenzie was no doubt referring to the Australian jurisdictions which have everything posted on their websites – inviting direct plagiarisation of the agreements and rates which was mentioned here last week. Despite that facility, there is no indication from McKenzie the rates are imminent.

On other matters currently before RITA, the Racing Integrity Unit Report compiled by Malcolm Burgess and now in the hands of RITA and is soon to be sent to the stakeholders and they will be invited to make submissions.

Confidence needs a boost coming into new season

by Brian de Lore
Published 19 July 2019

Economies around the world rise and fall on confidence, gold medals at Olympic games are won and lost on the same commodity, and the analogy more than ever before applies to New Zealand racing and breeding as we close in on the 2019-20 racing season.

The breeding business underpins every element of racing in New Zealand including our success in neighbouring Australia. The algorithm upon which our halcyon days were based was to retain our best female families, import the best bloodstock affordable from Europe and breed horses in much higher numbers.

That formula has contracted in every aspect to the extent that compared to forty years ago we are breeding half the numbers. We also have only one (Savabeel) compared to the 20 stallions in the top 50 we had in 1978 on the Australian Stallion Premiership. We have only four percent compared to 10 percent of the Australian thoroughbred population, and can no longer afford to keep our good mares and race fillies when alongside a comparatively buoyant Australian industry.

That history might bore some readers, but it’s regurgitated here only to highlight today’s level of industry confidence, or in this era, the lack of it. A breeder approached The Optimist last week to ask whether or not they should breed their mares this season – a crystal ball to provide accurate advice on such matters would be a welcome addition to every breeders mantlepiece.

A core group of breeders will always breed all their mares. Others will decrease the band such as Waikato Stud did this year, reducing the 220 to a band of 180. Some are now saying they are breeding only every second year and further anecdotal evidence says others are just giving up.

On the other hand, Ray Knight of Novara Park Stud in Cambridge is all positivity about the coming breeding season and says his bookings are ahead of this time last season. Novara Park stands the promising young stallion Sweynesse and newcomer Staphanos.

“I think breeders have become more price-conscious when doing their matings,” Knight said this week, “but a lot of breeders who are undecided or say they are not breeding their mares change their minds because it’s also counter-productive to leave the mare empty.”

The number of foals bred season by season is a direct reflection of confidence in the industry. It’s critical we don’t drop below current levels because a further decline will directly affect the average field size for domestic racing, and to fall below the threshold number of about 10.5 has the domino effect of reducing betting interest – the only thing that drives stakesmoney.

*NZTR prediction of the foal crop for the coming season is the same as 2013-2014 levels. The table doesn’t show the late 1980s level which exceeded 6,300*

It’s racing’s Catch-22. The prospect of field-size reductions and fewer numbers reduces the overall quality of horses racing from season to season, and the Pattern Race Committee will again confront the dilemma of eliminating some listed races and reducing group races to a numeral of diminishing significance.

The Pattern Race Committee is due to meet again in early August and would it be a surprise if racing suffered a further bout of black-type erosion? The answer is no. Any such decisions will bring a further lessening of confidence.

Examining the history, it’s worth noting the decline in racing is a worldwide phenomenon and has been occurring for decades, but evidence exists which shows good governance can arrest this whirlpool drop into an unknown black hole. Both Australia and Ireland are examples to cite.

In the 1960s New Zealand racing commanded 96 percent of the betting dollar – the only competition for it being Golden Kiwi. Racing in 2019 is down to 16 percent of that same dollar. Couple that with a Racing Act of 2003 that hasn’t worked and governance of the poorest order, especially that seen from the NZRB in the past 10 years, and we are where we are today.

Confidence is what we need going forward and while RITA is the four-letter word on everyone’s lips, and one in which we have placed our faith going forward, other hurdles and hoops to jump through lie waiting on the path to revitalisation.

RITA has been in the job only three weeks, and we need to give that board time to tackle its mountain of problems, do due diligence on all of them, and bring the Messara Report into play over the next year. Not only will RITA have to deal with the dog’s breakfast they have inherited from NZRB, but they have also been involuntarily partnered with DIA, which is a fate no one would have wished upon them.

The DIA’s involvement in likelihood goes back to very soon after Messara delivered the report to the Minister nearly a year ago, or even before that. If you are wondering why the setting up and collection of both racefields and the POC (Point of Consumption) levy will take another six to 12 months, or even 18 months as one astute pundit suggested this week, then the DIA is your answer.

While racing looks for points of confidence upon which it can burst from the barrier stalls and leap into a bright, new future, the DIA (Department of Irregular Activity) is what Cutts’s Brush was to the Grand National Steeplechase in the 1960s and 1970s – enough to trip everything up.

Cutts’s was Riccarton steeplechase jump of five feet three inches high, constructed of stiff manuka, of a jumping length of five-foot, and known to support a Morris Minor car which it successfully held firm sometime in the sixties. The best of steeplechasers were found wanting at Cutts – no chance of brushing through it. Today it’s a shadow of its former self.

The DIA is the designated authority, appointed by the Minister, and it’s critical that the revenues from racefields or Betting Information Use Charges (BIUC) as RITA is calling it plus POC which became legislation through the Racing Reform Bill No.1, start accumulating to racing and sporting codes at the earliest date.

When fully operational, the potential is to bring new revenue to this struggling industry to the tune of $20 million to $25m per annum. And implementation shouldn’t be that hard as the blueprints for both can be found with user charges and application forms (the templates are done for them) on both the Racing.com and Racing NSW websites.

When we had to listen to all that carry-on from NZRB’s Glenda Hughes and John Allen about missing out on $1 million a month from not getting racefields, what a joke. NZRB would never have been getting it – nothing was in place in the form of agreements with overseas betting operators to collect it – and still isn’t.

Further confidence would be forthcoming if a replacement for the ill-fated The Informant could be launched in the near future. Plans are afoot, and since the advent of RITA, some progress is now being made to do something with the much-maligned and poorly managed Best Bets.

The industry badly needs a decent form guide and printed medium for weekly news and communication, and The Informant’s demise was an untimely setback. Further progress of a new publication should surface in the coming weeks.

Racing administrators not guilty on the grounds of insanity

by Brian de Lore
Published 12 July 2019

When it comes to being under the control of the DIA (Department of Internal Affairs), you can bet things will be moving very slowly. That’s the nature of the beast.

Racing in New Zealand is in that predicament despite its desperate state. The clutches of a government department and its bureaucratic lack of inertia is the thing that will sink racing before any well-conceived RITA plans hit the road running.

What’s it about? Well, think about the expert advice John Messara advocated in his Review delivered to Minister of Racing Peters on July 27 last year; yes, it’s only a couple of weeks short of a year ago. Messara in making his suite of 17 recommendations stressed full adoption and urgency of implementation for a successful outcome.

On page 10, he stated, “…it is critical that the implementation of the recommendations be pursued urgently and in their entirety, as this is the step at which previous reform efforts have failed.”

Wasn’t it Albert Einstein who said, “The definition of insanity is doing the same thing over and over again and expecting a different result.”

The industry has done exactly that, and racing is now lurching from Messara’s expression of being in ‘a serious state of malaise’ a year ago to today’s predicament of ‘a perilous domain of demise.’

Last week’s revelation that nothing has yet been put in place to collect racefields or (BIUC) (betting information user charges) or POC (point of consumption) levies is the problematic outcome of being DIA controlled. Information received from the NZ-First office said it would take six to 12 months to get the necessary agreements.

Last year the Minister wisely decided to adopt the Messara Report, but after consultation with governmental bureaucrats, the urgency factor was deleted from the formula. It is now apparent the recommendations in the report have been somewhat remolded to suit that bureaucratic process – at the expense of the owners who the Minister has previously identified as the most critical people in racing.

Racehorse owners today are markedly worse off compared to 12 months ago. Stakes have remained constant on borrowed money, but everything else is rising in costs around them, which impacts every owner.

Veterinary services, feed costs, transport costs, and the impending 15 percent rise in ACC levies for stable staff and trackwork riders have all gone up or going up. And the buck stops with the owner. Trainers, too, are worse off with a diminishing pool of owners, rising rentals with some subsidising the cost of the horsebox in the cause of staying actively involved.

What’s the state of the racing nation, you may well ask? The revenue streams that racing has talked about as being urgent are apparently not urgent if you judge it on DIA’s mode of operandi. DIA is the designated authority to collect the levies – that was a ministerial mistake.

NZRB had taken its overdraft facility up to the maximum of $25 million this season with nine to $10 million due for repayment at the end of this season – a challenging situation for RITA to inherit, perhaps. With only eight to $10 million cash-in-hand, the chance of repaying that money is virtually nil – RITA will have to renegotiate a roll-over of that overdraft facility.

Where does that leave stakesmoney for the coming season or how long can the current level of stakes continue without those new revenue streams in place? That would be a good question for RITA to answer to the industry ASAP.

But the answer may not be forthcoming because presently RITA is not talking while it weighs up its options. For this and last season, the NZRB borrowed a total of $22 million to make the minimum stake $10,000. Would it be logical to assume that to keep stakesmoney at its current level RITA would need $11 million from somewhere or just run out of cash by about November?

Is this racing industry broke? The answer is yes. Do most people involved have a touch of the ‘denials’ and a hint of Ostridge about them? The answer is again, yes. Is there any significant evidence of urgency to fix things coming from this bureaucratic ensemble of revenue collectors? This time the answer is no.

RITA will be urgent about fixing things but the fact that John Allen and his salubrious bunch of overpaid executives have thrown the RITA team a hospital pass is likely to have provoked a lot of head-scratching.

The FOB platform has been operational for six months, and it’s clearly evident it hasn’t fulfilled any of the John Allen promises. The NZRB budget will be shy by something like $20 million, and although TAB turnover on sports betting has risen in recent weeks, it is not delivering a good enough margin of profit.

Information supplied to The Optimist says the margin on sports betting has been only five percent in recent times. By CEO Allen’s own admission, it was only three percent for the first three months of its operation (January to March).

It cost $50 million plus to build when you correct the NZRB creative accounting, but an even bigger worry is the total $17 million in annual running costs that they signed up for with Paddy Power and Openbet. One of those contracts runs for 10 years and the other for five years – a substantial ongoing commitment, and a headache for RITA.

The new website is a ‘dog’ as many of the TAB’s long-standing customers have judged it before defecting to one of the Australian corporates. A lot of the issues with it are unfixable, and when you add to that the poor customer relations record of the TAB and its 2018-19 performance, the long term prognosis for increased returns to the codes is merely fake news.

The bottom line is that the doubling of stakes for New Zealand racing isn’t happening anytime soon. The way this saga is panning out, it will be a superlative effort by RITA if they can hold stakes to the current level for the entire season.

The first thing that should happen is for the Minister to relieve DIA from its role as ‘Designated Authority.’ Put a body of people in charge of that critical responsibility that know what they are doing – take some of the insanity out of the equation and replace it with common sense.

Even holding stakes to the same level is losing ground. Not only do the costs rise, but every time an Australian jurisdiction announces stakes increases, New Zealand loses ground. NSW’s third tier of racing is ‘Country’ which last week announced the total prizemoney allocation would rise to A$81 million, which is an increase of A$48 million commencing in August 2019.

The NSW Racing Media Release is reproduced below:

MEDIA RELEASE

Tuesday, 2 July 2019

Major prizemoney increases for feature country meetings.

Racing NSW today announced major prizemoney increases to country racing carnivals right across NSW as a further boost to country racing which will commence from 1 August 2019.

With this announcement today, total annual prizemoney to be paid for country racing in NSW will now be more than $81 million which is an increase of $48million or 145% since 2012. Country racing has received the largest increase ofany sector during this time.

There will now be eight feature Country Cup races with prizemoney of $200,000 at the following racecourses: Port Macquarie, Goulburn, Albury, Wellington,Tamworth, Wagga Wagga, Scone and Grafton.

In addition, prizemoney for Grafton’s Ramornie Handicap, the Wagga Wagga Town Plate and Scone’s Dark Jewel Quality will also be increased to $200,000.

The Coffs Harbour and Muswellbrook Cups will receive an increase in prizemoney to $150,000 each and the Taree Cup, Dubbo Cup and Snake Gully Cup at Gundagai will receive an increase in prizemoney to $100,000.

Also, the feature meetings at Lismore, Coonamble, Coonabarabran, Mudgee, Moruya, Bega and Orange have received significant increases for their Cups and support races at these meetings.

At each of these feature country meetings, there will now also be a $50,000‘Country Magic’ race which is restricted to country-trained horses only. These ‘Country Magic’ races will ensure country participants have an extra opportunity to compete at these feature meetings.

These latest announcements follow on from recent increases to minimum prizemoney levels to $22,000 per race and 40 Country Showcase meetings per annum with each race being at least $30,000 and the introduction of races restricted to country-trained horses only such as:

– $1.3 million The Kosciuszko-
– $500,000 Country Championships Final
– 7 x $150,000 Country Championships qualifiers throughout NSW for total $1,050,000
– $75,000 weekly Highway races
– $40,000 maidens for country-trained horses only

Racing NSW will also provide marketing and promotional support to these country race clubs. These events are also supported by Destination NSW to ensure tourism is brought into the local region. The event will get the local community to get together to celebrate everything great about their town.

Racing NSW Chairman, Mr Russell Balding AO, said: “A key strategic priority of Racing NSW is for country racing to continue to stage great carnivals and Cup Race meetings and to ensure that thoroughbred racing is widely celebrated and enjoyed throughout all of NSW, not just Sydney and the Provincials.

“Thoroughbred racing, dressing up, heading to the races and having a bet is part of what we do.

“The prizemoney increases for these meetings, along with the marketing and promotion of the Carnivals themselves, particularly to the younger demographic, will lift NSW Country Racing to a whole new level.

“In addition, the promotion, through Destination NSW of the particular regional attractions and experiences leading up to and during the actual Country Racing Carnival, will be another reason for people to visit regional NSW and make Country Racing part of their short stay or holiday whilst in the region,” Mr Balding said.

Minister for Better Regulation and Innovation, Mr Kevin Anderson MP, said: “The increase in prizemoney is not only good for racing, but has great flow on effects for regional communities.

“It’s no secret that our regional communities are doing it tough, especially given this unprecedented drought, so investing in racedays can help drive tourism and increase bed nights which is crucial to our local economies,”

Mr Anderson said. “Racing is more than just an event in regional communities, it’s part of the culture, which is why we want to continue to make racing as enjoyable and accessible as possible.”

Racefields cast in the starting stalls

by Brian de Lore
Published 5 July 2019

Five days into RITA (Racing Industry Transition Agency) and all’s quiet on the proverbial Western Front. No statements, no appearances, no initiations, and no action of any aesthetic nature.

If RITA were expected to fly into Petone on a magic carpet last Monday morning and wave a magic wand and fix a plethora of industry ailments, then a lot of enthusiastic, hopeful, voyeuristic industry stakeholders would have departed disappointed.

Not quite as big as the let-down from New Zealand’s Cricket World Cup effort against England in the early hours of Thursday morning. That was an appalling performance that lacked intensity and commitment.

We don’t expect the Blacks Caps to win the World Cup because it’s now blatantly obvious they are not good enough. But we do expect RITA to front up to the racing industry – now that they have taken the reins from NZRB – and tell us what they are doing and when they are doing it. They owe that to the industry at the very least.

Why? Because they don’t own the industry; it belongs to the participants. RITA is a representative committee that has been seconded to play a part in fixing it, and while doing that why wouldn’t they take the opportunity of making a deserved gesture to racing people and give a running commentary on how and when?

The MAC in its own words in the Executive Summary of its Interim Report stated: “The Committee has engaged with the racing industry openly and transparently. As change progresses, dealings with the industry and communities must continue to be transparent, inclusive and robust.”

The industry advocates transparency and accountability from all administrators and with history in mind should be casting suspicion upon newbies from outside racing – 16 years of being fed on a mushroom diet of darkness and unpalatable decision-making. RITA needs to fix that by showing the way forward as its statement suggests.

First board meeting for RITA next week

RITA has its first board meeting next week (July 10^th), and one can only assume that in the interim the NZRB accounts have been uplifted and a team of auditors is working flat-out as you read this to discover what NZRB has been cooking up in the creative kitchen at Petone – Their Kitchen Rules!

When known, RITA should be open about it and reveal all the irregularities and years of misuse of racing industry funds. It seems that deception and glossing over reality is a way of life at Petone because it has also continued into RITA’s first week.

By Monday morning NZRB had deleted its website masthead and replaced it with a RITA equivalent, and in this new format the CEO John Allen bio claimed he has been working for RITA since March 2015. Fantasy – just make it up as you go, John.

It’s a reminder of another laughable occurrence at one of Allen’s Racing Industry Conservation meetings (the travelling circus) at Matamata last year when he claimed NZRB hadn’t gone and borrowed money to prop up the minimum stakes to $10,000 – the $22 million over two years. But when questioned further by one of the seven attendees it turned out that NZRB already had a substantial overdraft facility and they were merely using that – sleight of hand or chicanery as it’s sometimes called.

Then, just to top it off, outgoing NZRB chair Glenda Hughes last week sent a departing email to the NZRB staff which stated: “I am immensely proud that the Board is leaving the NZRB in a much stronger position than we inherited. I’d like to acknowledge that the investment in the FOB was not only the right decision but will prove critical in the long-term sustainability of the industry.”

On reading that fiction, a wry smile must have come to the face of even the most ardent gravy-trainers at NZRB.

A stumbling block for RITA

In last week’s blog, I concluded by saying, ‘…from Monday racing can commence a journey down the path of greater prosperity.’ Upon further investigation, it appears that statement is subject to a significant caveat which could be a stumbling block for RITA.

We are in the first week of the new legislation coming into effect, and theoretically the new revenue streams of racefields (betting information use charge) and POC (Point of Consumption levy) should be returning to the codes somewhere between $250,000 and $500,000 per week – but it isn’t.

Nothing is coming in except one voluntary payment because the designated authority, DIA (Department of Internal Affairs) has not negotiated the agreements with the overseas betting operators – yes, we are in the hands of an inefficient bureaucratic process that lacks expertise in this area and moves at a snail’s pace.

Every week that goes by without those agreements is collectively costing the three codes up to a half million. The exact amount isn’t known because the POC levy is the income derived from New Zealanders betting with overseas operators and without collecting it, no-one knows how big the pot will be. We can only assume it will be massive given the anecdotal evidence of Kiwi punters deserting our TAB for a better deal with Australian-based corporates.

In the 123-page Interim Report by the MAC (Ministerial Advisory Committee), the recommendation to the Minister was to appoint the codes as the designated authority to negotiate and collect the Betting Information Use Charge, but that advice was ignored and DIA was appointed.

The MAC also advised that DIA collect the POC levy which is more understandable because the overseas betting operators would be revealing commercially sensitive information which they wouldn’t want to divulge to a body such as NZTR. But to make DIA the authority for both is silly.

The Racing Reform Bill No.1 went through under urgency to get the new revenue streams active ASAP, but when the barrier gates slammed open on Monday morning the industry failed to jump. It’s Friday and we are still cast in the gates having missed the start by five days and counting.

Australia started collecting racefields in 2008, albeit contested in the courts for a period, and here we are 11 years hence with the legislation passed but still floundering in the familiar pool of indecision. Lack of preparation, lack of consultation, lack of readiness, and the result is revenue down the drain.

The July 1^st date for the new legislation was mooted way back at the beginning of the year so what excuse can there be for not having the rates agreed upon and the agreements in place for day one. It’s pathetic, to say the least, and overseas betting operators must be laughing their heads off at this show of mismanagement.

Codes should be the Designated Authority

All desperate for cash and racefields being their property, the codes would react with the enthusiasm of a dog with a meaty bone if they were the authority. NZTR could have acted as the aggregator for all three plus sport and had these agreements in place. CEO Bernard Saundry is vastly experienced in racefields in Australia and was the obvious choice as opposed to some non-racing bureaucrat in DIA.

Under Clause 65 AE of the Racing Reform Bill No.1, the Minister has the power to influence a change on this point. It states: “The Department may delegate in writing any of its functions or powers as the designated authority to another entity.”

The absurdity of the situation is highlighted in the Messara Report, which states: “We do not believe it is appropriate for government or a government department to assume the role of designated authority for the issue of a betting information use agreement and it is more a role for an industry body…codes and sport in the best interests of their respective industries and stakeholders.”

When The Optimist recently posed the question of collection of BIUC levies to the Minister’s office, the reply came back: “Offshore betting operators wanting new agreements for betting use information agreements will need to wait until the offshore charges regime is brought into being through regulations.

“The offshore betting operators raised the need for consultation at the select committee, and this will be addressed as part of the regulation setting process.”

The interpretation of that response is ‘the DIA is a government department and the delay will be at our leisure.’

Countdown to the Cusp

by Brian de Lore
Published 28 June 2019

Counting down to the cusp by definition means something is nearing a point of transition between two different states.

That’s where racing is today; on the cusp and nearing the point of transition from NZRB to RITA. Monday is the day, July 1^st when the industry undertakes a paradigm shift in every aspect of its being.

And that means administration, income streams, repeal of taxes, implementation of a change management plan, initiate TAB outsourcing negotiations, governance structure planning, establish Racing NZ, establish Wagering NZ and most of all in the broader sense of the meaning, run racing for the stakeholders and not the administrators.

The above more-or-less summarises what John Messara foresaw in his review for the future of New Zealand Racing and what Minister Peters has planned in acting upon that review. The Review was Messara’s baby, and RITA is the Minister’s.

Messara knew what to do, and Peters knew how to execute it. For most stakeholders, the changes have seemed very slow in coming for the simple reason that the industry has been ailing for so long. Racing has been losing ground forever without anything being done to curb it – all that changes on Monday.

Two years ago before the last general election, Winston told this writer: “The racing industry can expect that nothing is going to change unless they themselves change.

“They can’t go on expecting a serious change in the policy unless they are prepared to work for it and vote for it. You need to ask the racing industry ‘do they or don’t they want a change?’

“The idea that they are going to get something without doing anything in return,” continued Peters, “does not work in modern day politics. In short, all I’m asking them to do is get out amongst their membership, professionals, vets, trainers, jockeys and the whole hundred yards and heavens-sake organise themselves and ensure they vote the right way.”

That lecture apparently worked because racing did vote for Winston Peters and NZ- First – 30,000 racing votes that were instrumental in NZ-First getting over the line and to the Coalition negotiating table to which Peters kept his word by taking the racing portfolio with him. So many traditional National voters in racing abandoned that Party after nine years of nothing for racing and jumped onto the Winston bandwagon.

Two years later the Racing Reform Bill No.1 is about to become a reality, and the industry would gladly have a midwinter celebration if it only had enough money left for a round of drinks.

In a chat with Simon Bridges during the week, the Leader of the Opposition admitted that National had largely neglected racing during his party’s nine-year term in government between 2008 – 2017. He conceded that between John Key and Bill English, little or no consideration was accorded racing and that Bill English was anti-racing.

When suggested to Bridges that although racing was now less than one percent of GDP, National had underestimated the racing-vote swing against his party and only a week after the election he had acknowledged that underappreciation when he with other MP’s paid visits to studs in the Waikato, he once again agreed.

National’s attitude towards racing was evident less than 12 hours before the commencement of voting in the 2017 election when they only then produced their first ever Racing Policy. As well, it was a flimsy last-minute document that said nothing – little wonder the racing vote went against National.

The Labour-NZ First-Greens Coalition gave racing its only hopes of survival. The alternative under a fourth term of National was a further degeneration to the extent seen in both Germany and Italy. These once proud racing nations are down the drain compared to Ireland and Australia which have strengthened but only after government support.

Federico Tesio, the genius of Dormello and great Italian breeder of such world-class phenomenons as Nearco and Ribot – two undefeated champions on the racecourse that had a world-wide impact on thoroughbred breeding – epitomised Italian racing and breeding.

Tesio died in 1954 aged 85. He left a great thoroughbred legacy for the world but gradual decline over many years in Italy has finally resulted in the European Pattern Committee this year stripping the boot of its last remaining Group One race which was run in November 2018.

The Lydia Tesio for three-year-old fillies over 2000 metres in 2018 was won, ironically, by former Italian trainer Luca Cumani – his final Group One success before retirement. The race was the last of nine Italian Group One races that had lost their status in the previous 12 years.

In an article written by Italian journalist Carl Di Lorio that appeared in Racing Post and on Racing.com earlier this year, he said ‘Italian racing has lurched into further crises.’

He also quoted winning and retiring trainer Luca Cumani as saying, ‘There doesn’t seem any chance of light at the end of the tunnel until the administration of Italian racing is changed and placed in the hands of racing people, as opposed to bureaucrats.’

New Zealand racing stakeholders which number in the 55,000 to 60,000 estimate when full-time, part-time and volunteers are all taken into account, should have little difficulty relating to the Cumani statement as NZRB has been overloaded with non-racing bureaucrats for many years.

The Minister devised a plan to fix racing’s woes, and he must take the credit for getting it to this stage because his methodology didn’t escape plenty of industry criticism. In that pre-election interview, he gave a clue in suggesting he would be doing it his way and not taking industry advice.

He said: “I’ve talked to a lot of people in the racing industry, and some of them think they know the business of politics, but they don’t. I probably don’t know as much about horses as I could know, but I seriously know a whole lot more about politics than they know.”

The know-how the Minister speaks of is now bearing fruit in the form of the Racing Reform Bill No.1 which kicks off a 12-month plan under RITA’s management with Bill No.2 to be in place by year’s end and the full metamorphosis of racing to be completed, less venue closures, by around this time next year.

Ignoring the more contentious issues in the Messara Report – the all-weather tracks, the reduction of venues and the divestiture of race club property and assets to the codes for the benefit of the industry overall – the immediate benefits from July 1^st should be gained mostly from income from racefields and the POC (Point of Consumption levy).

The legislation in Bill No.1 with racefields requires overseas betting operators to have obtained permission from the designated authority (DIA) or their delegate before they can publish race fields from New Zealand after July 1st. In theory, they will have entered into a contract to pay a percentage (around two percent) commission on turnover back to DIA for distribution to the codes.

RITA has renamed racefields as Betting Information Use Charge (BIUC). The POC is a levy on bets placed by New Zealand-based punters on overseas betting agencies. The rate set by the Minister could be around 10 percent, all of which will come back to benefit racing and sports in New Zealand.

No one knows how exactly how much income it will yield, but estimates by some industry accountants are saying between $1 million and $2 million per month.

In New Zealand, we are getting a much better deal on the POC levy than any state of Australia. Every dollar collected will come back to racing and sports compared to NSW which returns to racing only 30 percent of monies collected with the government pocketing the rest. Worse still is South Australia which set the levy high at 20 percent with all monies retained by the government.

The deal for New Zealand is excellent, and along with a negotiated up-front fee for outsourcing and savings of $50 million to $70 million annually in costs, once an outsourcing arrangement is in place, the industry is well on the way to doubling prizemoney as specified in the Messara Report. With everything in place and self-determination devolved to the codes, transparency of operation should follow automatically.

Lack of transparency and accountability to the stakeholders has been one of the bugbears of the industry since 2003. Not only does the flow of information require vast improvement, but the accuracy of it also needs serious attention.

Consider the following which CEO John Allen posted on the NZRB website this week: “ The outgoing Board are leaving the organisation on a strong footing, equipped to be able to deliver increased returns to the industry on the back of a competitive betting platform, solid technology and world leading presentation of racing content.”

It got more Alice in Wonderland-like in the very next paragraph when he continued: “Finally, we are currently working through our Statement of Intent, which outlines the strategic direction for the organization over a three-year period and includes a discussion of the outcomes being sought by the main priorities for the three years ahead.

But wait, there’s more: “We will be working with the new Board and Codes to finalise this over the coming month or so. Once this is complete, I will embark on another series of industry conversation and look forward to seeing as many of you as possible around the country.”

Having been fed volumes of such NZRB fiction over many years, RITA now has an opportunity to treat the stakeholders with the respect they deserve and initiate a policy of full transparency and accountability that should continue through to Racing NZ and Wagering NZ.

Today (Friday, July 28^th) is the day the MAC’s final report is due to be delivered to the Minister. Its adoption should be a fait accompli and from Monday racing can commence a journey down the path of greater prosperity.

Stage One complete but now for the hard work!

by Brian de Lore
Published 21 June 2019

A racing milestone took place with Thursday’s third and final reading of the Racing Reform Bill No.1 meaning the racing industry will come under new management and legislation from Monday, July 1^st.

Stage One complete, but all the planning and hard work by Minister Winston Peters and his NZ-First office headed by Jon Johansson, the Ministerial Advisory Committee (MAC) and DIA, will pale into insignificance compared what needs to happen over the next year or more to turn around the fortunes of this ailing industry.

By next Friday MAC is due to deliver it’s second and final report to the Minister which under the Terms of Reference is to outline the plan for structural changes and the transition to the new legislation to be implemented by RITA (Racing Industry Transitional Authority). The MAC has been busy writing that blueprint and schedule for the workload which they will undertake for themselves under its new auspices of RITA.

The final MAC report is likely to be even more comprehensive than the 123-page Interim Report which was completed and delivered by the end of March. The requirements for this one are:

final advice on any operational or other matters that the Government should consider in its response to the Report; and
a draft transition plan for the racing sector, identifying key steps, processes, and timings.

In a press release dated June 21^st (today), the Minister announced: “RITA will be led by Dean McKenzie (Chair), Bill Birnie, Liz Dawson, Kristy McDonald, Anna Stove, and Sir Peter Vela.

“With transitional powers, RITA will enable the urgent changes required to drive the racing industry toward a financially sustainable future,” says Mr. Peters.

“To provide continuity and maintain the momentum for change, the Chair and members of the Ministerial Advisory Committee (MAC), established by the Minister in 2018, have been appointed to the board of RITA.

“Mr. McKenzie’s experience, dedication and passion to improving the industry make him the ideal choice to lead this very important work,” says Mr. Peters.

“Members of the MAC – Bill Birnie, Liz Dawson, Kristy McDonald and Sir Peter Vela will continue to support Mr. McKenzie in revitalising the racing industry.

“Mr. Peters expects that Ms Stove will bring a fresh perspective to RITA, along with her extensive experience in leading and driving transformational change.”

Anna Stove has strong leadership skills and is presently Vice Chair of the Counties Racing Club and was due to step up to Chair in October. Her extensive global executive experience includes being Chair of Global Woman New Zealand Trustee, Director of Hikurangi Cannabis Company (Medical Research), formerly a Director of Medicines New Zealand, and for seven years the Vice Chair and Director of Shooting Star Hospice in London

Anna is the ideal appointment – she is the daughter of the well-known breeder, studmaster and owner of Progressive Farms, Brian Mollet. She grew up riding, has been around thoroughbreds and for many years has been actively involved in breeding and ownership.

Anna is the sixth member of RITA, and a seventh may be appointed at a later date when a person with another specific skill set has been found – possibly a wagering one.

We know that the NZRB board will be defunct by Monday week. RITA takes over the ship’s wheel on July 1^st,but no one knows but themselves and the Minister what the first moves will be except they will focus on revenue growth, support a Change Management Program and set leadership and governance arrangements.

Those points were clearly outlined in the Interim Report as well as stating: “Change will happen quickly, and disruption must be carefully managed and minimised.”

If that is to happen, then it seems logical that McKenzie would take up the position of Executive-Chairman to expedite all the changes and rein in the costs while maximising the revenue streams – that would simply not happen under the current management which has no genuine record of cost-containment or sensible business practice.

Dean McKenzie’s RITA’s challenges include 1. A failed leadership team 2. CEO still in denial 3. Disillusioned and demotivated staff. 4. Unpopular fixed odds betting platform. 5. Significant loss of customers. 6. Insufficient income to fund stakes at current levels. 7. No further borrowing capacity. 8. Over resourced and too expensive. 9. Racing product in serious decline. 10. Substandard racing surfaces and dilapidated infrastructure.

Everyone bleats on about BAU (Business As Usual), and disruption must be minimised – but for what? BAU for the NZRB is currently advertising 14 employment positions and the recent appointment of a General Manager of Technology who will reputedly earn $350,000 to $400,000 a year, and who is due to relocate from Australia to take up the position at the end of July.

The GM of Technology will no doubt be a replacement for Dianna Taylor who played a substantive role in the Fixed Odds Betting (FOB) saga but resigned two weeks after it’s launch. Taylor was also a major player in the Kiwi Bank computer system build which went on the scrapheap after six months at a loss of $90 to $100 million.

With RITA coming on July 1^st and the executive, overpaid management team knowing it, would not any reasonable organisation have put staff appointments on hold rather than exacerbate the problems to be confronted by RITA.

BAU should really be BSAU. And minimised disruption shouldn’t enter into the calculation because to get the job done quickly and efficiently, disruption is inevitable. Do you think V’Landys and Messara were worried about disruption when they planned their Coup d’état on Racing NSW and turned the industry around with the blessing of the NSW government? Doubt it.

To get the job done will require steely-strong leadership of the kind that’s been lacking in racing in New Zealand for so long. The challenges are mounting up which is in evidence with the reaction of several sporting entities that have voiced dissatisfaction with the Racing Reform Bill No.1 after the third reading.

It’s developed into the needy and the greedy. The racing industry is The Needy and will die without both parts of the legislation, and the sports organisations which have their hands out for more money are The Greedy.

The second part of the legislation scheduled to be introduced by December to be passed into legislation by January 1st will be a more challenging assignment by the admission of sources within the NZ-First office. It involves changes to the structure of the entities, establish TAB NZ, and put into place any revenue structures not covered in Bill No.1.

Bill No.1 was passed into law with full Coalition support including the Greens. That support will also be required in December, but some of the betting issues may prove to be a bone of contention with the establishment of TAB NZ. Add to that what is certain to be a growing whinge from The Greedy, and a hurdle becomes a steeplechase jump.

Sports entities clearly do not grasp that they will all be financially better off with the legislation passed in its entirety than at present. Racefields (Betting Information Use Charge as it was renamed by MAC, just to confuse you further) and the POC (Point of Consumption) levy will provide two new revenue streams for both sports and racing never before accessed – despite it being law in Australia since 2008.

The initiative to collect these taxes and levies came from the racing codes, not NZRB, and would have been unknown to sporting entities. Sport pays nothing for the maintenance of the vehicle (TAB) which collects the revenue for them (currently $10 million annually)

“Ït’s pretty disappointing to have people who would make that comment when we are trying to rapidly grow the pie and ensure that everyone gets more out of it,” said Winston Peters today (Friday 2st June) on NewstalkZB.

“If you have people saying that then I think they should come and have a chat to me about it. It’s disappointing when they show no gratitude while we are trying to fix things up – to take that attitude.”

When questioned on whether or not he could save the racing industry, Peters replied: “If you get the structure right and you get the people right, suddenly it will take off.”

Manure will hit the fan in two weeks!

by Brian de Lore
Published 13 June 2019

We all should know what happens when manure hits a fan? The euphemistic definition goes something like this: ‘an action takes place bringing about a number of undesirable consequences;’ or if you prefer, ‘you reach the point at which an already unstable situation devolves into utter chaos.’

Another definition says, ‘a riot takes place, and it’s the best way to solve problems.’ The Optimist prefers the latter, but the racing industry has hardly been through times of riot. Quite the opposite, racing has been a benign whinger for many-a-year with little or no organised action other than individual complainants like myself who wield no power but can only provoke thought.

All things considered, we are a manure of an industry. Manure because that’s what horses produce and manure because that’s the level of effort the racing industry has made to get itself organised and demand a better deal for itself – it still hasn’t happened.

In this blog last week I quoted our now Minister Winston Peters from a 35-minute phone chat I had with him in 2017, 22 months ago, when he was on the campaign trail. It was one of our first phone calls, and much of the conversation hasn’t been written – but there comes a time.

That time is now. And while NZRB is endemically ravaged with denialism, the disease seems to have been contained to Petone. The Dept of Agriculture must have got in quick, thinking we had received another Queensland fruit-fly via NZ-Post and erected a ring fence.

When I complained bitterly to Peters that day about the direction NZRB CEO John Allen was taking the racing industry, and questioned why a person of his background was ever appointed to run racing, the NZ-First leader didn’t hold back.

“John Allen came from the Post Office (NZ-Post), and we all know what happened there, and then he went to Foreign Affairs (MFAT),” said Peters, “and 42 diplomats signed a paper against him, and then he ends up heading the racing industry, and I’m sitting there thinking ‘what on earth is wrong with the racing industry.’

“He comes along and treats racing as a motivational exercise and thinks the industry needs some motivation, and the industry doesn’t need that – they need someone who knows what the hell he’s talking about.

“The first thing you need is someone who knows one end of the horse from the other. Employing people on $900,000 a year (probably a reference to what the NZ-Post CEO is paid) is just ridiculous. Racing has suffered from a lack of leadership – at the top. But the CEO is only symptomatic of the problem; start with the people that appointed him – you have to get rid of them.”

Nearly two years later, we still haven’t got rid of those people – they have two weeks left to run – the board of NZRB. The industry is incredulous they have been allowed to survive for so long, but when Peters became Minister 18 months ago he chose to deal with the racing problem in a slower bureaucratic fashion than was recommended in the Messara Report; probably on advice to achieve the best long-term result.

A year ago while Messara was in the middle of compiling his report, and all but one member of the NZRB board was due for replacement in July 2018, it was leaked to The Optimist that CEO Allen successfully negotiated a new three-year extension to his employment contract.

If the board thought they were about to go, and they agreed to keep Allen in racing for a further three years just as they were expecting to depart, would that not be deemed a breach of their fiduciary duty, or more plainly an irresponsible act of governance, not just to an incoming board, but for all stakeholders.

It should be stressed, however, this information comes from a third party and is unlikely to be confirmed by either Allen or NZRB. So it can only be described as a rumour; albeit a strong rumour from a good source – RITA will find out soon enough when the manure hits the fan.

That was a year ago, so if correct, he will still have two years still to run on his contract. At recent Industry Conversation Meetings, Allen has been openly stating he isn’t going anywhere, is looking forward to RITA and will be in the job for some time.

But logic tells you that simply cannot be an option. When RITA steps into the breach on July 1^st how can they keep on a CEO on who has belligerently defied industry opinion, is running a TAB which to all intents and purposes is broke, has built a $50 million FOB (Fixed Odds Betting platform) against all industry advice except his own executive team which has failed in the six months since launch, has failed to deliver on other strategic initiatives, and is unapologetically continuing to lie to the industry.

The TAB is at an all-time low, including the morale of employees. It has been limiting the amount the bigger punters are allowed to win; they are the elite customers who might be good punters and are a chance to win. A source from inside revealed the TAB is desperate – in panic mode after reputedly losing big-time on the Ruiz-Joshua fight. Ruiz was around 8 to one.

The source who is always accurate said the TAB had had a knee-jerk reaction across the whole business without consultation. Even retail outlets are cutting bets and are alienating loyal customers.

Anyone who has run a successful business knows it takes a certain amount of good will towards your customers to retain them. The TAB in New Zealand has displayed no goodwill in a decade or more, perhaps since outsiders took control after the Racing Act of 2003 came into being. The TAB is a disgrace, but it all changes on July 1^st.

Is it any wonder thousands of New Zealanders are now betting directly with corporates in Australia. That’s why the New Zealand industry will benefit so much from the POC (Point of Consumption) levy which will give our industry a big kick-back, and that’s why the legislation (Racing Reform Bill No.1) which is about to get its second reading as I write this, is so important for the future of the industry.

MAC will become RITA on July 1^st, and that Board will be focused on revenue for the industry. The Minister will have done the first half of his job, and the road for maximum funding will open up for collection by RITA while putting the Messara Report into operation in an attempt to save every part of the industry which hasn’t been damaged beyond repair.

RITA Chair Dean McKenzie stopped talking to The Optimist a couple of weeks ago and won’t do so now until July. Complaints have been to no avail, but McKenzie is shutting up shop on communication because July 1^st will come around quickly, and a super-plan of engagement will commence.

No alternative exists. The Optimist predicts McKenzie will be appointed Executive Chairman of RITA and take over the day to day running of the TAB, and Allen will be sidelined in the first instance and placed on gardening leave to be available to answer questions about all the chaos he has caused over the past four and a half years. This is the end of the road for Allen – make no mistake.

In two weeks and one day, MAC’s final report will be delivered to the Minister. Peters has repeatedly said he has complete faith in the MAC which becomes RITA with the addition of one more, and possibly a seventh member when the skill-set for that person they are seeking is found.

Swift action will be required by RITA to turn this industry around. July is going to be a very compelling month for participants. We know that MAC has been working plenty of overtime; RITA is unlikely to get any respite.

Racing Reform Bill No.1 still on track despite the dissenters

by Brian de Lore
Published 7 June 2019

“The problems in racing are going to be solved at a higher level,” said Winston Peters almost two years ago when in opposition and while on the campaign trail in the first week of August 2017, two months before the last General Election.

“By that I mean a new government and a Minister of Racing changing the legislative structure from top to bottom, and changing the financial structure as well so that this industry comes back to being a paying proposition for the owner.

“The owners are critically the most important people, and you will revive the racing industry when you get a system that makes it worthwhile for the owner to be part of the industry. That means prizemoney. There is also gross waste with massively over costed administration.”

Fast forward 22 months and the Minister is now delivering those promises as we close in on Racing Reform Bill No 1, and a change of governance with RITA (Racing Industry Transition Authority) taking over from the disbanding NZRB on July 1^st.

MAC (Ministerial Advisory Committee) comprises of Dean McKenzie (Chair), Sir Peter Vela, Liz Dawson (ONZM), Kristy McDonald (QC, ONZM) and Bill Birnie (CNZM). These five people have been receiving unqualified praise from the Minister, the NZ-First office and DIA with whom they have worked tirelessly for five months on prioritising the Messara Report and bringing racing to the threshold of massive change.

A source from within the NZ-First office yesterday confirmed they are very appreciative of the work conducted by MAC and described them as a ‘fantastic group; having worked incredibly well together, and incredibly fast under the very challenging timeline they were given.’

That same source also revealed that all five that comprise the MAC had agreed to come across as RITA, but a sixth person would also be added to the mix to supplement the existing skill-set in MAC. The sixth person under APH (Appointments and Honours Committee) gender equality regulations must be a female.

A seventh position is in abeyance until they find someone with a specific skill set. The source did not reveal the nature of the skill-set, but it would be surprising if it’s not someone with extensive experience in wagering – a large part of increasing the revenue is in the know-how of negotiating the best deal in outsourcing the TAB.

The Minister’s office doesn’t feel they are under any pressure to appoint the seventh board member and will not do so until that person emerges. But finding a New Zealander with a deep knowledge of wagering is nigh-on impossible; when the appointment is imminent, they will almost assuredly be seeking an Australian.

Who the sixth appointment in RITA will be will not be known until a Cabinet meeting the week after next. On Tuesday APH will consider the nomination(s) and make a decision which can only be confirmed and made public with rubber stamping by Cabinet.

Remember, RITA will be in existence for only 12 months, or thereabouts. Some industry stakeholders have voiced fear from the extensive powers given to DIA and the Minister over the RITA, but in the transition period with substantial legislative changes and some tough decisions to be made it seems a logical move on the journey to form WNZ (Wagering NZ) and RacingNZ.

When that change of governance structure occurs, racings responsibilities then devolve to the individual codes and with income streams certain to be in a much healthier state thanks to racefields, POC (Point of Consumption) levy and outsourcing of the TAB, the Minister and the DIA will then take a step back and let racing run itself.

The broad, long-term vision the Minister outlined for racing before the last general was for legislation that would serve the industry ad-infinitum and be in place in 30 and 40 years hence for the then Minister, whoever that be.

The thought that the Minister and/or DIA would continue to hug the steering wheel is a concept that has only been promoted by the fearmongers and is nowhere to be found in MAC’s 123-page Interim Report or the Messara Report.

Apart from the anomalies and arguments which have arisen over the issue of venues, and some questions over outsourcing which still requires a lot of investigation, RITA is being sworn in to get the Messara recommendations done and dusted for a much brighter racing future.

Racing Reform Bill No.1’s closure date for submissions was on this past Tuesday, 4^th June. Forty-six were received in total including 14 from various sporting entities. The submission from Sport New Zealand which supported the Bill which was acknowledged in a NZ-First press release on Wednesday.

The Minister praised Sport NZ by saying, “It was encouraging that Sport NZ sees the potential for increased revenue flowing to sport as a result of the Racing Reform Bill.”

Peters was referring to the fact that both Racing Reform Bill’s 1 & 2 are structured to greatly increase the return to all sporting codes with the creation of larger revenue streams, a point seemingly missed in the submissions of those sporting bodies putting their hand out for a higher percentage take.

Checking with the Australian arrangement for returns to sport through TABs and corporate bookmakers, it’s interesting to note that New Zealand returns more to sport on a percentage basis than any state in Australia, and a former Tabcorp employee rated the New Zealand TAB financial treatment of sport as ‘generous and one of the best in the world.’

Wednesday’s press release also referred to the Nikki Kaye debacle speech in parliament last week with the Minister saying, “National’s Nikki Kaye has been leading a fear campaign against the Bill, one which had no basis in fact nor support from her own caucus colleagues.

Peters then added, “The best response to Nikki Kaye’s politicking was delivered by Sport NZ today during their oral submission when they said: ‘It’s a good day for racing and a good day for sport,’”

NZ-First also confirmed that every schedule had been met, to date, and a report from the Select Committee which is due this coming Tuesday will be delivered, and they will confirm the legislation with only minor tinkering and amendments to tidy up the language.

Dissention within the National Party Caucus is apparent with both Bennett and McKelvie privately supporting the Bill. National may yet try to slow the process down with the introduction of some SOPs (Supplementary Order Papers).

But the Coalition has a solid majority which was very evident with the Green’s supporting the Bill during the speeches and voting with the government and against all the National amendments in the that forgettable debate last week.

NZ-First made no secret of the Minister’s delight to have the support of the Green Party, given the flimsy behaviour of the National party – long live the Greens

Parliament displays its lack of racing nous

by Brian de Lore
Published 31 May 2019

Few racing stakeholders would have even known it was happening, and fewer would have tuned-in to Channel 86 on Sky to watch it, and even fewer would have seen last Tuesday as a momentous day for the future of New Zealand racing.

But Tuesday was a momentous day for racing because it was the day racing Minster Winston Peters introduced his Racing Reform Bill No.1 to Parliament, and it was the day that will kick off the process that will transform racing from a dying dog to a dancing dragon.

Yes, the detractors and the denigrators and the whingers are all coming out enforce voicing negativity; we do have a lot of very frustrated people in this business, but it’s the view of The Optimist that Minister Peters is delivering the promises he made pre-election, and substantially better times are ahead for the sport of thoroughbred racing.

Everything that occurred on Tuesday in Parliament for racing was very positive, and it came only after a mountain of planning, scheduling, and execution; it didn’t happen by chance.

The Minister made sure that his timing was right, he had the full support of the Coalition, MAC had done its job in acting upon the blueprint known as the Messara Report, and that nothing that the National Party protested in their speeches or at debate time, could influence the result.

The bone of contention for National was the truncated time-period between the first reading and the Bill going to Select Committee by June 11^th and coming back to Parliament for a second and third reading before being passed into legislation in record time. But the protestations failed.

National speakers said they supported the Bill but then argued for a delay to string it out for many more months to give sports and other bodies time for submissions. They also argued that the Transport and Infrastructure Select Committee chosen for this Bill was an unsuitable committee and that it should be going before the Primary Production Committee (Chaired by National MP David Bennett).

An amendment to that effect moved by Gerry Brownlie failed by 63 votes to 55. All amendments failed by the same margin and the Bill will now go to the T&I Select Committee which happens to be chaired by an NZ-First List MP.

Brownlie further argued that the racing industry was boring, which appeared to be a classic case of the pot calling the kettle black. He also claimed, along with his National Party colleagues, that he had been consulting with racing people, but where and when that happened no one seems to recall. Brownlie couldn’t remember the name of the Wellington course (Trentham) and also said the racing business was a $26 billion industry when in reality it is only $1.6 billion.

If you didn’t understand why the Minister called for submissions on the Messara Report last October, then you do now. The submissions following evaluation were taken into account by MAC in prioritising recommendations on operationalising the Messara Report – so the time for submissions has well expired. The Minister can legitimately argue he has consulted the people.

As well as the National contradiction of voting against it, they claimed a lack of consultation with sports, plus the truncated Select Committee process for a Bill of its size, gambling harm and any other reason they could fabricate. But they did it without aplomb and did it without any substantial knowledge of the industry.

National did racing a huge disservice during nine years of government during which time they ironically had the racing vote. But that vote turned against National in the 2017 election, and the analysts say the racing vote got NZ First over the line – if you voted for Winston in 2017 then you have been more than vindicated by what happened in parliament on Tuesday.

National looked inadequate in both the speeches and debate which included the smarmy Nathan Guy who was Minister of Racing for more than five years. When Minister he sat on the racefields legislation and did nothing about it for years, but on Tuesday blamed parliamentary colleagues for their inaction on racefields.

Little wonder that the NBR (National Business Review) rated Guy the least impressive Minister during the last term of National government. During the debate, he was shut down by the Speaker of the House for his lack of argument.

Guy is the person who appointed Glenda Hughes as Chair of NZRB and Hughes, in turn, was responsible for the appointment of CEO John Allen – none of those three have made a positive contribution; three more non-racing people which thoroughbred history will place in the ever-increasing basket of failed leaders.

National MP for Central Auckland Nikki Kaye was less than impressive when she argued that sports were getting a less than fair deal with the new Bill. She talked aimlessly for 10 minutes and not only showed she had failed to comprehend the Bill, but displayed a complete lack of understanding of how sports gain a cut of the betting despite not having either been part of the initiation of the TAB, or having contributed anything towards the running costs of its administration, retail or online services.

Kaye doesn’t understand that the two racing reform bills are designed to increase revenue, and as that expands so does the take for sports. The POC (Point of Consumption) levy means that any resident of New Zealand who places bets on a sporting event with an Australian corporate bookmaker will soon see a percentage of that bet returned to the sport in NZ – a new revenue stream and a first for this country.

Kaye also hasn’t grasped that $50 million of racing’s money has been used to build a FOB (Fixed-Odds-Betting) platform which is essentially designed to increase sports options and sports betting which will increase the sports take. Not much of a deal for racing for which we can thank CEO Allen.

Nor has she taken into account the moral high-ground on the history of the TAB – started in 1951 by the racing clubs for the benefit of racing. Along the way, sports hitched a ride and have gleaned a percentage with no contribution to the running costs.

Sports currently get around $10 million annually from the TAB which makes it the country’s second-biggest avenue of financial support behind the government. And now they want to bite the hand that feeds them.

The margins on sports betting are a lot less than racing. For example, the gross profit is historically between eight and nine percent from which sports would be paid a net two percent and racing a net two percent. But Allen has admitted that in the first three months of the FOB (January to March) the margins were running at, not nine, but only three percent, and given the competitiveness of the global market, the margins are likely to have remained skinny ever since.

The Kaye argument is non-sensical, but the gradual infiltration of sporting people into NZRB over many years is now seeing sports putting it its hand up for a larger share of the pie even though the pie was cooked-up from a racing recipe with all ingredients paid for by racing.

In the overall scheme of politics, it has to be said that National on Tuesday did not show the racing industry enough understanding or sympathy to win back the racing vote if an election happened tomorrow.

The Debating Chamber mostly emptied-out for Tuesday’s reading, speeches, and debate, and the them and us battle lines were drawn for those who remained. The banter was characterised with disingenuous performances of either reading from a script or just towing the party line – if it were the pop-up globe theatre putting on a Shakespearean play the actors would have been booed-off the stage.

The day was a resounding win to Minister Peters and racing, and in yesterday’s budget also came an allocation of $3.5 million which is likely to be for the running costs for RITA to carry out the transition of every item contained in the two Bills which will take a year.

That $3.5 million is part of a $46.5 benefit to racing that will come back over the next four seasons, the majority being the repeal of the betting levy. Although the exact use of the $3.5 million isn’t specified, the major slice may be in place for RITA’s Change Management Plan which will undoubtedly incur costs through restructuring.

July 1^st can’t come around fast enough!

Do we know who’s currently in charge of racing?

By Brian de Lore
Published 24 May 2019

The burning question of who is running racing in New Zealand five weeks before RITA replaces NZRB may leave you scratching your head.

If you go strictly by the Racing Act 2003, then NZRB is in charge, and as CEO John Allen has been telling his staff, it’s BAU (Business As Usual). Is this why he and his highly paid executives are touring the country with seven venues listed for yet another round of ‘Industry Conversations’ with a footnote on the NZRB webpage that says further venues may be added.

Is this a serious attempt to rally industry support, or an attempt to find out if Hokitika and Riverton actually exist, or can it be construed as ‘gardening leave’ as the end of Allen’s tenure as CEO nears? Perhaps it’s a farewell tour but as The Optimist pointed out last week, these conversations which may more appropriately be called ‘Nonsense to the Nonagenarian’ speeches cost in the vicinity of $8,000 to $9,000 a time – diligent use of industry finances you might not say.

Whatever’s analysed and said about NZRB’s use of industry funds, from an industry stakeholder viewpoint, it can’t be complimentary. And the verdict on the rhetoric NZRB has been spinning the industry for the past four years; it will not it be complimentary either.

The Racing Act of 2003, as mentioned above, may have been a good idea in theory, but in practice, the Act has received only cursory respect from NZRB. No organisation was in place to mediate it or ensure it be followed as a non-contestable piece of legislated law. Over the years, the three codes have failed to stand-up strongly enough for the rights of the stakeholders.

Take clause 9 (1) under Functions of the NZRB Board, as an example. It says:(a) to develop policies that are conducive to the overall economic development of the racing industry, and the economic well-being of people who, and organisations which, derive their livelihoods from racing.

Also, under Functions of the Board Clause 9 (h), it says: to use its resources, including financial, technical, physical, and human resources, for purposes that, in the opinion of the Board, will directly or indirectly benefit New Zealand racing:

Very poorly written legislation with the use of the word ‘opinion’ and can any stakeholder in racing honestly raise their hand and say ‘yes,’ they have received benefits? Or can any of the organisations it refers to – the owners, the trainers, and the breeders raise their hands and say ‘yes’ that has happened? No. they cannot; none of that has happened to any extent and protestation by all these organisations to the treatment handed down by NZRB has been only soft.

Not enough fight in the dog – Poodles when they needed to be Rottweilers. The passing into law of new legislation in the weeks ahead will, therefore, only be as good as the people appointed to enforce it and perhaps the addition of an ombudsman for its enforcement – the latter might be wishful thinking.

Participants at the coalface of racing only want a fair go. They need a reason to remain in the game because the anecdotal evidence suggests its tougher for owners, trainers, and breeders in 2019 than it’s ever been in the history of thoroughbred horses in New Zealand

Racing Minister Winston Peters didn’t announce the full make-up of RITA (Racing Industry Transitional Authority) at last week’s May Sale at Karaka, but he did after making his speech confirm that the existing five people that make up MAC (Ministerial Advisory Committee) are the five that will transition into RITA with the addition of two new members for a board of seven. Who these two appointments are will be is crucial to code fortunes over the next 12 months.

And that brings us back to the original question of ‘who is currently in charge of racing? It’s not MAC until it becomes RITA on July 1^st. Officially its NZRB but they will be too busy cleaning out their desks. In reality, it’s the Minister, but he’s too busy doing Foreign Affairs and other things and so has delegated the responsibility to his office – does that make sense.

The DIA is involved which means bureaucratically compliant appointments, i.e., the two additions to RITA come under State Services Commission guidelines – the important issue for racing is, are they to be racing people? Will they have an understanding of the industry and drag this business away from a succession of failed Institute of Directors’ appointments that have dogged racing for so long.

On Page 11 of the 12-page Cabinet Paper 2 for Transitional Governance, it says:

“Governance of RITA

7. agree that the governance provisions for RITA be:

7.1 a Board of up to 7 members;

7.2 that Board members have a strong primary duty to act in the best interest of the Board and the achievement of its goals;

7.3 the Board members are to be appointed by the Minister for Racing for the duration of the transitional period, but subject to reappointment for a finite period if required to manage any residual matters;

7.4 that candidates for appointment to the RITA Board will be required to collectively meet specific skills and experience criteria, including governance and:

7.4.1 industry expertise to effectively manage racing functions; 7.4.2 knowledge and experience of sport at a national level; 7.4.3 commercial and/or legal expertise to manage devolution of assets, functions and responsibilities; and

7.4.4 change management expertise to oversee the transition process;

8. note that Bill No.1 will provide that the terms of serving NZRB Board members end when RITA is created;

9. note that appointments to the RITA Board will be made consistent with the State Services Commission’s Board Appointment and Induction Guidelines;

10. note that the Minister for Racing will consult the Minister for Sport and Recreation to ensure that the board of RITA includes a national level sport perspective;

11. note that the Minister for Racing will submit a paper to the Cabinet Appointments and Honours Committee on the proposed membership of RITA in time to enable governance arrangements to be in place for the intended establishment date of 1 July 2019;

“The RITA Board should be closely accountable to the Minister for Racing.”

A few weeks ago the codes were asked for nominations for the two positions. The Optimist is aware of who the two people NZTR put up for selection, both of which go to the races, have full industry knowledge, are currently in administrative roles in racing. Best not name them here in case they do not make the cut.

The alternative is that the State Services Commission criteria will dredge up relics from the past such as a retired judge or a long-standing public servant with a faultless record in everything but racing. It’s all been tried before, and it has always failed. And under SSC rules all committees or boards are gender equal which requires the two new appointees be either both female or one male and one female.

That makes it tough when the best single appointment the Minister could make would be to bring Messara himself into the fold. That doesn’t appear to be on the cards and nor does the appointment of either of his offsiders who were integrally involved in the revitalisation of Racing NSW including the person who wrote the legislation and made it happen.

Experience in wagering is what’s blatantly lacking in the current five, and a Messara could fill that gap. The legislation should be finished by now if we are to see the Racing Act of 2019 Part One passed by 30 June, and with no time for three readings, it may need to go through parliament under urgency. Should that not happen, then RITA cannot come into existence.

RITA is not the permanent board, though, as its lifetime is expected to be around a year. Once the approved Cabinet papers are transcribed into legislation, and the new ship is up and sailing, RITA’s role is over. With or without new personnel, RITA effectively then becomes Racing NZ.

RITA was created by the Minister to prioritise the Messara Report, and its 123-page Interim Report is testimony to the amount of work this committee has done since late December. That work continues unabated, and as we fast close-in on the end of May and move into June, more of the positives contained in the report will unfold.

One of the focuses of the Report in the Executive summary is the clear and warming statement, “Racing stakeholders must benefit from a new industry model – the industry has been living beyond its means, and for too long.”

It goes on to say in the very next paragraph, “The committee also wants to reverse the historical model where the stakeholders of the business get what’s left after the administrators have taken what they believed they needed to run the industry. The stakeholders can no longer be left at the end of the food train.”

If that statement is not verification of NZRB’s outlandish administration and wastage of industry funds, then what is? – it’s a Muhammad Ali-like combination of knock-out blows all in a few words.

The clue as to what will happen after July 1^st when RITA takes control is contained on page 123, the very last page of the Interim Report. It states under the heading of Establishing RITA: “Change will happen quickly…we are looking at a period of months, not years, to shift from the current structures and way of operating to the form and functions outlined in the Messara Report…”

At the top of a RITA four-point bullet-point list under that statement, the first line reads, “supports the Change Management Program.” which may be seen as a vital clue that RITA will make early moves to reduce the overheads with early management changes.’

In a brief statement to The Optimist this week, MAC Chairperson Dean McKenzie said: “MAC is on track to have the final report to the Minister by the due date, being the end of June. Until that point it is a work in progress, extending and updating the work plan and overall direction contained in the interim report.”

RITA will fast become polar-opposites with NZRB which is currently offering 15 new career positions on its website and recently employed a new General Manager of Technology at an estimated salary of $350,000 to $400,000 – the new appointee supposedly scheduled to be relocated from Australia with his family in July.

That’s what NZRB see as BAU (Business As Usual). On the other hand, it could be further evidence of an epidemic of that infectious disease known as Denialism which appears to be rife in the suburb of Petone.

Footnote:

The formation of a steering committee was undertaken at Karaka last week for the express purpose of establishing a publication for racing to fill the void left by the now defunct The Informant. That committee was to have travelled to Wellington for talks with NZRB about the integration of the new weekly with Best Bets. The meeting, for obvious reasons, has now been deferred until July when RITA takes the reins.

Winston gets the betting duty back for racing as promised

by Brian de Lore
Published 17^th May 2019

Racing Minister Winston Peters delivered another piece of the racing industry jigsaw puzzle solution this morning at Karaka when he announced his government was repealing the betting levy for racing as part of Budget 2019.

In his speech to an attentive group of industry participants, he said: “As Messara pointed out, the New Zealand Racing industry could and should be performing at a comparative level to other jurisdictions – for example, as in Australia.

“For this reason, the Government will repeal the current betting levy that is taken from racing and sporting gambling profits. By repealing the levy, this money will no longer flow to the Crown – it will instead be retained by the racing industry for the development of the racing industry.

“The funds will be distributed to the racing and sporting sectors, with part of the funds to be set aside to support a reduction in gambling harm initiatives. This is not small change,” emphasised Peters. “This levy represents four percent of betting profits, and in 2018, it amounted to approximately $13.9 million.

“The levy will be progressively reduced over three years until it is phased out entirely,” he said, but surprisingly his speech made no mention of either a synthetic or all-weather track for Cambridge or the personnel make-up of RITA which replaces NZRB on July 1^st. Those announcements are still pending.

Some racing pundits will be disappointed about the three-year phasing out time, instead of it coming back 100 percent immediately, but remember that all these concessions the Minister gains for racing require negotiation with Treasury with whom Peters has been seemingly fighting the 100-year war.

When Messara lobbied the NSW government for tax parity, it took him forever to get it, and even then, the tax concessions were phased out slowly over five years. But it was a landmark win for Racing NSW, and for his perseverance and guile, it was the part of the reason Messara received his Heroic Award, Member of the Order of Australia, and more recently Longines IFHA International Award of Merit. They are three of six big awards he has received – all for racing.

In New Zealand, we haven’t had the luxury of a Messara or a CEO of the calibre of Peter V’landys. But when examining the long-list of racing ministers, it can be safely said that Peters is the only one to have delivered significant tangible benefits, and he has done it in both his terms as Minister of Racing.

In his first stint, 2005 to 2008, he repealed a racing tax which had immediate benefits of $33 million annually and today continues to benefit the industry to the tune of $65 million annually. The tragedy of that gain is that most of the money has been used to mushroom the NZRB gravy-train rather than filter through to needy industry stakeholders.

Having read the Cabinet papers several times since their release over a month ago, it’s was easy to convince yourself racing would be getting more in this announcement than subsequently received. But that assertion was based on the number of budget-sensitive redactions over the three Cabinet papers which numbered 31, and then an overly optimistic reviewer.

Two years ago, Winston talked about the battles he had with Treasury over various issues for racing, and it appears to have been no different this time. In Cabinet Paper No 1 it seems evident that Treasury has little regard for the racing industry. Treasury was just one of many government bureaucracies consulted to complete the suite of Cabinet Papers which also included the State Sector Commission, Inland Revenue Department, Ministry of Foreign Affairs and Trade, Ministry of Health, Te Puni Kokiri, Ministry of Justice, Sport New Zealand and Ministry of Primary Industries.

Treasury came up with all sorts of hurdles and was negative. It talked about, “significant regulatory and financial implications for the Crown; the risks relating to greater gambling harms as a result of the proposals, including any wider impacts on wellbeing; the impacts on New Zealand consumers (gamblers), including whether they will face higher or lower costs; and the impact on the financial position of the New Zealand Racing Board.”

The last one is a beauty – indicating empathy between those two organisations. If you are worried about the financial impact on NZRB but are oblivious about the plight of the racing stakeholders then, “Houston, we have a problem.”

Politicians do deals to get things rubber-stamped and although no evidence has been put forth to suggest the Minister had to concede ground on getting the betting levy eliminated, the fact that it has to be phased out over three years suggests it was hardly likely to be in the Minister’s plan.

Quite the opposite. In the Executive Summary of Cabinet Paper 1, it talks about “the immediate need for supplementary revenue; an urgent need for reform; financial viability from a commercial perspective; and a requirement for bold and deliberate decision-making.”

The Minister understands the urgency for racing’s plight but knows, at the same time, the legislation to right the ship long-term is attainable only through cumbersome and slow bureaucratic processes. We are getting closer though – only six weeks away from the of Bill No. 1 coming before Parliament if MAC and DIA collectively keep to their tight schedule.

Consider the impact of the two Bills. With the collection of racefields and Point Of Consumption (POC) levy, $30 million a year will come back to racing – revenue not previously collected. Australia started mustering this tax in 2008, and that’s one reason we have been left behind – all having resulted from the work of people like V’landys and Messara.

Add to that the savings derived from outsourcing the TAB and its subsidiaries such as broadcasting – a further $70 million a year. Total $100 million back to the codes above what they were getting and the feasibility of Messara’s claim of doubling stakes becomes a reality.

That doesn’t take into account the massive up-front, lump sum fee at outsourcing negotiation time, which is money that could go back into badly needed infrastructure upgrading of facilities at racecourses.

To manage it correctly requires a fundamental change of thinking at an administrative level; a more business-like approach which has been AWOL at NZRB.

Whatever happened to the plain, simple logic of good, sensible business practice? The two components of income and expenses. If your income exceeds your expenses, then you make a profit. If the income reduces for whatever reason, the most controllable component in business is the expenses, and so you cut your cloth accordingly.

That basic rule-of-thumb is unknown at NZRB. The decline in profit has coincided with increased expenses, and it’s been going on for a long, long time. It’s called ‘denialism’ which is a psychological condition of human behavior.

Denialism is when a person or group of people avoid reality as a way to avoid a psychologically uncomfortable truth. It occurs when a seemingly intelligent and sane adult vehemently denies truths despite a body of irrefutable data. That’s what’s been happening at NZRB.

It’s either denialism or when you have no skin in the game you just don’t care. Take the recent round of NZRB Industry Conversations, as they have been calling them, as an example. Last week it was Hastings, and next week it will be Riccarton. The salaries of the three executives involved probably totals $1.2 million or around $5,000 a day. Auxiliary expenses such as airfares, transfers, lunches, dinners, accommodation if required, and anything else, could easily bring it up to $8,000 or $9,000 per day.

They are preaching for little over an hour to a mainly elderly group of around 30 people, half of whom have come for a cup of tea and sausage roll FOC. The other half are mainly retirees with a genuine racing interest – few trainers or working participants can get along in the middle of the day.

The question is, what quantifiable return is racing to get for this expenditure – the algorithm to measure it doesn’t exist – this industry needs a ‘nonsense to nonagenarian’ meter – it would have gone off the scale! As well, no apparent concern about the wastage of industry money is in evidence from either the protagonists or the dozing nonagenarians.

The culture will be changing, though. RITA will get the Messara Report done and dusted inside a year, and when that happens, the industry will have a spring in its step that’s been missing for years.

Racing’s livewires ‘Boys Get Paid’ will be out in force making their presence felt and redefining the standards for the enjoyment of racing – Luke has posted his debut blog here on this site today and will regularly contribute as we wait and hope for the emergence of a new racing weekly. Onwards and upwards.

Seven weeks to RITA and CEO Allen needs to resign

by Brian de Lore

New Zealand Racing Board CEO John Allen appeared to be in denial of the impending derailing of his ever-fattening gravy-train when the evangelistic pied-piper of racing-spin pulled into the Hastings platform this week for another round of preaching to racing’s unconverted.

But from all reports, few if any of the 30 or so Hawkes Bay participants that turned up to witness Allen’s arm-waving dissertation at Hastings Racecourse went away convinced. Why would they be after being told ‘the racing industry needs to tell its stories better to gain wider support.’

Irony, indeed, when you consider the very vehicle that was conveying all the stories, The Informant, folded as a direct result of Allen and his mean-minded executives denying the ‘racing-form’ to the weekly paper which resulted in the form coming from Australia at considerable cost. In a marginal business, it made all the difference.

All in the cause of promoting the money-burning Best Bets which has reputedly seen its circulation decrease from around 3,500 to 1,500 in the ownership of the NZRB. A very peculiar set of circumstances when one considers The Informant’s ‘form guide’ could only have been enhancing TAB turnover well before lessening the sales of Best Bets.

“Best Bets can be purchased in only two outlets in Hastings,” well-known breeder and racing identity Lucy Scoular told The Optimist the day after Allen and his highly paid coal-stoking executives had shunted out of town. “The two places are a dairy on the outskirts of town and the TAB – that’s for a population of 60,000 people,” added Scoular.

Like so many other towns in rural New Zealand, the lack of an easy to purchase printed form guide is hardly the formula for successfully retaining yet another diminishing swathe of older generation punters; many of whom have dropped out since the demise of The Informant – racing may never get them back.

But Allen is oblivious to such things and deflects the blame squarely back onto racing; after all, racing people should have told their stories better to get wider support. Also, over-the-head of Allen would have been trainer John Bary’s question to him.

He asked: “What were you doing on Christmas Day.? My family and I had to muck-out 30 boxes twice on Christmas Day because I couldn’t afford to pay staff time and a half.”

“During the two-hour meeting,” continued Lucy Scoular, John Allen told us the new board wouldn’t be any better than what they have now. “We all went along wanting answers – owners, trainers, and breeders – but we didn’t get any answers.”

Anyone who has ever read Ernest Hemingway’s novel, The Sun Also Rises, may recognise a quote that could be attributed to Allen’s travelling from town to town with his road show. It goes: “you can’t get away from yourself by moving from one place to another.”

Allen was employed by the NZRB about four years ago, but all that must come to an end in seven weeks when the NZRB ceases to be an entity and is replaced by the Racing Industry Transition Authority (RITA). Hallelujah! Not long to wait now. It means that Allen will cease to be responsible to the people who employed him, not that he ever seemed to be, and he should tender his resignation now, and disappear by the time RITA arrives. It would be his finest decision.

NZRB has employed a succession of disastrous CEO’s, and without knowing which has been the worst, it’s fair to say that Allen is right up with the best of the worst. Why am I attacking him again? Because until this industry we know as racing and breeding looks itself in the mirror and takes responsibility for its actions, admits its mistakes, gets some balls, and promises never to be so stupid again, it will continue to repeat these disasters.

Good riddance to the old board; RITA will be the new board, albeit a temporary one, and despite all the new legislation and the ‘blank sheet of paper new beginning’ that John Messara foresaw the industry needed, the future success or failure of racing in New Zealand will be in the hands a just a few people. Messara has always said, personnel is everything; one person can change the world.”

The Optimist wasn’t an attendee at Hastings Racecourse, but it’s safe to say Allen would not have been apologising to the industry for introducing a failing Fixed Odds Betting Platform amid industry protestations at the cost of $50 plus million. He would not have been apologising for collecting an annual salary which has risen to $680,000 despite having zero industry knowledge when appointed four years ago – basic commonsense ignored but, nevertheless, a recurring lesson to be learned.

He would not have been telling the group that $60 to $70 million was available in annual savings by outsourcing the TAB to Tabcorp – a figure largely agreed upon by Deloitte, Investec and Messara; or that the FOB to work requires 245 never to be made changes; or that NZRB will miss its 2018-19 budget by about $25 million; or that despite the tangible capitalisation of the FOB, it might be worth nothing overnight.

Neither would he have talked about the declining horse population which even if stabilised wouldn’t be a great outcome; or that they lost the game two years ago when Australia legislated against its resident population betting on the NZ TAB, and 800 accounts went west; or that we don’t co-mingle the trifecta pools with Australia because some VIP customers get rebates as high as 21% in an effort to keep turnover up; or that 400 to 500 people will have to be let go at NZRB to keep racing’s 60,000 full-time, part-time and volunteer participants in the game.

But wait, there’s more!: NZRB has initiated the Audit and Efficiency Report which is required this year under the Racing Act of 2003. But because the NZRB is still in place, and officially steering the ship, it will be a soft report. Half of the Australian fields are missing from the Best Bets. VIP and Elite customers have deserted the ship and getting them back will be difficult.

Minister Winston Peters new legislation will be the industry’s saving grace, but its effectiveness is still limited to the quality of the people appointed to operationalise it. Revenue will flow from new streams such as racefields which MAC has redefined in its 123-page Interim Report as a ‘Betting Information Use Charge,’ and a Point of Consumption tax for overseas operators.

In this month’s budget which the Minister will address with some pre-budget day announcements at next Friday’s Karaka Mixed Bloodstock Sale, a repeal of the betting levy worth around $13 million annually is almost a certainty.

But in the three Cabinet papers written and approved last month, totalling 45 pages, the number of redactions earmarked ‘budget sensitive’ is more than 30 – suggesting racing may be getting more than just the betting levy back, although it has been said that some may relate to comment from Treasury.

Last week Peters said: “Due to the comprehensive and detailed nature of budgets which has been the case for decades now, there will be budgetary announcements made before the 29^th of May.” – he needed a venue for those announcements and has decided on Karaka.

MAC Chairman and likely candidate for RITA chairman Dean McKenzie told The Optimist this week: “The progress of the bill is on track, and MAC had a meeting this past Tuesday, and from that, we have updated work plans to the end of June. Everything is going along as planned, but that doesn’t mean everything will be finished by the end of June.

“Several work streams will go past June. Outsourcing is the obvious one – it’s one of the lengthiest – as it should be because it’s also one of the most important, but we have already stated that previously.

“A lot of work has to be done before July 1^st because when RITA takes the seat, it will have a work-plan from MAC – what has to be changed to advance, and the change aspects of Messara’s recommendations. RITA will have a BAU (business as usual) agenda and then the Change Management plan, the reform plan that MAC has been working on based on the Messara Report recommendations – updated to a work plan that shows where it is, and what still needs to be done.

“June 30^th is a Sunday, so our target date is June 28^th for MAC’s final report to the Minister.”

With maximising revenue for racing a pre-requisite in the Messara Report, and the potential for outsourcing to provide a windfall for racing upfront, McKenzie said, “The sub-committee for outsourcing (RIOEC) is progressing along the lines stated in the interim report. We are trying to get the process right because you can’t get to the end of the process and be worried about the result.

“Because if the process is right, then whatever the result – whether you do or don’t outsource – you are confident all the boxes have been ticked along the way, and whatever the decision is, it’s the best one.

“Betting Information Use Charge – better terminology for racefields,” continued McKenzie. “MAC prefers that terminology – it describes it better. It’s the information used for betting – and you charge for it. It’s in all our documentation.”

On the question of Section 14 of the current Act and the future distribution of funds to the codes, McKenzie said, “What MAC has focused on for the industry is making sure we have got revenue for the industry, as soon as we can, and only then are we progressing – given the tight time-frames within which we are working.

“Only then can we move on to how we distribute it – the simple logic is that if you haven’t got money then no need to worry about how you distribute it. Grant-Thornton has been engaged to do some work for MAC.”

RITA appointments next crucial step for Racing Minister Peters

by Brian de Lore
Published 3 May 2019

Racing Minister Winston Peters returned to New Zealand from a round trip to Iceland, Scandinavia, and Doha last Sunday, but before jet-lag had set in, and within 24 hours of his return, he had kindly made himself available for a phone interview for The Optimist.

Peters, in a very jovial mood, light-heartedly suggested an alternative name to The Optimist by saying, “You should have called your column Phoenix Rising, but never mind.” That suggestion, I conceded, could be placed on hold for future consideration.

But what wasn’t on hold was the Minister’s enthusiasm, his commitment, and his energy to drive the racing industry reform well beyond positive recent announcements that have sparked reform and set a new legislative process into motion.

“What I can say to the industry,” began Peters, “is that we have commenced with a thorough process of what was happening, and what was not happening against international comparatives.

“We have come to some serious conclusions, and we have done our utmost to put every one of those conclusions into effect as fast as we possibly could, given the timeframe we had – this governmental legislation is not as fast as many would have hoped but is still very rapid in terms of the big picture.

“There is so much going on in parliament with other legislation; I am pleased to be able to say that it’s on track in the tight schedule we had available to us.”

The Minister’s time reference was an acknowledgment that while progress during his 18-months as Minister had seemed tediously slow to an ailing racing fraternity, in terms of the legislative process through parliament, the headway achieved was at full gallop.

By July 1^st, racing people will have a very clear picture of where we are going,” continued Peters. “They should know well in advance of where we are heading if they have read the Cabinet papers, and if they have read the Messara Report – the first paper to read was the Messara Report, the second was the MAC Interim Report, and the third was the Cabinet Papers, and the fourth will be the bill itself passing through parliament.

“The framework has been set-up, and alongside that, I hope to announce something well before Budget 2019 on May 29^th, I can’t say exactly when because I haven’t got the time fixed, but I hope to make a clear statement well before the Budget, and about what it means for racing now. When I know, I’ll tell you where it will be.”

Predictably, this imminent announcement may be about the building of a synthetic or all-weather track, but also due for release soon is the personnel make-up of RITA (Racing Industry Transition Authority) which will take control of the racing industry on July 1^st. It seems logical to assume that once these people have been chosen and know who they are, their names will quickly be made public.

One could argue that the make-up of RITA will be the single most important decision Minister Peters will make for racing this year. Why, because racing has a history of poor governance with the wrong people getting appointed to key positions which has influenced the precarious financial predicament that racing faces today.

Putting that argument to the Minister, he responded: “No appropriate or correct system will work without the personnel to go with it. You have to look at the big picture, and I want to turn this industry around and have a serious revival of racing in this country and getting the systems right, and we have to stick to the plan and clearly the people, the right men and women to run it, is critical.

“I’m seriously happy with MAC (Ministerial Advisory Committee) – they started work on the 4^th of January; they have shown commitment, completed a lot of work and made a lot of progress. We got the right man in Messara to write the review, and we have the right man in McKenzie – I’m happy with that.”

Logic would tell you that subject to availability all five members of MAC will transition to RITA with the addition of a further two for a total seven. The appointment of the additional two and the skills they should possess is documented in Cabinet Paper Two on page six under the heading of Governance of Rita.

Governance of RITA says:

29. The RITA Board will govern both the BAU (business as usual) functions of the former NZRB and the management of change necessary for the successful transition to the new arrangements proposed by the Messara Report. To enable the appointment of a refreshed Board for RITA, Bill No. 1 will end the terms of serving NZRB Board members when RITA is established.

30. A Board of up to 7 members is proposed for RITA, with the majority having skills related to change and the remainder with skills related to BAU. To carry out these roles effectively, the members of RITA should collectively have competencies that include governance and:

30.1 industry expertise to effectively manage racing functions;

30.2 knowledge and experience of sport at a national level;

30.3 commercial and/or legal expertise to manage devolution of assets, functions and responsibilities; and

30.4 change management expertise to oversee the transition process.

31. It is important that the members of RITA have a strong primary duty to act in the best interest of the racing industry as a whole and the achievement of the transition objectives. Accordingly, it is not intended to create specific code representative positions on the RITA Board and the Chair will not be independent (as currently with the NZRB). This is a change from the current requirements for appointment to the NZRB Board, where the chairs of each racing code (or their delegates) are appointed.

32. The Minister for Racing will provide a paper to the Appointments and Honours (APH) Committee as soon as possible on the proposed membership and Chair of RITA, to enable governance arrangements to be in place for the intended establishment date of 1 July 2019. The MAC was created as a precursor to the establishment of RITA. The Minister for Racing is looking for continuity between the work of the MAC and RITA.

33. The appointments will address the need for the membership of RITA to include a national level sports perspective, either through the appointment of MAC members who have both racing and sports experience, or the appointment of a specific person with a sports background. The Minister for Sport and Recreation will be consulted regarding this.”

The requirements in clause 30 are all met by existing members of MAC, but in clause 31 it says: “It is important that the members of the RITA have a strong primary duty to act in the best interest of the racing industry.”

As only two of the five MAC members have a strong racing background, it seems logical that the two additional members should essentially be racing people that can contribute with a range of skills including personalities conducive to the transition of management. It is not a requirement of the new legislation for the establishment of RITA to have code representatives as was the case with the soon to be defunct NZRB.

Recently a small window of opportunity was accorded to the three codes to nominate prospective members for RITA, but no guarantee exists on the Minister’s behalf to appoint any of the nominees.

The danger for racing is the prospect of the DIA having too much say about the make-up of RITA, and subjecting the additional board members to the criteria of the State Services Commission. Retired former Deputy Commissioner of Police Malcolm Burgess was last month appointed to review the RIU (Racing Integrity Unit).

Burgess is not a racing man and has been asked to deliver his report by the end of May. Is it too skeptical to think the depth of the report, given the non-racing background of Burgess and the time permitted for its completion, will render it of doubtful value? Would not have retired NSW Chief Stipendiary Steward Ray Murrihy been a better choice if neutrality to racing’s participants had been a defining factor.

As it says at the top of this story, the appointment of RITA is crucial to the racing industry’s future. RITA’s role begins on July 1^st, and it has the job of enacting the contents of Bill No. 1, and afterwards later in the year everything in Bill No. 2. Once all the transitioning to the new legislation is complete, in around one year, a permanent structure commences, and RacingNZ replaces RITA.

In the meantime, NZRB is going to miss their budget by a country mile by season’s end, and RITA will inherit the deficit. In last year’s SOI (Statement Of Intent) the budgeted profit was $173 million – the shortfall may be around $25 million. If racing gets the duty back on Budget Day on May 29^th, and you add-in income from voluntary racefields and savings are made in other areas, stakes money will stay at the current level in the new season.

The three Cabinet papers released last month contain a large number of redactions which could influence one to believe something more for racing than just the duty might be on the cards for the industry.

Cheekily pressing the Minister for budget information during this week’s chat, he responded, “You know what the term ‘budget sensitive’ means – I can’t breach that.

“But I can say this, that due to the comprehensive and detailed nature of budgets which has been the case for decades now, there will be budgetary announcements made before the 29^th of May – I am looking for a space to make a pre-budget announcement which would answer your question.”

The Good News & The Bad News

by Brian de Lore
Published 26 April 2019

April has been a defining month for the thoroughbred industry, and participants with their eye on the ball will be fully aware it of its polarisation of emotions with a combination of good news and bad news.

The good news came a couple of weeks ago when Cabinet gave its tick of approval to three detail-laden papers on racing which resulted from the comprehensive 123-page Interim Report that MAC (Ministerial Advisory Committee) presented to Minister Peters on 28^th of February 2019.

It’s the best news racing’s had in many years because it did two things in respect of the relationship this ailing industry has with its Minister Winston Peters. It firstly justified in every way the faith that racing placed in Peters at the last election at which the veteran politician only just scraped home with the help of the racing vote.

Secondly, it vindicated Peters in everything he has been telling racing since commencing his second term as Minister 18 months ago. And that was, he would fix racing, but fix it his way, and fix it permanently with legislation set in stone that would serve the industry for the long haul.

The thumbs-up from Cabinet which came on April 17^th should have had the stakeholders dancing in the streets for it substantiated everything that Peters had promised well over a year ago. For many, it had been a not so patient wait which was vindicated by the incredible amount of detail and planning it encapsulated.

It had seemed like an eternity waiting for this progress, but the information released made it worthwhile. If you don’t believe it’s the best news for many-a-year, then it’s likely you haven’t read it. If the Messara Report had provided the foundation-stone for this new structure, then these Cabinet papers have brought to light an impressive framework. Now we await the cladding and the roof.

But with the good news has come the bad news. The Informant ceased publication at the beginning of April and is currently the subject of a restructuring or renegotiation for a return to the newsstands. When or if it happens is unknown to this writer, but a further meeting is believed to be on the agenda for Monday the 29^thof April.

More bad news surfaced in the form of TAB turnover figures for 2019 for betting on horses and greyhound meetings in New Zealand. It is stressed these figures do not include Australian horse racing, gaming or sports betting.

For the first 15 weeks of the year, betting was down $17,091,124. That equates to more than $4 million in less profit for the same period in 2018 – for little more than one-quarter of the season. April was also the month the NZRB half-yearly report analysis could be made, and that shows that debt has increased from $10 million at the end of last season to $25 million by the end of January. The NZRB’s revolving credit facility has a limit of $25 million, so it’s, reached.

The report also says that cash on hand was at $8 million at January’s end, but $4 million owed to Gaming. The monthly distributions the NZRB makes to the codes to fund stakes is $14 million. Does that mean you need to take 60 or 90 days to pay the bills instead of the usual 30? Will RITA inherit a liquidity crisis on July 1^st? – highly likely.

The racing industry is in a precarious financial state!

But back to the good news. The Cabinet papers which total 45 pages in all are worth a read and available at this URL: www.dia.govt.nz/racing-review How the papers are structured is contained in the opening of Cabinet paper 1, shown below:

“Review of Racing: Paper 1 – Overview of the New Zealand Racing Industry and identified issues

Proposal

1. This Cabinet paper is one of a suite of three that will collectively provide the Government’s first legislative response to the recommendations of the Review of the New Zealand Racing Industry (the Messara Report). This paper recommends that the Cabinet agree to support the overall intent of the Messara Report, and agree the broad proposed content of the two amendment Bills to be introduced in 2019 – the Racing Amendment Bill No 1 (Bill No. 1) and Racing Amendment Bill No 2 (Bill No. 2).

2. The two accompanying papers provide detailed information on the proposed content of Bill No. 1: 2.1

Paper 2 – Policy decisions on transitional governance to drive change. This paper proposes new racing industry governance arrangements for the transition period leading up to the formation of the new industry structure. 2.2

Paper 3 – Proposals for immediately increasing revenue for the racing industry. This paper addresses the racing industry’s immediate need for supplementary revenue to ensure it is financially sustainable into the future.”

The upshot of these three papers is they are 90 percent true to the Messara Report in accordance with MAC’s Interim Report. Reference to the Messara Report is extensive, and deviation is rare.

If you haven’t read the entire 123 pages of the MAC Interim Report, then take the time to read the Executive Summary which is the first five pages at the beginning. To find it also go to the URL shown above.

In meetings with MAC Chair Dean McKenzie since his appointment, he has always stressed the integrity of the Messara Report and the importance of revenue.

In summary, it says, “The Messara Report sets the challenge for the industry,” and in the next paragraph it goes on to say, “the recommendations will deliver more revenue to increase prizemoney levels; better governance across all industry organisations; a renewed focus on integrity and animal welfare; a more efficient network of racing venues that cater for national, regional and community racing; and investment in our ageing facilities and investment in our thoroughbred tracks (both turf and synthetic), to provide top-class racing, training and trialling surfaces year-round.”

This week McKenzie told the optimist: “In the Executive Summary we focus on the revenue aspect – we are prioritising the revenue side of it which is at the front of it; we are trying to create positive momentum by generating as much revenue as we can, as early as we can.

“And we have to make sure it’s manageable because with the two-bill set-up – we couldn’t put everything into one bill – because we just wouldn’t have had time to get this process moving.”

One of racing’s biggest potential revenue earners is outsourcing the TAB. In the Executive Summary, it says, ‘…outsourcing is not a foregone conclusion.’ I asked McKenzie to elaborate:

“You have to make sure you know the whole picture before you can decide, said McKenzie. “Arguably, the formation of the TAB in 1951 is the single most important thing that’s ever happened in NZ racing. If you say that’s true, then the future of the TAB is one of the most important issues, and the process to undertake the decision-making has to be robust and watertight. I don’t think anyone would dispute that.

“No one around our committee table is saying we should, or we shouldn’t be outsourcing – we have focused on getting the process right. So, whatever the outcome is at the end of that process it will be the best one for the industry. We have some work going on at the moment with our industry group, but a lot of that work will fall into that RITA timeline by the July 1st.

“If we get the process right, the industry will know we have come to the correct conclusion. It must be based on the most robust process to gain the best result – it’s very crucial for the future of the industry.”

So much to write about but not enough space in this first, genuine posting on the theoptimist.co.nz. To understand how the structure works between now and when RITA take control of the industry, go to the URL above and MAC’s Interim Report Recommendations which on page 25 you will find ‘The Work Plan for the Committee.’ A comprehensive schedule of events is listed.

To conclude, it is appropriate to salute Racing Minister Winston Peters promise to the industry relative to the future of racing which has now been rubber-stamped by Cabinet. In my article entitled, ‘Minister says he’s not leaving port without plotting the correct course,’ published on February 8^th, 2018, one week after the Messara’s ‘start with a blank sheet of paper,’ article, he said the following:

“I had put a lot of work into trying to understand why this industry is stalled, and it became more and more apparent, as I went around and talked to people, that we have a major structural problem here which requires full and genuine reform.

“And that is to do with the Racing Act that has been around for a very long time and which is clear to me, doesn’t fit the bill for where we should now be heading.

“By that, I mean with a truly sustainable plan and not a short term fix – we can’t rush in with something that would only be temporary and dangerous for the industry long term – the three industries or codes we are talking about have to be changed to benefit racing overall.

“If the press and your fellow commentators want a short term fix then they have the wrong Minister. I want to make sure the fix is sustainable and will get us to the end with the right environment for owners, punters and all others associated with the industry and their codes – long term sustainability which turns around prizemoney.

“If it turns around the quality of people coming into the industry and gives them the confidence to be in it and ensures that the number of impediments like track standards are seriously considered in the critical areas of investment, then it will be worth it.”

“I’ve gone back and questioned the Act’s integrity and asked the question – ‘are the codes capable of looking after themselves as three separate units, or can we soldier on with the serious material differences between them’? And in the end, I thought the only thing these codes are interested in is themselves and the ability to be masters of their own destiny inside a better framework.

“In short, we are going back to first principles here – the Act can wait until we get it right and that might not be too far away, but I need to talk to the three codes individually.

“We want a structural framework to survive this government and go on to long-term success rather than have a big start, a boost and then a stall and all sorts of people grappling with impediments.

“Since I got this job it’s been my priority to find out what’s going on in within the three codes, and what I’m staring in the face that’s seriously wrong – the two components of cost and the income – both seriously unsatisfactory.

“It’s premature to give detail now, but we’ve been working on a time-frame and the path we’re taking. I want to ensure all three codes can see the wisdom of that, and that they all understand that’s it’s the health of all three that concerns me, and I want to ensure we maximise in every sense the income that’s capable of being generated which is demonstratively not happening at present.”

The Minister’s comments above cannot be viewed as anything but visionary!

Redoute’s Choice leaves behind a huge legacy

by Brian de Lore
Published 28^th March 2019

Arrowfield Stud principal John Messara AM has been in the racing and breeding business long enough to remain philosophical about the highs and lows, the good fortune versus the ill-fortune, and agrees that no matter how well-planned and cleaver you are, in the horse business you still need that ‘bird on the shoulder.’

When you own enough horses, all the emotional excitements and disappointments can occur within only short interludes of separation. It happened over the past week when Messara’s super-colt The Autumn Sun scored a narrow victory in the Gr. 1 Rosehill Guineas in entirely unsuitable underfoot conditions, and less than three days later Arrowfield’s super-sire Redoute’s Choice was dead.

The irony is that The Autumn Sun, by Redoute’s Choice, was purchased by Messara to succeed his legendary dad at Arrowfield in a yet to be specified season – most industry pundits now saying it’s a given he will be retired without racing again and prepared for his first book of mares in 2019.

Messara isn’t saying that won’t happen but what he is saying is that the decision is pending and that he will let the dust settle on Rosehill’s sticky surface from Saturday before consulting fellow part-owner Hermitage and trainer Chris Waller.

Losing Redoute’s Choice on Tuesday morning wasn’t Arrowfield’s only strike of misfortune. Saturday two weeks ago on the morning of the day The Autumn Sun brilliantly won the Gr.1 Randwick Guineas, an early morning electrical storm created havoc amongst a paddock of Arrowfield mares that resulted in the loss of the Flying Spur mare Alverta.

“We are all feeling very down today, Messara told The Informant on Tuesday, “but all good things eventually come to an end. Losing this bloke today and two weeks ago losing Alverta – they were probably the most significant male and female on the property, and Alverta was in-foal to Dundeel.”

Alverta was special to Arrowfield as the stud bred her and she was Paul Messara’s first stakes winner as a trainer, winning the Gr.1 Coolmore at Rosehill in one of her eight victories before being campaigned in England by the younger Messara where she ran third to Starspangledbanner in the Gr.1 Darley July Cup at Newmarket.

“What can you do?” Messara lamented. “We didn’t want Redoute’s to suffer; that was the main thing. We found him in the paddock covered in mud; he was a very proud horse which indicated he had got down and then struggled to get up.

“He was in great stress and was very lame in his off hind which ironically had always been one of his good legs. He had seemingly strained something trying to get up off the ground. He didn’t have a lot of flexibility in those arthritic front legs.

“We gave him analgesics which relieved the pain, and then he had a good night and drank all his water and ate all his feed overnight, and the next day which was Monday, he couldn’t do anything more than walk slowly in fairy steps. His front knees had blown up about twice normal size because he had to put pressure on them while he got off his hind legs, and from that point, the situation was becoming impossible.

“He’d get off one leg to get onto the other, and then he’d get off that one to get back onto the first, and in the end, there was nowhere for him to go in terms of mobility – it was hopeless.

“We took the decision Monday night; the vet recommended euthanasia. We were worried that he would fall and break a leg, he would be in a lot of pain, and that would be too traumatic for the horse and everybody. We couldn’t allow that to happen; we had no options.”

Although the loss of such a great horse will always be traumatic under any circumstances, Arrowfield can console themselves in the knowledge that the three times Australia’s Champion Sire got to the age of 22 despite the arthritic knee condition he had suffered from for some years.

The son of Danehill took out his first of three sires’ titles in 2005/06 which in that season included Champion Filly Miss Finland and was at the height of his commercial prowess the following season, commanding a service fee of A$330,000 when covering 224 mares.

Testimony to Redoute Choice’s popularity at yearling sale time is the stat which shows no fewer than 79 of his progeny have been $1 million plus yearlings, highlighted by the Australian record yearling price of A$5 million paid for a colt out the Desert Sun mare Helsinge at the 2013 Sydney Easter Sale.

Restricted to a more manageable book of 74 mares in 2017 before lowering to 45 in 2018, Redoute’s Choice has been a consistent, pre-potent force in the sire ranks since his debut stud season in 2000 at a fee of A$30,000, siring around 1,050 winners which collectively have won prizemoney in excess of A157 million and still counting.

Even this season, his results have been exceptional, and he’s still in the top five in the Sires’ Premiership. He is also likely to collect his first Australian Broodmare Sires’ title with progeny earnings to date amounting to $15.2 million from 15 stakes winners.

As well as Golden Slipper winner Miss Finland, other notables by Redoute’s Choice include Lankan Rupee, Stratum, Dariana, God’s Own, Allez Wonder, Nadeem, Lotteria, Melito, Fashions Afield, Master of Design amongst many others, plus resident Arrowfield sires Snitzel, Not A Single Doubt, and Scissor Kick.

The strength of the Danehill blood through Redoute’s Choice remains supremely dominant with 10 of his sons at stud led by current Champion Sire Snitzel having sired Group One winners.

Internationally Redoute’s Choice is credited with 54 Group One wins and a total of 329 group and listed events. At home in Australia, he has sired 34 individual Group One winners and 160 stakes winners. His second crop son Snitzel who won the Gr.1 Oakleigh Plate will this season emulate his dad when he takes out his third Champion Sire title.

Foaled in 1996 from the Canny Lad mare Shantha’s Choice, Redoute’s Choice was bred and raced by Muzaffar Yaseen. In his 10-start career from the Rick Hore-Lacey stable in Melbourne, he won five races including four at Group One level – the Blue Diamond Stakes at two years, the Manikato Stakes first-up at three, the Caulfield Guineas and the C.F. Orr Stakes.

As impressive as his race record reads, The Autumn Sun’s record is even superior as Messara points out: “He’s the only colt to win five group one races from his first nine starts since the keeping of groups and listed race records

“We are tipping out The Autumn Sun for six weeks,” he continued, “and during that time we are going to make up our minds whether to race him on or retire him. Redoute’s passing now tips the scale a little bit but to be fair he’s owned 50/50, and I want to hear what my partner has got to say.

“On Saturday Chris Waller said the track was an eight and was all right and will probably improve to a seven, and I thought on that basis we should start. But instead of being an eight it was probably a nine or a 10. If I’d known, we wouldn’t have run him; we could have waited for something else like the Doncaster.

“But we took our chances; our jockey Kerrin McEvoy got off after race one and said ‘this is a bog out here.’ He said, ‘ít’s not an eight, it’s a 10.’ I was nervous after that waiting for our race; I knew it would be a struggle. He was also jumping up to 2000 metres, but in the ground it was really 2100 metres – it was too much.

“He ran the same time as the winner of the Ranvet at weight-age-age. We were very lucky to get away with it.

“We won’t be going to the UK this year, but there’s still a chance for next year if he comes back next year as big as the trainer says. He says he could be the best racehorse in the world next year and will take Winx’s position next season if we give him a chance.

“I haven’t made a decision. Half of me says he should go to stud now with Redoute’s gone; the other half says how many times are you ever likely to get one like that. It’s extremely hard to make that decision.

“He pulled up alright after the race. Chris says ‘he’s well.’ He’s bright, and he’s tough, but there was nothing more to prove in this preparation, so we sent him out, and Chris agreed.

“A decision on his future will only be made after discussions with the other part-owner. That’s a matter of fairness.”

Longines award justifies the Messara’s NZ appointment

by Brian de Lore
Published 21 March 2019

Racing Minister Winston Peters can take a considerable amount of self-satisfaction in the knowledge that the man he appointed to review New Zealand racing almost a year ago has just been awarded the most coveted accolade in world racing.

John Messara AM was this week named as the 2019 recipient of the prestigious Longines and IFHA International Award of Merit which recognises distinguished horsemen and horsewomen for lifelong contributions to thoroughbred racing. The Award which was inaugurated in 2013 is an order to honour public figures for their outstanding contribution to the world of horse racing.

The award is both affirmation of the esteem in which Messara is held worldwide and testimony to Racing Minister Winston Peters erudite decision to engage him to review the New Zealand Racing Industry.

Messara will be honored during a ceremony in Sydney on Thursday, 11 April, in advance of the $4 million Gr. 1 Longines Queen Elizabeth Stakes at Randwick the following Saturday in which Winx is scheduled to contest the race as the final start of her stellar career.

“It’s an honour to receive recognition from one’s international peers,” Messara told The Informant this week. “My involvement in the industry has been a labour of love.”

The Award concept between Swiss watchmaker Longines and the International Federation of Horseracing Authorities (IFHA) was conjointly created in 2013 to honour public figures for their outstanding contribution to the world of horse racing

Messara is the first Australian and only the second person from the Southern Hemisphere to receive the award. Previous winners include the Magnier family and trainer Aidan O’Brien, the driving forces behind Coolmore and the Ballydoyle Racing Stable in Ireland, legendary Japanese jockey Yutaka Take and, the Romanet family who are long-renowned leaders in both the French and international world of horseracing.

Leading Irish trainer Jim Bolger was also a recipient as well as owner-breeder Alec Head – the past champion trainer and patriarch of prominent stud farm Haras du Quesnay. Seth Hancock of historic Claiborne Farm in America won it as did the late Marcel Zarour Atanacio, former chairman of the South American organization for the promotion of Thoroughbreds (OSAF).

It’s a star-studded list of previous recipients, but Messara is a worthy winner after so many crowning achievements in Australia over some 35 years from which he is identified as the single person most responsible for elevating the Australian industry to its current high standing in the thoroughbred world.

The greatest Messara achievement was taking prizemoney levels in NSW from $118 million to $203 million per annum during his five years as Chairman of Racing NSW. But his long career as an administrator has seen him overhaul taxation, integrity, governance, initiate and attract investment for infrastructure and industry modernisation, and the creation of The Championships which has reinvigorated the Sydney Autumn Carnival.

Messara made huge inroads in raising the ethics of the racing industry. He made substantial improvements in the areas of surveillance, drug detection, information sharing with Australian Crime Commission, introducing funding for detection of gene doping, a total ban on anabolic steroids and overhauling the rules including the introduction of the secret commissions rule.

He was also the Chairman of Racing Australia for three years from 2014 and in 2008 was awarded the honour of a Member of the Order of Australia.

McKenzie reassures the industry that – ‘the times, they are a-changin’

by Brian de Lore
Published 21 March 2019

Ministerial Advisory Committee (MAC) Chairperson Dean McKenzie wasn’t singing the famous Bob Dylan tune, ‘The times, they are a changin,’ but that was the message conveyed when McKenzie spoke openly about MAC for the first time since its establishment in December.

MAC delivered its interim report to Minister Peters on schedule on February 28^th, and the Minister was impressed, saying last week, “The government wishes to acknowledge the excellent work of the panel so far and for its productive interactions with the racing industry and government officials.”

The Terms of Reference under which MAC was formed and has operated did not allow for any communication with the industry stakeholders during the process of compiling its list of prioritised Messara recommendations.

This racing industry, however, has been kept in the dark for years by administrations that were supposed to do the opposite – the stakeholders are accustomed to that treatment. Lack of communication has been the order of the millennium but is rivalled now by the ever-widening gap of costs of to the owner against potential returns.

If we took a very pragmatic and cynical view of the plight of racing people in this country, we might say that despite all the big salaries and all the meetings that were ever convened to solve the problems, nothing has improved one iota. The end to another racing season looms fast without any tangible improvements in place upon which we can hang our hats.

That’s not the fault of MAC which formed only in December. The Minister and his newish committee called are not responsible for this industry’s ills of the past, but will they undoubtedly will be responsible for the make or break of the future.

McKenzie understands the industry frustration and may have sought Ministerial approval before breaking the previous protocol of silence to talk to The Informant last week. He began, “This is a climate for change, and it’s happening. I know it won’t be fast enough for some, but this is major reform, and you don’t do major reform in a few short months.

“There’s a lot that’s happened; a lot of work has been done, and we have made very good progress, but there’s still a lot of work to do.”

McKenzie was referring to the limited time between the formation of MAC and the delivery of the interim report at the end of last month. That period transversed Christmas and New Year, but McKenzie made no secret of the inordinate amount of time and effort put in by the five-person committee to deliver a report that will serve the industry to its best advantage.

“Even though the process has been going for some time without any information released, it’s at a very positive stage as we move forward to the remaining stages to complete the process,” said McKenzie

“The next step is for Cabinet to approve both the interim report and the advice from the Department of Internal Affairs (DIA). The interim report will not be released at this point of time, but a further announcement on the next steps will be made following Cabinet decision-making in the coming weeks.

“This is likely to set out a busy legislative calendar and the establishment of a transitional racing authority (RITA) as previously indicated in the ‘Terms of Reference.’”

McKenzie’s awareness that the racing industry has been incredibly frustrated by a lack of information to stakeholders made him keen to explain further:

“Up until the end of February when we handed the report in, we had met on five separate occasions as a full committee excluding our meeting on the day we first met the Minister,” he said. “That was from the middle of December, and effectively we had 77 days to complete the interim report which included Christmas and New Year holidays.

“That excludes any sub-committee meetings or other meetings involving some individual members of the committee. Quite early in the piece, we had engaged with the codes and NZRB with Sport NZ, and we have continued to liaise with all those bodies from the middle of January.

“Over Christmas and New Year our small team put together the first set of papers for a January 6^th and 7^th meeting – a Sunday and Monday. Then we met again two weeks after that, and then three weeks later again; that was the full MAC but also during that time there were various sub-meetings set up to get all the other work underway and get it done in time.

“As per our Terms of Reference, we had two milestones to achieve; one being the end of February with the interim report and the other still to be done with the end of June being the deadline for the final report.

“Our workload has been constant through that period, and the work delivered in the interim report doesn’t stop at that point. If you read the Terms of Reference, it keeps coming back to things we have to do ongoing – work plans and identifying roadblocks and procedures. There’s a work plan for the issues, and the interim report, when released, will show both what we have done and what is coming up.

“We have a schedule of various tasks at different time points, and in the interim report, we had to show the minister how each of those work-streams were to be implemented by the 30^th June and in some instances after that date.”

McKenzie couldn’t give out the details of the work completed by MAC but once approved at Cabinet level the interim report will be released. Also to be released at some point will be the submissions on the Messara Report which have influenced MAC’s work after all submissions were thoroughly analysed.

“In the time available,” continued McKenzie, “we could only genuinely engage with the industry wider public on the Messara recommendations in two ways. The first was consulting with all three codes and NZRB with Sport NZ separately at an early meeting, and the second was through the nearly 1700 submissions.

McKenzie älso said that MAC quickly developed and has maintained an excellent working relationship with both the Minister’s office and the DIA. And having a small but highly experienced team in New Zealand racing assisting MAC was instrumental in meeting the tight deadline.

Where is all this taking us, you may well ask? The answer lies in the Minister’s original plan to leave the racing industry with legislation that will still be in place 30 years hence and serving racing well – unlike the Racing Act of 2003.

That’s why Peters stopped the original racefields legislation going through about 18 months ago. If it was not going to serve racing well and give it the desired result, why proceed?. Peters knew not to send it through parliament when he found to be a poorly written document. Eventually, it would have ended up on the same scrap heap as the Racing Act of 2003, and ominously the new FOB website may potentially provide the scrapheap with a trifecta.

MAC was set up to prioritise the Messara Report because it’s still the blueprint for change. Part One of the report talks about structure, finances, and legislation. If you are restructuring properly and starting from a blank sheet of paper as Messara once said, then a very wide broom needs to go through all three codes as well as NZRB –a prediction to dwell on.

“The racing industry can be assured that this government is highly motivated to deliver reform and revenue to the three codes,” said Minister Peters last week. He also made a similar statement when campaigning for the last election and this industry is keen for him to deliver.

Peters talks about revenue, and that’s what racing needs in mountain-like proportions for stake money. The FOB isn’t shaping up as the silver bullet NZRB said it would and, revenue of the magnitude required must surely come from maximising income through outsourcing the TAB and cutting costs with a frugal administrative structure.

Reform will come with new legislation, and MAC is playing its part in furtherïng that cause. Last week the Minister said, “MAC has produced an interim report which reflects the submissions from the racing industry which establishes options at technical, legal, financial and process-orientated steps to be taken.”

It seems clear from that statement the Minister is pleased with everything MAC has achieved thus far. And equally, McKenzie displayed both optimism and lots of confidence in Peters when he stated, “The Minister is an engaging person who is passionate about reforming racing.”

The industry waits as it has done before – perhaps not now holding its breath, but in McKenzie the action is aplenty, and hope springs eternal.

MAC recommendations held back for Cabinet approval

by Brian de Lore
Published 14 March 2019

Racing Minister Winston Peters phoned The Informant this week to provide an update on the progress of the Ministerial Advisory Committee (MAC) recommendations but then said he wasn’t able to discuss MAC’s prioritised list in any detail.

Admittedly, the writer does not receive the Minister’s phone calls with random regularity – less so in recent times; it now requires a lot of text prompting to an extremely busy Deputy Prime Minister who holds four Ministerial portfolios including Foreign Affairs, is often acting PM and is busier than the proverbial one-armed paper-hanger.

But what we have developed is an understanding that at the appropriate time we can communicate and subsequently deliver a message to racing’s stakeholders which is a pipeline for information that appears lacking from both NZTR or NZRB. When do either of those organisations communicate to the stakeholders the progress made at government level by quoting the Minister?

Are not people employed specifically for that role – government liaison – and haven’t they a duty to keep stakeholders up with the play in important industry matters – it doesn’t happen for whatever unknown reason.

The Minister read a prepared statement over the phone from which he said, “On the 28th of February, I received from the MAC the guiding next steps on racing industry reform based on the John Messara Review. MAC has produced an interim report which reflects submissions from the racing industry and establishes the options for clinical, legal, process orientated and the financial steps to be taken – and that’s where things are now.

“We acknowledge the excellent work of that panel so far, with a very productive interaction with the racing industry and government officials. Our next step is for cabinet to make decisions based on the interim report and advice from the DIA.”

Apart from Winston’s familiar dulcet tones, it didn’t sound like Peters talking. It was the first time in all our phone conversations that he had read something from a prepared statement which reminded me of a quote from the USA lawyer and statesman Dean Acheson who once said, “A prepared statement is not written to inform the reader but to protect the writer.”

Suspecting then, the Minister was following the advice given by his office of bureaucratic sidekicks led by his Chief-of-Staff and political scientist John Johanssen; I decided my best strategy was to fire at him a rapid series of curly questions.

‘What about RITA and what about the legislation,’ was fired at the Minister with a machine-gun-like approach but his interjection came with raucous laughter while saying, “You’ve prepared the whole damn steeplechase course for me, and I’ve only just arrived at the first hurdle.”

At that point, it was the interrogator who had fallen at the first jump. But one questions that resonated was, ‘how can MAC make any recommendations for change without knowing the true financial state of the industry – surely the first move must be to instigate the Performance and Efficiency Audit as demanded this year under the current Racing Act of 2003’?

NZRB has taken the industry into an unknown state of disrepair. No one knows the true current financial state of the racing and until a thorough and unbiased audit is completed that information will remain hidden. Unless you know how much money is in the bank or the level of debt that’s accrued, how can any business decide on its strategy for the future?

“There’s two ways of looking at the industry,” responded Peters, “and that’s with what’s there now and what’s prospected into the future. With things unchanged, this industry is in serious trouble. I’m looking at where things are now and where they have to go to, and the budgetary bits for the May budget are based on those factors plus other alternatives and policies we have such as all-weather racing and that sort of thing.”

But a suggestion to the Minister that the all-weather tracks were nothing more than a distraction to the real issues facing the industry appeared not to be heard.

“We have said to three areas in the country that we would welcome applications,” continued Peters, “based on their thorough due diligence and research into what is required based on differences in climate and other anomalies and we have said to them – we’ve done the hardest part – we have gone and got the industry the money.

“All-weather has a mixed history internationally, and the utmost caution in making the right choice is critical, but that doesn’t mean we should put off making a choice.

“It’s very important that the due diligence and research is put in, and we have a number of international experts that will be of help to us on the finality of the decisions on those issues.”

“The MAC report won’t be published or released at this point because it requires cabinet decisions,” Peters continued, “but I’ve got the statutory opening for the legislation – that is all organised. Further announcements will be made following the cabinet decision on these matters in the coming weeks. The matter of cabinet decision making is imminent.”

So, what about the legislation being done and dusted by the end of June. Is that still on track, was the next question for the Minister?

“Yes,” replied Peters after a some hesitation, “but with qualification. You never know what will come out of left field in terms of the whole agenda, but it’s on track as we speak.”

Peters agreed there would be some comfort for the stakeholders knowing that the writing of the legislation is well-advanced, and agreed that message should be conveyed to the industry.

When suggested to him that the TAB has failed to increase its customer numbers sufficiently, as claimed they would, and that total TAB turnover was down since the FOB platform went live January 4^th, he replied, “The TAB is down about 4.1 per cent I believe without having the figures in front of me. There could be a range of reasons for that and one could be the novelty and newness of the system but we will know shortly, before too long, whether that’s a fact or not.”

But being a follower of the TAB figures it is prudent to report that in the first 54 days of betting in 2019 up to February 27^th, turnover for that period is down $18.15 million compared to the same period last year – that is for betting on horses and greyhounds but doesn’t not include sports betting.

For those 54 days in 2018, the turnover was $266,727,693 compared to $248,577,542 for 2019 – a decline of 6.8 per cent. If sports betting has risen on last year’s figures, it may account for the Minister’s lesser quoted figure of just a 4.1 per cent decline.

However analysed, the turnover compared to last year has fallen and no industry prospers on a decreasing revenue. When suggested to the Minister the NZRB would be unlikely to meet its budget in the current financial year and the present worry of the industry was that the minimum stake may have to decrease, he sounded less perturbed.

“I know what their concern is,” replied the Minister, “but the fact is that for Saturday racing we have a much higher figure projected for stakes that we are setting out to achieve and we are not taking our eyes off that prize – $50,000 minimum a race. That’s where we seek to go.”

All-Star Mile and Golden Eagle test the pattern system

by Brian de Lore
7th March 2019

Traditionalists will be hating it but the new generation of Australian racegoers are loving it, as the long-feuding state versus state stakes rivalry takes more twists and turns than a post-earthquake Christchurch to Picton train journey.

This long-standing feud goes back more than 50 years, but with Australian racing more international today than ever before, the intensity of the stakes war has heightened in the past year to the point where the accusation is now about it undermining Australia’s pattern racing.

Australian racing has taken a big leap forward over a long period in the eyes of the internationals. It started way back in the late 1970’s with Robert Sangster and Swettenham Stud and then reached a new level when Vintage Crop become the first northern hemisphere visitor to come south and win the Melbourne Cup of 1993.

The willingness of state governments to support racing, a change in the tax regime to benefit breeders, the shuttling of international stallions which worked sensationally in the upgrading of pedigrees, and the ever-increasing presence of international breeders and racing syndicates has seen Australian racing transform over the past 40 years.

Even before that, racing in Australia was always of a very high standard, and had a great history, and was a sport or pastime well-suited to the Australian psyche of being willing to bet on anything including the fabled ‘two flies crawling up a wall’ with the resulting nonchalant catch-cry of ‘she’ll be right, mate.’

The propensity of the population to bet combined with the inherited traditions of the old country has seen Australia establish an enviable history of racing over the past 150 years. That tradition is indelibly felt in the atmosphere that pervades historic courses like Flemington and Randwick on the big race days.

And from that history has evolved pattern racing which is the very foundation upon which the system operates. It determines every good horse’s level from the division of the also-rans, the status of the races divided into group and listed, the allocation of prizemoney to those races, the venues and dates for where and when they run, and how everything fits not just into a domestic racing calendar but in more recent times an international one.

The evolved pattern system establishes every level of achievement and is what encourages breeders to breed the best to best, before hoping for the best. Today the traditionalists are fighting to protect it. Racing is taking on a new persona now a new generation of under-35 Australians are voting with their feet and saying the excitement of the event is what matters.

The movement is both fuelled and led by Racing NSW CEO Peter Vlandys who was recently quoted as saying, “Racing has been built on tradition; does it have a place in modern Australian racing?”

We don’t think about tradition in Australian racing being to forefront of its future decision-making, but deep in the heart of Australia’s oldest racing clubs, tradition is one of the strongest elements present and is at the very core of its pattern racing.

So, the advent of The Everest in October 2017 was like a dagger through hearts of the very staunch traditionalists. But commercially it was a resounding success, and the whole racing world stopped and focused on one sprint race for $10 million.

What The Everest didn’t do so much was interfere with the pattern races and most of the horses contesting the race were still able to relocate to Melbourne and run in the major sprint races such as the winner Redzel who went on and won the Darley Classic at Flemington in Cup Week.

“The Everest is the highest turnover race of any race we have ever had in NSW,” Vlandys told Racing.com recently referring to the 2018 running, “and 82 per cent of the people that came to it were under 35 so they are definitely interested in wagering – they are our future customer.”

But this Racing.com interrogation of Vlandys, who wasn’t taking a backstep on any of the NSW initiatives, had him more under fire for his promotion of the Golden Eagle which is a $7.5 million race for four-year-olds over 1500 metres at set-weight conditions scheduled to be run the same day as Victoria Derby Day at Flemington on November 2^nd.

On that same card, Racing Victoria also run the $1 million Gr. 1 Kennedy Mile. When questioned about the undermining of pattern racing, Vlandys responded, “Just because there’s a pattern there, who’s to say it should stifle any innovation. What’s good about these new events is that the younger generation do embrace them. It’s their event; they don’t care about tradition. They care about a product that they can engage in, and we are giving them that product. We are focused on a 20-year plan, not just a two to three-year plan – to have customers 20 years down the track.”

When the announcement of $5 million All-Star Mile came, which will debut at Flemington on Saturday week, it seemed a very retaliatory move. But instead of criticising the race, Vlandys defended the Racing Victoria move even though the event will be run only one week before the $1 million George Ryder Stakes over 1500 metres at Rosehill – the highest contested ratings race run in Australia in the past two seasons.

“I was the first person to compliment Racing Victoria on the All-Star mile even though it was smack bang in the middle of our autumn carnival,” continued Vlandys. “I have no concerns about it; I think it’s a great initiative and I think it’s good for the long-term future for racing in Australia. It will hopefully attract a whole new generation because they could become customers of NSW racing, or Queensland racing or any racing for that matter.”

Since those comments, the All-Star Mile field was declared and no fewer than nine of the final field of 14 runners have won, been placed or contested races at group one level, and it’s highly unlikely any of the 14 including Happy Clapper will now be in Sydney for the George Ryder Stakes.

“There’s certainly a place for tradition, but it’s a balancing act,” quipped Vlandys. “If you stay solely on tradition you will perish; it can only last so long. What I have noticed is that this under 35 years racegoers are different to what other generations have been.

“Every new race we have put in place has been pretty well self-funded – The Everest is funded by slot holders, The Kosciuszko by sweepstake tickets. This one is a completely new product and a joint venture because we have concentrated on returning our traditional revenues to bread and butter races.

“When I started with Racing NSW the metropolitan prizemoney was $40,000 a race; now it’s $125,000. Everything has gone up two or three hundred percent because we have given all our traditional revenues back to the bread and butter races. At the same time, you have to have aspirational races; races that promote your industry and that people can aspire to. They should be aspiring to win a Golden Eagle or an Everest. We need those races because they are our marketing races to get new customers.”

No one denies that Vlandys has done an excellent job for Racing NSW over a long period. His no-nonsense approach and determination to succeed has seen him step on a lot of toes without stopping to apologise – a Captain Marvel type character we could greatly benefit from on the eastern of the Tasman.

And in the unapologetic Vlandys responses of this interview, he said something that would loudly resonate with most Kiwis in terms of what has been sadly lacking – “We have to look at ourselves every year and do a three, a five, and 20-year plan.

“My job is to maximise the returns to the participants in NSW. As far as I’m concerned the revenue I can get for them is prizemoney. The more prizemoney I can return to the participants the better. I will continue to look, to review and to analyse every opportunity and take it if I can maximise the revenue for those NSW participants. If I don’t do that, I’m negligent and should not be here.

“Any CEO has to maximise the dividends to the shareholders, “continued Vlandys to strongly reemphasise the point. “My shareholders happen to be the participants. We will continue to look at all elements of racing and analyse everything we do to maximise the revenues for the racing industry.”

Prizemoney still viewed as the single most important factor

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.

Brightest star on the horizon – The Autumn Sun

By Brian de Lore
Published 21 February 2019

The long-awaited re-appearance of The Autumn Sun in Saturday’s group two $400,000 Hobartville Stakes on Saturday may be symbolic in that it heralds the ushering-in of the new champion, as the reigning champion moves closer towards the lowering of the curtain on the most glamourous racing career in thoroughbred history.

Three more races for Winx and that curtain will finally will be down, but just as champion trainer Chris Waller may have been hopeful of a reprieve from the pressure of training a winning sequence not to be broken, the next best horse appears ready to step-up onto the mantle she will vacate.

Outside of Winx there’s no denying The Autumn Sun is the most exciting racehorse in Australasia. After just six starts which includes five wins including three at group one level, he is easily rated the top three-year-old in the country.

In winning the Gr. 1 Caulfield Guineas in October at his sixth start, The Autumn Sun was Timeform rated at 126, an assessment attained by only three other winners in the history of that illustrious race including New Zealand’s Three-Year-Old Champion of 1995-96 in Our Maizcay, and Australian Horse of the Year and Champion Three-Year-Old male Weekend Hustler in the 2007-08 season.

Some of the biggest thoroughbred names in the history of Australian racing have won the Caulfield Guineas including The Autumn Sun’s own sire Redoubt’s Choice in 1999. Others include Manikato, Vain, Sobar, Mahogany, Beechcraft, Storm Queen, Red Anchor, Dual Choice, Rajah Sahib, Tulloch, Luskin Star, Grosvenor, Sovereign Red, Grand Cidium, Lonhro and Surround.

But none of the household names above have matched The Autumn Sun’s time of 1.35.5, and with the weight-scale lifted from 55.5kg to 56.5kg around 10 years ago he carried an extra kilogram. In addition, he sat three deep the entire journey and won easing down by four and a half lengths, the second biggest margin in history.

Very few horses have ever achieved three group one successes within the first six starts of their career. A fortnight prior to the Caulfield Guineas the colt had put in a scintillating last to first performance in the Gr. 1 Golden Rose at Rosehill, and before that at his final start as a two-year-old won the Gr. 1 J.J Atkins at Doomben beating Zousain which he also relegated to second in the Golden Rose.

After the Golden Rose Waller said, “This horse has amazing potential and I feel we have unearthed only a small portion of what is to come. His athleticism, temperament, good looks and speed combine to create a horse that dominated at two and now into his three-year-old season, and I have no doubt this will continue as a later three-year-old and beyond.”

Athletic he was but at 480kg he was far from the heaviest spring three-year-old. His natural ability combined with a Winx-like temperament has been to the fore in his so far brief career but now as an autumn horse the physical development will be evident at Rosehill on Saturday. He has furnished and strengthened and is now closer to 500kg.

The colt’s only career defeat came in the Gr.2 Stan Fox Stakes. That race was over 1400m at Rosehill in September on a heavy track at his first three-year-old start and was first-up after a spell of three months. He was beaten into third place by Tarka and Dealmaker, 1.4 lengths from the winner.

Saturday’s Hobartville Stakes sees The Autumn Sun as one of only nine entries with a benchmark rating of 110. Nearest on the ratings is the 88-rated Gem Song which won the Gr.3 Eskimo Prince two weeks ago, with most the other top colts apparently avoiding the race for obvious reasons. The $1 million Randwick Guineas is earmarked as his second start back but beyond that no further plans have been made.

The Autumn Sun was jointly bred by Arrowfield Stud and The Aga Khan Studs and was sold at the 2017 Inglis Easter Yearling Sale where he was selected by Mulcaster Bloodstock and then purchased by Chris Waller and Hermitage Thoroughbreds for $700,000. In October prior the running of the Caulfield Guineas John Messara AM bought a half share back for Arrowfield Stud for an undisclosed sum.

The astute Messara recognised The Autumn Sun for his stallion potential, and particularly as a replacement for the now 22-year-old Redoubt’s Choice, himself a son of the incomparable Danehill which Messara bought for Arrowfield Stud as long ago as 1989 – a decision that changed the face of Australian breeding and began a new dynasty.

The Autumn Sun is out of the Galileo mare Azmiyna, a half-sister to His Highness The Aga Khan’s European Champion and fourtime Group 1 winner Azamour. Selected by Mulcaster Bloodstock from Arrowfield’s 2017 Inglis Easter draft, the colt was purchased for $700,000 by Hermitage Thoroughbreds & Chris Waller Racing.

Punters dissatisfaction with FOB mirrors TAB turnover

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.”

Hubie de Burgh still using the Colin Hayes criteria for yearling selection

by Brian de Lore
Published 31 January 2019

World renown bloodstock agent Hubie de Burgh credits his success and longevity after 40 years in the business to the early grounding he was given by the late and great South Australian trainer Colin Hayes.

Making a return visit to New Zealand this week for Book One of the Karaka Sales, de Burgh under his company name of deBurgh Equine has been inspecting and buying yearlings for His Highness Sheikh Hamdan Bin Rashid Al Maktoum of the UAE and Australian syndication company Darby Bloodstock.

It’s 36 years since de Burgh made his National Sales debut at Trentham in the company of the legendary Colin Hayes and Colin McAlpine, and 31 years since he selected and purchased Zabeel in the first year at Karaka in 1988.

“In Zabeel’s year he was the best-looking horse on the sales ground,” recalled de Burgh, “any idiot could have bought him that year. He had a Nuryev head on him; he had balance and he walked beautifully; he was obviously a very good horse.”

But far from being an ‘idiot,’ the then 33-year-old de Burgh representing Sheikh Hamdan put his hand-up to fire in the winning bid at $650,000, a huge amount at the time which today converts on the CPI index to the equivalent of just under $1.5 million.

“We decided we were not going home without Zabeel,” continued de Burgh, “and bought him for a lot of money but there were two horses we wanted that year and Doctor Chapman bought the other which turned out to be Dr. Grace. We ran out of money otherwise we would have had the two of them.”

Both horses were by Champion Sire Sir Tristram and were reared, prepared and offered for sale in the Ra Ora Stud draft on behalf of racing magnate Robert Sangster. Zabeel was out of the diminutive but quality Nureyev mare Lady Giselle who was a twin, and Dr. Grace was out of the South Australian Derby winning mare English Wonder, by Twig Moss.

They were both high-quality yearlings who became high-quality racehorses and those facts can be verified by this writer who was privileged to be representing Sangster and Ra Ora Stud in the vendor’s box behind the auctioneer in what was the debut year for Karaka.

The irony of the sale of those two yearlings is that Rosehill trainer Dr. Geoff Chapman was underbidder on Zabeel before winning the bidding war on Dr. Grace. About 20 months later, early in October 1989, Zabeel defeated Dr.Grace by one length in the $250,000 Group Two Moonee Valley Stakes over 1600m.

Third in that same race was the New Zealand-bred Courtza, the previous season’s Golden Slipper winner raced by the late Nick Columb. Of course, Courtza would subsequently return to Waikato Stud where she was bred and play a huge role in that stud’s rise to prominence as the dam of Champion Three-Year-Old and Sire, O’Reilly.

Dr. Grace went on to win 12 races including the ATC Derby, The BMW, two Manion Cups, a Liston an Underwood and finished his career with a victory over Super Impose in the Chelmsford, accruing $2.7 million in stakes.

De Burgh was adamant about the Hayes influence, saying, “The time I spent with Colin in the early days was the most formative of my career. He was like a second father – I learned so much from him. He was ruthless on his appraisal of the anatomy of horses.

“On my first trip to New Zealand with Colin and Colin McAlpine, we looked at a lot of horses at all levels. It was so interesting, and then we’d be together at Lindsay Park on the gallops discussing it and then we’d be at dinner discussing it, and everything he talked about was way ahead of his time.”

De Burgh was lucky to get to Australia at all, let alone meet Colin Hayes, and after he did arrive in the lucky country his father came visiting to take him home. He explained, “I first worked for Claiborne Farm in America and then for Clay Camp who was one of the big consignors at Saratoga.

“Then I went back to the UK and ended up getting the job to bring horses to Australia on the shuttle at 48-hours notice – I was at the Curragh Bloodstock Agency at the time – the guy that was going to take them burst an eardrum waterskiing just two days before departure so the next day they told me I was going. I didn’t even know where Australia was.

“Then I fell in love with Australia. I took the horse down and afterward my father came down and made me come home otherwise I was intending to stay. When I came back I worked for Jimmy O’Connor at Milluna and then David Coles at Coles Bloodstock. And while all that was going on I was following a man that I worshipped and that was Colin Hayes.

“I was 28 when I got the job with Sheikh Hamdan. I was young but had already lived for five years in Australia by then and I was in love with the Star Kingdom horses and the first one I bought was Nouvelle Star – I wanted to get her to Europe – they were very tough horses. She was a Nolholme mare and mated to Blushing Groom she later produced the first classic winner for the Sheikh.

“Then we picked out At Talaq which was a horse we already had and sent him to Colin Hayes. I had never met Colin but I rang him and he said, ‘yes, of course,’ but he was such a global thinker even then – years ahead of his time. He was a visionary.

“At Talaq won the Melbourne Cup and then we decided to come down and buy yearlings and that’s how the whole thing started.

“We bought the 1990 Blue Diamond Stakes winner Mahaasin out of the Magic Millions Sale. All these events including Zabeel started this extraordinary relationship between the Hayes family and Sheikh Hamdan and its gone on unbroken all the way through to David Hayes’s return to Australia from Hong Kong and beyond, and we’ve had lots of group winners all the way through.”

And just as de Burgh benefitted from the Hayes mentoring all those years ago, the knowledge is now being passed on to the next generation in the form of a young Will Johnson who himself comes with a group one pedigree.

“Will Johnson is a fantastic young guy, very knowledgable,” says de Burgh. “He was an assistant trainer to Roger Varian in England. His father is Tim Johnson – they are the Johnsons that bred Vain. His mother is a Cox from the family that the Cox Plate was named after so he was meant to be in this business.

“When you look around the world now there are teams of young guys coming through that are global people; young people around 30 years old from France, Ireland and England that are very impressive – very different to the era when I was in. Will is a very good example of them.

After three or the four days of Book One completed, de Burgh with Johnson’s assistance had purchased four yearlings – three for Sheikh Hamdan and one for Darby Racing.

They are Lot 19, a filly by I Am Invincible for $500,000, Lot 272, a Redoubt’s Choice filly for $200,000, Lot 275, an Iffraaj colt for $360,000, and for Darby Racing Lot 411, a Savabeel colt for $150,000.

On the difference between buying for Sheikh Hamdan as opposed to Darby Racing de Burgh commented, “We bought for Darby and were underbidder on a couple earlier in the sale. Darby’s budget has to be met – they have to be very strict on what they pay for a horse because they have to turn around and sell it down. Australia is a world leader on syndication; the infrastructure, the marketing, the networking; how the whole thing works.

“It really makes owning a racehorse just good fun. You can sell one percent here and there. In Europe, we are still a little bit too elitist but are all picking up on the success of companies like Darby Racing and they now all want to do the same thing – they are 10 years behind.

“Darby has about 90 horses and god-knows how many owners on its books. A horse can go on their social network site and they are getting hits within 30 seconds.

And on buying in Australia or New Zealand, de Burgh says, “I still work off the criteria Colin taught me 40 years ago because when you are buying horses in the southern hemisphere it’s a very different type you are seeing than when buying a European horse.

“The big mistake some European buyers make down here is they buy these big, long-striding European things – they float along and you think they’re great – but actually, a lot of them don’t have the turn of foot so while you have to have motion, you don’t have to have these long-striding things.