Achieving the Australasian record price for a ready-to-run two-year-old in November had a historical significance that dates back to 1872 when Christopher Grace’s great-great-grandfather joined the Canterbury Jockey Club and commenced a remarkable career as an owner, breeder and administrator.
George Stead, or G.G. Stead as he became better known, became the most successful owner in history. He won 13 New Zealand Derbies, nine New Zealand Oaks, three Auckland Cups, four St Legers, 16 CJC Champagne Stakes, ten ARC Royal Stakes, four Wellington Cups, and ten Great Northern Foal Stakes. His epitaph stated that “no other man in the colonies had raced thoroughbred horses with such conspicuous success as he, and he died a pillar of the turf.”
So, while the $1.65 million record-breaking colt had an outstanding pedigree; by thrice Champion Australian sire I Am Invincible from the dual group one winning mare, Shillelagh, by Savabeel, it could be argued his breeder Christopher Grace QSM had an even better one.
G.G. Stead’s second-born child, daughter Noel, married Russell Grace, grandfather of Chris Grace. Chris’s great uncle and G.G.’s son Gerald stood the Stead-bred six-times champion sire, Martian, and Chris’s uncle, Bob Stead founded and ran the highly successful Sasanof Stud, named after his father Wilfred Stead’s 1916 Melbourne Cup winner Sasanof, a son of Martian.
Wilfred had bought Sasanof as a yearling for 400 guineas and won the Cup with him as a three-year-old. He bought Flaxmere Stud, stood successful stallions, and bred the Keith Voitre-ridden 1933 Auckland Cup winner, Royal Artist.
Chris bought Chantal’s dam when he was 16
Chris’s grandfather and father both raced horses successfully, and Chris was just 16 when he accompanied his father to the 1957 Alton Lodge Dispersal Sale and bought Chantal’s dam, Tenderfoot. Four years later, he bred Chantal, a daughter of Tenderfoot, by the successful Alton Lodge sire, Chatsworth II.
But from the beginning, Chris’s father restricted Chris from keeping more than a single horse on the family farm, forcing him to sell all the mare’s foals.
Chantal had to be offered as a weanling, and the filly came to the attention of Lorraine Jamieson of Cardoness Stud, who bought her in a birdcage sale at Awapuni for only 50 guineas. Chantal won nine races, including three group ones. She defeated Galilee in the 1965 Epsom Handicap at Randwick. She also took out the George Main Stakes and the WRC George Adams at group one level.
Later, Lorraine Jamieson-bred yearlings out of Chantal twice topped the National Sale under her Cardoness Stud banner at Trentham in 1970 and 1974.
This brief synopsis of the G.G. Stead to Chris Grace successes, spanning five generations of the family, barely scratches the surface of what they achieved. No single breeder in New Zealand has a family background that rivals Chris Grace’s.
But Chris and Susanna Grace’s record-breaking $1.65m colt didn’t attain that price on the Stead-Grace record of brilliance alone. The stars had to align with three further ingredients: a record-making buyer with deep pockets named David Ellis CNZM, a Minister of Racing to encourage a strong buying bench, and a well-conducted and promoted sale by New Zealand Bloodstock.
An inordinate amount of promotion by New Zealand Bloodstock in Asia and Minister Winston Peters combined their efforts to bring to Karaka the best group of Asian buyers seen in NZ in years. Hong Kong buyers occupied five of the top ten list of the leading buyers.
In buying 72 lots, Hong Kong-based buyers spent more than $17.1 million. China and Mongolia signed for a further 15. In addition to the Malaysian buyers, the sales to Asia reached a remarkable level, considering the loss of the Singapore and Macau markets.
Winston Peters can take most of the credit for the presence of a sizeable Malaysian contingent of buyers that spent more than $3 million for 40 horses at an average of around $70,000. His earlier visit to Malaysia saw him simultaneously combine his Minister of Foreign Affairs and Racing roles for a win-win result.
If the 14 ministers of racing since 1991 lined up to race each other in the Ministers’ Contribution to Racing Stakes at Ellerslie, Winston’s three stints would see him at the winning post before the chasers turned for home. Several would barely have left the gates.
Local buyers bought 57 lots for $6.2 million at the R2R, but David Ellis finished the sale as the only NZ buyer on the top 10 aggregate list. Six Ready to Run Sales ago, in the pre-COVID days of 2019, five NZ buyers made the top 10 on aggregate.
In those six years, the Ready to Run Sale aggregate has increased 64 percent, the average 66 percent, the top price trebled from $550,000, and David Ellis’s buying power has strengthened in unison. David has operated internationally for decades, closing the Te Akau stable in Singapore only when racing ceased in that jurisdiction and opening a new stable at Cranbourne with plans to expand to 60 boxes.
Auctioneer Steve Davis always begs bidders to ‘buy the one you want’ and not settle for alternatives, and that’s what David Ellis does, sometimes paying less, such as Melody Belle, which he bought for $57,500 before she won 14 group ones, and on other occasions paying overs, but more often than not getting the one he wants.
So, the record-breaking 2024 R2R colt became a watershed purchase, combining the impressive pedigree of breeder Christopher Grace and the most prolific buyer in NZ thoroughbred sales history. David Ellis CNZM will be inducted into the New Zealand Racing Hall of Fame at the 2025 induction.
It’s mind-blowing to consider that the David and Karyn Fenton-Ellis team syndicated 72 horses during 2024, an unparalleled feat that deserves recognition in an industry contracting annually in average field sizes and numbers of horses in work.
David attended his first National Yearling Sale at Trentham in 1982, and two years later, at the 1984 renewal, he would make his first-ever National Sale yearling purchase, bidding $65,000 for a chestnut filly by Sovereign Edition from Hellespont II, thus a sister to the classy two-year-old filly, Helen of Troy.
How many horses he bought in the following forty years is incalculable, but his reign as 19 consecutive times leading buyer at the National Yearling Sale will surely go to 20 in a month at Karaka.
The Te Akau colours won 193 races in Australasia last season and $15.54 million in prizemoney. That result included nine group ones and 30 black-type events in total. The Te Akau stable has now won 15 trainer premierships.
Everyone in racing wants to beat the tangerine and blue, either purely for competitive reasons or the ‘green monster’ kicking in – racing is the most jealous game in the world, something that the late, great Colin Jillings often alluded to.
Perhaps Steve Davis at the rostrum should stop saying ‘Buy the one you want’ and replace it with ‘Buy the one David Ellis wants.’
If New Zealand Thoroughbred Racing CEO Bruce Sharrock goes ahead with his plan to ‘kill off’ hurdle and steeplechase racing in New Zealand, he will inflict immeasurable harm upon the thoroughbred industry.
The consultation paper Sharrock released on August 5 to try and soften you up and convince you that jumping needs to go is overwhelmingly slanted against jumping and out of context with the entire thoroughbred industry.
The document is reminiscent of Mark Twain’s saying: “There are three kinds of lies: lies, damn lies, and statistics.” All Sharrock has done with his paper is inappropriately depict a series of graph statistics to give jumping racing a punch below the belt.
Any halfwit could take all the statistics compiled on New Zealand flat racing’s demise over the past 25 years and make a case to close it down. Mark Twain would agree with me on that.
Entain arrived 15 months ago to save New Zealand racing. And it has saved it; stakes went up 25 percent. Had they not partnered with TAB NZ at that time, stakes would have undergone a 20 percent reduction – a differential of 47 percent on what we race for this season.
West Coast led in by part-owner Henry Williamson after winning his third Grand National
The stakes are available to grow jumping racing in the winter months, and this past winter’s exciting racing has come in hurdle and steeplechase events, not the flat horses. The two star horses of the winter, The Cossack, winner of the Waikato and Wellington Steeplechases at his past two starts, and West Coast, winner of the Koral and Grand National Steeplechases at his past two
Nothing on the flat came near these four races for exciting racing, especially in the 18 race meetings on the poly tracks at Cambridge, Awapuni and Riccarton in June, July and August, which more often than not threw up poor quality horses in small fields.
The synthetic tracks have their place in the winter months; some trainers like them, and some don’t. But racing’s future survival will not depend on mediocrity – and what those tracks deliver is precisely that. Racing needs the stars to excite racing people – Imperatriz, Orchestral, Crocetti, The Cossack, West Coast, etc.
Three of the greats in NZ jumping history – Eiffel Tower, Teak and Kumai
We all know there’s a problem with jockey numbers, but this has arisen due to an inactive NZTR administration over many years. They have done nothing to address the jockey issue except shrink the number of Highweight races from almost one each race meeting to a handful for the year, thus disincentivising the jumping jockeys from staying in the game or attracting new ones from overseas.
Trainer John Wheeler summed it up succinctly when he wrote in his submission: “Three years ago, at a meeting in Hawkes Bay attended by jumping enthusiasts and two NZTR representatives, we addressed the shortage of riders. We were assured that NZTR would take action, but nothing has been done.”
John Wheeler advertised for jockeys in UK and Ireland
John continued: “Personally, I took the initiative to advertise in the UK and Ireland for jump riders, resulting in interest from Joshua Parker and Bradley Roberts, though he, unfortunately, returned home soon after arriving.”
Daniel Nakhle also got proactive about the shortage of jockeys and can take the credit for bringing in our current champion jockey of 2023-24, Warren Kennedy. Why should it be left to owners and trainers to bring jockeys into the country, which benefits the whole industry?
NZTR has simply become the registrar of thoroughbred births, deaths and marriages with a strong focus on animal welfare, health & safety and rehoming – commendable stuff, but it won’t be enough to save us. Where’s the vision, the creativity, and addressing the issues at the coalface of racing, such as the absence of jockeys?
Over 100 submissions have reputedly been lodged at NZTR this week in response to the Sharrock consultation paper. John Wheeler is as experienced as anyone currently in racing, and it’s worth quoting more of his submission.
John Wheeler: NZTR presented manipulated figures
John said: ”NZTR’s communication on this issue, such as racing statistics, seems designed to undermine jumps racing by presenting manipulated figures that cast the sector in a negative light, without highlighting any positives.
“Despite the lack of support, the jump racing sector has not only survived but thrived. This season has seen strong fields, increased jumpers, more young people involved, and well-attended jump racing events, which is promising for the future. It’s important to remember that many of New Zealand and Australia’s best trainers of staff have come from a jumper or amateur rider background.”
Former journalist and NZTR employee Mary Burgess has submitted a detailed submission. It’s too long to reproduce here, but here’s an excerpt from her post on Facebook this week:
“Last season – 2023-24 – 152 jumpers lined up in 73 jumps races, but just 36 of those horses restricted themselves to jumps races. The other 116 raced 508 times on the flat, an average 4.3 starts each. Add to that their 566 starts in either hurdle or steeplechase races and overall, our “jumpers” averaged 7.06 starts each.
“If you applied the average per horse turnover figure from the 2022-23 NZTR Annual Report (the 2023-24 one not yet available online) then that’s around $17.7m they contribute to the total NZ Turnover.
“How about another stat which might surprise you – 19.83% of our jumpers (23 in total) actually raced on the Awapuni or Cambridge synthetic tracks.
“So, let’s agree that jumpers aren’t just jumpers, and NZTR needs to consider the impact they have across the season.
Mary Burgess: Getting rid of jumpers creates a welfare issue
“To get rid of jumping would be to create a welfare issue with these 152 horses, and the many, many, many more currently going through the process to get their jumping tickets, tipped out of racing and flooding the rehoming market.”
Mary makes an excellent point about the crossover of jumping horses that race on the flat. Getting rid of jumpers will also get rid of people. NZTR needs a plan to retain all its current supporters and find new ones – not downsize and contract the industry.
One of the Sharrock document stats depicts the field size argument. Below the graph, the caption says: “Average field size in jumps races has stayed in a range between 8 and the low 9s (compared to flat size average of 10.54).”
It’s a poor argument when you look at today’s Hastings races. The listed Sir Colin Meads Trophy for three-year-olds is worth $90,000 but has only eight acceptors, and the Group Three Gold Trail Stakes worth $120,000 has only ten acceptors. Since the year 2000, NZTR has reduced the number of races programmed annually from around 3000 to 2300 to keep flat racing field sizes above 10.
The Christchurch Hunt Club with their hounds in the birdcage at Riccarton on Grand National Day.
New Zealand has 28 hunt clubs, of which 18 once staged race days. Today, only two clubs are still involved, the Pakuranga Hunt and the Rotorua-Bay of Plenty Hunt. Can the hunt clubs be reengaged? Historically, hunting, point-to-point racing, hurdling, and steeplechasing had a strong connection and crossover of participants, but over the years, they appear to have drifted apart.
Finally, NZTR has reportedly received over 100 submissions in response to the Sharrock consultation document on jumping. What are the chances of all the board at NZTR reading all the submissions and taking all the arguments into account, or is this process simply an exercise of going through the motions?
Free-to-air Trackside and aggressive marketing have Entain Managing Director Cameron Rodger smiling broadly after receiving the latest betting figures.
A few days ago, he told me, “We are just now in the process of measuring what the move to Free to Air has done to overall trackside audience numbers. This data is still being finalised but to give you a sense of the result – our total Trackside audience on Saturdays is up more than 25% – and the total viewership over the week is up even more.”
Cameron added: “It’s more brutal out there than probably anyone could have accurately pictured, not just the betting market but all consumer markets, but what I’m seeing is upside through engaging more customers – we have so many more customers on our books now compared to last year. But we are getting less out of each customer than we had hoped because there is less money in everyone’s pockets.
“Through our investment here, we have managed to fill the funnel at a fast rate, so we have had a 21 percent increase in customers, which delivers to us a turnover that’s not in decline. And that increase came after only 17 days of testing from marketing the new app, so that’s tracking really positively. If we had the same customer base we started with, we would be in serious trouble.”
The economic downturn may be worldwide, but it is reportedly worse in New Zealand than in Australia. So why is post-COVID betting in Australia estimated to have a 15—to 20 percent downturn, but against that trend, turnover has increased in NZ over the past year?
Entain men have a passion for racing
The simple one-word answer is Entain. The newbies have introduced a fresh change of direction and taken control of the decision-making at TAB NZ, thus eliminating the non-performing, apathetic administration of the past with an injection of new life. Dean Shannon, Lachlan Fitt, and Cameron Rodger are intelligent people who all have a passion for horse racing, a vital but missing ingredient in most of their predecessors over the previous 20 years.
Entain’s partnership with TAB NZ can only be described as ‘game-changing.’ Cameron Rodger doesn’t entirely agree with my assessment that TAB NZ would now be broke. He says: “If the new distributions hadn’t gone through, distributions to the codes would probably have been cut by about $20 million.”
Applying that to the thoroughbred industry, the available prizemoney would be 36 percent less than the current level, accompanied by an exodus of the industry comparable to the annual Hajj to Mecca.
Cameron Rodger is buoyed by the most recent stats coming to him after a year of placing racing in front of the general public by embracing mainstream media. He elaborated:
“Thoroughbred racing in May was up 28 per cent in turnover on the previous year, which is a huge leap forward, and harness was up 15 per cent, and Greyhounds was up eight per cent, and that’s just May. Total active customers in May 2024, was 82,500 against 72,000 the previous May, so we are genuinely thrilled with what we are seeing.
June new customers up 15%
“As an example, for the month of June thus far, we’ve had two-and-a-half times more account sign-ups than we had in the same period last year. That number is exceeding even our own new customer number forecasts – by just under 15%.
“It tells us that the different initiatives we’ve put in place are doing a great job of getting customers in the door which is the critical measure we are chasing, and is especially gratifying this early on.”
No one will deny that Entain has made a great effort in year one, but what about sustainability? The first year has passed with a positive pass mark, but everyone with an investment in racing is interested in the long term with consistent growth which will encourage new participants. I put that question to Cameron:
“We have a five-year window for a reason, we are not going to be going backwards. If people can see that we are trying our best to find a solution to issues that are not really our issues to solve, hopefully, it shows how serious we are about New Zealand’s future for the long term.
“We don’t even have to worry about the turnover right now because we are here for the long haul. I’m not just putting on a brave face, there are genuinely very good signs despite the tough, tough market.
Riding out the economic downturn
“Without the economic downturn, we would be really flying along. The upshot of this is that we can ride out the cycle now, and distributions won’t be affected. We can keep investing and growing customer numbers. When the economy comes back, we have a great customer base to grow again.
“We are up 3.5 percent year-on-year in turnover and gross profit is also up slightly.
“Other jurisdictions are down, and we are putting up a helluva fight. It’s genuinely showing us that if we can get these numbers up further, it’s very positive for the future. The best thing we can do at this time is not to try to get more money out of our customers in this economic climate.”
When I suggested to Cameron that the problems confronting the breeding industry are just as serious as racing with a historically declining stallion, broodmare and foal population, he responded this way: “We are aware of the problems facing the breeding industry.
“The top end seems to look after itself, but there has been a weakening of the middle and bottom end. We are trying to get involved through the Pearl Series. We have looked at the decline of the broodmare band, which can’t be ignored; if you look at the number of stakes-winning mares and progeny going through the sales, it’s on the decline, and good broodmares are getting harder and harder to buy.
“Prizemoney increases still catching up” – Cameron Rodger
“We do know that increased prizemoney makes a difference over time, but we are trying to think of tactical ways we can engage the breeding and racing industry. I don’t really think that the full upside of the prizemoney injections has yet caught up to all areas of the industry.
“I think the time to be investing in the industry is in a downturn, and I know that’s an easy thing to say, and everyone knows that principle, but it’s just a hard thing to do in real terms. The amazing positive we have right now is that we are one of the few sectors where, despite the inflationary pressure, the underlying picture is improving. I do believe that things will improve within a couple of years, but it might be a more extended period of pain than most people thought.
I said to Cameron Rodger that we are an apathetic industry with a poor record of helping ourselves and now we are relying on Entain. He replied: “We are not pretending we have a silver bullet.
Cameron Rodger: “Lachlan Fitt is a machine; he doesn’t stop”
“Lachlan Fitt has been appointed Chairman of the board of Thoroughbred Marketing (NZTM),” he continued. “You won’t find a more passionate foreigner when it comes to the New Zealand industry – he loves it and is a machine; he doesn’t stop. He’s never satisfied and he’s the one that’s driving things here, but we haven’t worked out all the equations yet.
The Entain executives have all pledged their allegiance to racing over sport, which is music to the ears of racing, but he did finish the chat by revealing an interesting stat, which comes as a result of advertising on mainstream media:
“The turnover on the Warriors has gone from about $400,000 to $620,000 per match involved, so it is about a 50 percent increase.”
Owners, trainers and jockeys have already tasted the benefits this season of increased stakes money emanating from the partnering of TAB NZ with the global betting giant Entain, and by the end of April, punters will get their turn, and it should be a game changer.
Come to think of it, a large proportion of owners and trainers (not jockeys, hopefully) will fall into the category of punters, so they will be doubly pleased when Entain announce their three-pronged attack on the TAB NZ betting experience at the end of April.
Coming is a state-of-the-art app and betting platform and a refresh of the TAB NZ brand’s livery. Sydney-based Entain CFO and Deputy CEO Lachlan Fitt expressed his enthusiasm for the app at a recent Ellerslie race meeting.
The app and new platform comes to TAB NZ after around $200 million of Entain IT development for its global operations.
Punters in NZ are historically entitled to a degree of TAB NZ cynicism after a prolonged period of poor service, poor odds, and incompetents in charge —some of whom had never placed a bet in their lives. How did it ever come to that?
But suddenly, we have gone from the invisible and uncontactable TAB people to an Entain trio of three passionate racing people – CEO Dean Shannon, Lachlan Fitt and NZ-based Managing Director Cameron Rodger.
Entain’s main players making the decisions for the future of NZ racing. From left, CEO Dean Shannon, CFO and Deputy CEO Lachlan Fitt, and NZ Managing Director Cameron Rodger
The infusion of Entain money into stakes and these three’s presence, enthusiasm and availability has put a spring in the steps of Kiwi racing stakeholders. It’s a refreshing start.
Cameron Rodger told me by phone last week: “We’re keeping the name and brand and everything that’s built up on it, but we’re giving it a new colour scheme and logo to give customers frustrated with the old platform – maybe the ones that have not been with us for a while – just to let them know this is a fresh start.
“And it’s very good—a high-quality customer offering,” continued Rodger. We think the user experience will be top of the market, and the other key part of it is that it’s very stable. We know just how frequently you’ve had outages and downtime with the current platform, and that will be a thing of the past.
New technology will provide a new experience
So, I asked, what else can punters expect from the new app and platform?
“What you have now is the exact product you’ve had all along; we’ve done nothing to improve it. We have put all our time and effort into the new product to get it up as quickly as possible. It will have more generosity, more flexibility, same-game, same-race multi-products—things that have become commonplace with offshore bookmakers and which, in NZ, the technology has lagged.
“It will be a huge, ‘brought up to speed,’ moment that will include simple things such as navigating quickly between races. It will be one or two clicks for what currently might take four or five. And that makes a world of difference for someone trying to quickly get on pre-race or pre-match.
“Betting on sports has been a big pain point for customers. It’s painfully slow, taking too long to accept, which has led people to think the bookmakers are being conservative, but it’s actually just the platform which was wired that way and can’t be changed.”
Thanks, Mr Allen, Ms Hughes and company, for spending $50 million on a dud platform and committing the TAB to pay $17 million annually for the updates for ten years. But that commitment happened only five-and-a-half years ago, so has Entain negotiated its way out of the contract? I asked Cameron Rodger if we had settled the Openbet and Paddy Power baggage.
Openbet and Paddy Power red-carded
“Yes, we have completely moved off that platform, and there’s no residual Openbet or Paddy Power reliance. As part of the deal we struck, it was our cost to bear, which we factored into our equations. That was all sorted and squared away after we signed up.
“It was a big cost, but we couldn’t stand still on that platform.”
What a relief to hear that the potential to be weighed down by the ball and chain NZRB Allen/Hughes debt had been rectified and kicked for touch.
But in my chat with Cameron Rodger, the ‘music to my ears’ part came when he said: “I think the big one I can give you that hopefully will be interesting and exciting for people to hear is that we are huge believers in freeware and broadening the television coverage to a wider audience.”
Free-to-air televised racing?
Free to air Trackside – wow, that would be a game-changer on its own.
According to the constitution, marketing racing is supposedly the domain of NZTR but is rarely actuated. By default, it’s now the territory of Entain, whose presence has generated newsworthy coverage on mainstream TV and radio.
At the Karaka Sales, Dean Shannon told me that Entain knew they had to make a ‘big splash’ to kick start racing here in NZ—it needed to be jolted into life to move forward. On the same question, Cameron Rodger recognised the need to revive the racing marketing and encourage new people to engage.
We have had droll accountants making the decisions, closing down radio, newspaper content, and TAB retail outlets, reducing broadcasting costs, and annoying the customer base. How does any industry thrive on a downsizing mentality?
Entain has shown it is diametrically opposed to that thinking. And since its arrival, it has injected $30 million more into NZ racing than its commitment to the contract.
Other positives have happened in NZ racing in the past year: the revival of Ellerslie; NZ Bloodstock embracing the arrival of Entain and joining in with sponsorship, and NZTR initiating ‘The Kiwi’ slot race, which, according to several sources, is a collaboration between all three parties.
Entain dragging the industry up with it
Simply put, Entain is dragging the rest of the industry along with its dynamism.
Meanwhile, the TAB NZ board can only be sitting on its hands, doing practically nothing, and wondering if it should be embarrassed by continuing to draw directors’ fees. The board is now relatively powerless and has failed to produce a half-year and full-year report for the year ending July 31, 2023.
Why haven’t they? The answer simply lies in an embarrassing rise in costs and a downturn in profits for the year in question. At the half-year mark last financial year, the TAB profit had fallen behind by $9.4 million on the previous year and heading for a record annual running cost in the vicinity of $130 million.
My regular reviews of the TAB’s financial downturn caused the bosses to stop publishing the monthly figures. And now, no half-year or annual report. There is no transparency or accountability, which is the short history of NZ racing.
The TAB board comprises Anna Stove (Chair), Wendie Harvey, Raewyn Lovett, and Bill Birnie. Kristy McDonald no longer appears on the website as a director, so she presumably has resigned.
Dean Shannon told me I shouldn’t be concerned about the cost of running the TAB from now on because Entain now covers all its expenses, along with a guaranteed minimum payment of $150 million a year to run the codes and provide stakes. He also said Entain expected to lose money for two years but should be in the black by year three.
30 percent of NZ online betting placed with Bet365
He aims to claw back the 30 percent of all online betting in New Zealand that goes directly offshore to Bet365, a privately owned platform that gives nothing back for the use of NZ racing.
Cameron Rodger said Entain would not be pushing the issue of geo-blocking but leaving it to the due process of government to decide. The codes will benefit by an additional $100 million from Entain if it’s passed into law.
Things have improved since Entain’s arrival, but this partnership has a cautionary side regarding the long-term sustainability of racing. We are in the honeymoon phase but should remember that the deal has to work financially for both parties to survive beyond the annual $150 million guarantee, which ceases in 2028.
The five years will come around quickly, after which the partnership will be conducted on a 50/50 gross profit basis. We need Entain to turn its massive NZ investment into an excellent annual long-term profit so we can run for prizemoney that will incentivise Kiwis to grow breeding and racing back to higher levels than we have now.
So, what do we really know about Entain beyond the charismatic trio of Shannon, Fitt and Rodger?
What we know about Entain
We know it’s a highly geared $4 billion global betting empire that, in August 2020, changed its name from GVC Holdings to Entain and has since invested heavily in various betting jurisdictions worldwide, including our TAB NZ.
We know that the company is registered in the tax-haven Isle of Man, where it runs worldwide gambling operations under the Ladbrokes, Neds, BetCity, Eurobet, Sportingbet, Crystalbet, Coral, PartyPoker, bwin and BetMGM brands. BetMGM is Entain’s joint venture with MGM Resorts.
We know the company’s share price fell by 40 percent last year, which caused shareholder dissatisfaction and indifferent reviews. Since then, replacements have arrived for the CEO and several board members.
We know that Entain expects the NZ betting market of approximately NZ$600 million to grow by 35 percent over the next five years.
We know that in an Australian interview last week, Dean Shannon was asked if he thought a 17 to 20 percent betting downturn across the board was a sizeable shift. He answered, “Yes, it has been a sizeable shift, but it shouldn’t be that surprising. This is predominantly driven by macroeconomic factors such as higher interest rates and cost-of-living pressures.”
We know, most importantly, that if it hadn’t done a deal with Entain, TAB NZ would now be either broke or less attractively partnered with one of two alternative offers – fact.
If TAB NZ ran a book on the next Minister of Racing, Winston Peters would be $1.50 and firming to have his third term in the role. Who else could be a legitimate candidate in the coalition negotiations underway this week?
Six months ago you could have bet 50/1, but now Winston has firmed into $1.50, and is better value than the Melbourne Cup favourite Vauban, which has eased from $3.50 to $4.20 in the last few days and must overcome the obstacles of history to win the race.
One United Kingdom punter has a $1,000 fifth leg multi riding on Vauban to win the Cup to win $1 million, and many supposedly very good judges of form are saying Vauban is a certainty.
But just like Winston getting the nod for his third stint as the Government rep for racing, a cynical school of thought exists about Vauban’s favouritism in this year’s Cup.
Here it is:
Vauban hasn’t raced for 92 days, and since 1991, only one horse has won the Cup with a break of 60 days or longer – Cross Counter in 1991 – and 48 horses have tried.
Vauban hasn’t raced for 92 days – three years for Winston
Vauban has won his last two starts impressively, but his previous eight starts were all in hurdle races. Six of his seven wins occurred in soft going, but with the temperature at Flemington expected to rise to 29 degrees, connections will get a Good4 unless blessed with the chance of a late afternoon thunderstorm.
Vintage Crop won two races over hurdles before his Cup win in 1993, but before that, you have to go back to the 19th Century to find a hurdler or steeplechaser winning the Cup – Malua in 1884 and Sheet Anchor in 1885.
Since 1991, five Northern Hemisphere starters in the Cup have started favourite at odds of 4/1 or less. Not one has finished in a place, although the northern invaders have a good overall record with 311 out of 736 starters in those 32 years. A level stake on all northern horses during that time would have reaped a profit of 40 percent on investment.
Without A Fight is a good chance to complete the Cup double.
Winston lost his last start and hasn’t raced for three years, but the $1.50 is still a good bet. He’s a known first-upper and a very cunning race tactician who rides his own race – you’ve all seen him riding that horse on TV in his pre-election campaign.
And you could argue that Winston has undergone a solid preparation because he’s the only politician who has produced a pre-election racing policy, giving notice that he’s still interested in the future of racing, albeit his previous race form lacks consistency.
NZ First Racing Policy:
Racing
The racing industry has long been an integral part of New Zealand’s economic wealth creation, lifestyle and entertainment.
This industry should have a realisable aspiration to contribute $3.5bn to our GDP, a sum equivalent to this industry’s contribution to Ireland’s economy. We have the land, the grass and animal food, and the people to be a racing world leader.
Currently, the industry employs thousands of mainly young New Zealanders with a reach to associated industries that includes thousands more. This industry employs over 15,000 people either directly or indirectly, with a further 12,000 associated with the racing infrastructure on a voluntary basis.
If regular racegoers are included, then well over 55,000 New Zealanders have a weekly involvement. To truly become internationally renowned, planning, rationalisation, and collaboration have to become paramount.
As well as potentially contributing much more to our economy, this industry has the imminent prospect of trembling its export wealth where racing stock is transported internationally by air. The recent TAB NZ Entain partnership has boosted stakes money for racing. But with guaranteed stakes for only the next five years a longer-term plan is required.
For this industry to be successful its control must be returned to the hands of expert racing people with a sound knowledge of their industry and democratically elected and having the respect of their codes. Having “skin in the game” leads to better decision making.
New Zealand First had the Racing Act 2020 passed as a result of the Messara Report recommendations that also called for continued consultation with all stakeholders.
New Zealand First provided funding for the Cambridge, Awapuni, and Riccarton all weather tracks, to ensure race days were not cancelled for weather events which were costing the industry millions with each cancellation. We recognised the economic potential of the racing sector and were responsible for initiatives to continue its growth.
Policy:
Wise investment in racing has made, and will continue to make, a growing contribution to this country’s GDP. And we will work with New Zealand Trade and Enterprise to develop export channels and opportunities.
New Zealand First believes that the long-term sustainability of the industry and racing self-determination, are achievable objectives. We will promote at government level that racing expertise and knowledge makes this a highly specialised industry. That can only come from the government respecting stakeholders and all participants.
New Zealand First believes that in a computerised age, the administrative costs in this industry are far too high. These costs must be addressed so that the most critical person in the racing industry, the owner, gets a much fairer go.
New Zealand First will work towards greater parity with raceday prize money in NSW, so that sound investment is the outcome and no longer a costly hobby. There was a time in New Zealand Racing where winning just one race would pay for the cost of the horse for the next twelve months. That must not go on being a distant nostalgic prospect.
New Zealand First policy is to properly market the industry, using the very best of the latest technology, to attract the rapid growth of younger participants, future owners, and breeders.
As with any industry, a realistic sustainable growth plan is required and critical and New Zealand First will work towards that.
The safety and the health of racing stock, be they horses or greyhounds, requires constant vigilance as does health, and safety, and the mitigation of gambling harm.
There are political parties proposing to fund their tax cuts through online wagering operators.
The TAB has estimated there is $400 million leaking to offshore wagering operators per year.
That tax policy expects to raise $170 million from this source (43% tax rate). That is not credible. This policy will boost the profits of offshore wagering corporations, at the expense of the funding of NZ Racing, sport, and the community.
The social licence that gambling operates in New Zealand, including Racing, Sport, Lotto, and the pokies, is that profits are returned to the community not corporations.
If that policy is implemented, it will cost Racing & Sport the $100 million that Entain committed to pay if geoblocking was introduced into New Zealand.
A large number of these operators are located in tax havens.
These on-line operators do not have the ‘problem gambling harm minimisation’ requirements of New Zealand operators and will prey on the most vulnerable.
Five years have elapsed (almost to the day) since John Messara AM handed over his ‘Review of the New Zealand Racing Industry’ to the then Minister of Racing, Winston Peters.
It’s timely, therefore, to get John’s thoughts in a Q&A. He kindly agreed to share his views on what’s happened in the intervening five years and where New Zealand Racing is heading.
BdL: It’s exactly five years since you completed the Messara Review with 17 recommendations which were implemented only in part, despite your pleading that it was a suite of fixes that needed to be completed together and urgently. How do you look back on what’s happened since, and what might have happened had every recommendation been implemented?
JM: That’s a good question.
When I began my Review in 2018, the New Zealand Thoroughbred Industry was short of revenue, short of capital and had what I considered a less-than-optimal administrative structure. My recommendations were intended to remedy those shortcomings, but they needed to be acted upon quickly and fully for maximum effect. This was not to be, and even after the recently announced TAB Joint Venture with Entain, there remains the need to complete the consolidation of clubs with the resultant surplus capital funds used to modernise tracks and facilities to international standards.
While we are not there yet, good progress has now been achieved, and I am beginning to look at the New Zealand Industry with optimism.
John Messara: I am quite happy that what I recommended then has remained relevant.
BdL: Is there any part of your review you would change five years hence? Were you surprised by the emotional response against track closures?
JM: No, I am quite happy that what I recommended then has remained relevant.
Yes, I expected an emotional response to track closures, but I was hoping that those who work and invest in New Zealand racing would see the bigger picture, given the dire state of the New Zealand racing economy. We did our best in the recommendations to ensure that all districts would retain a viable racetrack capable of presenting regular, good-quality racing within a reasonable distance.
To read the five-year-old Messara Review, go to the following link:
BdL: Your long-term interest in NZ started with a successful bid for Waikato’s Balcarres Stud in 1981 before the Government quashed the sale because you were an Australian buying land in NZ. After that rejection, what drove you to retain a keen interest, then write the Review, and afterwards continue to help an ailing NZ industry?
John Messara: I have always admired Kiwis for their valiant “will to win”
JM: I have always admired Kiwis for their valiant “will to win” and their strength in adversity, and it has been easy to respect New Zealand thoroughbreds for their continuous over-achievement. The first yearling sale I ever attended was at Trentham in 1969, when Sovereign Edition’s first crop yearlings were on offer.
I see racing people all over the world as being part of “one sporting family”, and I was pleased to try to give something back to a brave New Zealand jurisdiction that had slipped..
BdL: Entain has now arrived to partner with TAB NZ, a move you strongly recommended in your Review, which could have happened five years ago. What’s your overview of the deal, and how do you see the effect on the New Zealand industry going forward?
Excerpt from the Messara Review: “I believe that the current governance structure and regulatory hierarchy do not lend themselves to the necessary level of Code accountability or to sound decision-making and this can lead to unnecessary Government involvement in the industry. It may be for this reason that, despite a number of previous independent reviews and industry reports, almost no meaningful reforms have been adopted since the passing of the Racing Act 2003 some 15 years ago.”
John Messara: The terms of the TAB-Entain deal are broadly in line with my expectations
JM: The terms of the TAB-Entain deal are broadly in line with my expectations at the time of the Review, and I see this as the beginning of an uptick in the industry.
BdL: Inflation has eroded NZ’s prizemoney over many years, unlike Australia, which has forged well ahead. This factor has disincentivised ownership and domestic spending at the Karaka Yearling Sale. What level of prizemoney does NZ need to bottom out the graph line and claw back lost owners for a sustainable future?
JM: I remember aiming for prizemoney of $100m in the 2018 Review. However, given the inflation in costs since that time, I would say that prizemoney of $120m would be more appropriate in 2023. Many factors contribute to the buoyancy of the thoroughbred industry, not the least of which is the level of discretionary income in the economy. Prizemoney is also an important factor in keeping the wheels of the industry greased, and while the majority of owners do not cover their costs of racing, many are driven by other factors. Prizemoney for “industry races” must be at a reasonable level to keep people in the game, maintain & grow investment and support the retention of fillies for breeding, while aspirational races through the Stakes program keep us all dreaming.
BdL: NZ has an alarmingly diminishing foal crop from a shrinking population of both stallions and mares. The Kiwi record of producing high-class horses to contest the best pattern races throughout Australasia must numerically be under threat. How can this be remedied?
John Messara: Field sizes and quality are important factors in wagering – the industry’s major source of revenue
JM: This is an international trend, although it is more accentuated in New Zealand. Field sizes and quality are important factors in wagering – the industry’s major source of revenue – so there must be an aim to grow the population of horses. We all know what a great horse breeding tradition exists in New Zealand, and the optimism that should come from recent and hopefully future announcements will fuel the fire and place upward pressure on the smaller number of yearlings currently available. I believe for those reasons that we may have seen the worst of that problem.
BdL: The Pattern determines the level of excellence of the best horses everywhere in the world. It has come under threat in recent years, mostly in Australia, with the introduction of high prizemoney non-pattern races, which is starting to divert the best horses away from traditional black-type racing. How is the integrity of the catalogue page retained? And what should be done to protect the Pattern, and how important is the Pattern for racing’s future?
JM: The Pattern is a key driver of investment in racing. Black type remains long after the prizemoney is forgotten. So, while we need an uplift in general prizemoney. we also need to protect the Pattern and ensure it reflects current performance and meets international conventions. A respected Pattern keeps the industry relevant on the world stage, something that is sometimes underrated by racing administrators.
BdL: NZ has a cumbersome and inefficient structure of administering racing – seven boards if you include the Members’ Council – in which a consensus to run racing efficiently is difficult to reach. Do you see a future fix for that problem? Is there a governance structure used in Australia that would work in NZ?
Excerpt from the Messara Review: “I believe that the current governance structure and regulatory hierarchy do not lend themselves to the necessary level of Code accountability or to sound decision-making and this can lead to unnecessary Government involvement in the industry. It may be for this reason that, despite a number of previous independent reviews and industry reports, almost no meaningful reforms have been adopted since the passing of the Racing Act 2003 some 15 years ago.”
JM: I think the Australian model is not necessarily appropriate in the smaller New Zealand jurisdiction. One point that has emerged in both countries is that boards with a majority of “independent directors” are less effective than boards populated by men and women who have deep racing industry knowledge & experience but are capable of retaining independence of mind and decision-making. However, I realise that this is not the current “wisdom”.
BdL: Do you detect underutilised strengths in the New Zealand industry? How would you manage New Zealand racing if you were solely in charge?
John Messara: The StrathAyr track has been a successful innovation in Australia
JM: My suggestions of 2018 remain relevant today.
BdL: NZ soon gets its first StrathAyr at Ellerslie to provide the first consistent racing surface. How do you see it impacting the future of NZ racing?
The StrathAyr track has been a successful innovation in Australia, and I have always believed that even fully artificial tracks have a role to play in racing and training, especially in grass jurisdictions that suffer extreme weather conditions. However, a few members of the training fraternity remain opposed to them but in Australia, at least, they are broadly well-accepted. Obviously, there is a need to adapt to different surfaces and proper, regular maintenance and renewal of such tracks is critical. Viable tracks in New Zealand will play a significant role in the continuity of racing and training if they are well-constructed and well-maintained.
BdL: The Waikato Racing Club, Cambridge Jockey Club, and Waipa Racing Club have now merged, which took effect on August 1, 2023. The Pukekohe-Auckland merger was the first in the modern era. Are these two amalgamations a precursor to more future mergers for remaining stronger racing clubs in NZ?
JM: I do hope that’s the case. New Zealand still has too many tracks for the size and scope of the industry. Unfortunately, this is a luxury that cannot be afforded.
BdL: How would you solve the Avondale Jockey Club dilemma? What are the benefits of Avondale joining Pukekohe and Auckland, and should the proceeds of any sale of Avondale be allocated to the future of the Ellerslie objectives or filtered down to the entire thoroughbred code?
John Messara: The glory days of racing in New Zealand may not recur until the Avondale issue is resolved
JM: The glory days of racing in New Zealand may not recur until the Avondale issue is resolved. The industry is hungry for capital to rejuvenate its key assets, and a merger that frees the capital locked in the Avondale property would, in one fell swoop, resolve this on a long-term basis. I do have some ideas on how this could be achieved for the benefit of all the parties involved. What a magnificent legacy Avondale could leave to the entire New Zealand racing industry!
BdL: If the entry of Entain into NZ and other changes brings NZ stakes up to an international level, would you envisage other clubs/amalgamations building StrathAyr tracks to combat what seems like an increasingly wet NZ climate?
Excerpt from the Messara Review: “The single most effective lever available to reinvigorate the New Zealand thoroughbred industry is prizemoney; it rewards and supports owners, trainers, jockeys, stable hands, and the entire supply chain including breeders, vets, farriers, feed merchants etc.”
JM: Possibly, but this is something that must be considered on a case-by-case basis.
BdL: Does NZ have a future with tote betting and comingling? Could that happen with Hong Kong and other jurisdictions where bookmakers are banned and where NZ racing could be marketed overseas?
John Messara: …racing should increasingly be telecast offshore
JM: Yes, as the New Zealand industry gets its house in order, its racing should increasingly be telecast offshore. Showcasing your racing in this way will not only generate incremental wagering revenue but also potentially draw new investors to your industry.
Finally, two further excerpts from the 5-year-old Messara Review:
“I am confident that with strong leadership, and the support and commitment of all sectors, organisations and participants, the industry can be turned around and achieve sustainability with consequential favourable impacts on the New Zealand economy. I emphasise the integrated nature of the recommendations.
“Based on a review of the state of racing in New Zealand and on experience with the Australian Racing Industry, it appears obvious that the industry is in need of an overhaul. The racing and wagering functions of the NZRB should again be separated, with all racing regulatory functions devolving to the three Codes and the NZRB being renamed and solely responsible for wagering on racing and sports, as well as the conduct of approved gaming within its venues and the broadcast of racing vision.”
Racing Minister Winston Peters came to the party on that one. The legislation that followed in the Racing Act of 2020 provided for the Codes to draw up a commercial agreement and take it to TAB NZ (as per the above paragraph) with Racing NZ in place to arbitrate on the devolvement of the regulatory functions down to the codes.
It never happened. The Codes proved themselves incapable of getting together and acting in the best interests of its stakeholders. Why didn’t they do it? Did they even read the legislation, or if they did, did they understand it? There’s no excuse, but there’s also no accountability either, apparently.
The worst case of administrative incompetence in the history of New Zealand racing. That’s my view on the performance of the New Zealand Thoroughbred Racing Board (NZTR) over the past three years.
The board has failed big time to serve the best interests of thoroughbred racing, and if they had any semblance of self-judgement and conscience they would all resign and refund their directors’ fees.
In simple terms, they have failed to use advantageous legislation written into the Racing Act of 2020.
The board’s failure to understand the Messara Review, relate it to the legislation, and lead all three codes through the process of a commercial agreement to devolve the decision-making for self-determination, displays a blatant lack of leadership, attention to the legislation, and doubt they even read it.
No excuse for failing to act
The NZTR board has performed poorly through its lack of action; there’s no other way to look at it.
Five years ago when John Messara wrote his ‘Review of New Zealand Racing,’ he recommended a change in the structure of racing with a separation of wagering and racing functions and a devolvement of decision-making power to the codes.
In Part 1 – Structure, Finances & Legislation on page 13, it states: “…it appears obvious that the industry is in need of an overhaul. The racing and wagering functions of the NZRB (TAB NZ) should again be separated with all racing regulatory functions devolving to the three Codes and NZRB being renamed and solely responsible for wagering on racing and sports…”
The then Minister of Racing Winston Peters at least took notice of that part of the Review and had the DIA write into the Racing Act of 2020 a provision for the codes to convene and put together a commercial agreement (or more than one) to govern themselves and stop the tail wagging the dog.
The relevant Racing Act of 2020 Clauses 15 and 58 appear at the bottom of this blog.
Codes failed to seize the opportunity
In summary, it opened the door for the codes to empower themselves for regulatory decision-making and leave the TAB with the simpler role of collecting the TAB profits from betting, gaming, racefields (Betting Information User Charges), Point of Consumption tax, excise duty rebate, etc, to fund the racing industry and sport from sports betting.
A commercial agreement would surely have insisted on involvement in forthcoming negotiations for partnering or outsourcing TAB NZ, but they failed to seize the opportunity.
Did they not even read the Messara Review and therefore failed to relate it to the legislation, or did they not read either, or are they just dumb? – take your pick.
Or did NZTR’s focus get distracted because of a COVID relocation to Australia which didn’t deter drawing down the directors’ fees? Whatever the reason, it’s an appalling lack of judgement and opportunity that calls for the resignation of the entire board, particularly Chairman Cameron George, as well as CEO Bruce Sharrock.
No accountability
Where is the accountability for such a damaging oversight?
Of the 17 recommendations Messara made in his review, he even allowed for the establishment of Racing NZ as a forum to adjudicate on matters of commercial agreements with the TAB.
Racing NZ came into existence through the legislation but NZTR has never used it for the purpose intended.
Recommendation 2 stated: “Establish Racing NZ as a consultative forum for the three Codes to agree on issues such as entering into commercial agreements with TAB NZ…”
Recommendation 1 said, “Change the governance structure with racing responsibilities devolving to the individual codes. This will sharpen the commercial focus of TAB and improve the decision-making and accountability of the codes.”
It didn’t happen.
Legislation should have put NZTR into driving seat
The legislation allowed for it, but no, NZTR sat on its hands and failed to move in the best interests of the stakeholders. It failed to carry out a straightforward legislative instruction that should have placed it in the driving seat.
The Members’ Council has two tasks: appointing the board and reviewing its performance. It does a poor job in the first instance and apparently sits on its hands for the second.
NZTR’s failure to act meant the codes had no say in the TAB NZ-Entain partnership deal which is appalling when you consider the TAB has signed the industry up for 25 years and the man who did the deal, Mike Tod, has resigned and scarpered with his massive bonus after only 14 months in the job.
NZTR also had no say in TAB NZ retaining $40 million of the upfront $150 million, which is in addition to the $90 million of retained cash and equity at the end of last season. A commercial agreement could have prevented this from happening and rightfully sent it down to benefit the codes.
We still don’t know enough about the fine print of the Entain deal to know how good it is, and not enough about Entain to feel at ease with a 25-year marriage when 10 years with a right of renewal might have provided more comfort.
Stakes announcement increase of 30% to 35% expected
On Thursday this week at Karaka, NZTR will announce stakes levels for the 2023-24 season, but it will not be the game-changing doubling of stakes the Messara Review envisaged five years ago. Too many blackbirds have pecked the pie before the codes arrived.
Based on the figures released by the dealmakers so far, my prediction is the NZTR stakes will go up by $20 million, from $61 million to $81 million, a rise of around 33 percent with the minimum stake rising from $14,000 to perhaps $17,500. I’m guessing.
Any rise is better than nothing considering the massive inflationary period racing has endured since COVID arrived, but when you have a $900 million deal with another $100 million contingent on geo-blocking, and it’s a one-off 25-year deal, and you need to shock this industry back into life, a 30 to 35 percent increase won’t be enough in June 2023 to cause recent industry defectors to rejoin.
The decline of our industry on a graph needs the line to bottom out and begin to rise again, but this deal falls short of that happening in either this or next season.
Slashing the TAB operating expenses
A glimmer of hope comes in the knowledge that Entain will take the slasher to TAB operating expenses. This season they will reach a record-high figure in the vicinity of $130 million. However, we know the wage bill will continue for two more years.
And without the Entain deal, the betting downturn this season would almost certainly have resulted in a reduction in stakes for 2023-24.
TAB NZ is anything but transparent. Management stopped producing the Monthly Trading Updates after February because I pounced on them each month and reported how poorly they had traded for the first six months of the season – down $9.4 million at the halfway mark on last season and heading for a non-sustainable industry result by July’s end.
TAB NZ has since changed its website and removed all previous Monthly Trading Updates. They did not hold an AGM after the late production of the Annual Report (January), and no half-year report has surfaced, and probably won’t, for the current season.
Opaque is more appropriate than transparent, and could anyone be confident it will improve with Entain steering the ship? We are sailing into the unknown but the alternative painted a very bleak picture.
Excerpt from the Racing Act of 2020:
15 Functions of racing codes
(1) The functions of each racing code are—
(h) to enter into commercial agreements with TAB NZ:
(i) to collaborate with the other racing codes to achieve the objectives of the racing industry as a whole:
(j) to carry out any other functions that are necessary or desirable to assist the code in achieving its objectives.
(2) Each racing code has and may exercise all the powers that may be reasonably necessary for carrying out its functions.
58 Functions of TAB NZ
(f) to enter into commercial agreements with each or all of the racing codes or Racing New Zealand (acting on behalf of the racing codes):
The Entain deal is a fizzer for racing. That’s my view after learning the devilish detail of an agreement that’s more about the TAB’s survival and the Minister’s generosity with racing’s money than it is about arresting racing’s decline.
Racing’s $150 million cake already had the icing removed before the codes turned up to collect it. By that time the cake had a value of $89.5 million and the Entain/TAB partnership had divided it into five slices, each for yearly distribution with the largest slice five years away.
The deal is no game-changer for racing as Minister McAnulty claimed at the Karaka announcement on Tuesday. What it truly represents is a Government appeasement of a conglomerate of 28 sporting organisations who lobbied hard for a chunk of the icing, plus handouts to a Women Sports Initiative and gambling harm minimisation which comes in addition to the levy already applied.
No one denies that all these organisations don’t deserve funding, but they are already funded to exist and this is racing’s money and represents a chance to secure its own future sustainability. Is the Government vote-buying here in an election year at racing’s expense?
TAB intends retaining $40 million in reserve – Why?
Does it make you curious that Entain offers $150 million upfront and then in partnership with TAB NZ takes $40 million back to hold in reserve to add to the $90 million of cash and equity on the books from last season’s annual report? All this money theoretically generated for racing.
TAB NZ has fast become racing’s nemesis. The board is sport heavy, is Government controlled, seems weakly represented by racing, and displays no worthwhile concern for racing’s future.
On Tuesday at the signing, McAnulty told me: “I have a lot of faith in the racing industry and the people that work within it, but the playing field hasn’t been level for a long time, and in a country our size that competes overseas, we need to have the structures right.
“That’s why I’m such a big believer in re-establishing the monopoly for the TAB, one because it re-establishes the original intent of having a single wagering provider that then feeds back to sports and racing – racing predominantly and sports additionally. That has been eroded because of online overseas betting.
“By closing that loophole and saying that if you want to back NZ racing you can bet solely through the TAB and this will secure it for the future – I think that’s massive and that’s why I have been leading that work, and that’s also why I have announced that in-principle decision today alongside the signing of the agreement,” he concluded.
Marketed as a billion-dollar deal, but announced as $900 million over five years, the missing $100 million comes in as a contingency when/if the Government sees fit to geo-block Kiwi punters.
Only $20 million to the codes in year one, less the year after…
This is how the deal is structured: The upfront drip-fed $150 million eroded by $500,000 to the Women Sports Initiative, $15 million to 28 sporting entities, $5 million towards gambling harm minimisation, and $40 million for a reserve fund held by TAB NZ.
Leaving $89.5 million distributed to the three codes over five years:
2023/24 $20m
2024/25 $15m
2025/26 $15m
2026/27 $15m
2027/28 $25m
These miserable annual allocations became known via a radio interview with NZTR CEO Bruce Sharrock on Saturday. Out of the $20 million for next season, the thoroughbred code gets $11.5 million, a meagre pot of cash for stakes increases and badly overdue maintenance and infrastructure at various racecourses.
Sharrock: Stakes not seen as a priority
In an online article headed “Increase in stakes not seen as a priority” which appeared on the Herald website late last Thursday, a Sharrock quote stated: “We know we are getting more money for the next five years and, yes, some will go into stakes, but we also have to look at infrastructure like our tracks.”
Racing’s woes intensified at last Tuesday’s announcement when the Minister also revealed the TAB would relinquish its Class 4 gaming licence and remove 500 poker machines from TAB outlets around the country.
Last season the pokies brought in $23 million profit, allowing the sporting clubs of NZ to apply and be allocated grants totaling $6 to $7 million, but additionally, the codes will now be denied income of $15 to $16 million, out of which the Racing Integrity Board (RIB) gets its funding ($14.2 million in 2021/22 season).
How the RIB will be funded in the future and when this takes effect is uncertain, but it would be logical to assume it will come out of normal code funding. Six years ago the RIU cost $5.8 million for the season, but in the Racing Act of 2020 the legislation changed the RIU to give it autonomy and it became a board, and afterwards the then Minister of Sport and Racing, Grant Robertson, appointed a bunch of non-racing retired policemen associates to run it, and costs have risen 145 percent.
‘Three groups spend other people’s money – children, thieves, politicians. All three need supervision.’
It reminds me of an old saying: ‘Three groups spend other people’s money – children, thieves, politicians. All three need supervision.’
It’s hard to fathom the logic for giving up the Class 4 licence and poker machine income unless it’s a move to appease a growing anti-greyhound/horse racing, anti-gambling lobby for vote-catching in an election year.
On radio on Saturday, Minister McAnulty failed to justify the decision when he said:
“Attached to the monopoly proposal (geo-blocking), but not part of the agreement, in exchange for expanding the monopoly from onshore to online I negotiated with the TAB and they agreed they would relinquish their class 4 gaming licence and stick just to wagering, and so that would be a 500 poker machine drop to our country’s total – there would not be machines in TAB outlets anymore, and that means the TAB can focus just on wagering as it was intended to do right from the start.
“All I’m proposing we do is return to the initial intention of the TAB; that it’s the sole wagering operator in the country to the benefit of racing and sports.”
It’s obvious from that remark the Minister knows nothing about the history of the TAB and its beginnings. The thoroughbred and harness racing clubs of New Zealand put up £50,000 and a proposal to the Government in 1950 to financially support the clubs – no mention of the ‘sole wagering operator’ or ‘sport’ which never contributed to the set-up costs or shared in the TAB running expenses.
Barton prepared a 24-page report which quite clearly rules in favour of the clubs as having an irrefutable claim to the beneficial ownership of the TAB – Friday Flash 1995
He should also be reminded that in 1995, George Barton QC after a thorough investigation handed down a paper to the New Zealand Racing Conference saying the racing clubs of NZ had an irrefutable claim to the beneficial ownership of the TAB.
Also remember this: The Government appointed John Allen and Glenda Hughes to run the TAB and the incompetence of that pair cost racing a fortune. Against industry wishes, they built a soon-to-be redundant fixed odds betting platform for $50 million with huge ongoing costs to accommodate sport – did either the Government or Sport compensate racing for this debacle?
No, they didn’t, but as soon as a pot of cash turns up for racing, The Government steps in and wants to give to everyone else, and Sport is the first in line for a handout.
Sport should get some money, but not racing’s cash over and above the fair arrangement that’s written into the Racing Act of 2020. The Government should fund sport independently, just as it gave $136 million to Auckland’s last Americas Cup.
Racing contributes hundreds of times more to the NZ economy than the Amercas Cup ever will – 14,000 full-time employees and 45-50,000 participants and volunteers.
CEO Mike Tod takes his bonus and runs
This is a better deal for sport than racing. But why sign up for 25 years? What happens if this marriage of convenience for mutual profit needs a divorce after a 7-year itch? It won’t matter to the mercenary Mike Tod who already has lodged his divorce papers and is on the run with a big bonus.
Kieran McAnulty’s radio interview revealed several debatable thoughts. Have a read of them below and then post your thoughts in the ‘Leave a Reply’ box at the bottom of the page.
Minister of Racing Kieran McAnulty said:
“Tuesday was a hugely proud day for me personally and the highlight of my career.
“We are very fortunate position for a country of our size to be a world leader, but the industry is under threat, and the various aspects of it are under threat, not just in the domestic racing scene, not just our contribution to the Australian racing scene but also the $1.6 billion export industry that underpins the racing industry.“
(surely he meant $1.6 million)
“The TAB is at the centre of that, and always has been, and always will be. If the TAB falls over, then so does our industry.
“The deal will be game-changing for the New Zealand industry, but at the same time I wanted to give everyone in racing the Government’s commitment to secure racing’s future. We want people to have confidence to invest in horses, and we want sponsors to have confidence to invest in the racing industry. We are doing what we can to save it and keep it sustainable into the future.
“You will note that it was an announcement of an in-principle decision. Cabinet has given me the go-ahead to look into how we can secure the TAB further into the future. Normally you wait for a decision before you announce it – everyone that’s got an interest in this will be able to have a say and input into it.
“Let’s be clear about what this is; it’s a service agreement. It’s a 25-year arrangement. At the end of that the TAB still remains in New Zealand hands. What the agreement says to Entain is that we want you to give us a world-leading platform, your access to products, the odds that you offer, the competition with overseas operators that you provide a world-leading standard product that New Zealanders deserve, and our TAB is simply too small to provide.
“In exchange for access to that Entain takes a cut of 50 percent moving forward. The projections are that given the amount of money the TAB is losing to overseas providers because the TAB can’t compete, the TAB will still make more money, and still going to distribute more money to New Zealand racing and sports than it would do if it was left like it was. The key thing is that we get more out of this than we are perceived to be giving away.
“In terms of the Entain deal, the TAB will be restricted to wagering products only, they won’t be allowed to do online casinos and won’t be allowed to do online pokies. But there is the potential for Entain to allow what they call Novelty Betting – betting on elections or things that aren’t sport or racing.
“I’m proposing that for novelty events, the same proportion is used, but the profit goes to gambling harm – it’s a progressive approach to expand the TAB product and in exchange for that we take harm minimisation seriously and fund it properly.
“Attached to the monopoly proposal, but not part of the agreement, in exchange for expanding the monopoly from onshore to online I negotiated with the TAB and they agreed they would relinquish their class4 gaming licence and stick just to wagering, and so that would be a 500 poker machine drop to our country’s total – there would not be machines in TAB outlets anymore, and that means the TAB can focus just on wagering as it was intended to do right from the start.
“All I’m proposing we do is return to the initial intention of the TAB; that it’s the sole wagering operator in the country to the benefit of racing and sports.
“We have to think about the situation we were facing, that the TAB would have fallen over within three years and racing have had less and less money to distribute around the country, and this agreement changes that.
Footnote:
If novelty betting comes in, and it sounds as though it’s over the line, my advice to the Hon Minister of Racing, Kieran McAnulty, is to mortgage his house and have a decent bet on a National-Act coalition new government landslide result in October – go 13+.
Every two years, a new group of high achievers come forward for induction into the New Zealand Racing Hall of Fame, and in the class of 2023, none would be more deserving of a place than the late Keith Felix Hawkins Voitre.
Not only did this young man display a genius rarely known in his profession, and perhaps posthumously never bettered in such a short career, but his perfection as a jockey came equally matched with an off-course behaviour that singled him out amongst his peers.
He exuded a manner, charm, and maturity well beyond his years. These qualities made him special, and consequently his sudden, early death all the more tragic.
Keith’s genius in the saddle existed for only 10 years, between his first ride at the age of 15, and his last at Moonee Valley 10 years later on 10 September 1938, when through no fault of his own, three horses fell in front of Keith’s mount, Frill Prince, in the Budgeree Handicap, all of them ridden by apprentices, including Bill Williamson. The three sustained comparatively minor injuries.
Keith’s mount followed the three fallers and went down over them; he had no chance, suffered severe head injuries, and died on the operating table in Melbourne Hospital at 10 pm that night. Not long before the accident, he had become engaged to a local Melbourne girl.
The tragedy provoked an outpouring of grief on both sides of the Tasman never before known in racing or for someone so young. The sorrowful reaction to Keith’s death resembled that of the demise of a head of state, royalty, or highly respected world champion.
Keith Voitre’s funeral on 20 September 1938 drew thousands of mourners that lined Melbourne’s St Kilda Road for the entire eight mile journey to Falkiner Cementery
A Melbourne newspaper wrote: “Men and women of every class gathered in a great crowd this afternoon for the funeral of Keith Voitre. Not for many years has an assembly been seen at a Melbourne funeral. The crowd included leaders of the Australian turf, sportsmen of every rank, men who had ridden with Voitre, and thousands who had followed his career from the enclosure and hill.”
Hundreds of floral wreaths arrived from all parts of Australia and New Zealand. The Wanganui Chronicle described Voitre as the finest horseman ever developed in the Dominion, likening him to the human equivalent of Phar Lap, with his name known in every corner and sphere of the Dominion.
Traffic became gridlocked in Melbourne that funeral day on 20 September 1938 as thousands gathered densely on both sides of St Kilda Road for the entire eight-mile route to the Falkiner Cemetery, where they formed a packed square around the site of the grave.
After the service, thirty jockeys formed a guard of honour as the coffin with his Melbourne Cup presentation whip resting on top underwent careful lifting by the pallbearers to the carriage. Three floral cars followed the hearse, banked high with wreaths, with many tied in the colours of the owners for which Voitre had ridden. One wreath stood out conspicuously, made with pansies and violets in a horseshoe shape with the word ‘Resting’ in gold letters on a blue background.
“…people admired his many excellent qualities as a man…”
In a eulogy that appeared in The Sportsman three days before the funeral, after espousing his brilliance as a jockey, the author writing as ‘Chiron’ said, “He was a young man with a most pleasing personality and address, and for that reason, he was popular both in the racing world and out of it, as people admired his many excellent qualities as a man apart from his merits as a jockey.
“He was a credit to his calling, and his death will cause sincere regret in Victoria as well as New Zealand, where he was conspicuously successful before he came to Australia,” concluded Chiron.
The Keith Voitre story had begun more than 60 years earlier when his Polish immigrant grandfather, Felix Voitrekovsky, stepped off the ship Lammershagen in Wellington in July 1875.
On a website called Polish History New Zealand, historian Barbara Scrivens explained, “The Polish spelling of Felix’s name is Feliks Wojciechowski. Felix continued to use the Germanised version in New Zealand.”
The detailed Barbara Scrivens’ history of the Voitrekovsky family later in her account mentions Keith’s father Ernest. It stated, “Ernie loved all his children, and his children loved him. They called him ‘Pop,’ as did his own family, and when he died in 1958 in Auckland, many others besides his own mourned his passing.
“Keith’s early success as a jockey allowed him to help set up his father in business in the cordial factory at 65 Albert Street, Palmerston North.”
In 1928, Ernest moved his family to Wanganui where he changed his name to Voitre, after which Ernest’s niece, Florinda, speculated the change came for practical purposes for the benefit of Keith.
Much later, after Ernest moved the family back to Palmerston North, Florinda is credited with this comment made in 1942: “So successful was the firm by this time that Ernie was able to build a beautiful home. The residence contained a small room sacred to the memory of Keith. In it had been gathered together all his cups, prizes, photographs, and memorabilia, as well as his riding outfit, saddle, whip, etc.”
Keith Voitre’s whip that was placed on his coffin for the funeral service. It was presented to him following his 1935 Melbourne Cup win, and bears the inscription: Presented by Mr Philip Wirth Senior to Keith Voitre, rider of MARABOU, winner of the 1935 Melbourne Cup
Barbara Scrivens’ research revealed praise for Keith’s father. She said, “Ernest Felix Voitre, a ‘charming man,’ approached his fiftieth year with a secure marriage, six children, the words ‘Voitre and Sons’ outside his cordial factory in Palmerston North, and enjoyed following his son Keith’s career as a jockey – on 10 September 1938, Ernest’s world collapsed…”
Keith inherited his grandfather’s diminutive size, quiet demeanour, and his father’s loving nature, all of which played their part in his astounding rise to fame and cult-like following. All the qualities he displayed as a human being came from his veneration for his parents, which transmitted to an unswerving loyalty to the owners for whom he rode with a fearlessness that won him many races.
A midget at school, but a quick thinker with a very sharp brain, in standard VI he finished the year as dux of the school. As a 12-year-old, he had entertained the idea of becoming a bank clerk, but a year later at Otaki, as a 13-year-old, he became mildly interested in becoming a jockey. Before school, he led horses out in the mornings for the Penman stable but only ever rode a bombproof hack, his first experience atop a horse.
After a year, his father suggested an approach to a trainer for an apprenticeship. In 1927, aged 14, his mother took Keith to Roley Hatch’s stables, where the trainer took a liking to the young lad, and his jockey indentures commenced.
5 stone 2 pound (33kg) for his first race ride
At 14 years, the diminutive Keith weighed barely more than four stone (25kg), but Hatch immediately recognised his potential and put time into teaching him, correcting all his learner faults and increasing his confidence. Six months hence he had grown and strengthened and increased his weight to 5st 2lb (33kg) when he made his debut in an official race, finishing last in a five-furlong sprint at Woodville.
In a frank interview in Sport and Sportsman published after his Melbourne Cup success on Marabou in 1935, Keith Voitre said: “It was Roley Hatch who taught me how to balance my weight in the saddle and how to ride a well-judged race.”
“I won my first race at Carterton on Callanmore. I’ll never forget the thrill of feeling my mount striding along, well within itself and ahead of the field, with the winning post sliding smoothly towards me. Soon after, I won another race on Callanmore, and after little more than 12 months in the saddle, I had ridden 18 winners.
“The following year, I brought 32 of them home,“ continued Keith, “and in the next season, 48. By that time, I had knocked all the rough edges off my riding and had an easy seat in the saddle. But most of my races were ridden according to my trainer’s instructions, and his judgment played a big part in my success.
“In 1931, I made my first trip to Australia, still as an apprentice, but on loan from Roley Hatch to J. T. Jamieson. It was a fairly short visit, but I rode five winners, one of them at Randwick, and finished second in the Metropolitan on In the Shade. I went back to New Zealand, not realising that Australia would be my home for many years to come. Back home, I soon struck form again.
In the Flemington mounting yard before the 1935 Melbourne Cup, Keith with former New Zealand trainer Lou Robertson discuss the tactics for the winning ride on Marabou.
“In the Melbourne Cup, I could feel Marabou bowling along sweetly under me. I could have sung three furlongs from home when I realised he had a good chance. On the home turn, I began to push him to the front, and as we straightened up for home, I knew I had the race won.
“I’m sorry for the man who hasn’t had that magnificent feeling. It may be a Melbourne Cup or a novice handicap, but nothing can dull the thrill of the final dash to the judge when your mount is streaking along ahead, and the sound of the hooves behind is only a dull echo that the wind carries away.
“My happiest moments have come when I am crouching over my mount’s neck as he goes further and further ahead or else creeps up on the leaders. It is then that you get the feeling of speed, and 20 years in the saddle would not affect my liking for it.
“I never use the whip unless I am absolutely forced to it. Horses are magnificent animals, sensitive and highly strung, and no jockey worthy of the game would knock them about just for the fun of it.
“Usually, I can get all the speed I need out of my mount by using my hands, knees, and heels, and a horse urged on in this way is always likely to do better than one that is hit all the way home. Often a hard whack with the whip is enough to throw a horse out of its stride, so common sense and decency should make jockeys use their mounts as kindly as they possibly can.
“Being a natural lightweight, I am a whole heap luckier than many other jockeys. Normally I ride at about 7.11 (49kg), but I can get down to 7.7 without trouble. I have never been in a Turkish bath In my life, and I’ve never had to waste.
“In 1932, I rode over 80 winners. The next year I put up a New Zealand record with 123 wins, and it was then that they began talking about my riding skill.
“I can only explain my record-year by saying I rode just as well as I could, taking my opportunities as they came, judging my mounts’ needs as well as I could, and having my full share of the luck. And I was lucky, too, in the calibre of the horses I was engaged to ride.
“I came to Australia and have no cause to regret my decision”- Keith Voitre
“The next year, I came to Australia because both Sydney and Melbourne seemed to offer a good market for riding skills. I have had no cause to regret my decision. My greatest races have been ridden in Australia; in most of them, I have had to use every atom of my skill. But in none of them did I perform superhuman or magic feats. I just rode as well as I could, and the horses did the rest.”
Keith rode 420 New Zealand winners in just a few seasons at home, including two Auckland Cups on Admiral Drake and Gold Trail, two Great Northern Foal Stakes, the Great Northern Guineas, two ARC Welcome Stakes, two Avondale Stakes, the CJC Jockey Club Handicap, Members Handicap, Egmont Cup, Manawatu Sires’ Produce Stakes, Napier, Nelson Cup, two Rangitikei Cups, two Taranaki Cups, Wanganui Cup, Wairarapa Cup, Wellesley Stakes, Wellington Stakes, and Wellington Cup.
In the 1931-32 season he won the New Zealand Jockeys’ Premiership as an apprentice with 82 wins. The following season he broke Hector Gray’s 116-win record with 123 wins which stood for 35 five years until broken by Bill Skelton in 1967-68.
In the short time Keith Voitre had ridden in Australia, he scored many notable successes; his principal wins included the Doncaster Handicap on Hall Mark, Melbourne Cup on Marabou, Victoria Derby on Feldspar, Newmarket Handicap on Count Ito, Oaks Stakes on Nalda; Ascot Vale Stakes on Tactical, Williamstown Cup on Garrio, Epsom Handicap on Synagogue, and South Australian St Leger on Donaster.
Champion Australian Jockey Billy Duncan praised Voitre
Champion Australian jockey of the day, Billy Duncan, won 11 Victorian Jockeys’ Premierships between 1920 and 1933 and won the Melbourne Cup at his first ride in the race on Night Watch in 1918 as an 18-year-old and again 14 years later on Peter Pan in 1932. He watched Keith Voitre closely while sidelined with injury.
He said, “I have been told by owners, trainers, and jockeys that Voitre and myself are counterparts. After watching him closely, I should say that our styles are identical in many respects. Like me, he seems to like a good break out of the machine and is invariably found in the first three or four.
“I never liked to ride the type of horse that could not be up with the leaders without being bustled. Naturally, I have been a critical observer of Voitre and other jockeys since my fall from Rose Valais, and with glasses, look for happenings throughout a race that possibly others would not bother about. In Voitre’s case, I have been most exacting. I have taken into consideration the type of horse he has ridden, his barrier position, and the distance of the race. In my own mind, I have mapped out the race I would ride on that particular horse, and our ideas seem to coincide.
“Never flustered, he is in complete control of his mount, and his face always carries that confident, mean, business look. He is always ready to seize an opening; an alert brain and vigorous methods help him in this regard. Perhaps the only difference in our riding could be detected in the closing stages of a race. Voitre has a style entirely his own, and all said and done, his judgment and effectiveness in finishes leave nothing to be desired.
“He gets the best out of his mounts, and no one could do more. To build up such a glorious record in such a short space of time speaks volumes for Voitre. He has the world at his feet. A natural lightweight, strong, vigorous, brainy and cool, he should go on for years, and being a gentlemanly little fellow, he will make many friends in the right direction.”
Footnote:
The Melbourne Cup presentation whip, recently framed, came into my possession in unusual circumstances, and I feel privileged to be the çustodian of such a historical object that represents Keith Voitre’s most important win.
Inscribed on the whip in brass, it says: “Presented by Mr Philip Wirth Senior, to Keith Voitre, rider of Marabou, winners of the 1935 Melbourne Cup.
In 1938 it was placed on Keith Voitre’s coffin for the funeral service and procession to Keith’s grave in Melbourne’s Falkiner Cemetary. It then went back to New Zealand with Keith’s parents and only returned to Australia on the 50th anniversary of Keith’s win on Marabou when his ex-jockey and trainer brother Noel returned to Melbourne in 1985 for the first time since Keith’s funeral.
Noel stayed with Brian and Jan Andrews, and Brian took him to visit Keith’s grave, and he went to the 1985 Melbourne Cup. He brought with him three scrapbooks kept on Keith to show to Brian and Jan and, upon leaving, gave Brian the whip. Since the passing of Brian, Jan had considered giving it to the Racing Museum in Melbourne but thought it really belonged in New Zealand.
Jan and I had occasionally discussed Brian’s riding accomplishments on Chat. One day she offered the whip to me and I accepted, and now I am its custodian (framed only last week), which is an honour, but the whip truly belongs in a New Zeland Racing Museum, which we currently don’t have.
Isn’t it about time racing people of influence formed a committee and did something about founding a racing museum?
An emerging problem for New Zealand thoroughbred racing and breeding over the past five years or more – its reliance on a diminishing number of high-end stakeholders to keep the hoof beats thundering in an industry operating on shaky ground.
The crumbling foundation of racing due mostly to a lack of incentivising prizemoney has gone on for far longer than five years, but what we are all witnessing today resembles tall poppies with weakened root systems. The most recent evidence: $10 million less spent by New Zealanders on yearlings in Book One and Two at Karaka in 2023 than the previous year.
The 2023 sale at Karaka held up with $13 million more spent by internationals due to an incredible run of success by New Zealand-breds in Australia and Asia over the past couple of years – thanks to the astute breeders that keep the Kiwi flag flying high in Aussie, Hong Kong, and Singapore.
More evidence – our foal crop this coming season will decline to almost 1970 level at which time the Stud Book finalised the foal count at 2,388. The latest figures from Wellington say 2,510 foals hit the ground last spring in 2022, but we are also confronted by a continuing annual trend of fewer mares bred as each year passes.
The Stud Book says the 4,565 mares covered in 2021 contracted to 4,293 in 2022.
At the beginning of this millennium, the NZTR equivalent had conducted 2,945 races in the season ending 1999/2000. Last season that number had reduced by 20 percent to 2,356. The growing scarcity of the owner has gradually shrunk the number of horses in work and races run.
The year Sir Tristram went to stud in 1976, he became one of 28 first-season sires from a total of 359 registered horses in the NZ Stallion Register. In the 2022 publication, only 133 stallions appeared in the same but much thinner register of which only five made their debut.
Sir Tristram emerged from the pack of 28 to be Champion Sire, a numbers game traditionally said to give you one chance in 14 or 15 for a stallion to make the grade. In the three springs of 2020 to 2022, only 13 new stallions in total have debuted their stud careers in NZ – how does New Zealand in the future sustain its Australian group one record when the numerical challenge becomes so daunting?
The thoroughbred breeding business underpins the entire structure upon which yearling sales and then racing draws its race fields on which punters bet, from which percentages are devolved into stakes money. But static prizemoney and rising costs for the owner have disincentivised reinvestment, so the medium-sized or small trainer now goes to the sale without an order, or he/she stays home and watches the sale on Trackside.
This recidivous cycle of annual thoroughbred decline has gone on for almost 40 years since my day at Ra Ora Stud when the national foal crop of 1986 hit a high of 6,112 foals. From that point in history, we have witnessed a foal crop decline of 60 percent.
A few stalwarts have stayed strong in the arenas of racing, yearling sales, and breeding, and can rightly be described as thoroughbred industry linchpins, and heroes. They are people like David Ellis, Albert Bosma, Graham Rogerson, Stephen Marsh, Tony Pike, Roger James, Sir Peter Vela, Garry and Mark Chittick, Gerry Harvey, Mark Chitty, Nelson and Rodney Schick, John Thompson, Sam Williams, Brent and Cherry Taylor and in more recent times Brendon & Jo Lindsay, Lib Petanga and Luigi Muello.
Take those names out and the New Zealand thoroughbred industry ceases to exist, unlike years gone by when a broader and stronger bench of domestic buyers bought yearlings from three times as many individual vendors supplying the offerings from a much wider range of stud farms.
David Ellis has strengthened his position over the years as others have fallen off the pace or gone by the board, and as the leading buyer at Karaka for the 18th consecutive year in 2023, his racing successes have increased and the industry has become more and more reliant upon his continued involvement.
DC Ellis the most prolific yearling buyer in NZ history
Since 2008, David Ellis has purchased 421 yearlings for Te Akau from the Premier/Book 1 Sale and easily become the most prolific buyer in National Sales history – by miles. No one has bought more or had his sustained longevity, and in 2023 we have reached the point where we need to recognise the importance of the role he plays.
I called New Zealand Bloodstock CEO Andrew Seabrook who has witnessed DC Ellis buying over many years. He responded this way:
“It is plain for all to see the hugely significant impact that David Ellis has had on the National Yearling Sales at Karaka over a sustained period of time. There wouldn’t be another jurisdiction in the world where one person has had such an influence on a yearling sale’s turnover. Despite prize money being way off where it needs to be, David and Karyn’s ability to attract new people to the game, whilst at the same time taking on significant financial risk, is quite amazing.”
Te Akau has strengthened against a weakening trend (look at the graph) which is remarkable, and racing’s survival badly needs Ellis just as it needs others doing their best such as Go Racing’s Albert Bosma, Stephen Marsh, Roger James, etc. They are all to be admired for their work rate and persistence in seeking to annex the best races on the calendar.
All these people need each other to survive in the thoroughbred industry. Everyone who supports the industry in one way or another should be applauded, and those getting out can’t be blamed but it weakens the base for those remaining in their diminishing numbers.
Passion and hard work seem to be the common denominator amongst all those forging on regardless of the rocky thoroughbred landscape to which they look out at each morning.
The moral of the Jack Macky story
It reminds me of a story Joe Walls told me about the late, great breeder, Jack Macky who stood Champion Sire Le Filou at Pirongia Stud near Te Awamutu. Le Filou swept all before him from the mid-1950s and became champion sire in various categories on 10 occasions. But like all great sires, the end came one day, in Le Filou’s case the year of 1969.
The replacement sire for Le Filou arrived for his debut season in 1970 – his name, Headland II. One day in the mid to late 1970s, Joe Walls phoned Jack and inquired about Jack’s well-being. Jack said he was okay, but the day had started very poorly, but he had recovered and was okay now.
When Joe asked Jack about what caused his bad start to the day, Jack’s dry sense of humour came to the fore when he replied that he had woken well and early, looked out the window after drawing the curtains, and had seen that Headland II was still alive in his paddock– Headland II by then had established himself as possibly the worst sire ever to stand in New Zealand.
He ruined many of Jack’s well-bred Le Filou mares and the best horse Headland II ever sired after the best of opportunities, won five races over hurdles – he managed a handful of minor winners but never a stakes winner.
The moral of the story: The giddy heights of Le Filou can sink to the dark depths of Headland in one year if the bird falls off your shoulder – it fell dead off Jack’s, but Jack as a breeder once again invested in and relied upon one stallion.
The risk of spending $millions on yearlings without owners
In the yearling ring every year, David Ellis will purchase as many of what he considers the best yearlings in numbers as high as he dares to commit himself financially – he knows the chances of success diminish if you rely on a small pool of horses, but he also knows that buying horses without owners will sink you if can’t find the owners and pay the New Zealand Bloodstock invoice – this year $6.3 million for Book One alone.
He has become accustomed to the risk. In the past five Karaka Book Ones, DC Ellis has bought 157 yearlings for $36.35 million, more money spent than the next five best New Zealand buyers combined. When he returns home after a yearling sale, Karyn and David go into action to syndicate every horse – this year 31 from the two books at Karaka and a further nine from Magic Millions on the Gold Coast ($Aus2.7m).
They do more in three or four months after each sale to bring new owners into racing than NZTR has done in its entire existence. David bought his first horse in 1983 and did his first syndication in 1986 and has led the way in NZ in changing the face of ownership. Thousands of new owners cheering home the tangerine and blue exist through Te Akau’s escalating success.
The last four years of Horse of the Year titles came through DC Ellis purchases in Melody Belle (2) and Probabeel (2), and the 2023 winner is almost certainly going to be Imperatriz to give Te Akau five in a row. Then consider Te Akau has won seven consecutive Karaka Millions 2yos, going for number eight in 2024, has notched 358 black-type successes, and is closing in on 90 group one wins.
If we look at who’s driving what’s left of New Zealand racing; it’s not NZTR, it’s the syndicators and a few trainers who go out looking for owners – Te Akau, Go Racing, Stephen Marsh, Roger James, and Wexford – the five biggest NZ buyers at Karaka in 2023. The bloodstock agents also do a pretty good job operating both domestically and internationally.
Recent inflation has not treated racehorse owners well in the equation of training costs against potential returns, which is why syndicates purchase five and 10 percent shareholdings – syndicates within syndicates to give thousands of small shareholders a sense of ownership.
* * * *
On the prospect of increasing prizemoney, the signing of the TAB NZ-Entain partnership occurred five weeks ago but has yet to be ratified by Minister of Racing, Kieran McAnulty. Why?
Could a fundamental problem exist with the deal in the form of contingencies dependent upon geo-blocking Kiwi punters in a one-only betting shop monopoly?
I’m only guessing on that one, but for some reason, the Minister hasn’t yet signed it off. We know that the TAB wants geo-blocking, the Government wants it, and for a more lucrative profit margin, Entain will want it.
The punters certainly don’t want it. In our supposedly democratic, freedom-of-choice country which I refuse to call anything but New Zealand, geo-blocking is almost certain to conflict with the New Zealand Bill of Rights 1990.
(All statistics and graphs contained in this article compiled from BdL research)
Operating expenses at TAB NZ out of control as profit declines
by Brian de Lore Published 11 February 2023
The double-edged sword of incomings versus outgoings dealt the racing industry two more deep slashes in its death by a thousand cuts when TAB NZ released its December 2022 result last week.
Disastrous December!
Profit came in at only $14.0 million compared to $16.1 million for December 2021. This result came despite the most recent December having five Saturdays compared to three raceday Saturdays for 2021. It’s traditionally the day of the biggest turnover by sheer weight of race meetings, sporting events, and weekend punters.
Operating expenses have blown out to $10.6 million or $700,000 more than in the previous year, December 2021. The year-to-date costs for the August to December first five months of the season show an upward hike from $47.6 million in 2021 to $53.7 million in 2022 – an increase of $6.1 million or 13 percent.
$12.2 million behind with seven months to go
Add the increased costs to the profit decline; $67.8 million down to $61.7 million, a difference of another $6.1 million, and you have a five-month deficit of $12.2 million. Extrapolate that out to season’s end, and TAB NZ is heading for a $25 to $30 million shortfall on the 2022 end-of-season profit.
Are you shocked, or did you know? You didn’t have to be Einstein to predict it.
New Zealand buyers of thoroughbred yearlings at Karaka for Book One and Book Two two weeks ago reflected the failure of the TAB to provide the code with adequate prizemoney by spending $10 million less than they did in 2022. Kiwi buyers turn up in fewer numbers as each year passes.
Prizemoney drives every facet of the industry. The lack of it drives people out.
Seemingly, TAB NZ has decided to ignore the crisis. Otherwise, they would surely have taken measures to minimise costs. But then again, does anyone in an executive position at the TAB care about making a stand for the future of racing?
The pitiful scenario doesn’t even consider the downturn the economy is reputably heading towards, with inflation driving higher interest rates and a shrinkage of the expendable dollar Kiwis have traditionally spent at the TAB in the past.
Poor management – operating expenditure too high
This mismanaged TAB mirrors the behaviour of a hapless NZ Government that has continuously printed money in the misguided belief the roosters wouldn’t come home to roost. Both guilty of not controlling costs.
To paraphrase a famous mixer of metaphors, ‘we are in the shit without a paddle.’
TAB NZ may partly blame the Government, partly blame COVID, and partly blame the codes, but never themselves. Is anyone in an executive position at the TAB concerned about their spiralling operating expenditure on a decreasing profit line? And, is anyone on the boards or in an administrative position in the codes doing anything at all to halt this decline?
The answer to both questions is an unequivocal NO because nothing ever changes.
NZTR’s wage bill at year-end 2022 had increased 35 percent to $5.4 million on the previous year. At its current rate, TAB NZ will have operating expenses of $129 million by season’s end – ludicrously extravagant. Even if the TAB reaches a partnering deal in the next month or so, it’s unlikely to kick in until 2024.
The parlous state of NZ racing is shown above in the first-five-month comparison of profit and operating expenses between 2021 and 2022
Examine the graph accompanying this narrative, and decide for yourself. All the figures have come from the monthly TAB trading updates; the indisputable numbers carefully checked for accuracy.
Ask yourself this: If you owned and managed a company that started to return diminishing profit margins, would you or would you not examine the outgoings and cut your cloth accordingly? Not at the TAB; its costs have risen by $6.1 million in five short months.
The TAB continuing this performance can only mean one thing; a $25 to $30-odd million deficit on last year’s result and another forthcoming announcement (probably March) on a second reduction in the distribution to the codes. They cut the distribution by $15 million in December, announcing in a letter to the codes they even considered a cut of $24 million.
Failure to meet budgets
The TAB’s budgeting is so astray it has dealt with only half the problem.
If TAB NZ, under the advice of PWC, insists they keep a reserve of $100 million, New Zealand stakes money will get slashed across all three codes – would that mean the guillotine for racing as opposed to death by a thousand cuts – the same result but a far quicker conclusion?
The rhetoric and decision-making by the under-one-year experienced incumbent TAB CEO, Mike Tod, is enough to set alarm bells clanging. He came from Air Zealand two jobs ago and didn’t take long to head-hunt two other former Air New Zealand employees.
Jodi Williams (Chief Marketing and Customer Experience Officer) and Fred Laury (Chief Digital Officer) joined the TAB in May and August, respectively, in 2022.
Mike Tod has this hare-brained idea about rebranding the TAB for a $15 to $20 million cost, and employing Jodi Williams seemingly became part of that plan. Her bio on the website says, “Jodi developed the brand platform that Air NZ sprung off to international acclaim and worked on Kiwibank’s new brand strategy and repositioning.”
$450,000 annually
Reputedly but unconfirmed, Jodi Williams gets paid a salary of $450,000 annually – information supplied second-hand from a reliable source. But without a TAB profit line that’s going well enough, the rebranding is now on hold. So, what does Jodi Williams do?
Well, her quotes appear in a TAB announcement entitled ‘TAB NZ reaches quarter-million milestone,’ released on the same day as the awful December result, strategically timed to divert attention away from the poor figures with veiled lies about how well the TAB is doing.
It talks about record active numbers of customers, up from 225,000 to 250,000, the success of past events such as the Melbourne Cup and Woman’s Rugby World Cup, weekly customer betting numbers of 78,000, how much they look forward to fight nights and the Super Bowl, while asking for NZ punters’ loyalty to TAB NZ.
It fails to mention the poor financial result for December or the year to date. It says nothing about why turnover is up and profit is down, how poorly the TAB’s ‘bonus back’ promotion is tracking in a desperate attempt to maintain their diminishing market share, or why Jodi Williams’ employment is part of the massive increase in operating expenses.
Alternatively, here’s a few Jodi Williams quotes: “We’ve made great strides in the last year to offer a world-class betting experience, and it’s great that Kiwis want to get involved.”
“On the back of customer improvements like boosted odds in sports and racing, and removing deductions from racing, our customers have embraced some of the amazing events we’ve had over the past year.
“Kiwi punters are loyal punters, and we want our racing codes, national sporting organisations and communities to thrive.
“The best way for New Zealanders to do that is by betting with TAB NZ, as every dollar spent with us helps to fuel racing, sports and communities all over the country, and we want to thank those loyal customers who get in the game through TAB NZ,” -Jodi Williams.
Racing people won’t swallow this tripe
Have your eyes glazed over, and you’re now feeling nauseous? Do Jodi Williams and Mike Tod believe the racing industry is dumb enough to swallow any of this tripe which gets worse with each profit-contracting month?
If Kiwi punters are loyal, as Williams claims, why is the TAB pleading with the DIA for legislation to geo-block New Zealanders in an attempt to stifle overseas-based betting agencies and monopolise the market? Everything else in the quotes is pure spin.
Williams has now hired former leading apprentice Hazel Schofer and created a position called ‘Elite Relationship Specialist,’ in which Williams says Schofer will provide support to TAB NZ’s high-value customers. WHAT!
Schofer proved herself a talented apprentice, winning 78 races in the 2020-21 season, but with all due respect, how will this 24-year-old add value and provide a quantifiable return in dealing with the TAB’s biggest punters? It’s not difficult to imagine how operating expenses have raced out of control.
Another memorable Williams quote: “Hazel has joined the team to deliver a world-class experience to our elite customers.” Really, ‘world-class’? Nothing has happened at TAB NZ for years that could be deemed ‘world-class.’
Racing’s survival not a priority at TAB NZ
Racing survival is no longer a priority for those running TAB NZ. The disconnect is so obvious, and some recent decisions have worked against turnover and profit. Consider the big Auckland wet two weeks ago when parts of Auckland flooded, effecting 0.3 percent of dwellings in the greater Auckland area.
The TAB made an across-the-board decision to close all Auckland TAB retail outlets the following day, Saturday, despite the vast majority residing in dry areas where retail around them remained open. Why?
The TAB is now closing down all TAB accounts of New Zealanders living overseas, despite some of these Kiwis having had betting accounts for many years. Why would they suddenly do that when no legislative changes have recently occurred?
An account holder who runs businesses in Thailand and has resided there for 30 years questioned the TAB about it upon receiving his closure email notice. He received the following reply:
“Unfortunately we were forced to close all accounts that were listed as having an overseas address in order to remain compliant with New Zealand’s Anti-Money Laundering laws. The TAB NZ app and site should not be able to be accessed outside of New Zealand.”
Why would it suddenly breach our laws when nothing has recently changed? Thailand has its own anti-money laundering laws, but the man in question with his TAB NZ account now closed, soon after legally opened an account with Bet365.
We have a board at TAB NZ dominated by non-racing people that is now blatantly disrespecting its core business of racing, and its actions over the past month paint a bleak outlook for all three racing codes.
Here is a mounting list of complaints that have accumulated against the behaviour of the TAB over the past month:
The TAB board has reduced the distribution to the codes by $15 million this season despite having $89 million on deposit.
The reduced distribution has caused Harness Racing NZ to reduce stakes by 10% from 1 February, with NZTR under threat to act similarly by season’s end.
TAB CEO Mike Tod consistently contradicts himself and displays naivety about the intricate workings of NZ racing and wagering.
A TAB NZ board member’s claims of communication between NZTR and TAB NZ reaching a level of excellence is now openly denied by the NZTR CEO and Chair, who last week complained that TAB NZ refuses to communicate and answer questions.
The 1951 formation of the TAB to specifically act as an organisation to financially support the thoroughbred and harness racing clubs of NZ has degenerated into a TAB displaying only self-preservation with diminishing concern for racing.
The cost-saving measures introduced by RITA to curtail the extravagant costs generated by the NZRB era of Hughes/Allen have gone out the window with a new ‘spend-up big’ regime with apparent impunity under Tod.
Tod’s claim in the TAB Statement of Intent 2023-2025 that: “ the 2021-22 financial year was the most profitable in the TAB’s 70-year history” is an untruth when you deduct the ‘racefields’ (BIUC) income and betting duty rebate, which came from Messara Review recommendations into legislation and had nothing to do with the core business of the TAB – all they do is collect it and distribute it on behalf of the codes.
TAB NZ produced a poor result last season, with only $140 million in profit from its core business, a figure similar to 2017.
The Australian-based Paul Bittar left the TAB board to negotiate the partnering of the TAB through his own company with the reason given as ‘conflicting interests. Does a conflict of interest become ‘insider trading’ if a commission is earned once the ‘partnering’ is finalised?
The TAB replacement director for Paul Bittar, nominated by the codes, has been rejected, and the TAB is now recommending its own choice of replacement – a move entirely contrary to Clause 45 of the Racing Act 2020 relating to the appointment of directors.
TAB had failed to post its 2022 Annual Report on its website by 28 December despite the fact I received a copy five days ago, and it’s attached.
Without the circled injection of ‘racefields’ and the betting duty rebate, the figures are poor
New Zealand racing has sunk to low depths. Self-interest, lack of knowledge, poor communication, lack of transparency, and mixed messages leads one to believe the serious malaise has developed into paralysis.
At a stakeholders meeting at Te Rapa last week, TAB CEO Tod told attendees that TAB NZ had lost its 18 to 35-year-old customer base to Bet365 because of fashion or trends, citing Bet365’s marketing practice of advertising on porn websites as another reason.
He told me the same thing in an hour-and-a-half meeting in his Auckland office two months ago. He would not accept my assertion that the betting product and odds offered by TAB NZ would not compete with any major betting agency operating out of Australia.
Tod believes that partnering and geo-blocking are the answers to all our woes. Partnering is inevitable, or the TAB will go broke – that’s why they are feathering away a nest egg now amounting to $89 million and not arresting the decline of racing and putting it into stakes.
VPN can by-pass geo-blocking
Geo-blocking betting in NZ will not work with the TAB in its current state. They’re saying it will give them a $150 million windfall, but that’s delusional. Included in the ways to bypass geo-blocking is using a VPN (Virtual Private Network) which gives the user anonymity and hides your IP address as it tunnels information between your device and the remote server.
Tod said at the stakeholders meeting that after consideration of four potential partners for the TAB, they had narrowed it to two. A decision on the successful applicant would happen at a forthcoming board meeting, but the announcement would not come until late March.
Partnering could produce an upfront windfall in the region of $100 million, but in light of recent events, how much of the money would return to racing to revitalise stakes?
Sport is pressing hard for a bigger share of the pie, and the board is sport dominated. The codes failed to get together to draw up a commercial agreement to present to the TAB, as clearly defined in the Racing Act of 2020, and as a consequence, the tail is still wagging the dog.
The commercial agreement could have pressed home The Racing Act’s Clause 57, which says, under the heading Objectives of the TAB, “The Objectives of the TAB are (a) to facilitate and promote betting and its profits for the long-term benefit of NZ racing.”
Without a commercial agreement, the codes gave up their commercial right to enforce the legislation upon the TAB, so no mechanism exists to hold the TAB to account, and that’s why the tail’s wagging the dog. That is what happens with poor leadership and too much time spent in Australia.
That miserable failure is the fault of the code directors, who appear to have failed to read the legislation, leaving the codes exposed. Where’s the accountability?
The TAB is cherry picking the legislation, and the parlous state of racing doesn’t appear to be a concern at the Chair or CEO level at the TAB, and the corporate gobbledygook messages contained in the annual report will not be understood by racing people.
Recent Tod writings might define him as racing’s new Jeykll & Hyde.
On 28 November, the TAB posted its Statement of Intent 2023-25 on the tabnz.org website in which CEO Mike Tod wrote, “TAB has weathered the storm” and “forecasts point to continued growth in distributions and payments flowing through to racing and sports in New Zealand.”
Four days later, on 2 December, Tod wrote to the CEOs of the three codes to inform them the distributions in the current season would reduce by $15 million, from $175 million to $160 million.
Statement of Intent conflicts with letter to codes
The Statement of Intent and the letter conflict; they bring to mind the infamous story of Dr Jeykll and Mr Hyde – a good and positive view on the one hand but a darker reality on the other.
The letter to the codes also warned about the possibility of future reductions in distributions while painting the TAB as the good guys in displaying leniency when considering the reduction.
It said: “The TAB NZ Board considered reducing distributions by $24 million (or 14%) but ultimately determined the balance sheet afforded the opportunity to ease the impact that will be felt by the Codes, whilst still operating in a financially responsible manner as is required under the Act. However, the board considered that a reduction of any less than $15m would likely take TAB NZ below the minimum balance sheet recommendations.”
Distributions get reviewed quarterly these days, so what if the expected downturn in the economy further reduces TAB profits during the third and fourth quarters of the current financial year? Will they further reduce the distributions?
Harness Racing New Zealand has just announced a ten percent cut in stakes commencing 1 February, the distribution reduction for the code lessening its funding by $4.4 million.
The TAB Annual Report, not yet released by TAB NZ, shows a reserve fund of $89 million
It’s laughable but not very funny that TAB NZ has $89 million on deposit because PWC and Grant Thornton advised it to do so, with Tod justifying the withholding of these TAB profits by quoting the legislation, which only says, “TAB NZ must operate in a financially responsible manner.” (Clause 61).
Tod also quotes a clause in the legislation which says the TAB may retain money for ‘harm prevention’ – what a crock! TAB NZ encourages everyone to bet more and more, and the so-called harm prevention clause exists only to satisfy the woke, politically-correct and critics of racing and gambling.
Racing has made no progress through the TAB for a decade and desperately needs Tod to successfully partner the TAB, but don’t hold your breath.
The core business of the TAB of racing is in serious decline, but the TAB continues the camouflaging-window dressing to take the heat off themselves.
Have a read of TAB NZ Annual Report (below), and remember, you read it here first. You will also find it on the Government website, but not on the TAB one, as of today 29-12-2022.
The great trainer passed away peacefully this morning at 12.15 am 23 December 2022, aged 91
Kim Clotworthy described him as a ‘genius,’ Peter Grieve said he was ‘outstanding in every way – he worked and played hard, but the horses always came first.’ Keith Haub: ‘He was half horse and half man – he understood horses and horses understood him.’
Remembering the life of Colin Jillings, by Brian de Lore Published 23 December 2022, updated from a BdL article in The Informant July 2018
Colin Jillings survived ‘the school of hard knocks’ to reach the top
Life was tough for kids growing up during World War II. Along with food rationing, it was a time of economic hardship with a scarcity of commodities and a lifestyle that required plenty of discipline, providing few luxuries.
Such was the early life of Colin Maurice Jillings, born amid the great depression on 11 March 1931 and grew up through the tough war times, which undoubtedly had a bearing on the person he became and the success he would later achieve.
When the war ended in 1945, Jillings was just 14 years old but had already been an apprentice jockey for over two years, having received his indentures for the start of the 1943-44 racing season.
“I was only 12 but put my age up to 13 to start my apprenticeship,” recalled Jillings; “they didn’t ask for birth certificates. It was different in those days – it was the war years.”
Jillings rode in 20 apprentice-only races before getting granted his full apprentice licence, allowing him to ride in open races. But that amounted to the least of this ambitious 12-year-old’s worries; his lowest weight recorded on his first licence read as six stone (38.1kg).
As a 10-year-old, the young Jillings would wander into Ivan Tucker’s stable yard at Ellerslie and be told to ‘scram’ by the leading trainer. On one occasion, after getting chased out the gate, Tucker came around the corner only minutes later to see the young rascal coming back through the gate atop a gelding named Brazilian returning from his afternoon walk.
“Brazilian was a jumper owned by Dr and Mrs Roberts from Huntly,” recalled Jillings in July of 2018. He remembered the circumstances vividly. “No, I didn’t give up going to the stable. I was only nine or ten and then later became the leading apprentice when I was still going to school.”
Jillings wouldn’t go away, and eventually, Ivan Tucker resigned himself to legging him up on the quiet horses, and the association began. Horses acted like a magnet to the young Jillings – hardly surprising with the racing blood flowing through his veins.
His father, Ledger Jillings, had a great love of horses and had spent much of his youth at a trotting stable while his grandfather Henry was a jockey, and his uncle had ridden many winners in the lightweight jockey ranks.
Before wandering through the gate at Tucker’s yard, the Jilling-kid had given the sofa at home many a whip hiding. Racing consumed young ‘Jillo’ and no doubt existed in his mind on the career path he would head down.
In those early days, no difference between discipline and bullying existed, and Jillings recalled: “Ivan Tucker was very tough – he used to get his middle finger and punch you in the muscle on the arm.”
Tucker soon recognised that horses that usually pulled hard would relax and travel for Jillings. He had a way with thoroughbreds and always showed Tucker the required potential.
Colin Jillings aboard Great Scot wins the 1947 Railway Handicap at Ellerslie
But little more than six months into his apprenticeship and just a couple of weeks before his 13th birthday, the young jockey with only a handful of rides behind him he had a horrific fall.
“Riding trackwork one foggy morning at Ellerslie on the number three grass, I fractured my skull when the horse I was riding collided with a horse ridden by Grenville Hughes – Grenville picked me up and helped me get to the hospital. I was out of action for 12 months and put on weight, too.”
Most young jockeys would not have returned, but the young Jillings didn’t lack courage and happily returned to riding a year later. “I was an apprentice jockey for a long time,” explained Jillings, “because I was still going to school.
“I used to catch the eight minutes to nine bus to go from Amy Street to attend St Peters School run by the Christian brothers, and there were a couple of mornings a Brother Lynch gave me six of the best for being late to school.”
“My mother had to write a letter to him to tell him that I had special permission to catch that bus from Ellerslie to Khyber Pass even though it didn’t get me there quite on time. I only suffered that on two mornings, and the problem was then solved.”
Jillings rode trackwork in the morning before going to school and then returned to work at the stable in the afternoon. Despite the distraction, he finished top of the class at St Peter’s in his final year, aged 15.
The young Jillings rode 13 thirds before he rode his first winner, but in his second full season as an apprentice, he notched up 28 wins, placing him second on the apprentice list in the 1945-46 season behind one of the all-time great apprentices of the time, Keith Nuttall.
“I was leading apprentice in 1946-47 but wasting hard,” Jillings proudly recalled. “By then I was walking 7st. 10lb and [G5] would ride 7st., and would start wasting Wednesday, have half a cup of tea at lunchtime, a piece of toast, and half a cup of tea at night time and do the sweatbox on Thursday and Friday nights. We had one at the stable. I used to lose the weight, but it took a lot out of you.”
He recalled the inevitable retirement for Colin Jillings-the jockey: “My last ride was on Super Vaals in 1947 at Ellerslie, and by then I was walking ten stone three pounds (65.4kg) and riding nine stone (57.1), so I was wasting 17 pounds by then – I was always pretty tall. I grew quite a lot in that 12 months I was out.”
Jillings had ridden 64 winners by this stage, was 16 years old, and would have liked nothing more than to have fulfilled his potential as a jockey. He had given his all and had grown too big, but his ability in the saddle didn’t go unnoticed.
Legendary horseman of both codes and gifted writer Clyde Conway wrote this accolade for Jillings in 1957: “One day at Te Aroha in 1946, Colin was riding Kill Fast. He literally pushed his mount up on the line to split a dead-heat with Gay Fault.
Colin follows Brockton and Baggy Hillis after an Ellerslie workout before Brockton’s second win in the Great Northern Hurdles.
“This prompted Charlie Gomer to remark to Skipper Ryan and myself (we were acting as stewards under him), That boy Jillings can ride. Even Hector Gray could not have got more out of that horse than Jillings did. If he could stay light, he could be as good a rider as this country has ever seen.”
Conway continued, “This was high praise indeed, for those that knew him were well aware that Charlie Gomer was never lavish with such comments. Furthermore, his years of reading races had made him a shrewd and hard-headed critic of jockeys and race riding.”
But as Conway himself conceded, “all the ability in the world is no good when you are walking over the nine stone mark and standing five foot 10 and a half inches in your socks.”
After discovering this long-lost quote buried in one of Jillings’ scrapbooks that his mother had carefully kept, Colin remembered Gomer: “Charlie Gomer was a chief stipe, and he was a very tough man – as tough as they come and well known for it.”
Phase one of the Colin Jillings racing career had ended, for try hard as he could to keep his weight down, and failing, a new career now beckoned. The opportunities as a hurdle jockey soon dried up.
The battle against increasing weight for any talented, young jockey with premiership aspirations is invariably about genetics more than a propensity to indulge in pizza. This was certainly the case for 16-year-old Colin Jillings when he rode his last race – a winning one which was the 64th success of his abbreviated riding career.
“My last ride was on Super Vaals in 1947 at Ellerslie, and by then I was walking ten stone three pounds (65kg) and riding nine stone (57kg), so I was wasting 17 pounds by then – I was always pretty tall,” said Jillings
“I became the private trainer for Albert Brownson when I was 19, explained Jillings. Before that, and between retiring from riding and starting training, I worked in the freezing chambers for two or three years.
“I took two horses to Australia and they both won – we sailed on the Monawai on the 1 February 1950 with Lady Finis and Gayriol, and we only took Lady Finis as a mate, but she did that well, and although she was only small, she was very good -she won three and ran 5th in the Doncaster.”
From jockey to trainer: Colin Jillings made the transition with immediate success
With these two horses and the trip away, his training ability began to manifest. As a 19-year-old, from just nine race starters, he collected four wins and two placings – Jillings, the trainer, had hit the ground running.
“In those days you had to be 21 to do anything, so Brownson had to be my guarantor for all the costs that I incurred; I was a private trainer, but all I did, really, was get a wage.
“Lady Finis was only small, but by God she was good. She won three and Gayriol won one but I had Gayriol going for £12,000 at Randwick on an all-up, and she was beaten a nose – a nose after a bad ride – well, I didn’t exactly cry, but there may have been a few tears rolling down my face.
“Lucky I didn’t win – probably would have killed myself with that much money. I came home thinking I was TJ Smith and Bart Cummings all rolled into one, and then Brownson sacked me, and it was probably fair enough, too.”
If Jillings had been feeling a little overly pleased with himself at that point of his career, he soon came back down to earth. Following that speed bump, he found himself out of racing again and down in Kinleith with his uncle to resume his career as a cable jointer.
“At the pulp and paper mill, we did all the cable jointing for them. I was there for about three years living in a two-man hut with my uncle, and we worked six days a week with only Sundays off. It was in Tokoroa that I met Alison.”
Colin with one of his favourite horses, Auckland Cup winner, Perhaps. Colin was inducted into the NZ Racing Hall of Fame and was awarded NZ Racing Personality of the Year.
But the lure of the turf beckoned again. He purchased a gelding named Armed trained at Takanini by Morrie Bowden. Eventually, Jillings took over the training himself, prepared Armed from a farm in Tokoroa, and won a couple of races at Matamata, on one occasion ridden by highweight jockey Jim Gibbs, whose only two rides for Jillings both won.
Armed suffered from unsoundness, but Jillings nevertheless saddled him up to win a Grand National Hurdle – testimony to the trainer’s horsemanship even at such a tender age. Meanwhile, he won a couple of races with Swift View, and the urge to go training full-time proved too great to resist.
Jillings left Kinleith and returned to Takanini, starting out with Armed, Goldbearing, and Durain, quickly made an impression and steadily built up a team of horses and a new clientele.
“I went back to Takanini to train in 1953,” he recalled. “My old boss Ivan Tucker then got disqualified for 12 months about 1954, and he appealed and got an extra 12 months, and that’s when I took over his stable. I moved in, paid him rent and I got Bright Gem, Emphatic and Bertha Fox, and I picked up Yemen as a two-year-old, too.”
In 1956 Jillings won the Auckland Cup with Yemen and married his Tokoroa sweetheart, Alison, a marriage of 65 years until Alison’s passing in 2021 at the couple’s townhouse at the Sir Edmund Hillary Retirement Village in Remuera.
On marriage, Jillings would joke: When you marry, you get an asset or a liability; well, I got an asset,” and then after a pause and a grin, he retorted, “marriage is like a three-ringed circus; first you get the engagement ring, then you get the wedding ring, and then you get the suffering.”
Jillo – well-known for his quick wit and memorable quotes
‘Jillo’ as he affectionately became known, all his life had his trademark legendary quick wit and humour, for which he became as famous as for turning out top horses. Always a deep thinker, he had a quote for every occasion, such as, “fools rush in where angels fear to tread,” or “we’ll keep going ahead even if it’s ass-over-head.”
One-time fellow Takanini trainer Frank Ritchie had many days of laughing at the Jillings rhetoric at trackwork and remembers him on one occasion saying: “ya know ol’ son what life’s biggest problem of all is? – the green monster.” He said, “jealousy – never, ever let it get you.
“The other thing he used to say was,” continued Ritchie, “‘never, ever let them know you’re hurting.’ He was talking about a losing bet or losing a horse to another trainer, and he said, ‘even if it’s killing you, never, ever let them know it’s hurting.’”
But while Jillings may have been the ‘poet laureate’ in a different age, he churned out the winners that placed him on a special level in the world of racing. Numerous runs of cheering home Jillings-trained winners far outweighed the occasional bout of ‘hurting’.
If a better trainer than Colin Jillings has lived in the history of New Zealand racing, then it’s an academic argument only – a bit like comparing Frankel with Phar Lap.
Jillings himself modestly put his success down to good fortune but did concede this: “I had a lot of luck as a trainer, but I worked hard at it, and it’s like everything in life – ‘as you sow – so shall you reap.’ I had a good horse every year but never had a big team in work. Today, it’s a numbers game, but I had a personal, hands-on approach.
“Care and attention were the most important factors for me,” came the Jillings answer he shot back to the question of ‘getting the best from your horse.’ None of this ‘she’ll be right’ – it’s got to be right.”
That manner of precision and work ethic saw Jillings train 1,372 career winners, including 703 in partnership with Richard Yuille, from a career that stretched 54 years from 1950 to 2004. Great thoroughbred names such as Stipulate, Yemen, McGinty, Uncle Remus, The Phantom Chance, Brockton, Perhaps, Lawful, Honourbright, Tiger Jones, Old Son, Port Royal, El Tombo, Sharivari, Beauzami, Springtide, Silver Image, Gold Ducal, Marquess, Athenaia, Shamrock Queen and Biltong only to name a few.
Long-time friend and owner Peter Grieve said of Jillings, “I went away with him a lot, and the horses always came first. He had two-year-olds, jumpers, stayers, fillies, Cup horses – everything; he could train them all equally as well.”
“Stipulate was the best horse I ever had – when I think what he went through,” said Jillings when pressed for a favourite. “He was a great horse; really tough – was he good! He won the Auckland and New Zealand Cups, should have won the Wellington Cup – he got beaten narrowly by Great Sensation, and it was my fault.
“I’d eased up on him a bit before the race, but he came out on the last day and beat the best weight-for-age field you’ve ever seen. And he bolted in. He was a stallion but was quiet – he wasn’t one of those that would roar or anything like that – a thorough gentleman, a great horse to train – tough – you could hit him with an axe, and it would bounce off him.”
Auckland Cup winner Perhaps also became a Jillings favourite. He said: “She was beautiful, Perhaps, you could have brought into this lounge – she had such a kind temperament. Sandy (Warren Sandman) who owned her was just the greatest man and owner you could have ever wished to train for.”
He did not suffer fools
Jillings didn’t suffer fools very easily and was notoriously tough on jockeys, but regular rider Bob Vance and the trainer had a long and successful association that survived the odd difference of opinion and developed into a bond of massive mutual respect.
“He just had a great eye for the small detail, said Vance. “You could walk a horse to the track, and if there was a problem, he would spot it from 50 metres away – he would tell you to go back and fix it. For the small detail, he was superb.
“He never had a big team, but his planning was unbelievable. When we went to the Cox Plate with The Phantom Chance, he knew what he was doing every day before he went.
“And he invariably always had the horse 100 percent on race day. He would target a big race and knew he would get the best out of his horse on that day. Everything had to be perfect for him down to the smallest detail – stuff most trainers wouldn’t think about.”
On Vance, Jillings said, “I put him on everything, but when I gave him instructions, he could carry them out to a tee. One day he drew 18 at the barrier in a two-year-old race, and he told all the other jocks behind the barrier, ‘watch out you fellas, I’m going straight to the fence,’ and he said there was only one jockey he was frightened of in that race and that was Chris McNab.
The Colin Jillings trained McGinty defeats Marscay in the 1982 Todman Slipper Trial at Rosehill
“But he got to the fence, and he won the race. He rode Uncle Remus as an apprentice, I might be a bit biased, but by god, he was a good rider – a really top rider.”
Of all the characters associated with Jillings over his long career, none has been more colourful than racecaller and McGinty part-owner, Keith Haub. In Australia in one of McGinty’s pre-race press scrums, Jillings was asked by the local scribes if all was well with McGinty going into the race. Jillings replied, “the horse is well, but it’s the owners that are the problem – one is a millionaire, and the other one thinks he’s a millionaire.”
It was yet another example of the Jillings quick wit and command of language although there was more than just an element of truth in that jibe. Haub and Jillings remained firm friends, and the pair always got together with Peter Grieve for regular catch-ups.
“He’s so clever, Hauby,” said Jillings. “There was no better auctioneer; he could sell property; there was never a better racecaller; he could sing and play the guitar as good as anyone – and he could have done anything in life he wanted to.”
On the other hand, Haub rated Jillings a steadying influence on his life: “Very strong on principles,” said Haub. “He had a huge effect on my career – he kept tabs on me. He’s highly principled, and he always listened carefully to everyone – he was a great student of life and took everything in.”
Some people just might construe that if Jillings was keeping tabs on Haub’s life then he must have suffered numerous distractions – but that’s another story.
And just as Frank Ritchie had earlier related, Haub’s take of Jillings as a deep thinker also brought him to tell Haub, ‘the disease that people have and they don’t know what it is – jealously. They don’t know they’ve got it.’
“Watching races from the stand, he hardly ever used binoculars, and he could analyse a race with the naked eye as good as I did with binoculars and still know everything that happened in it.”
In later years, Jillo’s eyesight failed him with macular degeneration setting in, but his memory and wit always remained sharp, and this legendary Hall of Famer, former Racing Personality of the Year and recipient of the Award for Outstanding Contribution to Racing, will never be forgotten as long as racing exists.
And the good times he had with his very good and close mates will remember fondly how he would often address them affectionately as ‘old son.’
A celebration of the life of Colin Maurice Jillings will take place in the Newmarket Room of the Ellerslie grandstand on 5 January 2023 at 2.00 PM.
A poorly performing TAB NZ last week announced to the three codes that distributions would be reduced for the current season, a move that places the present low levels of New Zealand thoroughbred prizemoney in jeopardy and further undermines the future of racing in New Zealand.
If you thought that the New Zealand racing fraternity’s morale had sunk to record-low levels by the middle of this past year, then think again. This announcement has plummeted the outlook to Mariana Trench depth.
TAB CEO Mike Tod responded promptly to The Optimist’s request for an explanation for the reduction and the current state of TAB’s finances.
Tod said: “TAB NZ will reduce distributions by nine percent in the 2022/23 financial year (year ended 31 July 2023).
$175 million reduces to $160 million
“Total distributions to the thoroughbred, harness and greyhound racing codes are anticipated to fall from $175m in the 2021/22 financial year to around $160m million for this financial year. The $15 million decline will put overall distributions on a similar footing to the 2020/21 financial year.
“The drop in distributions is a reflection of multiple headwinds facing the business, not least the battle TAB NZ is in with offshore operators for New Zealand-based customers.”
Thankfully, NZTR has $24 million of stakeholders’ money on deposit and the current stakes level, as low as it is, will be maintained through to the end of the season. What happens after that is anyone’s guess, but it could be ugly.
Mike Tod does not specify the ‘multiple headwinds’ but those following TAB NZ’s progress from NZRB and RITA days through to TAB NZ which commenced with a new board on August 1st 2020, could have predicted this whirlpool of decline which is another nail in the coffin of domestic racing in New Zealand.
Worldwide wagering has metamorphosed in the past five years with mergers, the opening of the USA market and hundreds of millions of dollars spent annually by a plethora of aggressive corporates attempting to gain a competitive advantage.
Wagering scale was always the problem
Here in good old conservative NZ, we have lived in a wagering bubble, seemingly oblivious to the outside world and pretending we are doing nicely while stuck in reverse gear. Whatever wagering scale our TAB lacked five years ago, the gap has further widened.
Looking from the outside in and identifying our biggest problem four and a half years ago, the Messara Review urged NZ to immediately investigate partnering the TAB and predicted we could double prizemoney by enacting a suite of 17 recommendations. Racing Minister Winston Peters agreed until the Kiwi oligarchs got in his ear and scuttled the notion.
And now, with the highest inflation for over 30 years and a dramatic rise in the cost of living affecting the expendable dollar, the TAB’s profit has shrunk and it’s now a wounded animal cowering in a corner.
CEO Mike Tod inherited the demise
To be fair to CEO Mike Tod, his tenure commenced only in March of this year and his current problems come inherited from previous administrative regimes with the most damage done before his arrival. The turnover in August and September rose through aggressive promotions but profit fell in the same months compared to 2021, and the only figure that matters is the bottom line.
October figures posted on the TAB website this past Thursday came up ugly. The month produced a profit of only $12 million (-13%) compared to the $13.8 for October 2021, despite increased turnover. October was the first full month of the ‘no deductions’ promotion which can only increase turnover, but simultaneously can only lessen the profit line. Substantial losses could occur in some races where multiple late scratchings result from a track downgrade after rain.
The first quarter result for this season shows profit decreased by $2.8 million for the same period in 2021. If you believe the economists who say things will worsen by the middle of next year, that figure could easily blow out to $15 million or more by the end of the fourth quarter.
Tod: Inadequate regulatory settings
On the question of how he intended to tackle these problems, Tod told The Optimist: “Inadequate regulatory settings are seeing increasingly intense competition from much larger unregulated offshore operators, the tightening economic conditions are putting pressure on Kiwis’ discretionary spend, and there continues to be challenges with racing abandonments and small field sizes.”
Does Mike Tod understand that small field sizes are a direct result of inadequate distributions which delivers poor stakes money resulting in reduced ownership? – it’s called a Catch-22
I asked him if he agreed that a reduction of distribution to fund prizemoney levels would speed up the shrinkage of ownership numbers, foal numbers and consequently the number of racehorses in work. And when those groups reduce we will have fewer race meetings with smaller field sizes which result in decreased TAB turnover, thus strengthening the headwinds to which he refers.
He responded: “It is a matter for the Codes to advise on how they will manage the impact of a cut to distributions and any flow-on effects.”
Tod: cost pressures in this environment of global high inflation
Tod continued: “Alongside this, TAB NZ is facing significant cost pressures in this environment of global high inflation, while also needing to deeply invest in its customer experience, brand, infrastructure and gambling harm minimisation to ensure that it can compete against these behemoth offshore operators.
“We estimate that Kiwis are losing up to $150 million annually to those unregulated offshore operators. That is money that could be staying in New Zealand for the betterment of racing, sport and communities with a simple change to the regulatory settings. This is a matter that we are actively engaged with the Government on.”
Tod’s estimate of a $150 million loss annually might be ‘a long stretch of the bow.’ It’s impossible to calculate a figure because it’s private credit card information, and the only guide we have is the figure released by Kiwibank. They said last March they processed $30 million a month to online gambling sites, of which 80 percent is off-shore.
Online betting surged during COVID lockdown
Kiwibank represents only four percent of the banking market, so the total figure might amortise out to around $72 million annually for the entire country. The bulk of this figure is expected to be online casino-type gambling which surged to these levels with the onset of the COVID-19 lockdown.
Few people will know that TAB NZ has $85 million on deposit, and intends building it to $100 million. When I asked Tod why the TAB is compelled to hold a reserve fund, he responded thus: “We need to ensure that we hold appropriate balance sheet strength to ensure the long-term viability of the business.”
He also added: “Under the Racing Industry Act 2020, TAB NZ is required to operate in a financially responsible manner and if it were to maintain distributions at the current level, it would likely breach recommendations made by PWC and Grant Thornton to maintain a strong balance sheet. The advisory firms issued the recommendations at the time the Government provided funding support when the racing industry was brought to a standstill by the initial Covid-19 lockdown.”
I take issue with Tod’s above comment because, while the Act requires the TAB to be responsible about money management, it says nothing about retaining money that rightfully belongs to the entire racing industry. The TAB grew out of the need to financially support the thoroughbred and harness racing clubs, not to collect betting profits to invest and build wealth as a corporate entity might.
Tod: We are required to operate responsibly for a sustainable future
In a letter Tod wrote to the codes last week to announce the distribution reduction, he said: “Under the Racing Industry Act 2020, TAB NZ is required to operate in a financially responsible manner to remain a sustainable business for the long term.
“In 2020, during the first Covid-19 lockdown and in light of the Government’s $72.5m Covid-19 racing support package, the Racing Industry Transition Agency took advice from both PWC and Grant Thornton to ensure that the future TAB NZ business would have independent analysis on what the business’ adequate net asset and minimum capital requirements should be, in order that TAB NZ would be able to meet this statutory obligation.”
The above statement typifies an administrative attitude of governance by people with no stake in the industry they govern. They appear to lack interest in the preservation of the horse industry and are disconnected from the problems facing racing. They have sadly prioritised preserving themselves over the industry.
The letter further stated: “If TAB NZ was to maintain distributions at $175m for FY23, the business would likely breach these balance sheet recommendations and put its ability to withstand any future shock at risk.”
PWC and Grant Thornton don’t understand racing
The problem with the PWC and Grant Thornton recommendations is they make them not giving a toss about the future of the racing industry.
The three big issues coming up for Mike Tod soon concern his support for geo-blocking New Zealand punters, rebranding TAB NZ, and partnering the business with an overseas corporate.
Tod told me six weeks ago he believes the current brand of ‘TAB NZ’ is not trendy and that the younger demographic of New Zealand punters has deserted the TAB for the likes of Bet365. In view of the distribution reduction, I asked him if it would still proceed and how much would it cost.
Tod said: “Work on the future direction of the TAB NZ brand is well advanced and a decision is expected in the first quarter of next year.”
He made no mention of the cost but independent information supplied says it would be in the range of $12 million plus.
On geo-blocking which would require a legislative change to the Gaming Act of 2003, he stated: “We are actively engaged with Government on potential changes and are expecting an update within the next two months.”
TAB partnering crucial for sustainable racing
The third and most important item for Mike Tod comes up next week when he will meet with potential partners with the prospect signing a partnership arrangement for the TAB in 2023. The success of this negotiation should be seen as the only long-term saviour for New Zealand racing.
If they do it right it will greatly enhance their income while substantially reducing costs, provide New Zealand punters with a vastly improved service, and potentially increase stakes money to a sustainable level.
Tod’s letter to the codes last week also said:
“Four international businesses will deliver proposals in person for a partnership with TAB NZ on 12 and 13 December. Our Board will meet before Christmas to decide whether to move into formal negotiations in the New Year with one or more parties.
“I have been deeply heartened by the level of engagement from the Chief Executive Officers and their due diligence teams over the past three months, and I am expecting to see distinctly different proposals from each party.
“If a preferred partner is identified, we are currently targeting the third week of January for a meeting of Chief Executive Officers from the Codes and representatives of the preferred party/parties.”
Three NZ-bred greats of the past, all bred at Te Parae Stud where they returned for retirement
by Brian de Lore Published 30th November 2022
The big positive, and one of the very few pluses for New Zealand racing today, is as a nation of horse breeders, the level of success achieved by the country’s breeders in Australia is extraordinary.
The pivotal strength of New Zealand has always come back to the quality of the product; the continued production of horsemen and women who have repeatedly over-achieved during the past 140 years and produced a superior thoroughbred product to race on Australasian racecourses.
The overused and hackneyed expression of ‘boxing above your weight’ has never rung more truthfully than in the production of thoroughbred horses. Aided by a primarily rural population in which a temperate climate helped produce rich grass-growing soils, it resulted in an environment perfect for rearing horses.
Hayes, Smith and Cummings – great NZ supporters
In the 50 post-World War II years, the most successful Australian trainers, such as Colin Hayes, TJ Smith, and Bart Cummings, recognised the Kiwi advantage and never missed coming to New Zealand to secure horses to train like Redcraze, Tulloch, Light Fingers, Galilee, Think Big, Dulcify, Hyperno, Gold and Black, Saintly, So You Think, etc.
Yes, that was then, I hear you say, and it isn’t relevant today. But it is significant because the production of quality NZ-breds has continued to succeed in Australia, albeit on a diminishing foal crop. We have declined to foal numbers equivalent to the spring of 1970, but the number has levelled out over the past two seasons.
Accurate foal crop numbers aren’t available until the Stud Book has received all the broodmare returns, and therein lies the problem. For example, upon checking with the Stud Book this week, I discovered that 138 current yearlings with registered brands do not yet officially exist as foals due to their breeders failing to submit broodmares returns from last season.
It’s an annual, ongoing problem with the same group of recidivist offenders.
Foal crop 45% of its former self
New Zealand today produces only 45 percent of the record foal crop number of 6,112 in 1986 from 11,136 mares bred in 1985. Australia has also lost ground in numbers, represented today by 65 percent of its 1985 numbers, but it’s pertinent to say the Australian industry is much stronger today than in 1985.
Around that time, John Messara working closely with Colin Hayes and a very supportive Prime Minister in Bob Hawke, wrote the submissions and lobbied the Australian Government on behalf of the breeding industry to get parity with New Zealand’s tax write-offs, and succeeded. The Federal Government approved it in 1987 and opened the door for a massive investment in the Australian breeding industry and for Messara’s Arrowfield Stud to acquire and shuttle the great Danehill.
New Zealand racing received an uppercut with the introduction of GST in 1986 (instant 10% inflation), and in the 1987 post-sharemarket crash wash-up; the greedy became the needy after the exposure of the tax-evading special partnerships
Back to the present, New Zealand breeders should receive applause in the current season. Despite losing their best fillies and mares annually to overseas buyers, they have rallied and enjoyed a successful string of results in Australia through this highly talented bunch:
Roch ‘n’ Horse and others
Lost And Running, No Compromise, High Emocean, I Wish I Win, Roch ‘n’ Horse, Gypsy Goddess, Riodini, Smokin’ Romans, Callsign Mav, Icebath, Aegon, Renaissance Woman, I’m Thunderstruck, Mo’unga, Sharp ‘n’ Smart, She’s Licketysplit, Mr Brightside, and Hezashocker. Who did I forget?
The breeding industry has done brilliantly with its limited resources. The rest of the industry has performed relatively poorly, with a cumbersome and costly administrative structure that oversees an ever-increasing string of abandonments in an industry clearly in decline.
We have boards for TAB NZ, Racing New Zealand, Racing Integrity, Members’ Council, and one each for thoroughbreds, harness, and greyhounds. Every year the collective cost of running these boards grows at an alarming rate while the collective racing industry diminishes with its ageing and dying demographic with no succession plan.
Seven boards that collectively fail as an administrative umbrella because they are thin on knowledge, passion and vision. Inducting a brilliant lawyer, accountant or business strategy analyst onto any of these boards is a waste of time if the inductee is unfamiliar with the industry. All those people do is collect the director’s fees, and contribute nothing but assumingly have an excellent social time – and we keep bringing them in.
The board ate lunch and left…
Consider this: An NZTR board meeting was held at Riccarton racecourse this season on one of the biggest days of the year. They concluded their board meeting, had a free lunch in the Balmerino Room, and all left for home after lunch bar the Otago representative – before the feature race was run – that’s their level of commitment.
Just think about this: the most successful administration era in racing came post-WW II when racing saw four decades of sustained growth with the best people in the industry stepping up and giving their time pro-bono – passionate insiders that did it for free. Now we have a members’ council drawn from people in the industry who wouldn’t know a good director if one hit them in the face, so they ask for trouble by advertising to the Institute of Directors.
Here’s a typical example of the lack of democracy conducted by NZTR when they sent out a call for applications for directors on 29 September.
The middle paragraph clearly states: “It is however noted that the Members’ Council is unlikely to make any changes to the current Board at this time.”
Cronyism
That’s what happens when the incumbent board builds a wall around themselves, and cronyism begins. But it didn’t start here; it’s been there for a long time. The Members’ Council is supposed to be independent of NZTR, but clearly, it isn’t and is under the control of NZTR, so why have them at all?
And my information is that today, the board or CEO will inform staff that NZTR will be shifting its office from Petone to Cambridge in 2024. An expanding number of NZTR employees will likely be asked to move north or be made redundant. The cost of salaries at NZTR increased from $4.1 million year ended 2020, to $5.4 million year ended 2021 – doesn’t CEO Bruce Sharrock understand that you have to cut your cloth in these tough times?
Does anyone remember when Trackside shifted from Petone to Auckland? It cost $11 million, and there was no justification for moving except for the convenience of CEO Andrew Brown who was on 900,000 euros annually. How much will it cost to shift to Cambridge, where prices are no different from those of a good suburb in Auckland?
Stud Book in Wellington since 1899
The Stud Book has resided in Wellington since 1899, when Volume One was published. It’s a very specialised job conducted by extraordinary people who often spend their entire working lives dedicated to it – do you think the NZTR board has considered or even cares about that?
Every facet of business conducted by NZTR today can be completed online, so there is no justification for arguing for the industry to be closer geographically to the administrative arm. This move only suits the directors – it’s completely self-serving.
Shifting NZTR to Cambridge will cost a fortune in a financial year when TAB returns to the codes are likely to shrink. This week I learned the TAB had warned NZTR about that likely downturn in revenue, and you only have to look at the August and September monthly results compared to 2021 to realise we might be in for some headwinds.
August profit was down, and although September turnover increased on 2020 by $20.5 million, profit reduced from $13.8 million to $13.2 million. Bonus bets and all the other promotions were the likely cause.
The DIA is currently reviewing the possibility of geo-blocking betting in New Zealand to push all betting through TAB NZ. NZTR CEO Bruce Sharrock and TAB NZ CEO Mike Tod both favour getting it through parliament. They’re deluded if they think that’s the answer.
Restricting Kiwi punters to the monopoly of TAB NZ, which offers a lousy product and skinny odds compared to the corporates operating in Australia, might cure Kiwis from betting at all.
The Aussies have all the choices and enjoy the best options. In NZ, we are starting to resemble the Russians – very few options and losing the war.
Two sets of figures recently released by TAB NZ can only leave you thinking that its diminishing turnover/profit trend is not sustainable for New Zealand Racing as we currently know it.
Examining the numbers leaves one in no doubt racing is financially contracting at an alarming rate. Few in the industry seem even aware or bothered about it except for Mike Tod, who has outlined plans in a memo to staff and how he will combat the strengthening headwinds at the TAB.
TAB NZ posted its July and end-of-year result three weeks before a memo from CEO Mike Tod came to staff talking of significant future changes. July revealed a betting profit of only $7.3 million, a massive $4.9 million below budget. A year earlier, the betting profit for July came in at $13.4 million, so this year’s July downturn is substantial.
The July year-on-year downturn calculated out at a contraction of 45.2%. Even when the figure is adjusted for an extra Saturday in July 2021, it still falls by 32%.
$28.9 million downturn off bottom line from previous year
For the full year ended July 31st, 2022, the profit came in at $23.5 million below the previous year. But operating expenses blew out to $119.0 million or $5.4 million above the previous year.
The bottom line differential between year-end 2021 and year-end 2022 resulted in a shortfall of $28.9 million. Last week TAB NZ posted its August profit which brought in $8.6 million, a 28% contraction in two years from the $11.9 million 2020 result.
Rising interest rates, mortgage payment hikes, and a recent sharp rise in the cost of living at the supermarket and other places must affect TAB turnover in the immediate future.
The Optimist has highlighted this industry’s woes ad nauseam for years, and I have always believed that the reluctance of the majority of New Zealand racing administrators to partner/outsource TAB NZ with a global betting operator would one day result in having to do by necessity rather than choice.
That day has apparently arrived.
Memo informs staff of an investigation into TAB partnering
In the memo to TAB staff on September 22nd, written by the relatively new CEO, Mike Tod (who started in March), the first two paragraphs read as follows:
“A key pillar in our TAB Gameplan growth strategy is leveraging global capabilities to build a world-class betting experience for our customers, and cementing a strategic partnership with a wagering operator at the cutting edge of the industry could be a key factor in us achieving that target.
“With that in mind, we have commenced discussions with a small number of international operators to understand how they may help us rapidly enhance our products, services and customer experience while building on the more than $200 million that was passed on to New Zealand racing, sport and communities in the 2021/22 financial year.”
Mike Tod’s claim that they passed on $200 million (true figure $140m) is both mischievous and misleading. He’s including the Betting Information User Charges (BIUC) ($23M), Gaming ($14m), and the reduction in the betting levy ($13m), which had nothing to do with what TAB NZ collected.
What a shock! The Tod statement contradicts everything NZRB, RITA, and TAB NZ (all the same mob) have previously said for years about the future direction of the TAB. John Allen only thought about building a FOB platform to justify his $680,000pa, and Dean McKenzie had a jealous-driven romantic affair with the TAB and had no intention of letting the Aussies near it.
Messara: …partnering will provide significantly increased prizemoney
The Messara Review highlighted it as its most vital recommendation of the 17 put forward, and John Messara AM openly stated that without the partnering of the TAB, the door would not open for the opportunity of doubling prizemoney to revive New Zealand racing.
CEO Mike Tod has breathed half a breath of fresh air into racing with his memo that a serious, proactive, and positive approach to investigating the partnering of the TAB is happening. Whether or not the reason comes back to simple financial commonsense or the TAB has no option as it faces stiff headwinds is uncertain.
Here’s a list of bullet points in the memo to TAB staff that provides testimony to Tod’s thinking on the matter:
Tod recognises the benefits of partnering
“The objectives of a strategic partnership would be to:
“Achieve a customer experience that is on par with leading Australian and global operators.
“Partner with an innovative operator that will help TAB NZ extract the biggest benefits and opportunities from its unique assets (in-play, gaming, retail and broadcast).
“Balance benefiting from a global product roadmap and having the ability to develop bespoke products that cater to the New Zealand environment.
“Have a partner who understands the importance of strong relationships with Government, racing and sport and is prepared to act in the interests of these stakeholders.
“Leverage the resources of a well-respected, global operator.
“For clarity, the process that has commenced is not about a sale of all or part of TAB NZ. It is about trying to identify a world-class strategic long-term partner.”
Tod stresses that it’s not a sale of the TAB but a long-term strategic partnership; what John Messara said should happen in his review four and a half years ago.
Substandard options and odds offered by TAB NZ
In the above five bullet points, the first suggests an admission that TAB NZ offers its customers substandard options and odds compared to other betting agencies – and punters already know that.
The second point mentions broadcast, which might put ‘the wind up’ everyone at Trackside as one of the benefits of partnering is the chance to substantially reduce TAB NZ’s costs which currently amount to a staggering $119 million annually.
The fourth bullet point mentions the strong relationship with the Government, which is another way of saying the Government has assumed ownership/control because Winton Peters bailed the TAB out of receivership with a $50 million gift in the 2020 May budget.
Bullet point four also describes ‘sport’ as a stakeholder, which is entirely incorrect. Sport supplies the TAB with a product on which to bet, for which they receive a fair fee and fair commission on the profit derived. Sport is simply a supplier.
When the NZ Racing Conference and NZ Trotting Conference sought a legal opinion on the ownership of the TAB in 1995, George Barton QC prepared a 24-page report stating that NZ racing clubs “have an irrefutable claim as beneficial owners of the TAB.”
Excerpt from the original document called “Off-Course Betting Scheme” approved by the Minister of Internal Affairs and dated 20 September 1950
The racing and trotting clubs had to put up £50,000 in September 1950 to start the TAB in 1951. Sport has contributed nothing in either set-up and running costs over the past 71 years and suddenly can’t claim to be stakeholders, but the clubs of New Zealand have proven themselves very weak in defending their rightful position of ownership of the TAB.
The fifth bullet point talks about leveraging the resources of a well-respected global operator. Well, is that comment present because the TAB has bankrupted its own resources?
About five years ago, RWWA (Racing and Wagering Western Australia) plugged into Tabcorp’s betting platform for an annual fee of $7 million. Our TAB built its own platform for $50 million, with $17 million annually committed in ongoing costs to Openbet and Paddy Power.
NZRB, in their day, seemed to have a mindset of doing a ‘number eight wire fix’ on the TAB to keep intact its misguided nationalistic safeguarding of a betting business it knew zero about – crazy!
$150 million upfront for partnering turned down 5 years ago
Our FOB platform is already out of date. Some global betting agencies spend as much as $120 million annually on IT development. How did Glenda Hughes, John Allen, and company ever think we could keep the pace up? Five years ago, they concealed a partnering offer from a big corporate betting agency with the upfront payment now acknowledged by insiders as $150 million.
On scale, the TAB in NZ never rated a chance to exist alone in a global market, let alone compete with the product. No one with authority at the TAB through all those years and name changes seems to have ever grasped that fact, and most have walked away without an ounce of accountability.
In post-World War II New Zealand, we saw four decades of growth and prosperity because the people that administered racing all had skin in the game; they had acquired knowledge through experience, had common visions and a passion for horses, and gave their time at no cost to the industry. They were successful.
Then the first minister of racing arrived in 1991, and the retardation began and 14 ministers later, we are still retarding. Most of our administrators today lack horse knowledge and a feel for the industry but, nevertheless, turn up to collect their massive salaries or directors’ fees for attending once a month.
Members’ Council has failed
The so-called Members Council that selects directors for NZTR has an appalling record – proven by the inability of their appointments to make a meaningful contribution. When the system fails, why continue with it?
The faceless TAB board gained their appointments politically through the previous racing Minister Grant Robertson, who also appointed the Chair and CEO of the Racing Integrity Board (RIB) – a retired judge and a retired deputy chief of police.
The cost to racing for the RIB now works out at $40,000 a day – every single day of the year. How’s that for value?
Cronyism, nepotism, partisanship, self-interest, jobs for the boys, call it what you like, but don’t say that any of these people landed their positions through a fair and democratic process to serve the best interests of racing.
Racing’s crooked all right – no doubt about it. But it’s not the people at the coalface.
Government interference is killing the racing goose, which bears no resemblance to its once golden colour. It’s gone a dull grey.
Hire a QC and contest ownership of the TAB
So, why don’t the clubs reunite, employ a fresh QC to do a new appraisal of the ownership of the TAB, and afterwards offer the Government its $50 million back, and reclaim the TAB under the same arrangement as when formed?
Under the directive of the DIA, TAB NZ has instructions to hold a reserve fund of $100 million in case it goes insolvent again. My information says they already have $60 million on deposit right now, but what good is that to the codes and participants?
Even if Mike Tod succeeds with his partnering plan, it will take one to two years to finalise a deal. In the meantime, racing needs the Government out of its life, and if an agreement fails, the clubs should take them to court based on a favourable review completed by the QC.
The marriage is incompatible and the sooner we see an annulment, the better.
TAB NZ runs advertising warning customers against the perils of addictive gambling and betting more than one can afford. It paints itself as an organisation that acts responsibly and cares about its customers, and all of us who place bets would like to think that’s true.
But, I’m afraid it’s far from the truth.
You don’t have to dig far beneath the shiny cosmetic side of the TAB to discover pari-mutuel or tote betting has a Catch-22 side to it, known only by a few people. They include those employees running the TAB’s elite punters group and a small number of big punters getting privileges paid for by the average punter.
It’s a rob Peter to pay Paul scenario. If you’re an average punter betting on the tote, you’re Peter. If you’re getting a rebate because you bet big, you’re Paul. A large number of Peters get skimmed to subsidise the winnings of a small group of Pauls. It does not apply to fixed-odds betting, only the tote.
Big punters getting rebates
In an enlightening conversation this week with a former top Tabcorp man who knows the wagering business worldwide, I learned that at any one time, there exists somewhere between six and ten individuals or syndicates that bet massive amounts internationally. With the help of rebates, usually around eight to 10 percent, but as high as 18 percent in the USA, where the ‘take-out’ can be as high as 20%.
Every wagering company in the world competes for the business of the big punters by offering rebates, and TAB NZ is no exception. But it’s secret squirrel stuff because the small punter or the ‘Peters,’ as I have labelled them, are getting their pockets picked unawares.
I can’t see that this is anything but stealing more money from punters who, over a lifetime, will lose anyway.
One of the Pauls is a man named Zeljko Ranogajec, a native Tasmanian of Croatian parents, who almost sent the Tasmanian TAB broke a few years ago – the state government bailed it out. Zeljko, or Z as he is sometimes known, is reputed to be a multi-billionaire from betting over the past 30 years.
He is still betting but now lives as a tax exile in the Isle of Man after the ATO (Australian Tax Office) chased him for back taxes from his winnings.
Zeljko skimming average punter even when placing losing bets
Z has never done an interview, but when taken to court by the ATO a few years ago, his operation came into the open. He admitted to the magistrate he makes most of his money by placing losing bets, making his money almost exclusively from the rebates in exchange for massive turnover.
Here’s how Z operates. He is a mathematical genius who developed an algorithm that will yield him a profit or loss threshold of +5% to -5% on every race he bets, betting on multiple runners. With a sophisticated computer software system, his computer will calculate the exact amount to be placed on each runner in the dying seconds before the race closes.
With the push of a button, the computer places the bets, and if the algorithm achieves the worse result of minus 5%, Z still wins on the race because his rebate is 10%. Potentially, his best result is plus 15%.
Z is betting on hundreds of races every week around the world, including New Zealand. Here’s evidence of his handiwork at an Addington dog meeting on Tuesday of last week.
Scam exposed on dog race betting
Three screenshots as evidence are displayed at the bottom of the page, but here’s the commentary: With 36 seconds before closing, the odds-on favourite, Diamond Vaper, was paying $1.70 to win and $1.00 to place with $1,246 in the win pool and $519 in the place pool.
In the running with the tote closed, Diamond Vaper showed $1.60 to win and $3.50 (very strange) the place, with the pool unchanged at $1,246 the win and $519 the place.
But two minutes later, well after the race finished, the win pool had exploded to $6,009 and the place pool to a mammoth $16,058. Diamond Vaper jumped straight to the front and won by 5¼ lengths untroubled. Note the vast discrepancy between the runners’ fixed and tote place prices when you view the third screenshot – the winner paid $1.30 to win and $1.40 the place.
The pool had mysteriously increased by $20,302, an increase of 1,150% on the amount shown ‘in running.’
I examined only five dog races that day at Addington and took the screenshots just in case. It’s a reasonable indication it’s happening regularly, and those in the know assure me that Z is the punter, having the luxury of the algorithm and software to get the money on late.
With all the above considered, does item 76 in the Racing Industry Act of 2020 present any cause for concern? It says in (Clause 3 below) that a provision exists for the TAB to allow betting for up 20 seconds after the race starts – potentially a good helping hand in the dog race quoted above. The winner over 295 metres completed the journey in 17 seconds.
A dozen years ago, Z admitted to the magistrate in court that he bet approximately $1 billion annually. No wagering company in the world has banned him because they want the turnover, but he is known to bet regularly in New Zealand because TAB NZ does not restrict the dividend level on his bets, whereas Australia will not accept bets from him paying less than $1.20.
So what happens when a horse such as Winx lines up with an actual price of $0.60 for the place dividend, and the betting rules say it must return $1.00? He bets $100,000 and gets the rebate?
No one talks about rebates. You won’t find any reference to the word in an annual report, so what happens when there are not enough ‘Peters’ in the pool to skim and pay winning bets to the Pauls?
Could the cost be covered up in other places in the annual reports? Here’s a possibility – consider the discrepancy in the 2015 Annual Report for ‘turnover related expenses’ with the 2019 Annual Report where the year of 2014-15 is duplicated.
The problem is that one 2014-15 figure in the 2015 Report is $53 million, but in 2019 the same year mysteriously increases to $64.6 million, a difference of $11.6 million. Where did that increase come from? Does the phrase ‘turnover related expenses’ have a Z in it?
The 2015 TAB Annual Report show Turnover Related expenses in 2014-15 to be $53 millionThe 2019 TAB Annual Report shows Turnover Related Expenses in 2014-15 to be $64.6 million
Indeed the auditors, Price Waterhouse Coopers, should have picked this up when they wrote their report. However, they say the directors are responsible for preparing the financial statement and ensuring they are free from material misstatement due to fraud or error.
The comingling of the trifecta pools with Tabcorp seemed to go sour about 2015 when the Aussie wagering company suspected Z got rebates from the NZ pool, with the latter having a higher percentage take-out – 25%. Either way, New Zealand trifecta punters get a raw deal with smaller pools and the weight of supporting Z.
Recent results posted by TAB NZ indicate all is not well. July profit came in at $8.7 million, $5.2 million below budget. Operating expenses for July amounted to $11.9 million and $1.7 million above budget. You’re in the sewerage when income falls and costs rise by that much.
TAB NZ profit fell by $23 million but costs rose – this past year
For the full year, profit fell by $23.5 million from the previous year to $154.8 million. Operating expenses rose to $119.0 million or $5.4 million above the previous year.
This result is a disaster. The low stakes we race for won’t be sustainable. It’s yet another nail in the coffin of NZ racing, and again highlights the poor decision not to adopt the Messara Review in its entirety.
Recommendation seven of the Messara Review would have markedly increased TAB profitability and halved the costs. But no, we had to keep doing the same old thing.
An ex-TAB long-term employee with 30 years of experience in the racing industry recently told me that key TAB employees are neither concerned about rising costs nor the addicted gamblers from whom they take bets. He said it’s all about ramping up the turnover, so they look good with costs hidden in other accounts – citing the bonus-bet scandal to hide $6 million.
And now we learn the DIA is undertaking a review into online gambling. What a joke that the Government thinks it can review and adjudicate on a business they know zero about.
This review is one of approximately 300 Government reviews currently underway in NZ. No wonder the civil servant population has increased by 50,000 in the past five years
No doubt they are looking into the possibility of geo-blocking the TAB as Australia has done. But there’s no possibility of it happening with TAB NZ in it’s current form with all of these skeletons that occupy the closet.
And it couldn’t possibly happen without partnering the whole business and offering punters a far superior and more honest product than it offers today. Z is not complaining, though. He seems happy with the current setup.
Dividends displayed with 36 remaining before the due startScreenshot 2 with the dog race ‘In Running’Final dividends two minutes post-race with a vastly increased betting pool
Click on the following link for a youtube more information on Zeljko Ranogajec:
Suppose you said this world we live in today has an unrecognisable skew to it, utterly foreign from what we knew even a short five years ago. In that case, you could be talking about politics, extreme climate events, violence, crime, inflation, cost of living, education, All Black rugby, work prospects or the potential for world war, etc.
All of the above have declined in standards or present a greater threat today, and the decline of racing runs parallel to them all. However, a light’s shining at the end of the NZ racing tunnel, and if the stars can see their way to align, the potential for better times do exist further down the track.
In the meantime, the Racing Integrity Board has become the elephant in the room. The Racing Industry Act 2020 transformed the Unit (RIU) into a Board (RIB) with autonomy, power, and an inflated budget, all activated by the then hapless Minister of Racing Grant Robertson.
Robertson appointed an equally hapless bunch of over-paid dinosaur-like ex-judges and policemen with no racing knowledge, expecting them to exercise justice in an industry in which they are ill-equipped and inadequate.
But firstly, let’s take a look at the shining light for racing’s future.
The Messara Review stressed Recommendation Seven of the 17; to outsource or partner TAB NZ with the likes of Tabcorp or an Australian registered corporate like Sportsbet, Ladbrokes, Bet365, etc.
We now know that NZRB (now known as TAB NZ) in the Glenda Hughes/John Allen reign received an up-front partnering offer in the vicinity of $50 to $100 million. Stakes could have almost doubled, as the Messara Review said it would, but no, Glenda and John, in their infinite irrationality, went and signed the industry up for a $50 million Fixed Odds Betting platform with $17 million annually to pay Openbet and Paddy Power for ten and five years respectively.
All up, a $200 million noose around NZ racing’s neck. That has proved a major fiscal obstacle, but a legal option may now exist to gain a release from the contract or, failing that, for the TAB to buy themselves out.
A release from that contract would see TAB NZ unencumbered and free to negotiate a partnering arrangement. Even better, TAB NZ has suddenly risen in value to the tune of hundreds of millions (possibly as much as $1 billion) because of two substantial new money-spinning changes that will occur within 18 months to two years.
The first – geo-blocking betting in New Zealand, as they have done in Australia. When in Australia, you cannot bet with a betting agency outside the country. The round-figure estimation of $480 million bet annually offshore by New Zealanders would divert to TAB NZ.
NZ punters deserve a better product
To deflect the betting to TAB NZ, the geo-blocking has to coincide with the partnering arrangement with an overseas betting agency because the unacceptably poor product dished up by our TAB. New Zealand punters would only buy into it with all the options and better odds – the current deal insults the betting public.
The calculation of overseas online betting losses of $480 million annually comes through Kiwibank monitoring the monthly amount it processes for all forms of gambling, including online casinos. They process $30 million a month through credit cards, and Kiwibank represents only 15 percent of New Zealand’s banking turnover.
The second big money-spinner comes with the advent of Ellerslie’s StrathAyr track, currently under construction. Completion of te surface at Auckland Thoroughbred Racing (ATR) should come within a year, with the second half of 2023 scheduled for bedding-in the grass to develop a robust root system before the prospect of the first major meeting on the new surface on the day of Karaka Millions, January 2024.
Ellerslie’s StrathAyr will attract overseas betting
With the $40 million new StrathAyr surface the equal of any in Australasia, Ellerslie will race for substantial stakes and utilise New Zealand’s unique time slot to offer regular racing of the highest standard. The stakes will attract the best horses, and the potential to beam Ellerslie racing into Hong Kong, and other Asian and American courses, will draw a massive financial reward, benefitting racing nationwide.
When the New Zealand Derby went televised into Hong Kong this year, it attracted massive betting for the one-only race. The total HK turnover amounted to $NZ5.5 million for just the Derby against the total NZ off-course turnover for ten races amounting to $4,143,775.
An entire race card beamed into Hong Kong regularly would result in an off-course betting record and change the face and the fortunes of New Zealand racing.
It still needs to happen; the stars need to align, but the benefits of New Zealand gaining international exposure with a high standard of racing might attract a flush of overseas investment into our breeding and racing. Ellerslie will reestablish itself as the showplace, and with the better stakes on offer, selling all our best horses overseas would slow down.
Auckland Thoroughbred Racing at Ellerslie on schedule with the building of their StrathAyr
There’s no future in running Group One races at places like Otaki on a Heavy10 where dubious quality fields hug the outside fence looking for a winning lane. Racing in NZ can’t continue to embrace mediocrity while we sit on our hands and look enviously at a screen depicting the high-quality product seen coming from Flemington, Moonee Valley, Randwick, and Rosehill.
We can’t beat them, so let’s join them. More than that, let’s make these changes and ensure NZ racing survives. The status quo presents as a poor option.
Provincial mindsets need casting aside. We should applaud Auckland Thoroughbred Racing for dispensing with their committee and replacing it with a professional board of five, now extended to seven, who have carefully developed a plan that will significantly increase the quality of the product. We need leadership, and Auckland Thoroughbred Racing is showing it.
But back to addressing the elephant in the room.
The RIB has mushroomed into a significant problem for the industry. In changing from a ‘Unit’ to a ‘Board,’ it has assumed a more powerful, autonomous position of control through the wording of the Racing Industry Act 2020 and endorsed by Grant Robertson.
It wouldn’t be so bad if the industry viewed the RIB as an efficient, fairminded organisation that displayed a good knowledge of racing and treated all participants equally. It does not apply – instead representing a danger to racing because the RIB wields a big stick on an industry in which they possess too little knowledge while costing it a fortune.
Think about how racing has contracted over the past half a dozen years, and then consider the six years since the 2015-16 season when the RIU cost $5.8 million – a figure thought to be excessive at the time. In the 2021-22 season just finished, the RIB has blown the budget of $14.2 million out to an estimated $16 million while many in racing at the grassroots level struggle to survive financially, and others consider Australia as a means of staying in the game.
Why do they cost so much, you ask? The RIB employs 40 permanent staff and 120 casual or contracted staff – what the hell do they all do? CEO Mike Clement is probably on $350,000 annually (I’m guessing), with additional anecdotal evidence of wastage by stipendiary stewards.
For example, take a recent case of stipes travelling by car from Dunedin to Oamaru races, a journey of 75 minutes, and incurring overnight expenses instead of returning to Dunedin the same day. This type of carry-on happens with regularity. Stipes are like musical chairs flying all over the country.
The RIB had inexpensive office rentals at the ATR offices at Ellerslie but opted for independence by shifting about 400 metres to the more salubrious and expensive Level Two of the modern Ascot Central Building on the outskirts of Ellerslie racecourse.
RIB spending out of control
How much money have they wasted on Operation Inca, a bungled sting on four harness racing people emanating from taped phone conversations in which the police and the RIB have alleged race fixing, but in the ongoing four years the case has lasted, no charges have ever eventuated through lack of evidence.
The incompetence of authorities in not knowing the difference between the discussion of race tactics and race fixing has not only cost the industry a fortune and damaged racing’s reputation, but the accused have all needed their own legal advice, one known to have spent $220,000 alone – and one of the alleged fixed races turning out to be a trial.
How much in legal fees has the RIB wasted on that one?
What about the trainer who had his stables raided just a week or so ago, and after a squad of RIB detectives failed to locate anything illegal, female stable workers experienced the indignity of a line of inappropriate questioning of possible sexual harassment by the trainer – trying to manufacture a complaint rather than acting upon a genuine one.
An industry employee close to the action has commented that CEO Mike Clement, who spent 42 years in the police force, believes that most horse trainers are crooked, and his job is to nail them. The industry as a whole feels that the RIB is trying too hard to discover breaches of the rules and justify their existence and extraordinarily high costs with a consistent flow of harsh disqualifications and fines.
I take the view that racing in New Zealand has fewer misdemeanours today than at any time in the past and is full of passionate horse people trying to get on with their business and survive, but now subjected to the siege of this overzealous RIB.
Crooks invade every industry, and that includes the police force itself. The racing industry is strictly regulated and far less corrupt than the building industry, government departments, and even the legal profession – that’s food for thought.
Core illustration of the composition of the StrathAyr track
John Messara with Redoute’s Choice at Arrowfield Stud
by Brian de Lore Published 8th July 2022
At the end of July, it will be four years since the Messara Review dropped into the hands of the then Minister of Racing, Winston Peters; a review that stressed the urgency of implementing 17 recommendations that required Kiwis to put their self-interest aside, unite, show some courage and embrace change for the revival of the whole Industry.
It didn’t happen. Like that flightless Kiwi-bird trying to relive its ancestry and get airborne again, it didn’t take off. You just knew it wouldn’t the moment the Minister called for submissions for everyone to offer their two-bobs worth.
The powers adopted several straightforward recommendations – the introduction of the Betting Information User Charges, Point of Consumption Tax, repeal of the Excise Duty, and the assignment of the Intellectual Property. However, those positives ultimately overshadowed by an industry still anchored by its failure to recognise the value in outsourcing/joint-venturing the commercial activities of the TAB.
That’s not to say the TAB thing won’t still happen. Forces are at work now, with the relevant parties warming to the idea. The belief that one day racing in New Zealand would have no choice but to get out of its bubble and think internationally is materialising – a high degree of cooperation between the boards of the TAB and NZTR has become a reality.
I digress; speculation on the future of the TAB NZ didn’t motivate this blog, but more particularly, the driving force behind a continuance of rising yearling and breeding stock values in Australia in the four years since John Messara wrote his review.
Brothers in arms: the XAO and Inglis Easter Yearlings
Australian prizemoney incentivises investment in bloodstock, but it can’t be the only factor because the return to owners in 2018 in NSW came out at 48 percent against all costs, and the figure probably hasn’t risen too far above that despite annual prizemoney hikes. When John Messara did his review, he calculated that owners in New Zealand received, on average, only 22 percent back against training costs, and four years hence it would be surprising if that figure hadn’t gone under 20.
I contacted John Messara to find out what he believed drove the bull market in bloodstock prices, and he replied with a compelling summary and a graph to back it up.
He said: “While prizemoney certainly plays a significant role in the sustainability of our Industry, returns to owners from that source, even in the better jurisdictions such as Australia, would at best cover 50 percent of training costs.
“So, this metric makes it a pretty poor investment and cannot explain the inflation in yearling prices over the last 20 years, as demonstrated in the graph below. Further, prizemoney has not been as generous in other open international jurisdictions as in Australia, yet bloodstock values in other places have also risen.
“So what is it?” asked John rhetorically. “Clearly, from the graph, we can see that the price of bloodstock has mirrored the movements in the economy-stock market, all of which makes sense, as in these buoyant times investors have had increased discretionary income to spend on hobbies.”
It’s second nature for John Messara to investigate stock market fluctuations against thoroughbred industry values. He started working life as an accountant in the early 1970s and then ran his own stockbroking firm before establishing the very successful Arrowfield Stud.”
The correlation between the Inglis Easter Yearling Sale and the Australian All Ordinaries Index is very evident
‘What other factors come to mind to influence bloodstock values,’ I asked John?
He responded: “While some of us invest in horses as a business, it is fundamentally a hobby for most, and participation therein is at its highest in buoyant economic times. Again, that’s not the full answer! Many more prominent players like to pit their selection skills against others in finding a superior athlete. In our industry, that’s picking a stakes winner!”
Pattern threatened worldwide
In determining the quality of the thoroughbred as a reference for valuation, evidence is emerging that the Pattern is under threat in several jurisdictions worldwide. Bill Finley writing in the American edition of TDN late in June, asked the question: “Do we really need so many stakes races?”
The article complained, “They could only scrape together a field of four for Saturday’s G.II Mother Goose S. at Belmont Park, run two weeks after they had a field of four in the G.I Acorn S. Saturday’s third race at Belmont fared no better. Only four went in the Wild Applause S.”
Finley further said: “In 2007, there were 474 graded stakes and 107 Grade I’s. This year, there will be 449 graded races and 101 Grade I’s. Over a 15-year period, the number of graded stakes has declined by 5.3% and the number of Grade I races has fallen by just 5.6%. The numbers haven’t come close to what has happened with the foal crop over that same period of time. The registered foal crop in 2007 was 34,358. In 2022, it will be about 17,000. That’s a decline of more than 50%”.
“That means that the American Graded Stakes Committee hasn’t done its job. The decline in the number of graded stakes should at least somewhat resemble the decline in the foal crop. That hasn’t happened. The graded stakes committee needs to show the sport some tough love and start taking a hacksaw to the list of graded stakes.”
JM: the Pattern must be protected
New Zealand also has a problem with the Pattern, but it appears the USA has a bigger one. John Messara has always advocated the protection of the Pattern in maintaining the integrity of the catalogue, which rewards excellence and determines values.
John says: “Stakes wins bring financial rewards and international recognition within the Industry. Thus, the Stakes program or Pattern plays a vital role in maintaining enthusiasm and demand amongst thoroughbred players and underpinning the residual value of the stock. Black type or stakes races established under guidelines from the IFHA are recognized internationally and form the basis of cataloguing standards, in turn supporting the fluency of the bloodstock market.
“The Stakes program underpins the development of ‘families’ in thoroughbred breeding and provides the pathways for planning racing campaigns and benchmarking our equine athletes.
JM: the Pattern – the bricks and mortar of the industry
“At the highest level, group one races are intended to ensure the best horses, jockeys, and trainers are pitted against each other to benefit the fan base and determine ultimate levels of athletic excellence. That‘s why I describe prizemoney and the Pattern as the bricks and mortar of the Industry.
“Like any other sport, horse racing must continue to be a meritocracy with the best athletes gaining the best rewards; the established internationally recognised standard for this is “black type.” However, to continue to play that role, the black type’s efficacy and integrity must be beyond reproach, and to that end, there is a job to do in reviewing our stakes program in Australia.
“The levers that drive our Industry are clear – prizemoney, the Pattern, and a fair, orderly, and enjoyable participation environment that rewards the best. Achieving and maintaining this takes a holistic approach from our industry administrators,” concluded John Messara.
However, rising inflation and the perilous state of economies worldwide throw a potential spanner in the works. Readers having viewed John Messara’s graph, which closely aligns prizemoney to Australia’s share market would ask what happens if or when the post-pandemic recession arrives, as many economists predict?
Australian prizemoney on the rise again
For the coming season, NSW will increase prizemoney by $29 million to $336 million. The minimum Saturday metropolitan stake rises from $130,000 to $150,000 – first-place going up from $61,250 to $76,500. Victoria has signalled a $26.2 million increase rising to $314 million across all levels for the season. Saturday in Melbourne goes from $130,000 to $150,000, with first-place rising from $71,250 to $82,500.
When the stock market crash came in 1987, Karaka had a record sale in 1988, and the Industry didn’t feel the full effect until later in the year when the Bart Cummings ‘fire sale’ took place in Sydney. Other recessions have also had a delayed impact on bloodstock.
The Bill Finley argument that the USA’s foal crop numbers should reflect a similar decline in their graded race classification doesn’t identify quality. The foal numbers in Australia have declined marginally, but the quality of their bloodstock during that period has gone to an elevated benchmark over any previous era.
We can vouch for that, anecdotally, watching many of the best fillies and mares leave for Australia annually due to New Zealand’s inability to afford to retain them.
The slow, painful death of New Zealand racing has never thrown up more evidence in recording its own demise than from the figures I extracted from the New Zealand Stud Book during the past week.
But far worse than the picture painted by these undeniable and tragic statistics is the ineptitude thoroughbred industry administrators display in refusing to recognise the major problems and then act with positive remedial action.
Asleep at the wheel, self-interest, and incompetence are the terms that come to mind when I think about the road New Zealand thoroughbred people are heading down, a road soon to be renamed Path of Penury.
When Mike Hosking related ‘Mike’s Minute’ on Newstalk ZB this past Wednesday morning, he spoke of the NZ Government, but it mirrored everything about the administration of the thoroughbred industry.
He said: “My biggest frustration with this country is that it’s not what it could be. In fact, it’s not what it has been; we lack an aspiration and a determination to be great, we are muddlers, we are dabblers, and we are led from the top by a bunch of out-of-touch theorists who have provided an unprecedented amount of damage to our culture and economy.
“The lack of delivery, the wastage in expenditure, and the recession almost upon us will add another nail in the NZ economic coffin.
“…people can go anywhere, and you know what, they will” – Mike Hosking
“This is a small-minded government with a small-world view, and the result is we are basically shrinking – people can go anywhere, and you know what, they will. In a world screaming out for skills, we are lining ourselves up as a country moderately interested in skills, but not overly, and when you get that, you get a loss of demand.
“Having a smaller number of people paying a greater share of an ever-increasing bill is a path to depravation, not a prosperous future.”
Mike’s rant all but describes racing administration in the new millennia – lacking aspiration and determination, muddlers, out-of-touch theorists, wastage in expenditure, shrinking, and a path to depravation.
If you want to view shrinkage, study my graph below, which I composed from four years of actual figures from matings/foals 2016/17 through to 2021/22, and projected the same rate of decline for the next two seasons to 2022-23. The 2022 matings predict a crop in the 2023 spring of only 2013 foals which equates to a foal depletion of 42 percent over six years.
If that’s not shrinkage, what is? Comparing Australia’s foal crop from stats over the latest available six-year period from 2014/15, foal numbers decreased only 2.76 percent, from 12,989 to 12,640. The 2.76 percent against NZ’s 42 percent directly reflects the lack of sustainability of NZ racing through the diminished viability of racing horses for paltry stakes against ever-increasing costs.
At NZTR, they talk about the assets of racing, i.e., the racecourses they wish to sell up to bolster their finances; they talk in press releases about the wonderful work they’re doing with horse welfare; they talk about the success of twilight racing and the Waikato racing clubs merging to secure the future; they talk about appointments of non-racing university graduates to the executive team with even more administrative expansion to come.
They talk about the opening of synthetic tracks as the panacea for winter racing; and they talk about lots of other similar stuff, none of which will return any increased stakes to the majority of owners who are on the bones of their backside.
They talk only about the items that pat themselves on the back and do nothing for the long-term security of racing. As the Titanic heads straight towards a giant iceberg, they stand on the deck, looking the other way and rearranging the deck chairs.
…crumbling under the threat of a shrinking horse population and the Pattern
It makes you wonder if most of these ever-increasing ‘have no skin in the game’ non-racing directors even understand that the foundations of racing are crumbling under the threat of a shrinking horse population and the Pattern.
In the last report of the NZ Pattern Committee, published on September 15th, 2021, three important races received downgrades for the current season; the Auckland Cup from Gr.1 to Gr.2, the ARC Easter Stakes (formerly the Easter Handicap) from Gr.2 to Gr.3, and the Rotorua Cup from Gr.3 to Listed. A further rationalisation is inevitable in an industry annually contracting in meetings, races run, and thoroughbred population.
Is NZ moving in the same direction as Italy, which ran its last group one race 18 months ago? Italy will never recover; it’s too late for them.
Take as an example the case of the Group Two Ultimate Mazda Japan Trophy run at Tauranga on March 26th. The race worth only $110,000 had only six starters, and the winner, a rising eight-year-old gelding named Gino Severini, won with a local rating of only 93 – an embarrassment that the Pattern Committee will have to deal with at its next meeting. Numerous other examples exist this season.
In the Pattern Committee report, it states: “While each NZ Pattern race justifies its status with respect to the APC (Asian Pattern Committee) Ground Rules, the NZPC views the percentage of Pattern races as unacceptably high if confidence in the integrity of NZ black type is to be maintained.”
…the NZ Pattern race percentage is uncomfortably high at 6.0%
In 2020, a Pattern Review, in part, in its findings, stated that: “the NZ Pattern race percentage is uncomfortably high at 6.0% and could compromise the credibility and commercial value of NZ black type.”
The Australians are already saying the value of New Zealand black type is well overstated, and not without justification, but they have to go quiet occasionally when NZ-bred and trained horses cross the Tasman and continue to win a good percentage of Australian group races with consistent regularity – thank God for the defunct Tavistock and the rising 21-year-old Savabeel.
But soon, we will enter a post-Tavistock and Savabeel era in which our broodmare population has continued to decline. Only five new stallions joining the ranks in each of the past two seasons is worrying when you consider that only one new stallion addition in 14 or 15 makes the grade. A much smaller percentage rise to the heights of Tavistock or Savabeel.
New Zealand has an enviable history of past success thanks to good horsemanship, judicious selection, environment, the temperate climate, suitability to grow good grass, and a fantastic record of rearing and developing quality racehorses since the days of Carbine.
…our horse people are the true assets
But that’s the past; the future looks anything but rosy. The environment will always exist, but our horse people are the true assets. As the thoroughbred population declines, so do our people numbers, with fewer entering the horse business as a career – coinciding with a rising age demographic.
New NZTR CEO Bruce Sharrock is saying the club collateral are the assets. He’s promoting selling all the clubs silverware, putting the money in the NZTR bank at five percent interest, and injecting $50 million annually. He said exactly that.
Sharrock doesn’t say to who, what, and where the $50 million would go, and that’s a worry because NZTR has a poor record of financial management, highlighted by the sale of the four-story Taranaki Street building in Wellington early in the millennia, and then paying rent forever after. That was nothing to do with Sharrock but the departure from similar thinking has not surfaced in recent times.
In a NZ Racing Desk article on April 12, Sharrock said: “At a very high level, if you look around the country and look at the asset base that the industry has, it would be safe to say, including Ellerslie, there would be a billion dollars worth of assets”
“If we can work together.” – Sharrock
Sharrock continued: “You could argue that it is not returning what it should to the industry. If we can work together and rationalise the assets and start generating a reasonable term, and let’s assume five percent which I think is conservative, that’s another $50 million running into our business annually.
“That all of a sudden, transforms the industry for generations beyond ours. Further track closures will also be part and parcel of the way forward. “I think there is further rationalisation of venues to come, without a doubt,” concluded Sharrock
The problems for Sharrock are that, firstly, the New Zealand industry has never worked together and never will; secondly, economists worldwide predict a recession which is likely to diminish discretionary spending at the TAB; thirdly, he is not talking up the need for stakes to increase which we all know is the only mechanism available to drive ownership, and straight-line the thoroughbred population.
Racing people have lost control of their industry, and that’s the problem. The game has undergone a 20-year hijacking by the government and the corporate world. Instead of the TAB and NZTR acting as service providers for the overall health of the thoroughbred industry, they now operate as corporate entities in their own right and have money on deposit that doesn’t appear to be in use for anything but their own expansionism.
the minimum stake could easily be $20,000
If just some of the cash reserves held by the TAB and NZTR went into prizemoney, the minimum stake could easily be $20,000. But there is no appetite surfacing from these boards for increased stakes, especially at the minimum.
New TAB boss Mike Tod didn’t waste any time employing a former workmate from Air New Zealand, a lady named Jodi Williams, who apparently made the corny safety videos that appear on the small screen for compulsory safety procedure viewing before every takeoff. Tod inherited an existing marketing manager, but he must have needed another?
Is anyone getting a sense of Deja Vu here with the name of John Allen coming to mind? And Sharrock has admitted employing two graduates with two more yet to be employed.
Is anyone getting a sense of Deja Vu here with the name of John Allen coming to mind? And Sharrock has admitted employing two graduates with two more yet to be employed. How could they possibly add value or save an industry that’s foreign to them?
So, an expanding admin is needed to preside over an industry haemorrhaging to death. Does anyone in racing comprehend this mindless stuff that results in our best horse people retiring or their relocation across the ditch to Australia? They are our assets, and we are losing them.
Mike Hosking hit the mark when he said, “people can go anywhere, and you know what, they will.”
Publisher and successful horse owner, Dame Wendy Pye
by Brian de Lore Published 25 March 2022
Well-known publisher and multiple racehorse owner and breeder, Dame Wendy Edith Pye DNZM MBE, has lashed out at NZTR for failing to give racehorse owners the deserved consideration in light of this week’s government announcement to relax some COVID protocols.
Dame Wendy contacted The Optimist yesterday to highlight another unnecessary hurdle for ownership in New Zealand created by a belligerent and bureaucratic NZTR that seemingly discourages owners from attending race meetings.
Dame Wendy said: “As an owner of many horses in New Zealand, I felt very disappointed to receive the NZTR DIRECTIVE FOR THE COVID PROTECTION FRAMEWORKupdate and an invitation from the club to go racing to see Appellant race at Tauranga this Saturday.
“They have not applied the new rules. No consideration is given to the fact that we are still behind a wire fence, have no access to our horse, and more importantly, no picture at the end with the trainer, jockey, and horse, if the horse wins. Owners are special, and NZTR need to recognise that fact”
Govt says: no limits for outdoors. NZTR says: Strictly no admittance to birdcage
The changes to the traffic light system from 11.59 pm Friday 25 March that Dame Wendy refers to says: ‘There will be no limits for outdoor activities, such as gatherings and events. You do not need to wear a face mask outdoors.’
After assessing those changes, NZTR sent a letter to owners the next day with a directive stating: ‘There is strictly NO admittance to the birdcage or any other official area.’ Why? The letter ended with the signature of Bernard Saundry.
When Dame Wendy talks about a wire fence, she only speaks euphemistically, but one may as well exist. The hypocrisy of this continued race day restriction is clear when you consider the owner is allowed to pick up the jockey and drive him/her to the races, drive them home and take them out to dinner. Additionally, no restriction applies to trial days where owners, trainers, and jockeys traditionally engage in close-up chats to evaluate performance.
Dame Wendy is incensed about it because she is passionate about racing and her horses. As an owner of numerous thoroughbreds, she is fully involved and delights in getting to the races whenever possible.
“Maybe they don’t need owners to continue racing,” lamented Dame Wendy. “We have put up with standing behind wire fences under Red. We are still under Red, but after Friday at midnight, we are allowed to be out in the open in large numbers without masks.
…to protect jockeys from getting COVID
“Also, when I queried this policy, on the phone, of no owners allowed in these places like the birdcage, I was told it was to protect jockeys from getting COVID. Sadly COVID will be with us for a long time. Does this mean the jockeys are not allowed to socialise with owners after the races?
“This ruling seems strange as health authorities tell us the best place is out in the open air. In fact, they say there is very little chance of contracting COVID outdoors. I don’t think owners often hug jockeys, but maybe that could be a rule. Sadly, as a committed owner who loves the industry, I see ownership dying.”
Dame Wendy concluded by saying: “I believe COVID will be with us for a long time. Why owners cannot at least be offered some joy from winning or even getting a placing is a mystery to me. It’s time for big and small owners to stand up against these subversive rulings and get racing in line with other jurisdictions, just as we’ve seen in Sydney and Melbourne on trackside.”
Owners today are subjected to decisions made by many people who have never owned anything larger than a cat or dog. Lack of empathy and increased government control is placing the racehorse owner closer to induction to the list of endangered species, with no serious planning underway to arrest the decline.
Australia keeps forging ahead
Several blogs ago, I identified total stakes offered in New Zealand had risen 2.5 percent over a 12-year period, compared to 73.3 percent in Australia for the same time.
Both TAB NZ and NZTR have retained money on deposit instead of increasing funding for increased stakes. Observers on the inside say some directors don’t believe growing stakes at the maiden and R65 level races will improve the industry enough to make a difference – what planet are they from?
High inflation is expected to go over seven percent this year, and sharply rising fuel costs to transport horses will go straight onto the owner’s bill and exacerbate the problem of sustainable racing as stakes money remains static.
Owners pay every single dollar to put racing on, and punters bet enough at present to provide the meagre stakes money for which owners race. Before the allocation of stakes, the administrative cost of running racing, the directors’ fees, and salaried executives are extracted. The latter figure is disproportionate to what’s left for stakes.
The entire problem can be fixed by partnering the TAB with a corporate such as Sportsbet, Entain, or Tabcorp. As a racing nation, we need to start thinking of ourselves as another state of Australia and join them. Partnering is a double-edged sword – increased income while cutting overheads.
What is the future in remaining independent and falling further and further behind Australia?
Tauranga has only 79 runners for eight races before Saturday morning scratchings
Look at the Tauranga meeting tomorrow. Only 79 runners for eight races before Saturday morning scratchings. Stake money is depleting the ranks of owners. Lately, the field sizes have fallen away. Two meetings ago at Trentham, only two of the eight races had fields of double-digit runners.
If we don’t partner the TAB, scale will beat us into obscurity. Sportsbet, for example, spent over $100 million on IT development last financial year. We spent about $5 million. How much ground will we lose annually? The platform is already out-of-date, and the product they offer is not competitive and hasn’t been for quite some time.
How many of the TAB board would fully understand that? They won’t be in favour of partnering, just as turkeys have never voted for Christmas.
Footnote
Apologies to those readers who complained about the extended time lapse between this blog and the previous one. I was looking for something positive to write about, and I’m still looking. Let me know if you hear of something.
This lone fisherman’s take on the new TAB CEO appointment cleared the early morning mist before a successful catch
by Brian de Lore Published 20th January 2022
TAB NZ’s Monday announcement of its new CEO revived memories of more than seven years ago when John Allen’s name occupied the press release as the new CEO of the New Zealand Racing Board (NZRB), name-changed to RITA in 2019 and now known as TAB NZ.
The obvious common denominator between John Allen and the appointment of new man Mike Tod is no wagering or racing knowledge. The similarities go deeper in that both gained the appointments from new boards with chairs possessing no wagering or racing knowledge.
And those chairs, Glenda Hughes then, and Mark Stewart now, have come as selections from Ministers of Racing, Nathan Guy and Grant Robertson respectively, two politicians from diverse backgrounds but with scant understanding of the business and certainly no wagering or racing background.
Seven years ago, the Guy, Hughes, and Allen trifecta proved financially crippling. Against all industry advice, they exhausted all available industry cash reserves and guided racing recklessly into massive debt and insolvency, and then they left to do other things. Recently it has come to light that the same team turned down a massive offer for partnering in 2017 without consulting the industry.
The new seven-year cycle trio of Robertson, Stewart, and Tod couldn’t possibly do worse, but history is against them turning around an industry with a multitude of problems of which they have a meagre understanding. It’s the not sticking to your knitting senario, having no skin in the game, and repeating failures – revalidating Einstein’s definition of insanity.
The view of the lone fisherman
Repeating those criticisms brings on more delirium for this writer. Better to seek an independent opinion and ask a thinking lone-fisherman with a lifetime of racing experience both here and in Australia; a man who fully understands the vagaries of the TAB and its strengths and shortfalls; a man with an ability to clear the fog and articulate his thoughts with clarity; a man who in his time would have made an ideal CEO of the TAB.
His name withheld for obvious reasons, but for this blog, let’s call him Sherlock Holmes due to his extraordinary skill in ‘detection,’ an adroitness he uses primarily today to seek out Snapper, Kahawai and Kingfish in our better fishing waters.
On Monday, I emailed the press release to my fisherman friend, Sherlock, and asked if he had any thoughts?
“What gets me is this sort of stuff” – fisherman
Sherlock aimed his first retort squarely at the language: “What gets me is this sort of stuff . . .’deeply customer-centric leader with extensive experience in key areas of focus for our organisation, including product and service innovation, marketing, brand and consumer engagement. His appointment and those areas of focus will allow us to drive further revenue growth for our racing and sporting stakeholders.’
“I have never in my entire life (and I’m three-quarters of the way to a century) heard anyone talk like this. It is as removed from everyday English as a passage from Hamlet. But Shakespeare’s works are confined to the stage. This Stewart fella is writing a press release. Can he not communicate with racing people in their own language and manner of speaking. Why this bureaucratese, this gobbledegook? My guess is that it is designed to obscure rather than illuminate.”
But what about Tod’s long list of jobs, I asked Sherlock?
“Yes, you are correct to bring up Tod’s constant changing of jobs. If he was a whiz at TVNZ, Fonterra, and Air New Zealand, why is he not now on a path to become CEO of one of those organisations?
“He’s a non-racing person in an industry where everybody involved has to be committed to the sport. Unlike air transport, banking, television and dairy produce, there is no reason for racing to exist. That it does exist comes down to its participants being passionate about it. Their lives would be empty without it. It’s their faith.
“On that faith note, all the great religions of the world insist that their Popes, Archbishops, Grand Muftis, Dalai Lamas and so on kick off their careers at the basic entry-level and work their way up. The military — another area of life that people join because of their love of the life it provides — is strict about this, too.
“On a brighter note, a Harvard Business School education would have contained lessons on how to keep a bureaucracy — which the TAB undoubtedly is — lean and streamlined. Here’s hoping Tod was focused on the days those lectures were given.”
Proof of the day’s catch sent with a strong view on the appointment of Tod
The Sherlock Holmes observation that racing needs a commitment, and racing exists only because of the passion, poses the next question – do the mainly non-racing, non-passionate people now running racing see it as dispensable with sport increasing its percentage of turnover and increasing its share of the pie?
When Mike Tod arrives in March, he will discover the TAB’s best period of profitability in recent times came when NZ racing went into lockdown, during which time betting turnover rose but the industry saved the distribution of prizemoney until racing recommenced.
Another worry for all racing today is the government threat of banning greyhound racing in New Zealand (like the ACT in Australia). Twice now, the industry has received a ministerial warning on animal welfare issues, and in this ever-increasing woke-world of political correctness and increased polling by the Greens, who knows if the dogs will go to the dogs.
After banning greyhounds, the nutty animal activists would then come after the horse industry in increased numbers. The non-racing, mercenary graduates of the Directors’ Institute that currently dominate racing’s administration might not care if a new TAB business plan identified NZ greyhound racing as dispensable and could have a replacement in waiting in the form of other overseas betting mediums.
Racing has no reason to exist other than a passion for horses
Sherlock the fisherman has reminded us that racing has no reason to exist other than its participants’ love of horses and their passion for racing them. But the game has declined, and the divide between the participants and the game’s administration has created increased tension, especially in light of unsustainable increased running costs at NZTR.
Very little information has flowed from TAB NZ to interested parties since the new board took control on August 1st. The codes have failed in their duty as specified in the Act to draw up a commercial agreement, take it to TAB NZ, and stop the tail wagging the dog. Yet, the legislation will be two years old in July.
The TAB supposedly acts as a service provider to the racing -The Racing Act 2020, clause 57 says: The objectives of TAB NZ are—
(a) to facilitate and promote betting; and to maximise—
(i) its profits for the long-term benefit of New Zealand racing.
But that isn’t happening; administrators ignore the legislation at their convenience, and the codes collectively have failed to come together for a show of strength and invoke the part that would devolve the power base.
Instead, NZTR concentrates on compliance issues. This past Monday, a party of six NZTR employees went Air NZ to Christchurch and Dunedin (at what cost?) to preach regulatory changes to horse trainers about coming restrictions on the issuing of trainers’ licences. Is this just another exercise in increasing bureaucracy while adding no value to the racing product?
While NZTR sweats the small stuff, the TAB hasn’t changed its ways. Why, for example, in its 2021 annual report notes to the financial statement, does it say on page 43, “$16 million relates to TAB NZ general cash funds invested in term deposits as part of TAB NZ’s normal investment strategy.
The TAB has never had a financial strategy (or should it have) to invest funds – they have simply made that up as an excuse to withhold funds for uses other than distribution to the codes for prizemoney.
TAB NZ Annual Report 2020-21: TAB undistributed betting surplus circled in red. Why hasn’t this money come down to the codes in accordance with the Racing Act 2020?
TAB NZ is a body corporate, not a private investment company acting for shareholders. And under the influence of this government, it has made less than a wholehearted effort to maintain an equilibrium for a sustainable racing future – a blight on all those involved.
TAB NZ Annual Report 2020-21: TAB balance sheet, cash and cash deposits circled in red.
Most people involved, including the Racing Minister and the majority of the TAB board, will not understand the meaning of a sustainable racing future – they are simply not au fait with the real issues confronting racing to point this failing business in the right direction.
The thoroughbred racing industry in New Zealand continues to plot its own path to penury with hapless decision-making, a lack of empathy for the stakeholders, and an apparent inability to recognise ‘the fix’ or the changes required to make racing sustainable.
The dawning of 2022 hasn’t thrown up any new hope, in my view, for a failing industry run by lightweights incapable of righting the course of the ship. Essentially, it comes back to leadership and the quality of the people in charge. Too many involved today have entered racing from the outside because of directors’ fees or the offer of an executive position with a hefty salary.
It’s no longer about people with a racing passion. Whatever way you assess it, the system and structure is broken and badly needs a trip to the ‘The Repair Shop.’ Only a major overhaul will suffice; the Racing Act of 2020 is not the panacea Winston Peters said it would be – it opened the door for more government control and a faster decline.
The narrative and tables that follow in this blog show conclusively that racing’s future is financially unsustainable with the current structure using the same people. The factual figures drawn from industry publications are uncontestable. They come from Size and Scope Reports, Annual Reports, Stallion Registers, etc.
Let’s compare two figures and try and make sense of it. In 2004 we had 1,434 registered trainers, and the Racing Integrity Unit cost $1,188,214 for the season. In 2021 the number of registered trainers had reduced to 790, a decline of 44 percent. But the RIU, which is now the RIB, will cost $14.2 million this season – an increase of almost 1200 percent from 2004.
Racing in the 2004 era didn’t particularly have an integrity problem out of the ordinary, and the scrutiny of trainers is only a tiny area of its jurisdiction, but how do you equate an almost halving of the number of trainers over 17 years during which time there’s a 12-times increase in the cost of integrity?
Over-indulgence in the use of industry money for administrative expansion over and above putting it into stakes isn’t a new trend for racing. NZRB, when run by Glenda Hughes and John Allen, blew $200 million of potential stakes money when they signed up the TAB for the Fixed Odds Betting Platform instead of outsourcing the service to TABcorp or Sportsbet. They walked free, and we inherited the legacy – that’s justice for you?
NZTR increases cannot be justified in an industry contracting every year
When they departed the carnage, we all thought the ‘gravy-train’ had finally derailed itself. But no, NZTR had already climbed aboard. In the 2004 to the present era of comparison in the accompanying tables, it’s safe to say racing has declined by 25 to 30 percent overall. But against that trend, the cost of running NZTR far exceeded the CPI index by rising to $10,890,239 or just on $210,000/week for last season, an increase of 271 percent on 2004. Salaries for the same period rose 631 percent to $4,124,624.
If a counter-argument to justify current costs could be mounted through a revival of industry fortunes, my accusations would be less impactful. But exponentially rising costs for an owner to go racing against the potential return, tells us the angle on the descent graph has steepened in the last year.
Worst still, NZTR costs will rise again this season. It has created a new position and employed a Chief Operating Officer, one rung below CEO Bernard Saundry. The board also plans to open an office in Cambridge (and at what cost?) because Waikato is the hub of the industry, and the location better suits the Auckland-dominated board. Given the state of racing, the move has no justification.
The board apparently had initially planned to shift the entire NZTR staff to Cambridge, but when several said they wouldn’t go, having two offices became the plan which has remained reasonably hush-hush. Chairman Cameron George, who has resided in Australia for the past year, said when elected in November 2020, he would run NZTR transparently, but quite the reverse has resulted.
Missing in Australia for an entire year, George now isn’t alone. CEO and fellow countryman Bernard Saundry flew to Melbourne the week before Christmas, so will either ever get back? Unless Minister of Racing Grant Robertson has issued a pre-departure return pass for Saundry, the COVID-19 website states that a ‘critical purpose to travel’ to New Zealand is required to enter New Zealand – and that’s for New Zealanders.
Saundry’s replacement will soon be announced, as will replacements (2) for the NZTR board. Short of Peter V’landys, who could turn this shambles around and make it work?
Today is January 7th, but if you’re a trainer looking to plan a campaign for your horses, after March 21st, nothing appears on the website for race programming or stakes money. My information is that NZTR’s promise last July to announce winter prizemoney from April onwards by Christmas did not happen because ‘they forgot.’
In a lame-duck press release sent to stakeholders on December 23rd, NZTR blamed the Delta variant and its effect on gaming income as the reason the stakes announcement didn’t happen and isn’t happening now until February. Why did they say that when gaming income has never factored in providing stakes for racing – someone made it up, with both George and Saundry’s signature on it dated the 23rd and neither in the country.
Like other press releases, they told readers how wonderful they’re doing with the usual spin that makes your eyes glaze over.
Last October, they sent stakeholders an NZTR Directions Update after receiving 40 submissions. Given their past record and the fact that the board is very upper North Island top-heavy, how can they be trusted on the following themes considered for changing at their February meeting.:
• Venue classification
• Investment of increased prize money – new initiatives Vs lower grade racing.
• Venue sale/use of assets for national, regional, or local purposes.
• Strengthening of certain areas in the North and South, possibly at the expense of other areas.
• Rotation vs Permanent placement of proposed initiative events.
Sorry, but where’s the NZTR record of good money management and cost control? None exists, so why would a Dargaville or a Timaru Club gladly hand over its 100-year built-up assets to an organisation which is just as likely to build itself a flash office block in Cambridge or have another round of salary increases?
NZTR has failed to draw up a commercial agreement with the other two codes and take it to TAB NZ, despite that direction having appeared in the Racing Act of 2020. That failure has cost the codes dearly as TAB NZ has $13 million on deposit that should have come down to the codes for prizemoney. Previously I identified that problem in “What TAB NZ doesn’t want its stakeholders to know,” published on November 2nd.
The latest NZTR’s Annual Report on page 13 says the following under, ‘nztr statutory role’:
(e) to distribute revenue received by the code to racing clubs registered with the code.
Then go to page 35 and see they have a total of $8.5 million on term deposit that, under their statutory obligations, according to the Act, should have gone to the clubs for distribution as prizemoney. NZTR had only $1 million on term deposit in the previous year. This is a cut and dry case of wrongful withholding of monies belonging to the pool of stakes money. It’s called defrauding the clubs and consequently the owners.
Racing doesn’t need this sleight-of-hand carry-on; it needs to survive and deliver everything it can to the grassroots. The clubs are the heart and soul of racing; it’s where the thousands of volunteers turn up as committees and workers because they have a passion for racing.
New Zealand can’t achieve Flemington and Randwick quality racing by selling up its grassroots to fund it – Australian racing has five levels of racing, and each exists to support the next level up. Our problem is we have five levels of administration, and none appear to be better than mediocre.
Everyone who has thought about it knows deep down racing has to change dramatically to survive – instead, we are in denial heading down a sinkhole. How do you keep justifying increased running costs for an industry in a severe state of numerical decline? The tables herewith tell the story.
Racing through NZTR doesn’t convey the truth; it covers up to make things look okay. And it lacks the fundamental integrity and passion of the people who ran it successfully in the previous millennium.
Footnote: The number of breeders in 2004 of 3,156 owned an average of 0.88/broodmare. By 2021, although increased in number to 3,868, the average ownership diminished to 0.34/broodmare.
The Trentham abandonment fiasco on Saturday is yet another example of a racing industry in administrative dishevelment; the failure to get the basics right or even follow its own rules.
The two most basic requirements to run a race meeting are to have horses ready to race and a racing surface prepared for that purpose. The trainers did their part and took their horses to Trentham from all parts of the country at great expense to the hundreds upon hundreds of owners who pay for them.
But the inability of the Wellington Racing Club/Race Incorporated/NZTR to carry out the most basic of their responsibilities to have a track correctly prepared for safe racing resulted in a monumental fail.
Everyone in racing knows that when summer arrives and the tracks get firm, summer rain always has the potential to turn the racing surface into a skating rink. A combination of a competent track manager, common sense, and an eye on the weather forecast usually eliminates potential problems. That happened on Saturday at Matamata, but not Trentham.
The problem occurs every year – though not usually at a premier meeting with several important group races – and the track manager gets chained into the stocks before he’s hung out to dry. Once the level of vilification has satisfied the powers that be, and the blame’s placed squarely upon one or two heads, the industry moves on before the same problem rears its ugly head again the following year.
The ambulance at the bottom of the cliff
The ambulance at the bottom of the cliff is a recurring theme for NZTR. In a document named ‘NZTR and RIU Race Meeting Abandonment Protocols,’ dated May 2018, the narrative covers only the procedures to be followed in the event of abandonment. It does not provide any pre-race day checks and balances procedures to mitigate the risk on the days leading up to the meeting.
So, if the track manager has a bad week, has taken his eye off the ball, potentially lost interest in the job, or even received a coercive phone call from a trainer looking for a particular type of going, the ingredients for a fail come into play. By Saturday morning, it’s too late, the damage irreparable.
NZTR is mostly to blame for Saturday’s abandonment, and the buck stops with CEO Bernard Saundry. He needs to front up and make that admission and fully apologise to all affected parties and provide a refund to the extent of $1,500 per horse (average) and not one likely to be a fraction of that amount. The Annual Report shows NZTR held back $10 million, so the money is there to pay it.
As well as the costs of horse transport – the commercial price of floating a Pukekohe-Trentham return is now $850 to $900 – you add accommodation for trainers and staff, airfares, meals, and petrol for those who drove. Midnight Mass, the favourite in the one and only race, will not be refunded, though, because it raced, nor will the punters who made it favourite even though the jockey had concerns about letting its head go.
Owners drove from Winton to Trentham
And then the story of the two owners who drove to Wellington from Winton in Southland thinking they would see their horse run in the Captain Cook Stakes. Petrol, the ferry crossing, two nights in a hotel, and on arrival at Trentham’s race day office, got the news that they had run out of racebooks and the issuing of owners’ drinks tickets had discontinued at the WRC due to COVID.
“Note from Bernard Saundry” in this week’s Raceform devoted only the first four paragraphs to the abandonment and didn’t go as far as an apology or an acceptance of responsibility. It stated, ‘compensation in line with NZTR’s policy,’ which historically will be meagre when applied to the actual cost. Typically the Saundry article talks mostly about vaccine passes, moving from red to orange traffic lights, and border crossings – all issues relevant to racing but sweating the small stuff compared to a premier meeting abandonment due to mismanagement.
NZTR had 36-hours prior warning the racing surface at Trentham might present a problem, but it failed to take the appropriate action. ‘Racing and Breeding News’ reported that trainer Alan Sharrock phoned stipendiary steward Neil Goodwin after Thursday’s abandonment of the last four races at New Plymouth as he knew the forecast predicted weekend rain for Trentham. He also stated he phoned his brother Bruce, the Chief Operating Officer at NZTR, who informed Saundry.
Concern expressed about the state of the track to Chief Stipendiary Steward
Last Thursday, Trentham experienced hot weather, but only 8mls of water went on the track that night compared to 34mls over two or three days at Matamata. On Saturday morning after 11mls of overnight and morning rain, a track inspection by several senior jockeys prompted one to express concern about the state of the track to Chief Stipendiary Steward, John Oatham. He reputedly responded by digging his heel into the track’s surface and walking away without saying a word.
In the only race of the day, most of the field experienced slipping during the run, although only two gained a mention for doing so in the Stewards’ Report. Michael McNab’s mount Dragon Biscuit cast both front plates with the rider experiencing slipping in the back straight. Two other runners took no part.
How many jockeys kept hold of the horse’s head just to negotiate the 1400 metres in a vertical position – quite a few, I would suggest? The running of the race clearly endangered the safety of the horses and jockeys and contravened the standards set out in the Health and Safety at Work Act 2015.
The stewards and the NZTR board are fortunate that no incident, injury, or death occurred during the one race, as failing to meet health/safety standards can result in severe penalties, even jail. If a senior jockey or deputation of jockeys expresses concerns about the safety of a track, it should be enough for the stewards to thoroughly investigate the problem before proceeding with the meeting.
Report ordered from Turf Consultants
Saundry has ordered a report from the NZ Sports Turf Institute (NZSTI) who claim expertise on golf courses and bowling greens on their website, but no mention of horseracing. As agronomists and graduates from Lincoln University, they are experts in plants and soil, so what gems of wisdom can they offer NZTR along with their big, fat invoice.
As well, the Racing Integrity Board (RIB), formerly known as the RIU (Unit), which a few years ago cost racing less than $6 million annually, but now has a budget of $14 million, will also furnish a full report, according to Saundry. Why, because the Abandonment Protocols paper demands it:
2.0 RIU Race Meeting Incident Reports If an incident has occurred or a hazard has been identified at a race meeting, the Chairman of Stewards must, on the day of the meeting, complete the RIU Race Meeting Incident Report (in the form attached to these Abandonment Protocols) and forward a copy to nominated staff within NZTR, the RIU and the Club.
Racing Minister Robertson appointed the RIB Board earlier this year, and former Deputy Police Commissioner Mike Clement took up the role of Chief Executive on July 1st. Clement has freely admitted he has zero knowledge of racing, so how he qualified for the job is anyone’s guess. Of course, we know all the board positions came from the Minister of Racing (also zero knowledge of racing), so we really do know what prompted them.
Reports won’t say anything we don’t know
What will these two reports say, you ask? They will exonerate the stewards and NZTR from any blame and point the finger at the track manager, saying he failed to apply the required amount of water to the track in the days leading up to the meeting, and consequently, the rain fell on a very firm track, and the surface became slippery.
And that may be true, but will the reports lambast anyone in a position of authority and say the buck stops at the top. I predict not.
The NZTR and RIU Race meeting Abandonment Protocols paper can be found at this link:
The TAB is ignoring its statutory obligation to maximise profits for the benefit of the racing codes
by Brian de Lore Published 2nd November 2021
So much deceit, woke politics, and cancel culture exists in the world today that it came as no surprise to discover TAB NZ had joined the fray and, although not yet telling lies, they’ve instead withheld information over the past few months that would raise serious stakeholder questions.
But the stakeholders of New Zealand racing and the true owner of the TAB, the thoroughbred and harness racing clubs that started the TAB in 1951, are used to poor treatment, getting asset-stripped and trampled over while barely offering a murmur of protest.
This year, the new TAB board under government control came into existence on August 1st, taking over after 18 to 20 months of RITA (Racing Industry Transition Authority) and before that the infamous NZRB (Racing Board), which presided over a series of expensive industry misdemeanours for over a dozen years.
In 2020 when RITA was in the middle of its reign of control, several weblogs appeared on this platform complaining bitterly of RITA’s refusal to post a Half-Year Report. Every year since 2006, the TAB website (https://www.tabnz.org/annual-reports?page=0) had published a Half Year Report, but in 2020, RITA, in its infinite wisdom, decided the tradition would cease.
Cover up of mounting debt
Why did they suddenly stop? Well, for no other reason than to cover up mounting debt (reaching $45 million by mid-2020) and poor TAB performance. Rather than baffle brains with a deceptive report as NZRB had regularly produced, RITA elected to pull the wool over all racing’s eyes with no report at all.
COVID-19 came along and helped save the TAB to a certain extent when racing ceased for a period, resulting in non-payment of prizemoney while punters remained in lockdown. With little else to do, punting turnover increased and improved the books.
Even so, Minister of Racing Winston Peters had to negotiate a $50 million bailout from the coalition government in the 2020 budget to stop the TAB from going into receivership – the TAB had operated illegally as insolvent for as long a year with the Minister’s knowledge.
In April 2021, RITA published a Half Year Report, but a couple of months later decided to join the cancel culture movement and remove it. Why? The half-year version isn’t audited, so perhaps it would contradict the Annual Report when eventually published or possibly contain information best kept from the eyes of racing’s stakeholders and participants.
The latter applied. From a copy saved to The Optimist’s hard drive before its removal from the website, it showed dubious financial management of TAB earnings – $13 million for the half-year kept by the TAB in term deposits instead of transferring to the codes to bolster prizemoney.
Minimum stake would rise to $20,000 overnight
Thirteen million dollars injected into prizemoney at ground level would take the minimum stake from $12,000 to $20,000 – a paradigm shift that would inject life into New Zealand racing and enable trainers to retain their shrinking band of presently disillusioned owners.
The TAB is a service provider to the racing industry with a duty to provide funding to sustain racing. It’s not a corporation that invests its profits elsewhere for a rainy day and/or for use for its own expansion.
But on page 13 of the now-deleted report, the note of explanation to the $13 million refers explicitly to ‘the TAB NZ’s normal investment strategy.’ Bollocks, there is no investment strategy (the term made up for their own convenience). It also mentions money for ‘working capital at any point in time,’ which can only be interpreted as adding a further carriage to the gravy train.
From page 13 of the deleted report:
TAB NZ did well in the first full COVID year and made a profit of $160 million (shown in the table below. In the 2020-21 season, it reduced bank debt by $20 million (from $45 million to $25 million). Take the $20 million off the TAB undistributed betting profits (table below), and it still had $18 million left. So, why did it retain that cash and invest it rather than distributing it to the codes?
It wasn’t withheld to repay more debt because the TAB Statement of Intent 2022-2024 says the remaining $25 million of debt will not be repaid until the year 2025.
In the previous two TAB financial years, the full accounted-for profit figure got distributed to the codes, but not this year. Did the TAB look at the new funding going directly to the codes from BIUC (Betting Information User Charges) and the Betting Levy, which totalled $25 million, and reduce the distribution accordingly so that the codes could only maintain or marginally increase prizemoney?
No other explanation could exist. Racing is getting shafted and suffocated at the same time by this intense government control through a Minister of Sport/Racing who has appointed a board top-heavy with non-racing sportspeople.
Fifteen months after the Racing Act of 2020 legislation and the three codes still haven’t drawn up a commercial agreement with TAB NZ, and the tail is still wagging the dog, which flies in the face of the legislation. All-round incompetency of the highest order. The codes are no more than the three stooges.
Anyone involved in ownership is fully aware of the continued decline of the sustainability of racing a horse. Yet, TAB NZ and NZTR boards have both displayed little appetite for injecting all available funding into prizemoney to stem the haemorrhaging of owners.
Are the boards, and especially TAB NZ, disengaged enough not to care or understand anything about the coalface of the industry, or is this woke-infested world hellbent on the redistribution of wealth commencing its master plan to kill-off racing?
Look at the new TAB NZ board that the ‘missing in action’ Minister of Sport/Racing, Grant Robertson, appointed to take over last August:
Mark Stewart, MNZM (Chair)
Mark Stewart – no relation to horse trainer Ciaron Maher
Stewart knows nothing about racing and has never been seen on a racecourse. Professional director with numerous roles. In 2018 honoured for service to the Community and Sport; in 2010 received the Sir Richard Hadlee Sports Trust’s ‘Most Outstanding Voluntary Administrator of the Year’; Sport Canterbury Outstanding Service Award 2010; the New Zealand Rugby League Outstanding Service Award in 2000.
Previous roles: Chairman, Mainland Football Federation; Organising Committee for FIFA under 20 World Cup; Chairman, New Zealand Football Foundation.
Anna Stove (Deputy Chair) Grew up on a thoroughbred stud farm and former committee person of the Counties Racing Club. Knows racing.
William (Bill) Birnie, CNZM Came from NZRB and RITA boards before this appointment. Professional director on various sporting boards. Lives in Sydney, doesn’t bet and lacks racing knowledge.
Paul Bittar Australian resident having had various roles in racing governance in Australia, New Zealand, and the United Kingdom. Consulted on wagering for Sportsbet in Australia when Sportsbet made an offer for partnering with the TAB three years ago.
Jason Fleming Hawkes Bay resident with racing experience. Currently on NZTR board, former CEO of the Hawkes Bay Racing Club and knows racing thoroughly.
Wendie Harvey Professional Director on 15 boards, including the Commissioner on the Gambling Commission, which deals with casino licensing applications and has the powers of a Commission of Inquiry. No racing knowledge or experience. On the TAB NZ website is said to have, ‘strong experience in culture transformation,’ which may be ominous for racing.
Raewyn Lovett, ONZM Lawyer and professional director on numerous boards, including deputy chair of Sport NZ, co-chair of the International Working Group on Women and Sport, and former Chair of Netball NZ. She says in her bio: “…have a keen interest in sport and the role that sport and recreation plays in well-being.” (that doesn’t sound like someone planning to increase betting turnover).
History says they will not contribute positively
Why were Mark Stewart, Wendie Harvey, and Raewyn Lovett appointed? They have no industry knowledge at all, but all are graduates from the NZ Institute of Directors, and all are sitting on this board for the wrong reasons (as far as racing is concerned), and they will offer nothing in the long term.
Harvey and Lovett were appointed because they satisfied the Government’s gender equality rules for boards. Shame because so many highly qualified racing women who understand the business could have filled those roles and done a great job.
History tells us Harvey and Lovett have no possible chance of making a meaningful contribution, but it also says the same about Robertson, who appointed them.
If this board as a collective had the best interests of racing at heart, they would immediately and thoroughly investigate the partnering of the TAB with an international operator.
Top-heavy with professional directors from sport
But only Jason Fleming and Anna Stove will be passionate about the future of the horse business in New Zealand. Paul Bittar has loads of horse experience. However, the board is top-heavy with professional directors involved in a sport, which is no accident, given that Grant Robertson was the Minister of Sport before he became Minister of Racing.
Nothing is more certain that sport will soon have its hand out for a bigger slice of the TAB pie, and although the interests of the racing codes accounts for 80 percent of the betting volume, the 20 percent bet on sport now has a controlling interest on the board and the running of the business.
This brings us back to the $13 million put on deposit rather than paid to the codes. Remember, that $13 million represented only half the year – it grew to $18 million for the full year.
Where is that money heading with this year’s precedent of withholding funds when racing desperately needs more money injected into prizemoney to retain its diminishing collective of poverty-stricken owners?
Sport muscles in on the TAB
If you doubt the intention of sport, then consider these facts. Firstly, every sport that returned from the Tokyo Olympics is screaming out for more funding, and the CEO for Sport NZ, Raelene (failed miserably in Australia) Castle, is leading the relentless charge at Grant Robertson for more cash to chase gold in Paris in 2024.
Secondly, even if the new board considered partnering the TAB with a betting operator for a much better financial result, and discovered it would be the best outcome for racing, would they proceed? Partnering would eventually make them redundant as directors of the TAB with a personal loss of directors’ fees, and would they consider it to be in the best interests of sport?
Whatever way you look at it, racing is now in a deeper hole than it was two years ago, one year ago, or even a month ago. Why have the codes been so uselessly representative of the interests of the people they supposedly represent. Lack of leadership has resulted in a lack of action.
The trouble with people working in the horse industry after years of repression and getting fleeced by infiltrators from the corporate world, is contained in this G.K Chesterton quote:
“When men choose not to fight, they do not thereafter become incapable of winning; they then become incapable of fighting for anything.”
In the interest of writing a positive slant on the thoroughbred industry, a searching effort to find an uplifting and positive twist on the business has once again drawn a blank and delayed this post, so it’s The Optimist as usual.
Thinking hard about where the thoroughbred industry is heading long-term is an exercise in extreme frustration. Why, when you take the helicopter view of the business, which shows we are trending downwards, cannot the so-called leaders of the business get together and devise a plan to arrest the decline and futureproof this once great game?
Why, also, can’t the appointed administration simply follow the legislation delivered to them 15 months ago, known as the Racing Industry Act 2020? One reason could be they haven’t read it. Another might be that they’re arrogant enough to ignore it – precisely what NZRB did under Glenda Hughes and John Allen. A third reason could be the presumption they’re endowed with brains, which at this stage is unproven.
Clause 17 of the legislation:
17 Racing codes must prepare business plan
(1) Before the start of a racing year, each racing code must prepare a business plan relating to that racing year.
(2) Each racing code must publish a copy of its business plan on an Internet site maintained by or on behalf of the code.
So, where’s the plan? There is no plan; the industry lurches forward in a drunken stupor, not knowing where, how, why, or when. They posted a paper on the website called “Industry Reshaping – Our Actions, NZTR Strategic Priorities. It’s not a plan, though; it’s just nonsense.
The content of NZTR’s reshaping paper is enough to make you nauseous. It starts with a message from the NZTR Board and CEO saying – ‘A Time For Action.’ This introduction finishes with this one-liner, “It’s time to stop the talk and take action.” Well, Bernard, that’s what the racing industry has been saying about you for the past three years.
The paper is divided into seven parts, and under each of its seven headings, it states: ‘What success looks like,’ – as though they would actually know what it looks like?
Meaningless NZTR gobbledygook
The first of the seven says: “We have looked beyond the domestic wagering market, enhancing the racing product through adapting timeslots to support wagering broadcast opportunities, the introduction of key initiatives and feature events within the racing calendar. We have grown revenue, maximising the domestic market and focusing on international growth through, firstly, Australia and internationally, via a broader range of partners.
“We have innovated in key customer periods of the year to drive greater punter and mainstream interest, showcasing the sport in multiple ways. The focus is on growth and the subsequent returns this will provide owners and participants.”
Have you ever read more BS than that? I haven’t; worse than this poorly written spin by someone on a six-figure salary as the voice piece for NZTR, is they expect you to believe it, keep calm and carry on, whatever it’s supposed to say.
NZTR has sunk to new depths. They don’t have a plan, despite the legislation; they have a cartel board of mates that decide your future in a pub at the Viaduct; they have a Chair that resides in Australia that won’t return before 2022; they have a CEO on a substantial salary that won’t leave a positive legacy, who will return to Australia in July and will never be seen again; they have a board with little appetite to increase stakes from the minimum up; they have one of their mates ready to succeed Saundry as soon as he’s in the departure lounge.
“If you fail to plan you are planning to fail”
A man named Harold Ickes simply said, “I am against Government by crony,” and it was Benjamin Franklin who said, “If you fail to plan, you are planning to fail.” Ickes and Franklin between them have defined NZTR.
So, where are the ethics, and where are they taking the industry? The one-word answer is ‘nowhere.’ Tweaking bits and pieces and closing down clubs to consolidate their financial position by stripping assets is only an interim and temporary fix and won’t curb the long-term decline, only slow it down.
This board hasn’t recognised its big challenge – to redefine the entire model and get $100 million annually into stakes and incentivise owners to reinvest instead of departing racing, never to return.
Half the NZTR board, including the Chair, are anecdotally quoted as saying they don’t believe increasing stakes from the bottom up is the answer to racing’s woes. These people are as deluded as the anti-vaxxers relying on their personal immunity to disease to fight off COVID. Have they never studied the Australian model?
…no awareness of the reasons for which they exist
So, why have we ended up with an NZTR board that no one in the industry wants? A board that doesn’t have a plan to post, which it should have done according to the legislation, a board guided by a poorly written constitution (doubting they have ever read it), and a board that appears to have no focus or awareness of the reasons for which they exist.
How long do we have to keep quoting Albert Einstein’s definition of insanity – doing the same thing over and over again and expecting different results.
The Racing Industry Act of 2020 says in Clause 15 under Functions of the racing codes:
(b) to develop and implement policies that are conducive to the overall economic development of racing conducted by the code and the economic wellbeing of people who, and organisations which, derive their livelihoods from that racing.
The 50 to 60,000 people in racing are working full-time, part-time, or volunteers plus the owners, trainers, etc. However, that five-figure number is now diminishing at an alarming rate due to the unsustainable way this industry is currently run.
The NZRB (later RITA and now TAB NZ) managed the TAB, but ignored a similarly worded 2003 legislation, and the funding was recklessly misused for its own expansive administration. That’s why we went from a cash and property-rich position of $104 million in the green in 2005 only to waste the lot and owe the bank $45 million by the year 2020.
Horse welfare first, owner welfare last
In the recently altered NZTR Constitution under the sub-title of Objects, the narrative fails to mention anything about a commitment to the people earning their living from racing, but prioritises horse welfare.
It states: “The Objects of Thoroughbred Racing are to develop and promote racing conducted by Thoroughbred Racing, as required by section 14 of the Racing Industry Act 2020, and in particular by: (a) Promoting and advancing thoroughbred racing in all its forms in New Zealand; and (b) Maintaining and striving to further improve conditions that support positive welfare outcomes for thoroughbreds in New Zealand; and (b) Considering and dealing with all matters submitted to Thoroughbred Racing in accordance with this Constitution and the Rules.”
We all know horse welfare is now an essential part of the horse business. Bernard Saundry talks with constant regularity about how well NZTR is doing with it, and COVID, but you never hear him talking about the urgent need to arrest the diminishing number of owners and horses or an urgency to get minimum prizemoney up.
A futuristic look at the AGM of the NZ Owner’s Association, circa 2025
The numbers don’t lie. The foal crop is annually diminishing as previously highlighted on this weblog. The number of individual starters in New Zealand has dropped 36.6 percent in the past dozen years. Not counting COVID year 2020, in 11 years, the number of races run has declined 19.6 percent between 2009 and 2019. The stats quoted here come from the back pages of the 2021 NZTBA Stallion Register – go check them!
Again, taking out COVID year 2020, the total prizemoney distributed in the same 11 years has risen only 2.5 percent – $58.4m in 2009 to $59.4 in 2019. In Australia in 2009, the distributed prizemoney amounted to $471.4m. By 2019 it was $807.5m, a rise of 71.3 percent (Australian Racing Fact Book stats), and that doesn’t consider the substantial increases we have heard about for this season.
11-year stakes money score: NZ 2.5, Australia 71.3
A New Zealand stakes rise of 2.5 percent, against Australia’s 71.3 percent. Let me say that once more – 2.5% NZ v 71.3% Oz. It’s not a score you will see in rugby, but it’s the 11-year racing score.
Establishing that differential as an actual state of fact, why hasn’t the thoroughbred code taken a long, hard look at itself in the mirror and concluded that only a ‘tip the business upside down’ remodel of the structure with drastic change can arrest racing’s sad and consistent decline.
The current board is incapable, and the system of board appointments and monitoring of the board’s performance by the Members Council has failed the industry miserably. The Members’ Council should be abolished; they are not up to the task.
Before the Racing Industry Act of 2020, NZRB/RITA/TAB NZ wielded a big stick over the codes, but with the devolvement of responsibilities to the codes through the Act, and the ownership of the IP established, the NZTR board potentially has the grunt to call the shots and get positive in a big way.
But ‘slow’ is their middle name. Fifteen months after the Act, a new commercial agreement with TAB NZ hasn’t even reached the discussion table. Under the terms of the Racing Act, the TAB’s objective is to maximise its profits as a wagering service provider to benefit the racing codes. Without a new commercial agreement, NZTR and the other codes cannot hold the TAB to account on meeting its statutory objectives.
The tail is still wagging the dog.
Clause 58 of the Racing Industry Act 2020, titled Functions of TAB NZ, states: (f) to enter into commercial agreements with each or all of the racing codes or Racing New Zealand (acting on behalf of the racing codes).
Where are the voices of protest from the sector groups, stakeholders, and clubs? To be aware of the history and decline (outlined above), it’s unfathomable the racing industry is standing by allowing it to happen without any sign of positive action from the want of emerging positive leadership.
Recommendation seven of the 17 in the Messara Review is the only course of action to save us from sinking further into the mire. If you don’t know what number seven is by now, then revisit the Review. Partnering the TAB should be the start of a new plan.
The industry requires a revolution to force the issue, and later this year, another NZTR AGM is due.
Apathy is rife in racing. My positive slant this week on racing – start a revolution or die wondering!
NZTR Chairman Cameron George ended up with both feet in his mouth last Friday week by carelessly putting his mouth into gear while his brain was in neutral. The incident followed the board meeting of NZTR (New Zealand Thoroughbred Racing) at Riccarton Racecourse on the day before the running of the Grand National Steeplechase.
Shaun Clotworthy was present in the room unbeknown to George when CEO Bernard Saundry made it known to George that Clotworthy had been appointed the new President of the New Zealand Trainers’ Association.
Participating in the meeting via Zoom from Australia, Cameron George made a series of disparaging remarks about Shaun and his appointment – overheard by all in earshot, including Shaun Clotworthy. Saundry attempted to hush him up, but George didn’t twig and continued the tirade until Clotworthy came into camera view. Predictably, it then stopped but without any sign of embarrassment or apology from George.
Details of the incident became known to The Optimist neither from Shaun Clotworthy nor anyone on the board. But when something that crass occurs, it’s human nature for a spillage of the beans, and it came to these pages second-hand, but afterwards confirmed in a phone call to Shaun Clotworthy.
Why is Cameron George on the board of NZTR ?
It raises a couple of questions that people in racing were asking before this incident. Why is Cameron George on the board of NZTR, and why is he the Chair? He’s Australian and has spent the whole of 2021 living and working in Australia; how can he possibly do justice to a position that requires constant attention for an industry declining at an alarming rate.
How do industry participants draw any confidence from someone who behaves in this manner? Not only is it a low act, but why would the Chair of NZTR turn vitriolic about anyone’s appointment at the Trainers’ Association unless it’s someone unlikely to comply with the cartel or someone who might stand firm for the battlers in racing, or someone who might mobilise his members for a better deal than they’ve been getting. Shaun could be all of those.
Shaun and Emma Clotworthy have been great supporters of the racing industry for many years, as was Shaun’s father, Kim Clotworthy, before that, going back to the days of the champion colt, Uncle Remus. They are a highly respected racing family that will still be involved long after Cameron George is a forgotten name back in Australia.
The New Zealand racing industry faces numerous challenges without cowboy behaviour borne out of buffoonery, ego, or self-interest. This sort of stuff has been going on for too long. Nepotism has become the norm, evident by a recent appointment, and denialism about the state of the racing industry is endemic in the ranks of racing administrators and even more so in Government circles which, led by Minister of Racing Grant Robertson, has assumed ownership of the TAB.
Big budget increase for RIU
Here’s something you probably don’t know: While owners and trainers are eating the wallpaper off their walls (you already knew that), the newly appointed RIU (Racing Integrity Unit) Board have had a budget increase from $9 million last season to $14 million for this current season. Who’s paying? You are!
Why? Partly because they are employing four new animal welfare inspectors to make sure everyone is doing the correct thing in the eyes of the PC brigade and ‘the Greenies,’ and unlike the rest of the industry, the Minister sees the need to expand or strengthen its control according to the Racing Act 2020. Does the budget also allow for an upgrade in the quality of the single malt scotch in the boardroom liquor cabinet?
Have a look at the new RIU Board. Appointed by Minister Robertson is the Chair Sir Bruce Robertson, well advanced in years, a retired judge who has a sports background but devoid of racing knowledge; Kristy McDonald QC, who has had her snout in the racing trough for years; Dr Patricia Pearce – vet and animal welfare; Brent Williams – ex JCA board member, and on the board of the NZ Egg producers Association; Penny Mudford, company director like the others, the veterinary council of NZ, Rural Woman NZ, and former Chair of the Racing Safety Development Fund Industry Working Group.
…stereotypical Government-appointed board
This board ticks all the boxes of the modern, stereotypical Government-appointed board with gender equality, a high average age with a cushy retiree look, an all-but-one content of names with numerous letters attached, and a long history of ‘Institute of Directors’ experience. The only thing they lack is a deep knowledge of racing which they may say isn’t required.
Then add Chief Executive Mike Clement, a retired NZ Police Deputy Commissioner of 42 years service, and you have it all, at an estimated cost of $14 million for one year. Five years ago, in 2016, the Annual Report of NZRB listed the cost of the RIU at $5.8 million. In five seasons, that’s an increase of 240 percent.
In the same five years, the thoroughbred foal crop has dropped 30 percent, which on the face of it, says that this expansion of the RIU is a complete overkill. Is it a Government kneejerk reaction to a series of accusations made against the greyhound fraternity on animal welfare issues?
Back in April, Minister Robertson announced he was putting in place a review of animal welfare and safety in the greyhound racing industry. Robertson said, “I have informed Greyhound Racing NZ that I am not satisfied the recommendations are being implemented in a way that is improving animal welfare, and with their failure to provide sufficient information on changes they are making.”
Sir Bruce Robertson led the review
Minister Robertson appointed Sir Bruce Robertson to lead the review, which was supposed to be completed by August 1st. As at August 23rd, nothing has been released, but it was very clear in April that the Government was most unhappy with the greyhound people led by recalcitrant CEO Glenda Hughes who failed to act upon a request for regular progress reports.
The Government press statement released jointly by Minister Robertson and Associate Agriculture Minister Meka Whaitiri didn’t mince words.
“It is the responsibility of the industry to hold itself accountable and ensure the best possible standards of welfare for greyhounds. Should the review show that progress has not been sufficient, a further fundamental look at the greyhound racing industry may be required,” Grant Robertson said.
If that wasn’t a clear enough warning, Whaitiri said, “I had written to Greyhound Racing New Zealand suggesting that they may wish to continue regular progress reporting on the recommendations from the Hansen Report. That suggestion was not acted on and this review will now address these matters.”
Attitudinal issues at Greyhound Racing NZ
Attitudinal issues at Greyhound Racing NZ also resulted in the code having no representatives on the board of TAB NZ. The code nomination (Stephen Henry) was unacceptable to the Minister, and when asked to submit a new nomination, they resubmitted the same name, as did Harness Racing NZ (Shaun Brooks). Both codes dug a hole for themselves to advance an argument they were never going to win.
The unknown cost of the new Racing New Zealand Board which is in the process of having two independent directors appointed, likely to be mercenary graduates from the Institute of Directors, will add more strain to industry finances.
Then add the cost of the new position of Chief Operating Officer as 2IC to Bernard Saundry and, all things considered, this racing industry is carrying on as though it’s the 1980s and all is well, and they’re printing money like the Government.
When the stake increases were announced by Bernard Saundry in July, he carried on as though we’d all won Lotto, and we should all be so grateful.
Spin doctor Bernard Saundry
Saundry said, “What a difference a year makes. Obviously, the owners will be the main beneficiaries. All levels will benefit. Of course, NZTR cannot take all the credit for the latest stake increases. There has been a concerted effort across the industry to reduce costs and we must acknowledge the substantial cost reductions achieved by TAB NZ”
Bernard, what planet did you come from? If you owned a few racehorses, you might come to your senses. The reality is the financial viability of the racing business is in freefall. You are right about a year making a difference – every year we fall further behind as the ratio of costs against potential returns worsens.
But you are also right about owners being the beneficiaries – that’s because they’re soon all heading to the dole queue at WINZ to get the benefit. And as for NZTR taking credit for the increases, there is no credit for you to take. You have put a paltry $2.2 million into the minimum stake to get it to $12,000, which is pathetic. Most of the NZTR board were against putting any money into the minimum because they wanted it all in the middle and top.
Every owner has to take their horse through the maiden and R65 class
Every owner has to take their horse through the maiden and R65 class to get to the middle and top to stay alive in the ownership game. If you don’t feed the troops, you will have an army running on empty stomachs and losing the battle. What is it about understanding the fundamentals of racing that administrators in this country have lacked for decades?
All the added costs outlined above will virtually wipe out the $13 million Winston Peters got back with the two per cent betting levy in the 2020 budget. The $20 million we are supposedly getting back from ‘racefields’ or Betting Information User Charges has only made up for the shortfall in other areas, and the stake increases as mentioned above only apply between September and April and are three-monthly reviewable.
In review, what we now have in New Zealand racing is not dissimilar to what happened 16 years ago when Winston Peters in his first term as Racing Minister was able to help the industry by signing off the free tax rebate. It was worth $33 million to racing in the first year and recurred annually with incremental increases to the extent that it’s worth double that today.
NZRB grabbed most of the money for themselves
The problem was that from 2005, NZRB grabbed most of the money for themselves instead of it coming back to owners in stakes. For the next 12 years, NZRB expanded at a rate of knots, and the wages bill went from $27 million to $66 million (+149%). For the same period, stakes rose by only 51 percent. Racing became the punching bag for the Government of the day.
Well, it’s groundhog day. As soon as they’ve gathered some extra dollars again, it’s redirected elsewhere. It is sad to say that many racing administrators today don’t believe that pumping as much money into stakes as possible will enhance the industry – they apparently have learned nothing from Australia.
My figures say the foal crop will be down 14 percent this spring which can also be used as a barometer for ownership. In Australia, 63 percent of owners are breeders, and one would expect the stat would be similar in New Zealand.
Those lines on the graph will continue to decline in unison unless our spin doctor administrators recognise the reality of the industry’s demise and take drastic and positive action with a remedy plan. If they can’t, they should all resign.
Whatever way you look at it, the three codes and all subsidiary boards, and heavy-handed Government control, have taken this racing industry into a deeper state of the serious malaise described in the Messara Review three years ago.
Albert Einstein summed up the situation best a little longer than three years ago when he said:
“There are only two things that are infinite – the universe and human stupidity, and I’m not sure about the universe.”
The New Zealand Thoroughbred Racing board proved conclusively this week that it lacks integrity, scruples, and the nous to recognise its proper role in the racing industry.
Racing people this week are aghast by the appointment of the new NZTR Chief Operating Officer announced on Thursday – NZTR’s own board member Bruce Sharrock after the advertised position drew an international response.
This board needs a sign nailed to the board room wall for its next meeting, with this C.S. Lewis quote in large letters: “Integrity is doing the right thing, even when no one is watching.”
Well, the perenially diminishing number of racing’s participants and stakeholders are watching and are fed up with the treatment they’re getting from an organisation that exists supposedly to run the thoroughbred racing business smoothly for the people that fund it with hard-earned cash – the owners, and the hundreds of volunteers who have been serving this industry forever.
As New Zealand racing has continued to suffer from years of substandard administration and contracting numbers of horses and owners year after year, NZTR in its wisdom this year decided to expand its executive staff with the creation of a new position called Chief Operating Officer. The question is, why when we are an industry strapped for cash?
How can it be justified? What are they paying? It’s unlikely to be less than $250,000 or $300,000/pa. Why does NZTR suddenly need this new person now, or is this an orchestrated set-up to replace the outgoing Bernard Saundry who leaves in July 2022?
In a phone conversation with Bernard Saundry on June 16th, I asked why they were advertising. He said: “We’ve got that much work that we’re not doing what we need to do, and there are projects that need to be completed, and I can’t do it with the existing resources.”
All you get out of Saundry and the media releases are the same old platitudes without detail, but The Optimist suspects that Sharrock, when he takes up his new role on August 30, will start dealing with the likes of the Dargaville Racing Club to try and enforce land sales and the equity transfers to NZTR from the clubs earmarked for closure.
Sharrock has been appointed to the new role after two of the current seven-man NZTR board applied for the position. It is also known to The Optimist that a highly qualified Australian applied for the job, but he realised he was no hope (just as everyone else who applied was no hope) when informed during his second Zoom interview of two rival applicants coming from within the board.
High-quality applicant not in the hunt
Needless to say, that applicant was ropable, as will any other applicant will be who wasted his/her time going through a process designed for appearance sake. The interviewing was done by Saundry, who reports to the board, and was appointed by the NZTR board four years ago. Draw your own conclusions.
Boards are entrusted with responsibilities and should be accountable, but as we saw with the NZRB board that existed until 2019, the behaviour can be appalling and the Directors’ Police never turn up. Don Argus AC FAICA outlined five principles for directors in Australia about 20 years ago which are still applicable today. Here are three extractions:
Every board owes its primary duty to the company or stakeholders. Nostakeholder (shareholder, employee, customer, or any other) is entitled to preferential treatment.
In discharging their fiduciary duty, directors should disregard their own interests.
The real key to effective governance is a properly functioning board where mutual trust and respect lead to open, informed and timely debate on any and every aspect of a company or entity’s affairs.
The NZTR system of board appointments has faltered, otherwise, you wouldn’t have four directors residing in Auckland, three of which were well known to each other before their appointments. Another lives in Hamilton while the remaining two come from Hawkes Bay and Canterbury.
Current Chair Cameron George, who currently resides in Australia, is well-known as CEO of the Vodafone Warriors. Bruce Sharrock is a Global Director of Esportif, a sports management company that manages a large number of Warriors’ players, and Andrew Fairgray worked for Vodafone. These three are far better qualified to run NZ Rugby League than they are racing.
Fairgray and George are on Facebook together, photographed with the Vodafone NZ Derby trophy in March 2017. Was the Members’ Council who make the appointments to the board aware of the association of the three before the appointments? Did they do their due diligence?
The strong rumour in the racing industry has been that Waikato Racing Club CEO Andrew Castles was the likely successor to Bernard Saundry when he leaves in 12 month’s time. When I repeated that notion to Bernard Saundry in June, he confirmed that he was also hearing the same rumour. He didn’t comment further.
Cameron George and Andrew Castles are former flatmates. Castles is also a close friend of TAB CTO Dean McKenzie who in turn is a former co-director of a sports management company with Bruce Sharrock.
All up, this is a cosy group, a little bit too cosy for comfort. When Cameron George became Chair last November, his first media release stated NZTR would adopt a policy of transparency, but to date, we have learned little from him, and the transparency comes exclusively through The Optimist.
The willingness of TAB NZ to pull the wool over the eyes of the racing public became evident once again on Friday when it released a media statement claiming the credit for $30 million of income derived, not from the TAB, but the 2020 legislation.
The $30 million is made up $20 million from ‘racefields’ or BIUC (Betting Information User Charges) and $10 million from the repeal of the two percent betting levy – two of the 17 Messara Review recommendations written into the racing Act of 2020, and nothing whatsoever to do with the TAB.
The TAB’s announcement that budgeted distributions to the racing codes for the upcoming 2021/22 season will be 23 percent higher than the $117 million budgeted distributions for the current season is laughable.
$117 million budget was low-ball because of COVID19
The $117m set by the TAB for the current season was a low-ball budgeted figure set when there were significant uncertainties for the future of New Zealand’s wagering and gaming businesses because of COVID-19.
So, this budget for the current season is $33 million below what is required to fund the codes to enable them to maintain stakes at the pre-COVID level and the anticipated TAB betting profits for the current season.
All this smoke and mirrors carry-on was part of the Glenda Hughes-John Allen publicity machine under NZRB, and now with a name change to TAB NZ and under the Chief Transitional Officer Dean McKenzie, nothing has changed.
The chasm between reality and the fanciful world of Dean McKenzie is wider than the Grand Canyon. The participants of racing have only ever wanted to know the truth handed out by someone who is genuinely working in their interests – not some overpaid, self-serving egotist of the type we have seen succeed each other for the past decade.
In the media release, McKenzie said: “It’s great that we’re in a position to increase our returns…we’re now seeing the positive returns from the investment made by the Government and the industry in the TAB. We’re excited with where we are heading and incredibly proud that significant tangible benefits….”
He’s excited, is there anyone in the real world excited?
Under last year’s legislation, the devolvement of many areas of responsibility from NZRB/RITA/TAB NZ to the racing codes has not happened because the three codes have not come together, as the legislation provided for, to draw up a commercial agreement for the negotiation of distributions into the codes, etc..
Bringing in the Racing New Zealand board was new to the legislation, and invented explicitly to: “act as a consultive forum for the racing codes, and to represent the racing codes in relation to negotiations, interactions with other bodies under this Act, and other matters, with the agreement of the racing codes.”
However, Racing New Zealand cannot function effectively because it hasn’t been appropriately appointed. It’s supposed to have one person from each of the codes and two independents. But the two independents haven’t been appointed, and the codes have been running it on a please themselves basis in the first year by taking along the three CEOs – Saundry, Woodham, and Hughes – none of those three are supposed to be involved and shouldn’t be involved.
It’s all very well having newish, one-year-old legislation in place, but when you have an industry that deliberately ignores bits and pieces to suit itself, it’s no different to them claiming they’re doing the Messara Review when, in fact, it’s only cherry-picking the low hanging fruit and leaving out the vital clauses.
Some of our leaders haven’t even read the legislation
Having spoken to some of the decision-makers at various times, would it surprise that some haven’t even read the legislation, and if they have, have only skimmed over it and don’t get it. Not that we wouldn’t mind altering the 59 clauses that require Ministerial stamp of approval to do anything – knowing we have a Minister very short on industry knowledge (and appearances) and advised by non-specified interested parties.
Racing remains in a mess. NZTR has been weak and has seen a deterioration in its relationship with racing people trying to stay active in the game. NZTR CEO Bernard Saundry refers to them as customers, but he isn’t running a corporation; in reality, he‘s their employee and should support them and develop initiatives to keep people active in racing and breeding. The foal crop numbers prove that’s not happening.
Where’s the future plan? It’s July 4th, and as I write this we have no funding model for the clubs for the season starting August 1st. On Weigh In when last interviewed, Saundry suggested prizemoney increases for the middle and top races, and the bottom level had their turn three years ago. Why didn’t he just kick 90 percent of owners in the guts there and then?
NZTR puts pressure on Dargaville for $800,000 to $1 million
Arrogance on NZTR surfaces regularly. Consider the plight of the Dargaville Racing Club and the stand-off that now exists as NZTR tries to enforce Clause 25 of the Racing Act 2020, which specifically addresses the ‘Transfer of surplus venue by agreement.’
NZTR has its hand out for 40 percent of the value of the Dargaville Racecourse, which is valued at somewhere between $2 to $2.5 million. Dargaville is an isolated outpost over an hour by car west of Ruakaka. It had one annual community-driven race day but hasn’t had a date allocated for four years. The club resisted taking their race date to Ruakaka as the sponsors and local community said they would not support it.
The Dargaville committee has accepted that the decline in racing would lead to track closures, but the pill they haven’t been able to swallow came when NZTR wrote to the committee to inform them no further racing would be staged at Dargaville with an offer to help sell the racecourse to put the money into other racecourses.
The club has owned the land in an unencumbered title since it was donated to them by a local family named Findlayson about 100 years ago. Since then, volunteer committees have run the racing with all upkeep on the course done through working bees. Not one cent has ever come from NZTR to assist in its maintenance. Some committee members have served for 30 volunteer years, so anyone with a sense of fairness will understand the resistance.
Shane Jones and Winston Peters at odds on the future of Dargaville
The irony of the Dargaville stand-off is the NZ First left hand not knowing what the NZ First right is doing. Almost simultaneously, Winston Peters signed off on the legislation for the ‘land grab,’ as NZ First’s Provincial Growth Fund Manager, Shane Jones, allocated the Dargaville community $900,000 to develop the racecourse for the benefit of the community.
Dargaville is on the point of gaining approval for a retirement village and housing development to benefit the locals, and rightly say the grant or the land value won’t be used to benefit NZTR, and nor it should.
In a letter to Dargaville from Bernard Saundry, dated June 25th, in part he stated: “As a starting position, we would propose that 20% of the proceeds be allocated to support racing in the northern region, 20% be allocated to NZTR for stakes and other purposes, and the balance (60%) settled on a community trust as the Club has previously proposed.
“I must also warn you that NZTR’s patience in relation to this matter is close to exhausted. We wish, as does the Minister, to see an industry-led negotiated resolution to the future of the Dargaville Racecourse. However, if the Club continues to fail to engage reasonably with NZTR by refusing to provide the information NZTR has requested, or to continues to avoid negotiating in good faith with NZTR, or otherwise act in a way which gives rise to concerns about the Club’s governance and management, we will be left with no choice but to consider other options to bring this matter to a close, such as exercising NZTR’s statutory power to dissolve the Club.”
“…analogous to the collectivisation of farmland in 1920s Soviet Russia” – Dargaville committee
The Dargaville Racing Club take this view:
The ‘Transfer of assets and surplus venues’ clause should have no place in New Zealand. It is analogous to the collectivisation of farmland in 1920s Soviet Russia (‘Your land is not yours, it belongs to everybody, and we are going to collectivise it.’)
“The clause is based on a false premise. Assets built up, particularly in rural communities, from donations of land, from volunteer labour, from grants and local fundraising, are community assets. Not Racing Industry assets, and no amount of Trumpian repetitive rhetoric will alter that fact.
“Racing has been held at Dargaville for nearly one hundred years. Never has there ever been mention of the race track being an ‘industry asset.’ It wasn’t an industry asset when the toilets needed replacing; it wasn’t an industry asset when the track rail needed replacing, or the many other capital improvements.
“The original land was donated circa 1925. In all that time no one can remember, and no record can be found of the New Zealand Racing Industry making any contributions to any capital development at Dargaville.
“All built by working bees, donated labour, donated goods…
“Very considerable input from the local community, first in developing the land, then gradually building up the asset we have now. Clubrooms, commentators tower, toilets, cafeteria, stables, jockey rooms, etc. All built by working bees, donated labour, donated goods, and capital grants from outside organisations such as ASB and Lotteries Board.
“It is an impossible leap to go from that level of community input to claiming, retrospectively, that the Dargaville racecourse, is in fact, an industry asset. It just stretches credulity.”
The Dargaville case rests, your honour. Let this be a warning to all clubs owning their own land, racing only once or twice a year – they’re coming to get you.
And to finish, I should reveal that NZTR isn’t happy with me because I used a table in a blog published on June 18th, entitled, “Alarming foal crop projection for 2021 as NZTR administratively expands.”
In that blog, I published a table put together by NZTR (the second table that appears on prizemoney increases) supposedly not meant for my eyes and apparently not meant for publication in The Optimist. I didn’t know that at the time, and it’s only a table I could have composed myself in two or three hours.
But I soon found out the NZTR board, or at least some of them, or perhaps just the absent Chair, was furious and has demanded to know who the whistleblower is. Who supplied the table? I did receive two phone calls making friendly inquiries on behalf of the injured parties but didn’t reveal the source.
Next, I am informed (third hand) that Bernard has sent out an email to over 50 on a database requesting any information as to who leaked the table. What are they going to do to that person if they find out? – disappointing that no reward was offered and disappointing Bernard didn’t even phone to ask if he needed to know that badly.
NZTR must have more important things to do than conduct a witch-hunt to find out who leaked the table, especially when it was minor information that was circulated to some clubs by email without a confidentiality stamp.
Well, I can tell you who leaked it, Bernard. It was Bill – a photo of Bill appears in my blog published June 25th.
Melbourne trainer Mick Price poignantly reflected the needs of the racing industry earlier this week when quoted in ANZ Bloodstock News as saying, “…ideally more could be done to help owners recoup their costs at the beginning of a horses career, which is imperative to keep owners in the sport.”
His comment came after Racing Victoria announced a $16 million injection of prize money for 2021-22 that failed to increase midweek racing in Melbourne where city-trained horses are likely to commence their racing careers and either graduate to Metropolitan Saturday racing or descend to country racing.
Even though a midweek maiden at Sandown is unchanged from the current season for 2021-22, the prize money is a $50,000 minimum. Racing Victoria has elected to leave metropolitan midweek as is, but increased metropolitan Saturdays from $125,000 to $130,000 and country TAB meetings from $23,000 to $25,000.
For New Zealanders, the $50,000 Sandown midweek is a comparative luxury when we line up for only 20 percent of that figure (exchange rate not considered). The cost of training a horse in Melbourne is around $68,000/year, which former New Zealand trainer Mike Moroney says covers everything, whereas a full year’s fees in a Matamata stable gives you no change from $40,000.
If you accepted that Matamata is a Sandown equivalent, racing for 20 percent of the stake when you’re paying 60 percent of the costs is a thrice worse situation here compared to Melbourne, and yet Mick Price is saying it’s not an equitable situation for them and the majority of owners are neglected.
Price strongly argues that most owners fall into the maiden and benchmark 70 (R65 equivalent in NZ) category, and after talking to the participants, he thinks it’s best to increase prizemoney in that majority group than see fewer horses in training from the depletion of owners. How can you argue against that view?
The luxury of Victorian racing is the number of options available below midweek metropolitan racing. Country racing this coming season will offer a minimum of $25,000, and below that, a non-TAB meeting minimum is $15,000. The lowest rung for the slow ones, picnic racing, provides no less than $5,000 a race.
Comparing New Zealand to Victoria, the biggest disparagement is in the maiden/R65 group. We know most owners will lose because the majority of horses going to the races are hay burners that will never pay their way, but to disincentivise the losing owner from coming back into the next horse by failing to increase the minimum is to shrink the ownership pool.
Last week, this column supplied evidence of the diminishing broodmares bred and lowering of the foal crop. The breeders are also racehorse owners by necessity, just as we have seen growing ownership from within the ranks of trainers – it all points to a shrinking industry dying because prize money has failed to keep pace with rising costs for the casual owner.
On June 1st, NZTR CEO Bernard Saundry said on ‘Weigh In,’ “the board would like to see support in the midrange and at the same time how do we build up the top end – three years ago, the money went into the bottom end.”
Last week in a chat with Bernard Saundry, he said, “Nothing’s been decided by the board yet, but they are meeting on Wednesday (June 16th). There have been numerous discussions for the top, middle and bottom.”
As we’re now into the last week of June and little more than a month from the new season, it’s about time NZTR let the industry know where it stands. They are apparently waiting to see how much is available for stakes in addition to last season’s meagre $53 million. Whatever they decide, it’s known they will reserve the right to review it before Christmas in case the TAB performs poorly in the second half of the year.
The talk on racecourses is that the board favours injecting extra prize money into the middle and top, reflecting Bernard Saundry’s Weigh In comment. But to suggest the minimum won’t go up because the lower end had its turn three years ago is laughable when you consider the alarming rise in costs during the same period.
Owners costs continually rising
Most clubs have increased track fees; transport costs never stop rising; horse feed companies have regularly passed on increased costs; the jockeys riding fee has gone up, and every other rising expense always finds a space on the owners’ invoices at month’s end.
Increased prize money only for the middle and top races would benefit the bigger clubs and a much smaller pool of owners. It should be noted the NZTR board is top-heavy, with the majority Auckland-based, all appointed by a Members Council dominated by the major clubs.
Racing has to be administered fairly for all stakeholders and needs to be seen to be acting fairly. What’s fair is the question? Are all groups with a vested interest represented? Far too often, we hear narrow, provincial viewpoints and subjectivity dominating discussions on administrative matters.
The concept of the Auckland Racing Club joining forces with Counties (and possibly Avondale) and pooling their resources to build a StraithAyr track at Ellerslie to run 32 odd meetings a year offering $100,000/race minimums should be embraced by every racing person wishing for a sustainable future for New Zealand Racing.
Its eventuality will raise the bar for everyone in the game, entice investment from owners, and bring new players. It would also profile Ellerslie to a standard currently enjoyed by Randwick in Sydney and Flemington in Melbourne and provide a high level of racing on a consistent surface for marketing to betting markets outside New Zealand – deriving increased income for stakes.
In the meantime, let’s stem the bleeding and arrest the declining number of owners. NZTR injecting extra prizemoney only into the middle and top, benefits only a minority of owners.
A reduction in the foal crop was the expectation of most pundits for 2021, but to learn the number of mares served in 2020 had reduced by 653 or 14 percent is another dagger in the side of a perennially weakening thoroughbred industry.
The figures supplied by NZTBA last week are saying the foal crop this coming spring will numerically be the smallest for 51 years since 2,388 foals were registered from foalings in 1970. In the history of thoroughbred breeding since Volume One of the NZ Stud Book was published in 1899, no single year has ever recorded a greater fall.
Using the ratio of mares covered to foals born from the 2019/20 season, the industry this coming spring can expect around 2,480 foals – almost half the number produced a dozen years ago. It’s a deplorable situation caused by inept administrations that have failed to recognise the need to drive the industry through increasing prizemoney – proof that breeders and owners are abandoning the industry.
The graph shows 10-year increments in foal crops plus the one-year difference between last season and this year’s projection of 2,480 foals
The breeding business is the foundation of the whole damn industry. It’s driven by the owners who attend or don’t attend the yearling sales. Owners are incentivised by prizemoney – that’s how it works successfully in Australia, and that’s how it fails miserably in New Zealand.
The average at the Book One Karaka Yearling Sale of 2021 was down 12 percent on the previous year, with 100 fewer yearlings catalogued. COVID kept the Australians away, but the weakness of the domestic buying bench is now blatantly reflected and confirmed in the coming foal crop – the only other barometer in addition to pathetic prizemoney to determine the current state of the industry’s ill-health.
Tragically, it’s man-made. Avoidance was not only possible but feasible had commonsense prevailed. We didn’t need to waste $200 million on the FOB platform included with its 10-year financial commitments to Openbet and Paddy Power. We didn’t need to spend up to $66 million annually on salaries at the TAB, which has now been reduced but not nearly enough. We didn’t need to employ non-racing high flyers who made the movie Dumb and Dumber look clever. We didn’t need to ignore the most vital ingredient in the Messara Review, which said outsource/partner the TAB.
…the winds of change are blowing a mere zephyr where nothing less than a hurricane will suffice.
But we did all those things, and now we are paying. We didn’t need to stand idly by and allow it all to happen either (I remove myself from that flaccid group). Worst of all, not very much has changed – a little tweaking here and there – the winds of change are blowing a mere zephyr where nothing less than a hurricane will suffice.
The impact of an under 2,500 foal crop won’t be felt Today, this season, or even next. It will be three years down the track when we try and do our usual thing – catalogue 1,200 to 1,300 yearlings, export 1,750 odd thoroughbreds overseas, and supply enough horses for a domestic racing season. All three of those categories will be weakened, particularly domestic racing, which is likely to see fewer race meetings hosting smaller field sizes.
In the five seasons between 2014/15 and 2018/19, New Zealand exported 8,768 thoroughbreds at an average of 1,753/season. In the late 1990s and early 2000s we were averaging around 2,000 exports with the best season in 1998/99 when 2,175 left these shores. The decline started in 2003, coinciding with the Racing Act of 2003, and NZRB commenced its reign of mismanagement.
The figures for horses exported may be distorted by broodmares and racehorses crossing the Tasman for brief periods before returning. Nevertheless, the downward trend has continued at a similar rate of decline in line with thoroughbred production.
Erosian of demand from overseas inevitable
An annual lowering of the foal crop, diluting the quality, and erosion of the demand from overseas buyers are inevitabilities. However, Australian yearling and broodmare sales are booming along with further increases in recent times in both NSW and Queensland while we fall further behind.
Only this week, the Queensland State Government announced a $41 million package for racing to upgrade infrastructure. NSW followed with their equivalent package with a $67 million upgrade at rural racetracks.
NSW Deputy Premier John Barilaro, standing alongside Peter V’landys at Scone races this week, was quoted in the Sydney Telegraph as saying: “Thoroughbred racing is the lifeblood of many country towns, accounting for around 14,000 jobs in the regions and contributes $1.9 billion to the state’s economy.”
If only we had a Government here in New Zealand that recognised racing’s contribution to the GDP, its importance to the economy by way of employment, and then conclude that, like all industries the Government has meddled-in in the past, their control is the path to penury.
We are not even asking for more cash. The Government needs to take a leaf from the pages of the Jockey Club in England in 1978 when this authoritarian body did a volte-face on their tight grip of racing and relinquished control for the betterment of the sport.
“The administrative structure of the sport must largely be in the hands of those who love, understand and work within it.” – Lord Howard de Walden in 1978
Following the 1978 Royal Commission into gambling when a message was whispered to the Jockey Club that its totalitarian attitude was no longer acceptable, Lord Howard de Walden afterwards stated publicly, “The administrative structure of the sport must largely be in the hands of those who love, understand and work within it.” He then called on the whole industry to unite behind this principle.
Out of that was born the British Racing Authority with the prospect of an independent chairman, an experienced CEO and secretariat, and 12 members of the board representing the whole industry. We have five boards with some reluctant to even talk to each other, a Members Council that has failed in its purpose, and numerous sector groups that collectively have the cohesion of the Elizabeth Taylor-Richard Burton marriage.
That brings forth the argument to dismantle the whole damn structure and start again with drastic change. Idealistic? Yes, but the current structure does not provide the game with a sustainable future. The present ‘tweak only’ post-Racing Act of 2020 form of running this business won’t prevent it from spiralling down the descending whirlpool and into the plughole.
Look back at the Premier Yearling Sale at Karaka, and before that at Trentham – once the leading sale in Australasia. This year Book One at Karaka saw 414 yearlings sold for an average of $123,184 and an aggregate of $50,998,000. In Sydney at Easter, 365 yearlings sold for an average of A$368,945 and an aggregate of A$134,665,000.
NZ is fast becoming irrelevant to Australia
The upshot is the New Zealand industry is fast becoming irrelevant to Australia. Yes, some Aussies will always want our stayers, but the figures don’t lie, and the broodmare strength to breed superior horses was very much on show at the recent Gold Coast Broodmare Sale.
The right people for a drastic and decisive change in New Zealand have not surfaced. Instead, the industry is hamstrung by the DIA, which is ponderous and clueless. The TAB now can’t sneeze without DIA approval, and when Minister Grant Robertson appoints the new board, who would know what to expect?
Last week, I wrote to NZTR CEO Bernard Saundry with a list of 16 issues I considered problems for the industry, requesting responses, which to Bernard’s credit, were replied to in written form on Monday and then followed up with a phone call. All the questions and answers are too long-winded to repeat here, but the more poignant ones are mentioned below.
When I asked Bernard where he thought the industry was heading on current trends, he said, “Positive – but we can always do more. We are seeing good discussion on venue infrastructure that will deliver improved sustainable returns for the industry.
“Horse numbers are good. Synthetic tracks are a game-changer…” – Bernard Saundry
“Horse numbers are good. Synthetic tracks are a game-changer for the industry and once the new TAB NZ Board is appointed, we will be advocating for all revitalising options to be considered. As you are aware, investment by TAB NZ in the acquisition and retention of customers, especially through technology, is required to drive customer growth.”
Bernard is positive because increased betting in COVID-19 year and ‘racefields’ income will provide an extra $8 to $10 million in prizemoney for the coming season. Bernard didn’t give me that figure; it came from elsewhere, but NZTR is not yet saying where they will inject the increases. Some people in racing are saying raise the minimum while others want increases in the middle and top.
Raising the minimum is preferable because there’s an army of owners paying for maiden and R65 horses that need encouragement to stay in the game. They are starving, and morale is low, and the troops need feeding – Napoleon once said, “An army marches on its stomach.” But the truth is, the army is fast reducing to one platoon.
Table courtesy of NZTR
The cost of the option for raising the minimum from $10,000 to $12,500 is $2.776,000, or from $10,000 to $15,000 is $5,716,000 (see the graph). If they adopted the former for $12,500 minimum, opted not to increase the top two lines of Iconic and Premier minimums, every other category shown could go up for a total cost of $9,116,000.
Wherever NZTR places the money, it won’t be enough. Stakesmoney needs a massive injection from returns that would derive from partnering/outsourcing the TAB plus banking all the savings in costs aligned with it.
Other questions put to Bernard included: Why were NZTR advertising for a Chief Operating Officer (new position) and expanding staff costs while the industry is contracting? If NZTR is relocating to the Waikato – why and at what cost? Why is NZTR asking that horses be named before trialling (trivial by comparison but important to owners and trainers)?
The explanations from Bernard Saundry can wait for another day; this rant is already too long.
But to conclude, it might be pertinent to quote former administrator David Lloyd who spent 50 years running race clubs as CEO at Te Aroha, Canterbury, Macau and Auckland. This week Dave said, “Today, you wouldn’t know that the racing industry exists.
“How are the young people ever going to be made aware of racing. Public awareness of racing is diminishing daily.”
“It is naïve to think that any outsourcing deal for TAB NZ would not enjoy the usual protections in transactions of that sort.” – John Messara AM
by Brian de Lore Published May 14th 2021
Charles Dickens summed up racing in New Zealand best, when he said: “IT WAS THE BEST OF TIMES, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on being received, for good or for evil, in the superlative degree of comparison only.”
How come Charles Dickens 200 years ago knew more about the state of New Zealand racing today than our current lot of Zombie administrators? He looked out and saw wood to harvest; they look out and see nothing because the trees are in the way.
Four years ago, we thought we were in the age of wisdom when the racing industry voted in a minister of racing who promised the spring of hope. He promised the best of times and gave racing an epoch of belief. He commissioned a world-renowned authority to review, and for a time, all thought we were going direct to heaven.
But light has since turned to darkness. The wisdom was ignored, and Chinese whispers heeded. Belief has turned to incredulity, hope to despair, and whatever we imagined we were going to have before us has turned into nothingness – a vacuum in which the noisiest authorities have insisted on being received, for good or for evil.
…they have bailed out the TAB and now without any consultation have assumed ownership, and therefore control of the racing industry.
The whole world has gone mad. The PC brigade has more than taken control; every day, our Government takes another step left; freedom of speech is under threat; they want to control everything, including a segregated health system, the Reserve Bank, Air New Zealand, St John’s Ambulance; they want to control our lives and eliminate privacy; they have bailed-out the TAB and now without any consultation have assumed ownership, and therefore control of the racing industry.
St John’s Ambulance is 70 percent Government funded but needs to resist them handing over the other 30 percent because the trade-off is Government representatives on the board and control. They have to keep their independence with the shortfall of funds coming in the form of donations.
Racing has no such choice – the TAB was insolvent and about to go into administration. Winston Peters threw $50 million at the problem to pay a massive pile of bills after trading illegally as insolvent for a considerable length of time. No one was admitting to insolvency, but when your debt to the bank vastly exceeds your net tangible assets, you can be only one thing – insolvent!
…can’t fix itself when it can’t confess to the skeletons in the closet.
Racing’s inability to speak openly about its shortcomings has been the biggest problem. It’s a dishonest administration that can’t fix itself when it can’t confess to the skeletons in the closet. Denialism has been rife; transparency zero, and accountability non-existent. The architects of all racing’s disastrous decisions have all walked freely away from the carnage they created.
None of this has changed because the advice to change the structure and outsource/partner the TAB in the Messara Review has been ignored. They have merely picked the low-hanging fruit and claimed they were operationalising the Messara Review – well, they’re not.
John Messara said recommendation seven was the key, and if you didn’t operationaise seven (outsourcing), then forget the rest. At the launch of the Messara Report, Winston Peters openly stated that he didn’t commission a review by an Australian expert to ignore the advice, but he did ignore it. Some lesser form of intelligence afterwards got to Minister Peters.
Excerpt from Friday Flash aricle in 1995
The administrative mindset is closed; we have replaced like with like – doing the same thing over and over again and each time promising a different result, to requote Einstein’s clarity of thought.
In an earlier blog, I said someone had to be in Racing Minister Robertson’s ear because he was short on knowledge on the history of the problems. Soon after, a reliable source confided that RITA Executive Chair Dean McKenzie had told her he’d comply with any course of action required by the Minister (how subservient of him). On April 14th, the Minister appointed McKenzie the new CTO (Chief Transitional Officer).
How you give out practically nothing in 16 minutes is an art form perfected by McKenzie
Last Monday, McKenzie appeared on the Trackside program Weigh-In and was interviewed on the state of the industry for about 16 minutes. How you give out practically nothing in 16 minutes is an art form perfected by McKenzie – that was the result.
McKenzie did talk about the TAB as an asset to the industry, which it should be, but isn’t when it owes the bank $35 million, which didn’t rate a mention. He talked about the pandemic when asked how much would be returned to the codes for stakes next season, but then enthused it might be $15 to $20 million subject to a plethora of caveats.
Where the interview fell down completely was McKenzie’s fantasy-driven fear of what outsourcing/partnering of the TAB might bring, suggesting that one plus one might not equal two. This cryptic answer was drawn from interviewer Mick Guerin’s suggestion that outsourcing might tie up the TAB for 25 years and be full of hooks and disadvantaging traps – none of which could have come from any factual precedence.
It was cringe viewing, and after I sent the Youtube link of the Weigh In program to John Messara in Australia, he responded by email this way:
John Messara: It is naïve to think that any outsourcing deal for the TAB NZ would not enjoy the usual protections in transactions of that sort.
“Brian,
I watched the Weigh In program yesterday where reference was made to my Review. The “sale” of the New Zealand TAB was mentioned. As you know, that was an option which the Review dismissed, instead recommending the pursuit of an outsourcing (partnering) of the TAB’s commercial activities to a major overseas operator to take advantage of the benefits from the scale that such an operator would bring to the table.
Obviously, any such deal would include numerous protections for the NZTAB, including the standard one relating to change of control of the incoming party. If that party happened to be the TABCORP, it should be noted that a 10% maximum shareholding exists under the Act in NSW, and that will not be able to be breached without Government and Industry approval.
It is naïve to think that any outsourcing deal for TAB NZ would not enjoy the usual protections in transactions of that sort.
JM”
Further to the Weigh In episode, unjustified was Guerin’s assertion about the bid from corporate bookmakers to take over Tabcorp (or become a shareholder) and, by doing so, present a substantial risk to TAB NZ. You only need to read the TAB Act of New South Wales to know the concern is groundless. Ownership of Tabcorp requires both Industry and Government Approval, and any agreement with Tabcorp would contain numerous get-out clauses and safety valves – it would not be a factor.
Tabcorp is a $4 billion entity. Partnering would be a mutually beneficial arrangement that would overcome New Zealand’s lack of scale and enable TAB NZ to plug straight into Tabcorp’s computer/IT development for a fraction of the cost the TAB is currently committed to paying Paddy Power and Openbet – $17 million annually.
…formation of the TAB in 1951 was the singular most important thing that has ever occurred in racing history.
McKenzie has always been against a partnering arrangement for the TAB, but he has never come out of the closet and publicly stated it or given a reason why. Privately he would continually say to me that the formation of the TAB in 1951 was the singular most important thing that has ever occurred in racing history.
What he meant at the time was as cryptic as many of the answers he gives interviewers today. Retrospectively I would now interpret that to mean the TAB was a New Zealand innovation that has served the industry well, and we’re not sharing it with anyone, even though it’s broke and the Government has assumed ownership.
Friday Flash 1995, clearly says that George Barton QC declared that the racing clubs set up the TAB and remain the rightful owners and operators
What he should be saying is, the TAB could be expanded and enhanced significantly in value for the benefit of the race clubs, owners and participants by investigating and entering into a partnering arrangement that will give us $50 to $100 million up-front for stakes and provide the industry’s futureproofing. And in addition – that we owe it to everyone in the industry in New Zealand to thoroughly investigate it.
The board is merely custodians of the percentages taken from punters to be used to enhance racing’s sustainability.
Perhaps they should try and remember who they are? The board makes decisions on no money of their own; they are merely custodians of the percentages taken from punters to be used to enhance racing’s sustainability.
New Zealand would have to go global to do it, but no appetite for thinking outside the insular square in which they operate has ever surfaced. It’s known as the No.8 wire mentality that’s succinctly summed up in the book ‘No.8 Re-wired.’
The book states: “Kiwis have been resting on their laurels while other countries have cranked up their race up the innovation ladder. We have a culture where we don’t just do things everyone else does. But in the modern times, as technology goes on and the world changes, that is not enough anymore. It can’t just be one guy in a shed anymore. There needs to be a lot more deep science, deeper research and collaboration to develop a brand new idea”.
We also know self-interest has featured very strongly in racing’s decision-making. For NZRB/RITA/TAB NZ board members to investigate and approve a partnering arrangement with the likes of Tabcorp would mean the board at the TAB level would become irrelevant and no longer be required. Has any reader out there recently met a turkey that voted for Christmas?
In Victoria, the betting turnover on racing for the same period was $5.07 billion, increasing 32.6 percent
COVID 19 has benefitted betting agencies all over the world. Betting turnover on racing for the half-year ended January 31st was $964,485 – an 11.7 percent increase from the previous year. In Victoria, the betting turnover on racing for the same period was $5.07 billion, increasing 32.6 percent. New Zealand has a population of five million compared to Victoria’s 6.7 million.
Racing Victoria Chief Executive Giles Thompson was reported in ANZ Bloodstock as saying: “We’d have to be fools to think it’s totally sustainable. I hope that we don’t go back to pre-COVID levels, but I am realistic that people engaged with us while there was very little else on.”
When Mick Guerin threw a similar question to Dean McKenzie on Weigh In, the response was cryptic again, but eventually, he concluded that COVID may go on for some time yet. It sounded like he was hoping. The difference between the two responses was the honesty of delivery.
The danger for racing will be coming inflation which the former Minister of Finance Steven Joyce was predicting this week on Newstalk radios Mike Hosking Breakfast Show. He thought New Zealand might be heading for sustained inflation and higher interest rates which would correct the housing market and tighten up the economy.
Less available cash will affect discretionary spending and, therefore, TAB betting
Less available cash will affect discretionary spending and, therefore, TAB betting. Negotiations to partner the TAB should commence immediately, or is it too late?
No, it’s never too late. That’s why I keep writing this stuff and, hopefully, you keep reading it.
To watch Weigh In on Youtube click on the following link:
History and logic tells us that as long we have a Department of Internal Affairs with its blood-drawing claws firmly gripped on the flesh of the racing industry, and an unschooled Minister of Racing having to sign off on so many vital issues, racing can’t revive itself.
Unlike Australia, racing in New Zealand has firmly fallen into the shackles of the Government. They have dragged racing along the road of slow death by suffocation, and this leftist Government, influenced by the ‘absolutist Greenies movement,’ is seeing the evaporation of any remaining sympathy for racing within the Beehive.
There was more than a hint of resentment when Minister Robertson referred to last May’s Winston Peters Racing Industry support package on $72.5 million in the 17th March quote in Racing News.
And my reference to Robertson as ‘unschooled’ is blatantly evident in his quote in the same article where he said: “Candidates (for the new TAB board) need not come from within the industry, as has happened in the past.”
Well, that was only the case in the distant past when we were in better shape. In the recent past, say the last dozen years, the most prominent decision-maker names have been Hughes, Allen, Bayliss, Stiassny, and Brown – none of whom knew which end bit and which end kicked when they arrived to govern racing.
Non-racing boards employed non-racing executives
Non-racing boards employed non-racing executives, and that whole sorry episode has been well-documented in these pages over several years.
Politics and nepotism brought all these people into racing during the John Key reign as PM (2008-2016). So the lefties can’t be blamed for the dark years after Minister Peters handed the baton to John Carter, who gave it to Craig Foss, who passed it to the great pretender Nathan Guy who stayed on as Minister of Racing for 6½ years – the disaster years.
The appointment process that brought all these bloodsuckers into the game hasn’t changed much. Having people with governance experience is one thing, but without a feel for the business, a profound knowledge of the industry’s mechanics, and a passion for making it work, racing will only continue its journey down the same slow road of death by suffocation.
The DIA’s Homer Simpson is stangling the life out of racing fan, Bart!
What would fix racing? Breaking free from the Government’s shackles with an amendment to the legislation that would change the TAB from a body corporate to a private company. Partnering the TAB with an overseas betting operator and getting $50 million upfront in the deal, and thereby eliminating the current $35 million debt and reducing future overheads substantially.
Wake up and partner the TAB!
The word in Aussie is several corporates, and one in particular, is still very interested in brokering a partnership with TAB NZ. The former RITA and now current TAB board clearly have never had an appetite to partner the TAB, but the right personnel on a new board has the potential to see the light and join the big boys in the global betting arena.
The TAB is now boasting on the website about how brilliantly it’s done in this financial year’s first half, and will have even less appetite for partnering. The trouble is, the result is COVID-19 driven, and they are building equity with the profits rather than sending them immediately down to the grassroots where most needed.
If the TAB is getting a profit margin of 20 percent, as stated, then the odds are too skinny for Kiwi punters to bet and win. It’s a game of margins, and anecdotally we know the winning punters are increasingly having their bets reduced or refused.
…the TAB will never catch up due to lack of scale
Partnering would bring massive savings, including plugging into the partner’s state-of-the-art betting platform developed with an IT budget in the vicinity of $120 million annually. Not to partner means New Zealand in the future is left further behind in the IT race, and the TAB will never catch up due to a lack of scale.
Partnering also immediately elevates New Zealand racing to be internationally competitive to punters by offering a better product. The result would open the opportunity to utilise its unique time slot to attract higher off-shore turnover to plow greater profits back into stakes money.
It’s becoming a pipedream to get something of this nature done – probably 100/1 and drifting as we endure the wait for the new TAB board announcement (August) that will determine the decision on partnering. That’s why the make-up of the board is so important. It’s also urgent but not in the DIA’s mind.
The summary in simple terms is this: As long as the TAB is controlled by a Government Department known as Internal Affairs, racing is paralysed and going nowhere. Everyone in racing should move to Aussie, and we now know that Air Zealand is putting on the flights for a mass exodus. Let’s go!
Alan Jackson endorsed by Breeders and Trainers
Of all the 41 applicants for the TAB board, only former NZTR Chair Alan Jackson, whose nomination was endorsed by both the NZ Breeders’ Association and Trainers’ Association, has experienced the wagering business’s workings at the high end. He worked with RWWA in the far west and Peter V’landys at Racing NSW.
It’s hard to imagine a workable board comprising 100 percent New Zealanders that also considers gender and ethnicity. Why can’t we forget this PCBS and just appoint the best people available? And perhaps include a couple of Australians with that all-important experience in wagering/gaming who possess the skills – a knowledge scarce in New Zealand but abundant in Aussie.
On that note, the last blog published here that named Liz Dawson as a possible candidate for the board, as well as Chair of the selection panel, has an explanation. She is not standing for the board, but as Chair was copied-in on the email amongst the 41 applicants.
Minister Robertson has expanded his search, and he will have the final say – a say that hopefully won’t be politically influenced. He has one chance at getting this right, and history is against him.
Fifty-nine clauses of Ministerial control – ridiculous!
When the new legislation’s first reading went to parliament in December 2019, it contained the Minister of Racing approval requirements in a massive 65 clauses. Following the Select Committee recommendations after the hearings, the final legislation had reduced the number from 65 to 59 – barely a token reduction.
That’s the level of ministerial intervention available to Robertson, which is the antithesis of what Winston Peters canvassed on in 2017. He lauded a racing industry at arms-length from the Government and one that has self-determination with autonomy set in stone. Those words disappeared into thin air.
It was a disappointing u-turn from Peters, who did get the gaming reduced in his first term as Minister with the stroke of his pen and then wholly eliminated the remaining two percent in his second term.
For the first 40 years after the thoroughbred and harness racing clubs of New Zealand made a collective agreement and formed the TAB, the Government participation in racing was minimal, and racing ran smoothly on a very low stakes money to cost ratio. In 1960/70s, one to 1½ wins would pay for your horse for the year. Today it’s four or five wins if you’re lucky.
Clipping the ticket on Lotto would have sent profitability through the roof
But in 1987, the TAB was dealt a setback when denied the opportunity to run Lotto through its retail outlets. Clipping the ticket on the Lotto turnover would have sent profitability through the roof.
The introduction of GST in 1986 handed racehorse owners instant inflation of ten percent, and the October 1987 sharemarket crash were consecutive blows from which racing in New Zealand has never recovered. The crash’s full impact didn’t hit the thoroughbred industry until the start of 1989, but it sent many investors broke and was felt for many years after.
The loophole in the thoroughbred industry’s tax laws allowing special partnerships was exploited to the full by both the needy and the greedy. Corporate non-racing people invested $2 to save $1 in tax, but post-crash discovered the investment was worth only ten cents. Paper fortunes were lost.
The tax loopholes were closed and the write-offs reduced, and simultaneously an Australian industry led by John Messara, that had lobbied their Government for tax parity with New Zealand, won the day and were awarded all the incentives needed for revitalisation to attract new investment money. The perennial incoming tide for New Zealand then went out and has never come back.
Falloon, King and Peters the best Ministers of Racing
Racing was still reeling from the double-whammy of GST and the crash when John Falloon stepped in as Minister. Falloon may have been one of the better ones, but after his contribution, and aside from Annette King and Winston Peters, a plethora of Ministers have come and gone and have been relatively useless in terms of effort and contribution.
The Minister of Internal Affairs presided over racing pre-1991 but was rarely required. The Minister of Internal Affairs was also in charge of Lotto from 1987. Racing administrators jealously took the view the DIA was conflicted and lobbied Jim Bolger’s National Party after its election success in 1990 for an independent minister. As a consequence, John Falloon became the first Racing Minister in 1991.
Falloon tried to revamp the industry in 1991, but when submissions were sought the industry fought against change, and nothing was achieved. In 2001 the then Racing Minister Annette King publically stated that racing was unfairly treated tax-wise because it was paying a higher level than casinos and gaming machines. She agreed that racing was disadvantaged as an industry in its own right.
Fair Tax brought in $33 million in year one
The Fair Tax Movement gained momentum leading up to 2005, but it wasn’t until Winston became Minister in 2005 that ‘Fair Tax’ became a reality, and the duty was reduced to two percent for racing. The first year produced an increased return to racing of $33 million, which today is worth about double that amount per annum.
The problem was the money didn’t all come back to racing as intended. NZRB expanded the administrative gravy train from a wage bill in 2005 of $27.7 million to $66.8 million in 2016 – an increase of 141 percent in 12 years.
Betting turnover on horses and dogs in that same 12-year-period rose by only 69 percent – $1.17 billion in 2005 to $1.98 billion in 2016. So that’s where these governmental controllers directed racing’s profits. A huge amount went into the salaries of racing employees than knew SFA about the business while the racing participants remained starved of prizemoney increases.
NZRB thievery by stealth was akin to armed hold-up
It was thievery by stealth rather than a Bonny and Clyde armed hold-up, but the end result was just the same, and the criminals seem to have exited scot-free. Worst still, the victims stood by passively and allowed it to happen.
The codes weren’t that dumb that they couldn’t see what was happening – blind Freddie saw it. But their passive response in not taking any action to stop the injustice only added to the mess.
The codes have said they were powerless under the Racing Act of 2003 while NZRB ignored the Act. But when you control the product, you have all the power you need. But the grit necessary to use it was absent.
Does anyone believe this chain of events would have been allowed to happen in NSW? – not likely!
Events of the past couple of weeks and particularly the conduct of Internal Affairs (DIA) has blatantly reemphasised the Government’s lack of administrative competence and complete absence of know-how to act in racing’s best interests.
The DIA’s handling of the appointment process for the board of TAB NZ makes Fawlty Towers look like a hotel with a seriously good management plan. Last week they undertook to send out four emails to the 42 applicants – two with gross errors and the other two to recall those emails.
On March 18th, two months and three days after applications closed and four months after the specifications for the appointments were written, the DIA’s Senior Policy Analyst Glenys Robinson wrote to the 42 board applicants outlining new criteria of knowledge and skills and also requiring short answers to a series of questions.
But the first stuff-up was the email was sent out in only draft form with corrections and redactions showing. After recalling the emails, the next email sent to the applicants was supposedly blind copied – but they weren’t. The names of all 42 on receipt of the email were immediately made known to each other.
The surprise is the inclusion of Liz Dawson on the list of 42. She’s on the RITA board as well Chair of the board selection panel for the new TAB board – an overt conflict of interests if she, indeed, is in a position to recommend herself to the Minister.
…the DIA having already leaked the names…
With Glenys Robinson and the DIA having already leaked the names, The Optimist was tempted to reprint all 42 here, but out of respect to the half dozen or so applicants in racing known to the writer, that temptation has been resisted.
The gender break-up of applicants is 32 men and ten women. And gender and ethnicity are sure to factor in this appointment process as all Government boards and committees in the now PC world of parliament and the civil service departments demand a minimum gender representation of 30 percent.
A significant percentage have come through the Institute of Directors and seemingly are mercenary non-racing people looking to enhance their income. At the same time, another large group is made up of sportspeople, perhaps looking to strengthen the presence of sport inside the TAB.
Since this appointment process commenced, the DIA, in its usual manner, has demonstrated its predictable inability to add value to anything they do on the racing front. This sorry band of over-paid civil servants continues to bumble their way through an enforced takeover of racing through the ‘virtual administration’ of the TAB, which Racing Minister Grant Robertson confirmed in a statement he made to Racing News, published on March 17th.
Robertson said: “The process to date has yielded some good candidates, but the selection panel has recommended that I broaden the search, and I agree. This is a significant decision for the future of racing in this country and I am determined to get it right…this does mean there will be a delay.”
…the DIA still rejigging the criteria to appoint the TAB board
No one in racing would disagree with Robertson’s sentiment to get it right, but does he need a reminder it’s almost nine months since the legislation became law? It’s also three years since the Messara Review was written, which stressed ‘urgency,’ and here we have the DIA still rejigging the criteria to appoint the TAB board.
The three things universally known about the DIA are (1) they have zero racing and wagering knowledge, (2) don’t care about racing or its current state of decline, and (3) work only at glacial movement pace in anything they ever do. Now we can add (4) – the inability to perform the simple task of sending an email without franking a ‘recall’ notice on it – twice in a couple of days.
The fact that it’s taken more than two months since applications closed to realise the 42 as a group doesn’t cut the mustard is an admission the process established to put this board together was flawed from the start.
Instead of consulting the best racing brains in Australasia on how to go about this task and commence shoulder-tapping and hand-selecting the correct people, the DIA has instead done its usual thing, floundering in its own ignorance and coming up short again.
In the Racing News story, Robertson said: “I expect each member of the board to have the expertise, including fiduciary and commercial experience, to enable a bright future for the racing and sports sectors.
“Candidates need not come from within the industry, as has generally happened in the past, and I’m asking the racing codes to nominate candidates with the skills and experience to ensure best governance practices.
“This is particularly important given the $72.5 million Racing Industry Support package” – Racing Minister Robertson
“This is particularly important given the $72.5 million Racing Industry Support package,” continued Robertson, “put forward by the former Minister for Racing, which is a considerable investment by the Government.”
The Robertson quote indicates racing is about to experience ‘groundhog day’ and get more of what we’ve had in our under-performing administrative past. No mention in this story of candidates requiring a deep racing knowledge with experience in wagering, which is what was blatantly lacking in the last half dozen years of NZRB governance.
The Robertson quote also reminds the industry of the enormity of the Government bail-out of the TAB last May, which in the Government’s view, places the TAB firmly in its grip (virtual administration), and which somewhat neutralises the devolvement of power to the codes that came with last June’s new legislation.
As was the case with Peters, Robertson’s problem is he’s time-poor for racing and will rely on faceless advisors to steer racing policy. It didn’t work with Peters and won’t work with Robertson.
Administratively speaking, we are as badly off now as we have ever been and potentially worse off by the time August arrives, and the DIA at its full-speed-ahead snail’s pace, announces this new board.
DIA: Appointments to the Board are expected to be made by August 2021
Why are they taking so long? In the addendum to the Candidate Information Sheet, which went out to the 42 applicants, it states: “Appointments to the Board are expected to be made by August 2021 (to be confirmed).”
It also mentions wagering and gaming governance in the addendum, but not as an absolute requirement in its 12-bullet point requirement set out under ‘Skills and attributes sought.’
The ‘to be confirmed’ proviso is ridiculous. Even without a further delay beyond August, the late announcement will determine the unlikelihood of seeing a cohesive TAB board operating before Christmas, given the time it will take for seven people to familiarise themselves with each other and develop a strategy going into 2022.
Reliable sources have whispered the selection panel requested both the Greyhound and Harness codes each submit new nominations in place of the unacceptable Stephen Henry (Greyhounds) and Shaun Brookes (Harness). Both codes have reacted in the most negative way possible.
The two codes arrogantly resubmitted both Henry and Brooks in an unbelievable display of defiance and disrespect towards the panel, the process, and the Racing Act of 2020.
…money that belonged to heartland racing people, which went down the drain
Most will be aware that Greyhounds CEO Glenda Hughes, and new Harness CEO Gary Woodham, along with Henry and Brooks, were all part of the NZRB team that built the FOB platform. They were all party to approving the ongoing commitments to Paddy Power and Openbet, which has cost the racing industry an estimated $200 million – money that belonged to heartland racing people, which went down the drain.
All four names were belatedly given ‘the shove’ for very good reason, and genuine supporters of those two codes along with the thoroughbred code should be appalled that these people haven’t been warned off all racing involvement – instead, they are like a bad smell that won’t go away, and are now trying to bully their way back into TAB governance.
Remember, we are only two years down the track from switching on the FOB platform. As Chair and part of the executive team, these four condoned the ongoing $17 million/year commitment to Paddy Power (5 years) and Openbet (10 years), which are binding contracts.
From all accounts, the only way to get out of the contract with the software providers, Openbet, is to write them a cheque – a huge cheque. And this will most likely happen because there is an inevitability about partnering the TAB, which is the only path available for increasing the income and reducing outgoings for a sustainable racing future.
Henry and Brooks won’t survive this arrogant second attempt because the Act says: “The Minister may veto a nomination made by the racing codes under subsection (1) but, if the Minister does so, the codes may make 1 or more further nominations until the Minister and the codes agree on the nominee.”
…NZTR now control the thoroughbred racing IP…
NZTR, as usual, has remained relatively quiet, but something is in the pipeline, and information suggests an announcement will occur in May with stakes money connotations. The trump-card held by NZTR is they now control the thoroughbred racing IP (Intellectual Property), and there’s nothing to stop NZTR from negotiating with an international wagering operator.
The codes getting back control of their IP was the biggest win of the Racing Act 2020. At the February/March 2020 Select Committee hearings at which almost 100 people delivered oral submissions, RITA Exec-Chair Dean McKenzie in delivering his submission, was alone in his stance against the IP returning to the codes.
Fortunately, he failed. NZTR now has the facility to make headway in the foremost requirement to increase prizemoney. In the last couple of weeks, field sizes have started to decrease, which is symptomatic of fewer horses in training. When field sizes reduce, so does betting
The annual income received from racefields or Business Information Use Charge (BIUC) is currently running at around $10 million, but it has the potential to reach $20 to $30 million pa, and if NZTR can sell a good deal on the IP, an increase in stakes money is not out of the question.
The previous blog published here highlighted the continued decline of the ratio of available stakes against the rising costs of racing horses in New Zealand. The monetary stats demonstrated the viability of racehorse ownership had decreased annually and would further decrease without drastic changes.
Increased TAB profits generated in the COVID year have been retained with no extra money returning to owners and stakeholders. NZTR argued retention was necessary due to the need to avoid last year’s situation when stakes money was received in arrears and owners were late paid.
“Every time we talk about how well turnovers are doing, it seems to generate an immediate cry for the need to increase stakes across the board.” – Bernard Saundry
In ‘Note from Bernard Saundry’ which appeared about three weeks ago in an edition of Raceform, Bernard wrote: “Every time we talk about how well turnovers are doing, it seems to generate an immediate cry for the need to increase stakes across the board.”
It’s as though NZTR is reluctant to confront the only issue that foremostly matters for the future sustainability of racing, or alternatively, the relative prosperity of the industry we jealously view in Australia, where they race for far greater stakes money.
Racing needs not only a good TAB NZ board but also the current NZTR board to step up and make a splash in the interests of the poverty-stricken participants they represent.
The drawback at NZTR is having a chair residing in Australia and a CEO who has one foot in the departure lounge at Wellington airport – Bernard Saundry’s contract finishes mid-2022.
How do you get dynamic performance from that situation?
The Racehorse Owners’ Association has now written to NZTR officially requesting that Cameron George resign his Chair position.
The woes of the racing industry in New Zealand can only be fixed by one thing – stakes money!
Stakes money is what drives the racing business and determines its state of health. But New Zealand racing isn’t driving anywhere, and if presented for a warrant of fitness today, it would get a FAIL with defect notices citing a blown head gasket, spark plugs that don’t spark, bald tyres, and a gearbox that doesn’t get out of first.
TAB NZ, as it’s now called (formerly RITA, and before that NZRB – the Racing Board), on February 19th, posted on its website a self-congratulatory update on its improved trading performance through COVID and especially in January in which it reported the month’s profit before distributions of $17.1 million.
And it’s quite true that our TAB, like every other betting agency worldwide, has benefitted from increased betting in a COVID lifestyle, resulting in greater profits. Turnover in NSW is up 39 percent and in Victoria, where harsher lockdowns were in force, the turnover at one point was running at 76 percent higher than normal.
Increased TAB profits will not go into stakes
But the problem for all of us, the participants of racing, is in the TAB’s wording which says “a reported profit before distributions of $17.1 million.” The keywords are “before distributions” because very little of that profit will come back to the codes, and indeed, none of it will flow into stakes money.
The $151 million will be achieved this year will only maintain the current prizemoney level which goes back to 2017.
If you examine the table below, the Year-To-Date Actual shows an excess of $13.1 million, which should be distributed back to the codes according to the legislation. But it’s not going to be because the TAB is in administration, and it’s the DIA that’s pulling the strings, and the pot of cash for prizemoney distributions is last in line to get a cut.
Prizemoney is a ginormous issue for racing. Recovery isn’t possible without a substantial increase. But you need a plan to seriously address the prizemoney issue (the Messara Review was a plan), and currently, no plan has come out of TAB New Zealand, and that’s why the appointment of the new TAB board is so crucial to the viability of racing’s future.
This coming July will mark three years since the Minister of Racing received the Messara Review. The introductory letter stated, “…the thoroughbred racing industry in New Zealand is in a serious state of malaise.”
Everyone except the board and executive of NZRB acknowledged the truth of that line. Well, it’s more valid today than it’s ever been because the costs of training horses have further risen in the ensuing three years, and the prospect of stakes going up remains dormant.
Take last Saturday’s Gr.2 Avondale Cup as an example. The race won by Robusto was worth $54,000 to the winner. When Bob Skelton rode Bellota to win the race in 1976, it was worth $21,000 to the winner, which when converted on the Reserve Bank’s CPI calculator has a buying power today of $197,000. In round figures, it was worth four times the value of today.
When the ill-fated Tony Williams rode Lucozade to victory 37-years-ago in 1984, the winner’s cheque was $66,000 or $12,000 more than Saturday. The $66,000 buying power today is equivalent to $225,000.
Then take into account the cost of training in 1976. Ray Verner at Takanini was charging $6/day, which converted to today’s buying power is $54. And Ray Verner’s accounts did not include the multitude of extras listed on today’s invoices where the owner pays a premium in addition to the daily base fee of over $90 at either Cambridge or Matamata.
You could safely assume that in 1976 your horse was racing for four times the prizemoney for half the costs. No wonder Murray Baker and Andrew Forsman during COVID have lost 17 horses which have crossed the Tasman to Australian trainers. Winning the Hobartville Stakes at Rosehill on Saturday with Aegon is yet another great advertisement for our breeding industry, but it does nothing to help the viability of racing horses in New Zealand.
,A typical screen of live sports betting when you open the TAB NZ website which álways priorities sport over racing. The Super Bowl in the USA earlier this month offered 300 different betting options, some of which attracted no bets with others holding total bets of only $1 or $2. The tote betting for win and place and exotics on horse racing wasn’t part of the new Fixed Odds Betting Platform but it was racing that paid for the entire cost of $50 million, plus all the ongoing commitments to Paddy Power and Openbet for the next five and ten years respectively.
And the TAB announcement on Friday was very self-congratulatory, but rest assured it does nothing to contribute to the dilemma of low prizemoney, which faces everyone who races a horse in a worsening scenario season by season.
As long as costs are rising, and they are every season, and stakes money has no apparent avenue open to it to increase at any stage in the foreseeable future, the chances of a return on an investment in a thoroughbred racehorse diminishes every year.
A multitude of people promoting racing will not admit to these facts. They loathe what I am saying, and denialism is rife. Why, because they are trying to sell something, so it’s against their interests to hear the truth spoken, and this racing industry is endemic with self-interest.
If racing could only look itself in the mirror, fess-up, and say, ‘we’ve got this wrong, we’re doing it wrong, and we have to change it.’ But they won’t because many are too ‘out of touch’ to know what to do anyway while others are only political about decision-making, and the rest are non-racing people with self-interest who have spent the money on self-expansion – money which belonged to the pot for increased stakes that never arrived.
TAB tell you only what they want you to know
Look at the TAB – it has been an endemically dishonest and incompetent organisation for years. They tell you only what they want you to know – a half-year result this year but none last year. Why? Because last year was a disaster, but they can live with this year and pat themselves on the back for the arrival of COVID.
Now they have an advertisement on Trackside TV asking you as a customer to remain loyal to them to curb leakage to the Australian corporates. But as they plead to you using sports stars such as All Black Stephen Donald and the under-performing CEO Dean McKenzie, they continue to shaft their customers by offering lower odds on a disappointing FOB platform, and banning or limiting any punters who show an ability to win consistently.
Ex-TAB non-performers such as Glenda Hughes, Gary Woodham, Shaun Brooks, and Stephen Henry who all failed so miserably for five years or longer as NZRB have all been regurgitated by Harness Racing NZ and Greyhound Racing NZ. Two have been put forward for selection to the yet-to-be-announced TAB NZ board – how stupid do the boards of Harness and Greyhounds have to be?
Do they really think people in racing, especially the thoroughbred code, will put up with that lunacy? What are they thinking? Don’t they remember that those failures mentioned above, along with John Allen and Glen Saville, made up the team of incompetents who cost this industry around $200 million of losses? Glen Saville was sent to Ireland, where he signed-up the New Zealand industry with Paddy Power and Openbet for those massive debts to accompany the FOB platform, and now he’s left NZ and gone to the USA to work for a division of Openbet – what does that tell you? He came from Australia, where he’d had three years as a junior project manager with Tom Waterhouse Bookmaking – he should never have been employed at NZRB in the first place.
The Investing For The Future table was lifted from the NZRB’s Statement of Intent for 2018-2020. It shows just how much John Allen and team missed the budget by. Note the $200.6 million prediction for the year ending 2020 in the bottom right-hand box for 30th July last year. The actual figure was only $120 million which was $10 million more than The Optimist’s prediction of $110 million – the difference accounted for in the upturn of betting through the period of COVID lockdown.
But I digress, back to the issue of no money for NZTR to increase stakes. The ‘racefields’ or Betting Information User Charges (BIUC), as RITA decided to call it, was ratified in the new legislation, but instead of NZTR gaining the appointment of the ‘designated authority’ to collect the money, the then Racing Minister Winston Peters with his lack of foresight appointed the DIA (Internal Affairs).
The appointment was a mistake, but NZTR led by Bernard Saundry, has been poor in appealing the decision and demanding NZTR be the ‘designated authority.’ If it had done so and been successful, the money collected could have come directly to the codes for increased stakes. That’s what was supposed to happen.
Let’s face it, NZTR has been a weak organisation for years. It didn’t show any metal in standing up to the poor decision-making at NZRB/RITA/TAB NZ, and they have let down the owners, trainers, employees, and volunteers and everyone integrally involved in thoroughbred racing. And I say thoroughbred racing because after the way Greyhounds and Harness have behaved they should be cut loose to drift.
Cameron George the absentee chairperson
The new board at NZTR this week released a statement on the Love Racing website. It said; “The New Zealand Thoroughbred Racing (NZTR) Board has agreed that Cameron George will remain as chairman until the 2021 AGM.
“George was initially appointed as interim chair following the 2019-20 Annual General Meeting in November.
“The NZTR Board decided at its February Board meeting that not only would George retain the chairmanship but that two Deputy Chairs would be appointed. These positions have been taken up by Darryll Park and Bruce Sharrock.
“The appointment of two deputy chairs enables our Board leadership to have a greater geographical spread across the industry. This structure also provides broader support to NZTR management and shares responsibilities across the board,” George said.
That’s horse manure and a big pile of it. Has any board anywhere in the world ever had an absentee Chairman with two deputies who essentially have no power. That’s the way George has set it up.
George further said: “Our Board is focused on continuing to develop a strong and transparent connection with all stakeholders, and we are united to achieve the best possible outcomes for the industry.”
But that statement is lip service only. So far, the 4-month old board has communicated nothing, and George shouldn’t be Chair of NZTR for the mere fact he is resident in Australia because he’s CEO of the Warriors. How can he do full justice to a code in strife when you’re out of the country. You can’t, which shows how this business is not capable of running itself.
…ineffective Members Council
It all comes back to an ineffective Members Council. They have failed to appoint a board capable of fixing this business for as long as the system has been in place, but they seem happy about their poor record of success. The Members Council should be abolished – perhaps some are too familiar with the people they’ve appointed?
Why, for example, are four of the seven on the board from Auckland and another from Hamilton. They also are all too familiar with each other and have already earned the sobriquet of ‘the cartel’ and are suspected of planning to take the Guineas races away from Riccarton to Ellerslie.
Everywhere south of Hamilton is underrepresented, with only two members. This unlevel playing field is an unhealthy aspect of the industry – resulted only from the existence of the Members’ Council.
Murmurings in the industry reveal that Cameron George was an unpopular appointment in the first place, and now he’s the Chair. He was a stipe who developed an unsavoury reputation both on and off the course.
If this industry can’t develop some integrity, it has nothing and will never go anywhere. Integrity, honesty, transparency, and accountability – in 2021, we have yet to see any of it.
Below: The Grant-Thornton Performance and Efficiency Report released in October 2019 shows a lack of performance and no efficiency. Note the debt level to the bank was $35 million in 2017 which under RITA rose to $45 million and is now back at $35 million.
Grant-Thornton’s Performance and Efficiency Report table released in October 2019. When the NZRB released their budget for 2019 they predicted a Net Profit of $165 million because they were deluded about the coming success of the FOB. The Optimist in January 2019 predicted a profit of $140 million and the final result was only $137 million. It also shows bank debt of $35 million at the end of 2019 and a five-year decline in equity from plus $70.8 million to -$47.4 million
A slap in the face to the thoroughbred code (NZTR) is how you would describe both the Greyhound and Harness nominations for board positions on the soon to be appointed TAB NZ board.
Recently I wrote about the ‘Decade of Disaster’ during which the racing industry endured poor administration with calamitous decision-making that has cost racing’s stakeholders a couple of hundred million dollars. This was an avoidable fall from the position of ‘cashed-up’ to technical TAB insolvency along with substantial debt to the bank.
The New Zealand Racing Board (NZRB), or the NZ Ruination Board as our leading trainer Murray Baker always described it, was crawling with incompetents who all but wrecked the industry. They collected massive salaries and board fees with no racing industry qualifications and then walked away (if not pushed) from the carnage with no accountability.
But have they walked? Apparently, not all! The Greyhound and Harness codes have decided in their infinite wisdom to align themselves with two former NZRB executives who were high up in the failed John Allen team and nominate them for positions on the TAB board to represent those codes. I’m calling it a disgrace.
…it can’t happen if the codes themselves are guilty of recidivist offending…
The New Zealand racing industry has an opportunity to put together a new board that will run this industry properly, but it can’t happen if the codes themselves are guilty of recidivist offending by regurgitating past failures with expectations of an entirely different result. I’m fed up with quoting Einstein, but he said it first.
You just don’t do it. It’s a no-no!
When former NZRB Chair Glenda Hughes was appointed CEO of Greyhounds NZ, it raised eyebrows, to say the least – did she know a Greyhound from an Afghan?. She appointed John Allen, who brought Stephen Henry with him via NZ Post and then Foreign Affairs. Jobs for the boys. Stephen Henry was the General Manager of Services at NZRB with no previous horse or wagering experience, and now he’s the nominee for the TAB board via Greyhounds NZ.
Harness NZ is even worse. Rod Croon was on the NZRB board as the harness nominee from 2012 through to 2018 and is currently the President of the Auckland Trotting Club. Their most recently appointed board member is the former NZRB financial controller Shaun Brooks, appointed by John Allen to NZRB in October 2015. He left NZRB suddenly amid some controversy about four years later, and now he’s the board nominee from Harness NZ.
Brooks was the financial controller at NZRB through the worst period of decline…
Brooks was the financial controller at NZRB through the worst period of decline and was the incumbent during the failure of NZRB to balance the books correctly when bonus bets were not accounted for in the final result.
The thoroughbred (NZTR) nominee is Jason Fleming, who has been in the racing game all his life, is an owner and breeder, a lawyer, and the director of a financial services company. He was the CEO of Hawkes Bay Racing and worked as a stable hand for John Wheeler many years ago, so he is a professional and knows the industry well from the coalface up.
It’s a given that the new board will require a diversity of skills. Is it not strange that the three codes would not have met to work together and collectively agree on the three nominees who can work together. In a perfect world, that’s what would have happened.
But it’s hard to imagine that anyone in the thoroughbred game would be happy about either Henry or Brooks, or followers of the other codes for that matter. Livid, yes, happy, no. This is a poor start in attempting to put together a TAB board for what will be a make or break couple of years with the industry in a dire financial situation post-NZRB.
The NZRB-John Allen and executives era needs to be exorcised into history
Why is this racing industry in New Zealand so inept? The NZRB-John Allen and executives era needs to be exorcised into history with no thought of looking back. What’s wrong with carefully chosen new people with new ideas?
Speaking by phone this week with a member of the board of Harness NZ, I asked the logical question of why they nominated Shaun Brooks? The answer came back, “the board rates him.” There was no point in continuing that discussion.
The performance of the TAB is much improved in the first five months of this season, due mainly to COVID19, and $10 million of the $45 million debt to the ASB has been repaid, but there’s still a long way to go, and the worldwide explosion in betting may yet return to pre-COVID levels – no one really knows where we are heading with the economy and betting levels, but we do know that nothing stays the same.
The involvement of the Department of Internal Affairs (DIA) in this process is flawed and problematic. They don’t have a clue what skills the board needs, and the process is wrong. A panel should have been briefed on the skillsets needed and then instructed to shoulder-tap the best people.
Calling for nominations through the DIA website will not attract the best candidates available. They need to be approached and cajoled to get the best mix of the right people.
It isn’t very reassuring for horse lovers dedicated to the racing industry to see this unfolding before them.
It isn’t very reassuring for horse lovers dedicated to the racing industry to see this unfolding before them. Thoroughbred racing is bigger than the other two codes combined and therefore is underrepresented in the new legislation. It’s a level playing field in Victoria with two thoroughbred reps and one each for the other two codes.
The problem in New Zealand is a lack of wagering knowledge. I decided to contact a retired CEO of Tabcorp who resides in Sydney and when employed, was paid A$1.2 million annually, for reasons of value – and not because he was shifted sideways after failing in a government department. He was remunerated according to his worth, and success was forthcoming.
He told me: “It’s going to be a mistake not to get a wagering expert. To me, a gambling expert is essential, particularly those that understand digital. You don’t pack the whole board that way, but you want to have diversity. The world is going to move, and the market will keep changing, as will the product.
“Achieving product parity and then having the agility to adjust to new products will be essential for them when taking a five or ten-year view. Playing catch-up football is essential, but that’s only phase one, and then you need people involved in both the executive and on the board that understand the gambling and wagering markets and how things move.
“You need someone that’s able to communicate with stakeholders and have a partnership-relationship with the racing industry.” – former Tabcorp CEO
“You need someone that’s able to communicate with stakeholders and have a partnership-relationship with the racing industry, but they also need to be strong influencers in that regulatory space to achieve parity and have the agility for the product parity as you advance.
“They also need to have a strong customer lense – what they call CRM, data buying, artificial intelligence – all that sort of stuff.
“It’s naive and ridiculous for New Zealand to sit here in isolation and say we are going to be successful by offering an inferior product to the rest of the world. If they respond and say ‘no, we have a good product,’ and we recognise we have to offer a world-class product, that will mean they will have to offer something better tomorrow – you don’t get there and say it’s done – it’s never done.
“The operating environment, the regulatory environment, the executive and the government environment has to be on their minds at all times.”
New Zealand is mainly devoid of the gambling/wagering experience required for a competent, pro-active board to enter the world of global wagering. The Aussies are good at it, it’s in their blood, and on a seven-person board, there should be room for at least one Australian with the know-how.
Minister Robertson and the DIA designated a process to put this board together. It’s wrong, and they need to alter it; the racing industry’s future depends on getting the good people.
Hope springs eternal is an expression coined by poet and writer Alexander Pope in 1732. The adage is relevant again for this, the first week of the new decade, as we exit a very forgettable decade for many aspects of the thoroughbred racing and breeding business.
It wasn’t that New Zealand didn’t produce some great horses, and we didn’t see some great racing, because we did. Our horsemen and horsewoman never faltered and upheld the great Kiwi tradition characterised by a display of eternal passion for horses, but in the end, they were failed by an industry declining economically under incompetent administration.
Consider the quality of the racing at both N.Z. Cup week and Boxing Day, and New Year’s Day at Ellerslie. It was outstanding racing, good-sized fields, big crowds, and top-class horses.
The decade (2011-2020) started with a violent earthquake that killed nearly 200 people in Christchurch and has finished amidst a worldwide pandemic that has impacted New Zealanders far less than the rest of the world. In that same period, the fortunes of the horse business have declined alarmingly through a series of irrational appointments of people capable only of disastrous decision making.
Equity of $85 million a decade ago
The decade started in 2011 with an annual report that said we had equity of $85 million, which was $5 million down on the budget for the year. It was a substantial decline in the equity of $104 million just a few years earlier.
The decade started with Stiassny (Chair) and Brown (CEO) and finished with McKenzie (Exec Chair). It also ended with zero net tangible equity and a debt to the ASB bank of $45 million. A long line of failed characters came and went in the middle, with each playing cameo roles with performances the equal of a Shakespearean tragedy.
Pause for a moment and take the helicopter view. Over the 10-years, how can this administrative fiasco have happened, let-alone been allowed to continue, to the point we have reached today where the racing industry in New Zealand is insolvent and in virtual Government led administration.
Racing is morally owned by the stakeholders – the owners, the club committees, the trainers, the breeders, the jockeys, the vets, the farriers, the punters, the horse lovers, the strappers and stable hands. They once ran the game represented by Haf Poland in Wellington with 20 employees who did the lot.
The stakeholders and participants are the people in racing for a lifetime and are the heart and soul of what makes racing tick. So why have these outsiders with no racing industry knowledge been allowed to infiltrate, like thieves in the night, take massive salaries, and leave with the dirty dishes still in the sink?
Government set about using racing as a punching bag
The devastation from their comings and goings is visible to all. In my view, they came because the Racing Act of 2003 set the door ajar and allowed them in as the Government set about using racing as a punching bag for its own devices.
Some of you will be saying, ‘he’s written all this before and is repeating himself,’ and you would be right. Two reasons currently exist for the repetition, and continuing to say it:
(1) Our administrators have known about this for years and have done little to turn things around – they are dumbstruck. It’s like the Titanic heading for the iceberg, but the Captain refuses to change course.
(2) The new 7-person board of TAB NZ is about to be chosen with recommendations to the Minister by a panel of three. If they pick more of the same ilk of people of the last decade, then kiss the game goodbye.
This could be our last big chance because, as John Messara has said many times in the past: “In the end it comes down to the people in charge. One person can change the world. The wrong people in a good administrative system will fail. Good people in a bad administration will change the system and succeed.”
“True ignorance is not the absence of knowledge, but the refusal to acquire it.”
Perhaps New Zealand racing in the past decade can be summed up in the Karl Popper quote: “True ignorance is not the absence of knowledge, but the refusal to acquire it.” The proof is offered in the complete dismissal of the Deloitte Report of 2017 and only the partial acceptance of the Messara Review a year later.
Messr Galbraith and Medames Dawson and Irlwin – they are the three making the recommendations to the Minister – are under a considerable amount of pressure to come up with the right people. Racing needs a board with industry and wagering knowledge above the corporate slant upon which boards were selected in the past – those boards have failed.
Alan Galbraith has a wealth of racing and breeding experience and is a Queen’s Councillor to boot. Liz Dawson and Anne Irlwin are both professional directors, with the former having been on the NZRB board in 2011 and RITA since 2018 – neither of those boards improved racing’s position. Anne Irlwin is a professional director with nothing on her cv to say she knows racing.
How much wagering experience do the latter two have between them to know who’s who? If they pick like for like, we are in trouble, and now with the Government boards and committees requiring 30 percent female content in their boards and committees, it means the best candidates may be passed over to satisfy gender quality rules.
The DIA itself doesn’t know what would constitute a good TAB board.
The DIA itself doesn’t know what would constitute a good TAB board. The Candidate Information sheet talks more about corporate governance, conflicts of interest, and gambling harm minimisation than it does about the real issue – understanding the workings, structure and trends of betting from a global perspective. Wagering experience is not about placing weekly bets on the NZ TAB.
We also need a board with some entrepreneurial flair that knows the need for massive changes and the vitally important role of good leadership. How else do you recover from a $45 million debt that nobody wants to talk about, get back into the green, and increase stakes? If the new TAB board doesn’t understand wagering globally, it will join other boards as a statistic on the long list of fails, and racing will further decline.
The NZ TAB, in its current form, is hopeless. The product is inferior; the FOB platform was poorly designed and was a wasted $50 million. Every corporate betting site in Australia has better navigation and more information and offers better odds. Despite this, our TAB gets business by default and has increased its turnover by about seven percent with the help of COVID-19.
Two and a half years ago when Messara delivered his ‘Review’ to the Minister on July 27th, 2018. Winston Peters had his chance, but after some people of influence read the Messara Review and got into the Minister’s ear, he went down a different path.
Peters then put the management of racing in the hands of RITA and the Viking (Johansson), and afterwards provided racing with only lip service, preferring to concentrate on the more critical matters such as running the country as Deputy PM and Minister of Foreign Affairs. No one would blame him for that; it’s just that racing didn’t want to be at the mercy of a Viking devoid of racing knowledge.
With the new Minister, Grant Robertson, it will be more of the same
With the new Minister, Grant Robertson, it will be more of the same. The workload with Finance and Deputy PM will be massive, and his involvement will be superficial with Internal Affairs (DIA) calling the shots with a TAB in administration
So what are the chances of getting a TAB Board that will do a ‘Lazurus’ for racing? On both previous form and the pace the DIA operates, you would have to say ‘remote.’ It’s two years since the DIA was appointed the designated authority, but they still haven’t set a POC rate (Point of Consumption) charges, let-alone collected any money.
In an article that appeared two weeks ago in ‘Politik’ written by Richard Harman, Minister Grant Robertson summarised the effect of COVID-19 so far. It unveiled the immediate economic outlook from Treasury’s viewpoint.
Robertson corrected Treasury’s predictions made at the start of COVID while declaring the high quality of the job he had done. He also said the pandemic was now estimated to be costing $50.1 instead of the original estimate of $40 billion.
In detailing some of those costs, he highlighted six areas where risks to the fiscal projections existed, and racing, or more specifically TAB NZ, which received a $50 million bail-out, was one of them.
Robertson said: “Under provisions of the Racing Industry Act 2020 that came into force on 1 August 2020 TAB NZ may now be deemed to be controlled by the Crown and therefore become part of the Government reporting entity. Until the accounting treatment is resolved, forecasts relating to TAB NZ have not been included in the fiscal forecasts, but may need to be included in future fiscal forecasts once the accounting treatment is confirmed.”
…the TAB was set up by the racing clubs in 1951 but the Government in the legislation made it a ‘body corporate’…
The problem with that statement is threefold. Firstly, the TAB was set up by the racing clubs in 1951 but the Government in the legislation made it a ‘body corporate,’ which by definition can’t be owned by anyone or a company but instead is a collective of unit-holders. In the mid-1990s, a Q.C. handed down a judgement that decreed the racing industry was the beneficial owner.
Secondly, the Racing Industry Act 2020 clearly states that TAB NZ is a body corporate and a legal entity separate from its members, officeholders, employees, and the Crown – yes, separate from the Crown.
Thirdly, if the Crown or Internal Affairs or Treasury (in other words, ‘The Government’) is running the TAB, then history tells us we are stuffed! The appalling record it has carved out through interfering with racing and using it for its own purposes, knowing nothing about the business, and not being interested in it, speaks for itself.
In a 10-minute sit-down chat with National Party and opposition leader Judith Collins at Ellerslie on Boxing Day, Ms.Collins told me that the Government has a poor record of trying to run or buy and sell businesses, and the relationship between the racing industry and the Government should be at arm’s length.
Judith Collins would reinstate Trackside Radio
As a by-the-way, she also said that if it were up to her, she would reinstate Radio Trackside and that it was a mistake to have discontinued such a service to punters. Ms.Collins and her husband, David Wong-Tung, appeared to be having a very relaxed, enjoyable day having a flutter from race to race.
So, what happened between the time the legislation was written and then rewritten for a second reading and the time the $50 million bail-out was announced. Did the Government agree to the money on the proviso it would steer the ship while RITA sat quietly in the background?
It doesn’t matter which party is the Government; they’re all the same, and the Ministers of Racing as a collective group have been a bunch of failures. Does anyone expect Deputy PM Robertson, who is up to his ears in work with Finance, etc., like Winston Peters before him, will devote any time fixing a racing industry he knows precious little about?
The Racing Industry Act 2020: 54 TAB New Zealand established (1) This section establishes TAB New Zealand (TAB NZ). (2) TAB NZ— (a) is a body corporate; and (b) is a legal entity separate from its members, office holders, and employees, and the Crown.
The above is part of clause 54 of the Racing Industry Act 2020. It says the TAB is both a body corporate and separate from the Crown.
The bottom line is, if the Crown is now assuming ownership of the TAB because it’s in administration, then racing is going nowhere fast based on past performances.
‘The racing industry has previously stated it considers it owns the TAB.’ – DIA brief to the new Minister
In the briefing papers on the racing portfolio given to Minister Robertson, a footnote appears on the bottom of page four, stating: “Although TAB NZ is a Statutory Entity, the Racing Industry Act does not define its ownership. The racing industry has previously stated it considers it owns the TAB.”
Minister Winston Peters received the documentation last March, which proved the TAB was started and underwritten by the thoroughbred and harness racing clubs of New Zealand to the tune of £50,000 in 1951. Instead of taking the opportunity to correct the mistake, he kept the proof to himself and left the TAB as a body corporate in the new legislation.
When $72.5 million came to racing in last year’s budget, of which $50 million was to bail-out a debt-ridden TAB under the management of RITA, the Government grip tightened on racing. The question is, what did RITA agree upon to get that money? What was the deal – handing over the reins must have been part of it?
We need knowledge; it’s too complex and global to have anything less
In summary, who in reality understands the business of racing? We need knowledge; it’s too complex and global to have anything less. If you don’t understand it and how to drive it and develop it, you will end up with people like John Allen who was doing no more than guessing and getting $680,000 annually for the privilege.
The pure corporate/government model doesn’t work. Where’s the business development, the people with entrepreneurial skills with a passion for racing who won’t walk away from the game and leave behind a trail of devastation?
If you appoint people without a racing passion, all you get are the mercenary graduates from the Institute of Directors who come for the dollars. They provide no transparency along the way, offer nothing, and leave with no accountability – that’s a snapshot of the history.
Racing needs to reinstate the moral compass it had in the past and address the real issues for the benefit of the people who work in it and not a few at the top. The decay of sporting bodies, such as cricket and rugby, is due to the same issues – selling out to the corporate world in favour of dollars and ignoring the grassroots.
Confirmation that the Department of Internal Affairs (DIA) is firmly controlling TAB NZ, as the process of phasing out RITA continues, is blatantly evident on the DIA website this week with a call for nominations for the new board.
Under the sub-heading of ‘Recent Announcements’ on the ‘Appointments to statutory bodies’ page, it states: “Board Members of TAB New Zealand nominations are now open. See Calls for nominations below.”
Last week, the assumption made here that the ‘selection panel’ would shoulder-tap prospective independent board members, which is likely to number four, isn’t entirely correct. The web page displays hyperlinks to the ‘nomination form’ and ‘candidate information,’ which indicates anybody is eligible to throw his/her hat into the ring.
The board will be seven members in total, of which three comprise a nomination from each of the codes. In addition to the codes, nominations for board positions were also called for from each recognised industry organisation, and Sport and Recreation New Zealand.
The Minister has the ‘power of veto’ of any person recommended by the panel
The Minister has the ‘power of veto’ of any person recommended by the panel, but given Minister Grant Robertson has minimal industry knowledge, it seems unlikely he would use that power once the names arrive on his desk.
Discovering the DIA appointments page was achieved purely by accident and very obviously wasn’t advertised to the broader racing community. Racing over many years must be the least transparent sport going, and with the TAB under DIA control, nothing much will change, and we know progress and implementation will be slow.
The candidate information page says that nominations will close on Friday, 15th January, at 5.00 pm. It also says, in typical government department snails pace, a decision on the makeup of the board will happen by May 2021. The job spec follows:
$33,430 per annum for Directors
Further on it states: “Fees are subject to the requirements of the Cabinet Fees Framework, and have been set as $33,430 per annum for Directors, and as $66,685 per annum for the Chair.”
It’s possible a suitable candidate or two not currently in the sights of the selection panel may fit the criteria and be available to make a valuable contribution to the industry. If that’s you, then click on this link and download the nomination forms, etc:
The TAB could do with a valuable contribution at the highest level; it’s well documented here and elsewhere in recent history that poor administration and structure led to the decline that required the government bail-out of $50 million from Winston Peters at budget-time last May.
Before that, the Minister was given the document which outlined the formation of the TAB in 1951 with the thoroughbred and harness racing clubs underwriting the project at the not insignificant cost at the time of £50,000. But with Winston’s bail-out came assumed ownership by the Government, and what very recently was known as a body corporate but now comes under the statutory body process of the wing of the DIA.
Fundamentally, no business like the TAB should be under the control of the Government because public servants have an abysmal record of running businesses. Remember, the demise of racing in recent times has been at the hands of government appointees.
Here’s a three-minute video that highlights that claim:
The interesting thing about the future of TAB NZ is the decision on partnering. Without partnering, New Zealand has no racing future, in my view, and partnering will come in the first instance as an option or later as an inevitability.
The global betting landscape has changed dramatically over the past couple of years, but even more so in COVID-19 year. Our TAB here is up seven percent since August, and we might have some extra cash to pay off debt but not increase stakes.
But spending in the third quarter in New Zealand as a whole in 2020 is up $1.8 billion or 28 percent on the same quarter in 2019 – most of it online because everyone has been stuck at home. It’s a hiatus and will not be permanent.
In Australia, the increased betting has been much more dramatic. A racing.com programme last week called ‘After the Last’ was on wagering in which a number of the corporate bookmaking CEO’s were interviewed and they painted a different picture of the betting successes achieved in COVID-19 year.
Sportsbet: There has been a reactivation of dormant punters in the tens of thousands if not hundreds of thousands
Sportsbet CEO Barney Evans said: “There has been a reactivation of dormant punters in the tens of thousands if not hundreds of thousands. The last quarter result drew an increase of 76 percent.”
Former administrator and punter, Mike Symons, backed up Evans when he said:
“It was like Saturday afternoon was the highlight of the week. Primary school parents formed new punters clubs – new punters have been born during this COVID era, and the challenge for Sportsbet, Pointsbet, Betfair and others is can you keep those punters engaged in racing when their diaries are opened up, and you’ve got school sports and other commitments on the weekend.
“Racing was the only sport in town, and we had a captive audience.”
“Racing was the only sport in town, and we had a captive audience.”
Evans followed up with these inciteful and encouraging comments:
“Every year at Sportsbet, there had been a one or two percent shift to sport from racing for five or six years, but now there’s been a significant shift back. There are about 500 to 600,000 sports punters who have taken up betting on racing this year.
“The Channel Seven coverage has been brilliant, and we have demystified racing for them – it’s visible to them.
“Punters are out there wanting to be informed. It leads to a deeper education of the punter and therefore more engagement with the sport and hopefully longevity with their involvement as a punter.
“We are racing’s marketing arm – we are reaching out to the audiences. We’re spending the money on marketing and getting them in, and we have to make sure we are merchandising racing more appropriately.
“We need to make racing more accessible to someone who doesn’t consider himself an expert.”
“We need to make racing more accessible to someone who doesn’t consider himself an expert.”
Would it not be good to hear someone from our TAB making such positive comments. But we hear nothing, not a word, and what we’ve heard in the past has often proved to be highly inaccurate.
The program displayed a graph which showed that from March to July 2019 in Victoria the percentage of betting was 75.5% through digital and 24.5% through retail. But in March-July 2020, the forced retail venue closures throughout COVID drove customer activity into digital to 90.9% and only 9.1% through retail.
The program emphasised the most significant win has been selling racing to sports bettors. It was the most significant upside.
Men aged 18 to 34 made up 79% of new account holders.
They got to dormant customers which then reactivated and new customers acquired from elsewhere and it led to an increase in overall market share. Men aged 18 to 34 made up 79% of new account holders.
Wagering with Sportsbet made $200 million profit in Australia during the pandemic. Sportsbet doubled its betting on the Melbourne Cup while Tabcorp went backwards by six percent because they were more reliant on retail, which COVID decreased.
In the 12-months prior to June 2020, the total spend by corporate bookmakers on marketing alone was $134 million.
We don’t market racing in New Zealand, which has to change. We got rid of radio and most believe that was a huge mistake, and Trackside needs to be free-to-air.
For all the reasons stated above, from the ‘After the Last’ programme, we badly need to partner our TAB and plug into their computer, and become part of a global betting market that’s continually changing and getting better.
The Racing Industry is currently metamorhising into a new area of administrators and everyone at the coalface of the industry committed to racing should be nervous about what’s coming.
The difference this time is that the industry has no room to move with an ASB bank debt of $45 million. If the wrong people get appointed again, we are sunk as an industry, and we have a history of poor administrators
It’s not that people are saying they don’t like the look of the new NZTR board or will be opposed to the ministerial appointments to the new TAB board before they’re announced, it’s that these appointed bodies have no history of success, and the appointment process isn’t any better now than it was before.
Look at the accompanying table and examine the Net Tangible Equity line from right to left. From plus $104 million in 2008 to minus $40 million today – 12 years of pain and money evaporated – not just money but also $144 million in lost equity.
Now
2019 (4)
2017 (3)
2013 (2)
2008 (1)
Net Cash/DEBT
-$45m
-$25m
$40m
$40m
$65m
Net Tangible Equity
($40m)
($20m)
$56m
$62m
$104m
Profit
$135m
$148m
$140m
$130m
Expenses
$207m
$211m
$200m
$173m
$141m
Salaries/Wages
$54m
$61m
$59m
$41m
$36m
Employees on >$100k
151
136
135
93
38
1. Nathan Guy takes over as the Minister for Racing 2. Nathan Guy Minister for Racing Minister and the reign of Glenda Hughes (Chairman) and John Allen (CEO) commences (2015). 3. Winston Peters commences as Minister for Racing 4. RITA is formed and Dean Mackenzie appointed as Chairman and then CEO/Chairman (Dec 2019)
But the level of wastage goes well beyond $144 million of tangible equity when you consider the cash cow known as the TAB, previously known as the New Zealand Racing Board, for all those years fuelled a ‘gravy train’ of spending the profits on themselves rather than increasing stakes to keep the industry healthy.
We had legislation known as the Racing Act of 2003 but the very reason for the legislation to keep racing in a healthy state with responsible governance was completely ignored – yet there was no accountability.
What is the point of passing legislation for racing if the incumbents decide to act in a less than above-board manner and ignore it?
What is the point of passing legislation for racing if the incumbents decide to act in a less than above-board manner and ignore it? The Legislation Police do not exist, and it’s as much a problem today as it was then.
Things started to go very wrong in the first decade of the 21st Century when some bright spark decided to sell the four-story building owned at 180 Taranaki Street.
The board took the view that NZTR shouldn’t be in the property business and, on March 1st, 2005, sold the building for $2.4 million – it had been inherited from the New Zealand Racing Conference. What would it be worth today? NZTR didn’t use all four floors and had rented out space to local businesses.
After the Taranaki Street property was sold, NZTR resided rent-free with NZRB at Petone for the next three years but was then charged rent at commercial rates – which they have paid ever since. How to go from wealthy landlords to poverty-stricken tenants in one easy lesson?
Fast forward to 2013 when that esteemed Minister of Racing Nathan Guy appointed fellow National cohort and National Party director Glenda Hughes
Fast forward to 2013 when that esteemed Minister of Racing Nathan Guy appointed fellow National cohort and National Party director Glenda Hughes as Chair of the NZRB on August 1st – and let the nepotism commence.
During the Hughes reign, the Petone property was sold for $9 million when on the books at $21 million.
Hughes appointed John Allen (shifted sideways from Foreign Affairs) who appointed Glen Saville who went off to Ireland alone to strike up deals for a fixed-odds betting platform (FOB) with Paddy Power and Openbet. He, Hughes,and John Allen spent $50 million on the FOB and, with his board’s approval, committed the TAB to $17 million per year in updates to keep everything working. Glen Saville had previously worked for Tom Waterhouse Bookmaking for about three years.
Saville has since gone from the TAB to reportedly work for Donbest in the USA, which is in the same ownership group as Openbet and Scientific Games based in Las Vegas.
Decisions essentially made by four people oversaw this massive decline
Decisions essentially made by four people oversaw this massive decline. Earlier in 2011, Michael Stiassny collected $77,000 in director fees in the same year he drove the Typhoon Betting Platform, which was written-off before it was ever turned on at a reputed overall cost of between $20 and $30 million.
Stiassny also employed Andrew Brown as the CEO on an annual salary of almost $1 million. Brown was followed by Bayley who was followed by Allen – the triumvirate of tragedy.
The 12-year decline is a real figure, yet the one constant during those 12 years is that you can pull up any of the annual reports, and the chairperson and CEO’s addresses all have a common theme of telling you how well they have done.
The TAB Annual Report released last week has Executive Chair Dean McKenzie’s report reading as though he’d just won an Oscar at the Academy Awards. He finishes with a long list of acknowledgments.
It reads in part: “And finally, I would like to acknowledge and thank the entire racing industry. At many times through the year, feedback from the industry has been robust. I put this down to the overwhelming passion through which participants approach the sport they love, combined with demands of such a comprehensive reform programme.
“However, we are by no means in the home straight.”- Dean McKenzie
McKenzie also said: “This year will go down as a year like no other. Yet, through it all, the new foundations for the industry are now firmly set. However, we are by no means in the home straight.”
“Home straight.” You have to be kidding, we have three laps to go before the $45 million owed to the ASB is paid down and we can look at increasing stakes.
The Executive Chair’s Report makes no mention of the bank debt or the plight of the owner who ultimately pays for the product on which the punters bet to provide the diabolically low level of prizemoney. They are the three issues that really matter; the rest is detail.
But I am not telling you anything new. The narrative in all these annual reports can be filed under the ‘smoke and mirrors’ category, and anyone in racing who has bothered to read them will know that by now.
The reason for dragging up this unsavoury history once more is not to make you feel ill, but to simply remind the industry that we could do without a repeat of these mistakes mentioned above, as the new CEO for the TAB is in the process of selection, and the ministerially appointed panel of Alan Galbraith QC, Liz Dawson and Anne Urlwin consider who the seven people will be to make up the new 7-person TAB Board.
From their collective knowledge, Galbraith, Dawson and Urlwin will recommend to the Minister the people who will run wagering in NZ
From their collective knowledge, Galbraith, Dawson and Urlwin will recommend to the Minister the people who will run wagering in NZ. Wagering is a very specialised business and once they have made their choices, will the Minister Grant Robertson (who’s wagering experience is that he likes a bet) be armed with the correct information to make educated decisions?
RITA first advertised for CEO pre-COVID19, which delayed the process, but the whispers say two Australians were interviewed, and a third under consideration has withdrawn his application since learning the remuneration offered for the position was reduced to $350,000.
The previous incumbent CEO, John Allen, was taking home $680,000. This year’s annual report identifies the top salary as $520,000, which is likely to relate to Executive Chair Dean McKenzie. It also says 51 employees earned $100,000 or more, which is a substantial increase numerically from the previous but may relate to severance packages more than annual packages.
The pressure is on to get a board that can turn this ship around. The industry at large may be ambivalent about appointments, but the changing of the guard has never been so crucial because repeating history isn’t an option.
Racing in New Zealand has an opportunity to enter a new era of prosperity that would benefit every racing person in the country if Auckland’s three clubs embraced the latest plan of merging all three to form a ‘super club.’
But uncertainty remains about Avondale joining both Counties and Auckland to participate in a triumvirate of club strength after last night’s fiery AGM at Avondale, which saw the club stay uncommitted about opting to pool Avondale’s assets with the other two clubs and make it a threesome.
Avondale keeps its options open at this stage and prefers to give it more thought before making a firm decision either way. But what is there to decide – the alternative is death by 1000 cuts.
Given the extent of the legislation, which became law in July, the Government could force Avondale to give up the racecourse under Clause 27 of the ACT -Transfer of surplus venues by Order in Council – which in part says:
Regardless of the Avondale decision, the other two clubs will proceed with the plan. In a joint letter to members of the ARC and Counties Racing Club on November 9th, from ARC Chair Doug Alderslade and Counties Chair Mark Chitty respectively, they outlined a merger between the two clubs that would deliver the following:
Doubling of average stake levels per race from $50,000 to $100,000
• Doubling of average stake levels per race from $50,000 to $100,000. • At least 40 race days per year on an international standard track at Ellerslie (achieved via the installation of a new Strath Ayr surface). • Ten races worth $500k per year and three races worth $1m per year. • A racing scene that attracts owners, trainers, jockeys and punters. • A financially viable regional racing club.
Counties and Auckland agreed to the concept at board level and then sent the letter to club members. Soon after, the Avondale Jockey Club in ‘Committee Recommendations’ in their annual report made four recommendations to their members, which could have seen Avondale join the other two clubs and become the third partner in potentially the most progressive advancement seen in NZ thoroughbred racing in 100 years.
The Counties-Auckland letter to members didn’t give too much detail and how these objectives would be achieved, but it came with a Deloitte summation which stated:
“The analysis that we have undertaken suggests that an amalgamation of ARC and CRC would create a club with the financial strength and facilities to meet the objectives that the Clubs are looking to achieve. The Clubs would be in a position to materially lift stake money and other returns to the industry as a consequence of their ability to release capital and build a significant investment portfolio – the returns on which would supplement distributions from NZTR. Further, there is additional value that would be available to ATC that has not been modelled for the purpose of our analysis. This includes the opportunity offered by the StrathAyr track to significantly increase the number of race days, the ability to attract additional advertising and sponsorship revenues and very significant additional option value in land that could be realised over a longer time period.
…essential if the industry is to survive and flourish.
“A plan based around consolidating club ownership and realising surplus assets to fund the capital expenditure necessary to bring the premium venue up to international standard and build the financial assets that can improve returns aligns with the recommendations of the Messara report and strategies that have been successful in other jurisdictions – and in Australia in particular. A successful execution of the amalgamation option would position Auckland to lead the way for the restructure of the New Zealand Thoroughbred Industry that is essential if the industry is to survive and flourish.”
The fact that Deloitte has given the thumbs-up should not be lost on anyone in racing. It was Deloitte that in mid-2017, compiled a report for NZTR that comprehensively outlined a plan to save the industry $54 million per year – total result, $162 million better off by 2020 without taking into account all the money subsequently squandered on the Fixed Odds Betting Platform (FOB) – $50 million that went down the drain in building it plus whatever they have wasted on updates.
They (NZRB) dismissed the Report without due consideration
The 2017 Deloitte Report was full of common sense and authority, and you needn’t be an Einstein to conclude the then NZRB board was culpably incompetent. They dismissed the Report without due consideration and proceeded to bathe themselves in an inglorious display of ineptitude by spending recklessly on an ill-conceived betting platform ultimately destined for the dust-bin.
Corporate suicide brought on by industry ignorance. Just because you have the academia to become a lawyer or an entrepreneurial accountant doesn’t qualify anyone from advancing beyond the level of ‘useless in business,’ which has been endemic in racing over many years – how often have we been retarded as an industry since all the academics with zero racing knowledge arrived en-masse to run it!
Club committees require a mix of skills. Counties and Auckland have recognised the issues and come together in an attempt to reset the ship’s course to avoid a giant wave that will eventually swamp them. It’s summed up in one line in the letter to members from the respective Presidents Doug Alderslade and Mark Chitty: “The status quo is simply not sustainable.”
…$16+ million annually to fund the doubling of stakes
The letter outlines the goals but understandably gives scant detail on how they can double prizemoney on 40 race dates on a StrathAyr at Ellerslie without using up the principle raised jointly by the clubs. They are not saying too much until the club members give their approval to proceed, but we know that they must be contemplating a ‘super business plan’ for an investment that will return in the order of $16+ million annually to fund the doubling of stakes – that’s my estimation of the cost, but I stand to be corrected.
The two clubs in the 2019/20 season collectively held 26 meetings and ran 227 races at an average of 8.7 races per meeting and an average stake per race of $49,994 – that includes the Karaka Millions races.
They paid out $11,348.675 in stakes, which is less money in stakes than one race we are all familiar with at Randwick known as The Everest and not much more than total prize money for the Melbourne Cup – that’s another example of how far we have fallen behind in stakes money.
Increasing the number of meetings to 40 based on our current prizemoney levels is how I arrived at $16+ million. How big can the pile of money be by selling up Counties and surplus land assets of Auckland, and adding what cash they have on hand to get this done? Certainly not by putting the money in the bank and earning interest at two percent or less.
“The Messara Review was the body of work that set the wheels of change in motion.” – ARC CEO Paul Wilcox
I decided to try and glean more information from ARC CEO Paul Wilcox. He said: “The Messara Review was the body of work that set the wheels of change in motion.
“Our letter sets out what we can do in the merger between the ARC and Counties. After that, it will be a matter of Avondale coming in as a joint partner. The increase that we are talking about from $50,000 to $100,000 – that will start to happen as soon as we get the green light from our members.
“This project is about maximising the return on our investments to maintain the stakes at a $100,000 average. We have surplus land here, and counties have their assets, and it’s about combining those assets for an investment from which we use the proceeds.
“We are not privy to the details at Counties, but we know what we have here which is surplus to racing requirements, and particularly PC168 where we did a 125-year lease and got that money upfront which has formed the ARC investment fund as it stands now.
“…the plan to put the Strath Ayr track in is not reliant upon anyone but ourselves and Counties”- Paul Wilcox
“What’s our plan? It goes back to your statement before that we stand on our own two feet in this arrangement – the plan to put the Strath Ayr track in is not reliant upon anyone but ourselves and Counties. If there was some assistance along the way, it wouldn’t be turned down, put it that way.
“Once we have that buy-in from our member base and we can go, then I will be not as evasive. I can’t say too much at present because we don’t want to upset any of the members with information before they have the chance to consider everything.”
In conclusion, Paul said: “The plan is to race at Counties and Avondale until the StrathAyr surface is in, which will take between 18 months and two years to build – the Ellerslie dates would spread out between those two courses. When you get a consistent surface to race on with quality horses, the punters will be eager to bet on them.”
In past times, the ARC has talked of selling ‘the Hill’ and although Paul Wilcox wouldn’t be drawn into the detail, it would be surprising if ‘the Hill’ wasn’t part of the surplus land plan, and jumping races became an Ellerslie thing of the past. Relocation of the Great Northern Steeples and Hurdles to a country course in the Waikato could be on the cards.
As well, the Strath Ayr surface is not conducive to jumping events, so it seems inevitable that hurdles and steeple events have a limited lifespan at Ellerslie.
Change is a dirty word in racing
The reluctance of the Avondale Club to make a decision is typical of what we see in racing everywhere in New Zealand. Change is a dirty word – most want things to remain the same in perpetuity in some faint hope the good old days might miraculously return – well, they’re not going to!
Club amalgamations and fewer venues is the biggest certainty for the future of racing. Another certainty is partnering the TAB, and these two certainties can be embraced and planned to achieve a better result, or they will be thrust upon us through our paralysis for engaging change or our inability to foresee racing’s horizon.
Racing is now looking for dynamic leadership and recent changes in the legislation, new personnel on the boards, a new entity called Racing NZ, COVID19 since March, a new Government and new Racing Minister, and a TAB in virtual administration – the Statutory Crown Entities Monitoring Department overseeing the TAB – have all contributed to a tumultuous 2020.
At budget time, Winston Peters threw $72.5 million at racing for synthetic tracks and prevented the TAB from going into receivership, which inevitably meant the Government effectively became the TAB owners and would assume control without making it official or public. Very little information has come out of the RITA/TAB website in the past six months.
The problem is the TAB still owes the ASB $45 million
The problem is the TAB still owes the ASB $45 million, which nobody talks about. My information is Government has told the TAB that money for increasing stakes won’t be available until the debt is significantly reduced, but we know stakes money is still the only thing that will drive this business forward into a better future
How do we get rid of the $45 million debt? Auckland’s Strath Ayr and 40 dates a year could be the start of it. We know that well-presented racing with good horses on a consistent surface is what drives betting. We know that Ellerslie is the showpiece of New Zealand racing, and on a StrathAyr, New Zealand racing can be marketed to the rest of the world.
We also know that six percent of racing presented to the betting public in Australia comes out of New Zealand. Yet betting on New Zealand racing is only two percent of their turnover. We don’t market our racing to Australia, and why would we when one week we are at Te Rapa, the next at Rotorua, the one after at Otaki – all different racing surfaces from dry to mud producing inconsistent results.
We want consistency and tiered racing to get the betting up. The Ellerslie Strath Ayr at a $100,000 average stake catering for better horses would improve our product out of sight and provide a platform on which to market New Zealand racing to the overseas betting public in our unique timeslot. Only then can you get that two percent up to six percent, and suddenly ‘racefields’ is earning $20 million instead of only $5 million.
The new administrative set-up in a visual is shown below. It depicts who’s responsible for what with the shift in the power-base identified in accordance with the new legislation. The number of people involved has obviously increased, and therefore the cost of keeping those extras will have risen.
ACT party leader David Seymour is not a racing man per sé, but he has been following the racing politics closely and has developed some firm views for the future of racing which dovetail into the principles espoused by ACT for the benefit of all New Zealanders – and for the first time, ACT released its racing policy a few weeks ago.
In keeping with ACT’s mission statement, which talks of reducing the role of government and increasing the role of free markets, ACT says in its racing policy it would “Abolish the Racing portfolio,” and “Ensure the Government has an arms-length relationship with the racing industry so it can self-determine its future.”
In 1990 the National Party, led by Jim Bolger, won a landslide victory in the General Election and made John Falloon the first Minister of Racing. Of the 12 Ministers since then, only Winston Peters has made a meaningful contribution to the industry, but the polls clearly indicate Winston’s tenure is at an end, and the political landscape for the racing industry is in for a shake-up.
Labour and the Green’s don’t have policies in 2020 but both ACT and National do with ACT taking a much keener interest as it emerges as the country’s most progressive vote catcher. This week David Seymour agreed to speak to The Optimist to elaborate on the policy.
David Seymour: So what is different about horse racing that makes it a constant political headache?
He firstly said: “Let’s just get back to first principles. You know, Netball New Zealand has 140,000 players every Saturday morning; they get out they play? It’s no problem, and there’s no politics and no subsidies. Everyone just gets on with it. So what is different about horse racing that makes it a constant political headache?
“Okay, you have gambling. So, there’s a need to regulate it, but in addition it means we’re going to stand up for your property rights so that you may sell your intellectual property to whoever you like on an open marketplace – Australasia wide. And we’d be enforcing racing’s property rights against people trying to poach them, and then racing can get on with it.”
ACT’s racing policy is supportive of the Messara Review with reservations on enforced venue closures, which he says should be determined by the free market, and under ACT’s policy, government handouts would be a Winston Peters thing of the past.
David Seymour says: “If your club or track makes money, then good on you, but if it goes broke, we’re very sorry to hear that, but it’s not our problem. That’s our basic approach. I don’t know if racing people are going to be happy with that because I suspect a lot of people that wanted the $70 million given to racing for items such as subsidising an all-weather track will be offended.
David Seymour: …we have 200,000 rugby players without a minister…
He continued: “After that, they’ll want tax breaks, and then they’ll want more, and everyone else will want tax breaks, but we are just not going to do it. No, my starting point is we have 200,000 rugby players without a minister, and there’s no problem. Why are we subsidising racing? Why does this sport always cause so much trouble?
I knew I had limited time with David Seymour, so resisted bringing up The Winston Peters pre-budget speech to announce $50 million of the $72.5 million handout was to pay the month’s bills and prevent the TAB from going into receivership three days later. Under ACT the market forces would have prevailed, and the long-term future would be different, perhaps better.
And there was no time to say that despite the handout, the TAB owes the ASB bank a reputed $45 million and still hasn’t produced the half-year balance sheet due after January 31st, which will show the TAB to be trading as an insolvent body corporate – marginally embarrassing for NZ-First after throwing $50 million at it. Put another way, it wouldn’t be a vote catcher.
Betting has picked up a little, but how long will it take to extinguish a debt that big while keeping stakes money at a sustainable level? It’s a Mt Everest, and we are at Base Camp ready to begin the climb with no oxygen canisters. I didn’t raise any of that stuff, but David Seymour knows it anyway.
What I did say was that after a succession of poor racing ministers, Winston Peters was the only Minister that ever made an effort for racing and had got us new legislation, which the industry was grateful for, but two years ago had made a strange decision not to engage John Messara to oversee implementation of the Messara Review after its completion. Undoubtedly, someone got into the Minister’s ear.
David Seymour on the Messara Review: you don’t buy a Rolls Royce and then get a Toyota mechanic to fix it…
David Seymour said: “As far as the Messara Review is concerned, you don’t buy a Rolls Royce and then get a Toyota mechanic to fix it, and that’s what Peters has done.
“The racing industry is part of a large group of people let down by Winston Peters. Racing isn’t alone in that respect; we’re here to stand on principle for racing just as we are for licensed firearm owners, and people who want the end of life choice, and people that want a more sensible response to COVID, and small business people, and taxpayers, and landlords, and a whole lot of other people being persecuted under the current Government.”
“Look, a vote for ACT is a vote to set racing free,” said David. “If you do that, we are not going to give you handouts, but we are going to stand up for your property rights, and we are going to let you self-determine and choose your own future.
“I don’t know if it makes any sense to racing; it may not, but we can say we’d give back the TAB to its rightful owners. Racing should be able to stand on its own four feet.
“Our policy for the tracks and clubs, in whether or not they continue, is the consumer’s choice– some may go broke, which is a commercial decision for them, but we won’t have the Government coming out and making that decision. We want the choice to be back with the consumer.”
An ACT/National coalition would be racing’s best result by far
ACT’s racing policy was followed last weekend by National’s – released on Saturday to coincide with Windsor Park’s Group One day at Hastings. An ACT/National coalition would be racing’s best result by far, and the worst result would be a return of the Green’s and Labour without NZ-First.
Last time NZ-First polled as low as they are polling (2008), they failed to get back into parliament. Funnier things have happened, but Winston looks sure to be spending a lot more time on his boat fishing than he has for a dozen years. It means a party vote for NZ-First will be a wasted vote.
David Seymour has been the most impressive parliamentarian over the past three years and his input deservedly described as ‘the voice of reason.’
The Pattern is the measuring stick by which the quality of performances of all thoroughbreds around the world are assessed, both for international and domestic comparisons and the continuation of the breed. But the introduction of sweepstakes type races has created division and put the Pattern under threat. John Messara AM has thought long and hard about its history, the introduction of races like The Everest and the future of the Pattern. He expresses his thoughts in this paper. – Brian de Lore
by John Messara Published 18 September 2020
The Spring stakes racing program, now upon us, provides a series of escalating tests of class – collectively known as the Pattern – that deeply engage me as a sports fan who wants to see the best thoroughbreds, jockeys and trainers not only identified, but also put under pressure by competing against each other.
As the season goes on, I build up vital information about individual horses, how they compare with their peers and how they measure up against horses of previous seasons.
That information helps turn my early views about stallions, broodmares and their progeny into proper assessments based on evidence I can trust. Those assessments feed into decision making, which in turn drives our participation in the sport and investment in the industry.
Importantly, the Pattern over the years has also proved to be a valuable tool in the programming of progressive horses with options of upper and lower paths to Group 1 glory.
Leading US racing journalist the late Kent Hollingsworth said it best when he wrote in The Blood-Horse in 1974, as the international Pattern was beginning to take shape:
“Because to improve the breed, to upgrade a broodmare band, to select a stallion, to understand a catalogue page, to evaluate a family – one must be able to recognize racing class.”
That seems like a self-evident truth to me yet, forty-six years later, the Pattern is threatened in Australia and around the world by a mind-set that under-values the quest for racing excellence – for me, the ultimate Key Performance Indicator – in favour of prizemoney, wagering and entertainment KPIs. In my view none of these four objectives is necessarily incompatible with the others.
The Pattern itself was introduced as an innovative solution that would help the industry respond to the changing demands of modern racing.
There is evidence to show that Pattern Committees can facilitate innovation in race development and programming, when racing administrators see it as a valuable and flexible asset, not a set-in-concrete impediment to progress.
I find myself in agreement with Brian Kavanagh, Chief Executive of Horse Racing Ireland and Chairman of the European Pattern Committee, in his address to the 38th Asian Racing Conference earlier this year:
“Innovation is good and should be welcomed and encouraged, but it must be within a controlled environment, such as that run by the European and other Pattern Committees, and should be based on the strategic objective of improving the breed of horses or improving the race programme within a particular region.”
Mr Kavanagh went on to point to recent developments in the fillies’, sprinters’ and stayers’ programme in Europe, and support for end-of-season championships in Britain, France and Ireland.
“They were all introduced following detailed discussion and, importantly, unanimous agreement between the European Pattern countries. And further afield, innovations such as the Dubai World Cup, the expanded Breeders’ Cup programme, the Championships programme in Sydney and the upgraded Hong Kong international races programme have all been accommodated within the Pattern races of those regions.”
Progress towards consistent racing standards
A major difficulty emerged soon after the introduction of the Pattern: how to establish consistent international racing standards, so a Group 1 race in Ireland, South Africa or Australia would be of a similar standard to a Group 1 race in Japan, the United States or Brazil. A consolidated world-wide Pattern remains elusive, although progress has been made in the past decade.
What is now called the World Rankings Supervisory Committee first published international classifications of the best British, Irish and French horses in 1977 to assess quality, give breeders accurate criteria for selection and provide a method to show progression or deterioration in the breed over time.
In 1983, the International Cataloguing Standards Committee (ICSC) was set up to prevent disparities in the criteria for Group Races and black type in sales catalogues. Classifications expanded to include non-European countries to encourage international competition and a similar ratings scale had to be adopted for consistency.
Today, ‘Part 1’ countries, where races are eligible for Group/Grade status, include the USA, Canada, Japan, U.A.E, Hong Kong, Australia, New Zealand, South Africa, Brazil, Peru, Chile and Argentina. Consistency of ratings is crucial for the selection of horses for international races and assessing quality for breeding and importing, as well as to identify both national and international ‘Champions’.We at Arrowfield certainly relied on the Group 1 rating of the Haydock Sprint Cup when we acquired Danehill in 1989!
In 2011 the Australian Racing Board adopted the Asian Racing Federation’s Ground Rules, which aim to co-ordinate the assessment of Pattern races on an international level and are based on the European rules. Previously, each country within the ARF followed its own methods of upgrading, downgrading, or introducing new black type races.
The Ground Rules provide a ratings-based system for changes to the Pattern, which is applied consistently throughout Asia and Europe. These ratings are set by the World Thoroughbred Rankings Supervisory Committee, which also has members from Europe, North America and South America. In order to achieve an upgrade or prevent a downgrade, the race must improve by changing its date or conditions, or by increasing its prizemoney and the importance of a race to a club, state or sponsor can no longer over-ride these criteria.
21st century challenges & opportunities
Since its establishment, the EPC has set the bar for quality of the Pattern and its mission has set principles for the Pattern in other countries: ‘to ensure the provision of a co-ordinated programme of quality races across Europe; countries working together rather than against each other’. For this mission to succeed, consistent methods of quality control are crucial.
Re-vamped racing carnivals and the introduction of super-races have created challenges for the Pattern on a global scale. While innovation is necessary to improve participation and develop racing, it is also important to ensure that changes expand racing in a way that considers the wider industry and the long-term impact on the sport and the breed.
Five case studies illustrate the bold and creative approaches taken by racing administrators, including Pattern Committees, to develop new events for 21st century audiences and participants without throwing the Pattern out with the bathwater:
Case Study #1: Breeders’ Cup, USA
The Breeders’ Cup (BC) was created in 1984 as a championship event to attract top international horses, generate revenue, betting handle and fans. Seven brand new races worth a total of $10 million were created. The Graded Stakes committee made the unprecedented decision to grant each race Grade 1 status and again in 1999 for the new Filly and Mare Turf.
The BC aimed to provide a more logical and definitive end to the racing season. They chose a date to minimise the effect on other Pattern races while still allowing BC to be held in acceptable weather. However, many other Graded Stakes had to come forward to avoid clashing and decreasing field sizes. The New York Racing Association (NYRA) adapted their Autumn Grade 1 races including the Champagne, Man ‘O’ War and Jockey Club Gold Cup so they would become BC lead-up races. This move, to work in harmony with BC, maintained the importance of each of these Grade 1 races.
While many races successfully adapted, some existing target races suffered. Held in November over 1½ miles, the Washington D.C. International Gr.1 was North America’s first international race and had attracted the best National and European horses since its inauguration in 1952. Despite efforts to try different dates on the calendar, it was eventually discontinued in 1994 due to its decline in quality and proximity to the popular BC.
Since 1984, BC tried to create a robust series of races throughout the year by contributing funds to many US and Canadian stakes races. However, these funded races were not linked to the year-end championships. In 2007, the BC Challenge Series was created as a series of qualifiers, serving as a prelude to the BC. This ensured that the best horses in each division would have to compete against each other on all occasions on a clear pathway to the BC. This new strategy accommodated the international Pattern and built recognition for both the brand and racing throughout the year, generating more excitement, fans, and wagering, and supporting breeders and sales. The Challenge Series began with 24 ‘Win and You’re In’ races in 2 countries in 2007 and grew to 86 races in 11 countries by 2019.
The BC history since its inception shows that even the boldest innovations can be subject to challenge and review, and that working with, rather than against the Pattern can be a highly successful strategy. In 2019 five Breeders’ Cup races were ranked among the world’s top 100 Group 1 races: Classic (rated 121.5), Mile (118.5), Turf (118.25), Sprint (118) & Distaff (116.5).
Case Study #2: British Champions Day, UK
Established in 2011, British Champions Day combined two big late-season fixtures into one Championship event between the Prix de l’Arc de Triomphe two weeks earlier and the Breeders’ Cup three weeks later.
A large prizemoney boost created the richest race day in Britain but how could Champions Day fit into the Pattern, without disrupting or under-mining existing races? The answer was to re-format existing end of season target races into one meeting with increased prizemoney and new titles to attract higher quality fields and allow the races to be assessed by the Pattern committee. To complement the Pattern, the top 6 races in five categories throughout the calendar were branded as part of the Championship Series: sprint, mile, middle distance, long distance and fillies and mares.
The British Champions Day program features four Group 1 races and one Group 2 – three of them from the historical season-end program at Newmarket and two from Ascot. They became the 5 Championship races, three of them named British Champions Sprint, F&M Stakes and Long Distance Cup, with the Queen Elizabeth II Stakes & Champion Stakes retaining their original names. The use and retention of meaningful race names is a valuable tool for maintaining the Pattern’s integrity over time, and building public familiarity with the annual program of major races.
In 2019 the Champion Stakes (rated 119.75), Queen Elizabeth Stakes (117.5) & British Champions Sprint (117.25) were all ranked among the top 60 Group 1 races in the world.
Case Study #3: The Championships, Australia
In Australia, we learned from both the US and UK initiatives and ‘The Championships’ were launched in 2014 as the culmination of the Sydney Autumn Carnival. The goal was to attract top horses from around Australia and the globe, present the best racing competition at a world-class event at season’s end and provide an economic boost to racing by attracting the younger generation to the racetrack. The challenge was to create a prestigious, attractive and commercially successful event by re-shaping, not breaking or ignoring the Pattern.
Ten existing target races with well-established pathways were re-packaged into a two-day event, including 8 existing Group 1 races. Clashes with other important races were avoided, but there was a need for the addition of new races to grow the program for juvenile fillies and 3-year-old sprinters. Two existing stakes races were renamed and incorporated in The Championships program but were not awarded instant Group 1 status. Instead, increased prizemoney to attract higher quality horses was given to help those races earn Group 1 status on their merits in due course.
In 2019 both the Queen Elizabeth Stakes (rated 122) & T.J. Smith Stakes (118.5) were ranked among the world’s top 5 Group 1 races in their respective distance categories.
Case Study #4: Commonwealth Cup, UK
The Commonwealth Cup was introduced as a brand-new Group 1 six-furlong race for 3YOs at Royal Ascot in 2015, as part of a series of changes initiated by the EPC to strengthen the European sprint program. The 3YO sprint category had been under-represented, with many horses being ‘stretched out’ to try and get the mile distance of the Guineas.
Four decisions were made to make room for, and launch the race:
1. The Diamond Jubilee Stakes (same course & distance at the Royal Ascot meeting) was closed to 3YOs, encouraging them to run in the new race.
2. The Buckingham Palace Stakes was removed from the Royal Ascot meeting.
3. Geldings were allowed to compete in the first 5 runnings of the race (2015-19) – the first age-restricted Group 1 race in Europe open to geldings. (As it happened, no gelding managed to win the race in those first five years).
4. The Commonwealth Cup was also the first new race in the 44-year history of the European Pattern to go straight in with Group 1 status, rather than with a probationary period at a lower level or no grade at all. This was permitted as it related to an important European strategic initiative, rather than a single event and on the understanding that if it did not meet Group 1 parameters, it would be subject for downgrade
The Commonwealth Cup has twice been ranked among the world’s top 100 Group 1 races, in 2017 with a rating of 117.25, and again in 2019 with a 118.75 rating.
Case Study #5: The Everest, Australia
Launched in 2017 by Racing New South Wales with little reference to the Australian Pattern Committee, The Everest has been an almost instant success in terms of attracting audiences, industry backing and the best horses, and does not appear to have had a negative impact on the major weight-for-age Group 1 sprint races, notably the VRC Sprint Classic (run three weeks later) and the T.J. Smith Stakes (part of The Championships in April).
In my view, a good argument can be made for including The Everest in the Pattern because, although the method of field selection is not traditional, the slot-holders can in theory choose any horse, but are, of course, motivated by their substantial investment to select the best horses they possibly can. The proof is in the pudding: since inception the Everest has rated at Group 1 level.
Conclusion
I regard the Pattern as the bedrock of our sport because it is a time-proven system for classifying our equine athletes according to their ability that guides owners and breeders to decisions which will lead to the improvement of the breed.
The Pattern enables owners to benchmark their horses against others in their generation as well as against horses of the same age in previous generations. For many of us, aspiring to have our horse at the top of such a list is the “raison d’etre” of racing.
I applaud advances in Australia which help to make horse racing more attractive and competitive in the 21st century marketplace, such as the introduction of The Championships and the establishment of The Everest.
However, it is important for the sport that these and other initiatives find a means of meshing with the Pattern rather than disrupting it; there is too much at stake for participants in doing otherwise. Respecting the Pattern is crucial to achieve international consistency and relevance. If changes are made based on an isolated interest without considering the long-term impact on the sport and breed, we risk damaging both our national and international racing product. This obviously demands collaboration between State, National and international racing administrators willing to work in the fertile space between innovation and tradition.
Leading South Island racing people remain divided on the issue of the building of the Polytrack at Riccarton with detractors of the proposal seemingly outnumbering those in favour by a Winx-like margin. But indications are the building of the track will go ahead despite the opposition.
Blood pressures are sure to rise, and the debate is bound to be lively when the NZTR Roadshow arrives at Ascot Park, Wingatui, and Riccarton over Thursday and Friday of this week when all subjects racing are up for discussion with NZTR heavyweights Alan Jackson and Bernard Saundry.
The synthetic track proposal for Riccarton will be the hottest item on the agenda. Owners, trainers, and motivated pundits may turn up in good numbers (although not more than 100 are allowed) at every venue to have their say and attempt to sway the argument.
Leading South Island and Riccarton trainer Michael Pitman makes no bones about where he stands in the Riccarton Polytrack debate.
He says: “No one knows how much it’s going to cost; that’s the thing that annoys me. They have a ballpark figure; it could be as low as $12 or $13 million, but it could be as high as $18 million, but they don’t know until the design plan is finalised.
Michael Pitman:I want to see more racing at Riccarton, and I don’t want to travel anymore…
“Personally, and I’m looking at this through rose coloured glass. I am based at Riccarton and have my own property at Yaldhurst, and I want to see more racing at Riccarton, and I don’t want to travel anymore because I’m sick of it.”
When asked what Michael Pitman would say to the people in Southland who might lose dates and have to travel more, Michael responded, “I agree with that, they probably will have to travel more, but that’s life.
“I’m all in favour of the all-weather track,” Michael continued, “and I hate the criticism of the track coming from people who have never seen one in their life. They are not the be-all and end-all; they’re only an aid, and they’ll probably hold only 12 meetings a year on the Riccarton one.
“I want to see more racing at Riccarton, but it can’t be held on the turf because the grass track probably couldn’t handle any more days than it has allocated now. It’s not going to suit all my horses, but hopefully, it will suit some of them.
“We will be able to hold regular trials on the all-weather and have much better facilities for training both through the winter and summer months. It will be a huge advantage for the Riccarton trainers to use the Polytrack for training six days a week, and that’s what they are all up in arms over. If they want to be professional trainers, they can shift to Riccarton.”
The grey area is the final cost and the annual maintenance costs
The Michael Pitman optimism in saying it might come in under the touted $16 million budget seems fanciful in the knowledge that nothing completed in racing in living memory has come in under budget. The grey area is the final cost and the annual maintenance costs, which are unknown at this time with the design plan incomplete.
Gallop South General Manager Jo Gordon says, “The ongoing costs are just one of the problems. Some people who want it can’t see past the Provincial Fund’s $10 million being there for the taking. They can’t see past the money.
“Why do we want a synthetic track?” continued Jo. “Places like Oamaru and Timaru have the lowest rainfall in New Zealand during winter. The South Island doesn’t generally run its winter racing on heavy, bottomless tracks like they do in the North Island.
“We wrote to Bernard Saundry, and he replied, but he thinks it’s just an Otago-Southland issue and he couldn’t be more wrong. In the past week, I’ve had seven trainers on the phone, and six of those were from Canterbury who didn’t want the synthetic track. Most trainers in Canterbury do not want it.
Jo Gordon: If they rip one more day out of the southern program, racing becomes all that less viable.
“If they rip one more day out of the southern program, racing becomes all that less viable. If racing goes in the south, they will all go – Canterbury will not survive by themselves.”
Jo Gordon’s thoughts were echoed by Riverton based leading Southland trainer Kelvin Tyler.
He said, “I can’t find one reason why the South Island would ever want one. Apart from Riccarton, Southland has the biggest number of horses in training, and if you want to stuff South Island racing then this is the fastest way to do it.
“If anyone thinks we are going to race on a synthetic track when we haven’t even worked a horse on it, then they’re dreaming.
“If Riverton was based in the middle of the South Island it would be the second-best track, and it would be in the top five in New Zealand. Riverton is as strong as it’s been in a long time; we have over 50 horses in work here now – it might be 20 years ago since we had those numbers.
Kelvin Tyler:If they close Riverton down, I’ll just walk away from racing
“If they close Riverton down, I’ll just walk away from racing and do my dairy farming. I love racing, though, and that’s why I’m in it – not for financial gain. At Riverton we have a lot of young guys that have come onto the committee – it’s very frustrating the way New Zealand racing is at present.
“Winter racing in the South Island has always been about racing on grass with winter class horses. We get heavy tracks, and some horses love it, but up the east coast of the Island the winter racing is often on dead tracks.”
John Parsons of the highly successful John and Karen Parsons training team from Balcairn in North Canterbury also has an issue with a synthetic track at Riccarton.
“If it was going to get the game back on track, there would be some sense to it,” began John, “but to spend that sort of money while they are closing all these small tracks when they’re already in place and are costing nothing – I can’t see the sense in it.
John Parsons: It might benefit a few Riccarton trainers, but how can you race on it if you don’t train on it.
“There are no synthetic tracks they race on in Sydney, and the ones in Melbourne are so predictable. I can’t believe they are even thinking about it. It might benefit a few Riccarton trainers, but how can you race on it if you don’t train on it. Horses working on it will have a distinct advantage when they race on it.
“In Australia they only run lower grade horses on it, and at Riccarton they are talking about 12 meetings a year. Where are they going to take those dates from? It will ruin racing in other places, and probably the south. They reckon the one at Cambridge cost $16 million; I’d rather see them put the money into stakes,” concluded John Parsons.
Leading the charge to build the Polytrack with the approval of his committee is Canterbury Jockey Club CEO Tim Mills who I phoned this week to see how he thought Friday’s meeting would go and how far the Club had progressed towards finalisation of the project.
“Friday’s meeting will have to be limited to 100 people,” said Tim, “but it shouldn’t be a problem because we haven’t had more than 100 in the past. This week might be Murphy’s law if they do come out of the woodwork for this discussion – we will have it set-up according to COVID-19 level two requirements.
“The three synthetic tracks is a national strategy, and where I think Gallop South have a problem with it is that the Messara Report predicted they might have only 20 race dates in six or seven years time, and they will lose race dates, and they will end up at the synthetic track – that’s where I believe the opposition all started and they’ve really got themselves fired-up about it.
Tim Mills: NZTR has told them they will still have their 32 dates
“NZTR has told them they will still have their 32 dates. You would have to ask Bernard Saundry for confirmation on that, but some information of that nature will be public after this week’s roadshow.
“There are two parts to it,” started Tim Mills in explanation of the Club’s stance, “and that is it’s part of the Messara Report, and the trustees of the racecourse have embraced the Messara Report to revitalise racing. While we accept that the synthetic track is not a silver bullet, the three synthetics is one of the 17 recommendations to revitalise racing.
“The design for the track is 1900 metres by 16 metres wide. It’s a bigger circumference but similar width to Cambridge.”
The annual cost of maintaining a Polytrack is dependent upon staff, equipment, the base, weather conditions and the amount of usage and the requirement of renovation, and is likely to be different for each track. I have seen documentation detailing annual costs of $1.56 million for maintenance of the Polytrack at the Singapore Jockey Club.
Tim Mills continued, “There are so many different stories about what they cost, and that’s certainly not what the maintenance costs will be. We’re told that if you spread the costs out over a 12-year average with the big projects that have to happen every four years, then it averages out at $55,000 to $65,000 annually.
“…how are we going to approach the situation in eight, ten or 12 years time when the material has to be relaid…” – Tim Mills
“The question we need to address with the NZTR before anything is nailed down is how are we going to approach the situation in eight, ten or 12 years time when the material has to be relaid – that’s the question that still needs to be resolved.
“Yes,” I have seen the Singapore costs, but as far as I’m aware, the Cambridge track isn’t going to be costing anything like that, so I don’t know why Riccarton would be any different to Cambridge. We would have preferred to have had a couple of years to see exactly what the maintenance costs would be but when the Minister announced the money that put everything on the opposite of the backburner, which is the fast burner.”
So, did the CJC feel the pressure of not wanting to pass up the opportunity to get the $10,000 million? Tim answered: “What we don’t want to pass up is the opportunity to be an evolutionary part of racing, and if the benefits are there for racing, to be part of an overall package.
“It’s hard to say if the people in opposition to the track will come across once the track is built, because they have it cemented in their brains they will lose race dates. Now, I can’t guarantee them they won’t lose dates because only NZTR can do that, but I have seen a letter that says NZTR do not intend to take away dates and destroy the pattern of racing in Otago and Southland.
Tim Mills: I’m struggling to see where the paranoia is coming from
“The likes of Motukarara, Waimate, and dare I say it, Timaru is the one at risk. The irony is the synthetic tracks are predominately late autumn, winter, early spring, and Southland only has one race date during that whole period. I’m struggling to see where the paranoia is coming from.
“I can only report on what we have been told, but Bernard is going to be talking about dates this week. I stress that the CJC doesn’t make a decision on dates.
“If it’s costing $5,000 a week, which is $250,000 a year, there is no way we can run it. Our information is it will cost between $55,000 and $65,000 a year to maintain, and if you look at what we pay to maintain grass tracks, the plough and sand tracks, it’s not in excess of that figure.
“Riccarton will get extra race dates, but they will be mid-week dates. We don’t know how many, it could be as many as 12, but it might be eight, nine or 13 – again, it’s all part of the revitalisation of the sport. It’s not going to take away the grass track as being the principal surface used for the major race days.
“The track would be built inside the line of the course proper so the plough will go. There will be a new grass track built inside the synthetic track. We have a meeting on the 16th of this month at which the design plans will be presented to interested parties.
Tim Mills: A lot of the questions Gallop South is asking are the same questions the CJC is asking of NZTR.
“A lot of the questions Gallop South is asking are the same questions the CJC is asking of NZTR. We are still waiting for some of those questions to be answered – at this point the final cost hasn’t even been determined. As soon as the design is finalised we will know the cost and the maintenance costs. The Minister’s announcement on the 12th of May accelerated everyone’s planning and thinking.
“I think the South Island would be foolish not to be taking the evolution of the sport seriously.”
The Optimist Says:
The pros and cons of the synthetic track debate is clouded by the financials detail of the deal with Government to access the Provincial Growth Fund (PGF).
Firstly, why did Cambridge get only $6.5 million when Awapuni and Riccarton were granted $10 million each? It seems strange given Cambridge needed the synthetic more than any other centre in New Zealand with more annual rainfall (1,213mm or 47.8 inch) and 1,100 horses in work, which is more than double the number of the other two venues combined.
Then, The Optimist discovered that the Department of Internal Affairs (DIA) advised both The Canterbury Jockey Club and Race Corp (Awapuni), they would both be required to front with a minimum of $3 million or a 22% contribution for the building of the Polytracks.
The way the numbers work is that the PGF grant of $10 million for each venue would include $500,000 deemed non-refundable by the clubs on the basis they needed to do Geotech work and feasibility studies, etc. And then there’s $9.5 million left for each of the Polytracks to be built.
So, if they did proceed with the preliminary work but decided not to go ahead, but did the work in good faith, they each wouldn’t have to pay the $500,000 back. After that, if the clubs proceed, they need to front up with the extra cash to complete the synthetic track projects, and for Awapuni, it’s a minimum of $3 million and for Riccarton, a minimum of $5 million. Neither club has that money available.
Another problem for both clubs comes in 10-years-time when the compound on the Polytrack needs redoing to the tune of several million for each track?
Another problem for both clubs comes in 10-years-time when the compound on the Polytrack needs redoing to the tune of several million for each track? How do they budget for that when neither club today has the cash to pay for 22 percent of the installion of the Polytrack in the first place.
Does anyone reading this (and all power to you for having the tenacity to read this far) believes we can afford to build these tracks? Both tracks seem a bridge too far, but one track might be doable if our esteemed Minister of Racing agreed to pour the PGF resources into the neediest one instead of two – both overstretched.
If you said which of Riccarton and Awapuni is the neediest, and were honest about it, then Awapuni and the Central Districts is far more desperate than Riccarton. Riccarton will survive, but the Central Districts has been on death’s door for ages and is worth saving – such a move could save it.
Consider the absurdity of this entire situation. The industry is broke, NZRB and RITA have sold us down the river, and $20 million is there in the PGF which can go into synthetic tracks with no chance of a financial return. What it might do is save the C.D. where the need is greater.
Race Incorporated have done their design for the synthetic, which would make it the first course in New Zealand to have three racecourses
Race Incorporated have done their design for the synthetic, which would make it the first course in New Zealand to have three racecourses.
If Awapuni gets a synthetic, the next step in the plan is to rip up the course proper at and do it properly. Race Incorporated have done their design for the synthetic, which would make it the first course in New Zealand to have three racecourses. They have plans for the long course bend and the short course bend on turf, and the synthetic inside those two.
They plan to go from 18 turf meetings a year to 22 or 24 and be able to run another 16 on synthetic. The thing about synthetic tracks is they love water – really love water. Water on a Polytrack tenses the track up slightly and the horses run faster times. Water or rainfall is far more prevalent at Awapuni than Riccarton.
In Winston Peters speech for his emergency support for racing made two days before the 2020 Budget was delivered, he said: “Compelling arguments exist behind synthetic race tracks because they reduce the number of cancelled events due to weather or poor surfaces.”
Annual rainfall at Awapuni is 980mm (38.6 inch) whereas Riccarton in 2019 was 543.2mm (21.38 inch). With reasonable drainage, neither Awapuni nor Riccarton race days should ever be lost to poor surfaces. It barely happened at all in the good old days.
If you were honest about what’s best for New Zealand racing and put all parochialism aside, then what would you do? If racing in New Zealand is to turn around its continuous fall from grace, then racing people have to band together and do what’s best for racing, and not what’s best for just themselves.
The growing discontent in the deep south is now echoing through the committee rooms of many New Zealand race clubs residing outside the metropolitan areas. And Gallop South has taken a determined step forward in seeking a significant change in the New Zealand Thoroughbred Racing (NZTR) Constitution.
Gallop South Incorporated, last week sent a memorandum to all race clubs and sector members with a proposal attached to amend the NZTR Constitution to give the stakeholders of the industry what they believe a more equitable and fairer structure of governance.
Gallop South represents the Beaumont Racing Club, Central Otago Racing Club, Gore Racing Club, Kurow Jockey Club, Riverton Racing Club, Tapanui Racing Club, Waikouaiti Racing Club, Wairio Jockey Club, Winton Jockey Club, and Wyndham Racing Club.
The problem for Gallop South and its army of supporters in other jurisdictions is that the devolving of powers from the New Zealand Racing Board (NZRB) down to the codes, as per the Racing Industry Act 2020, has also handed NZTR full control of the race club assets with the clubs devoid of voice at board level.
When eighty-five percent of 1,700 submissions supported the Messara Review in October 2018, it was for full adoption of the 17 recommendations as a suite of interconnected solutions reliant on each other for an overall benefit, but we know that never happened. RITA and the DIA cherry-picked the recommendations, which included venue rationalisation or as the clubs labelled it, the ‘land-grab.’
…NZTR not representative of the stakeholders
The new legislation gives the power back to the codes, which theoretically should be a positive step forward for future governance. But the argument is that the thoroughbred code (NZTR) has evolved into something not representative of the stakeholders of thoroughbred racing, and Gallop South is leading the charge to change that anomaly.
The ‘them and us’ stand-off that existed between the old Racing Board and NZTR cannot be allowed to pass down to a 2020 stand-off between NZTR and the stakeholders of racing – the clubs and sector groups represent the heart and soul of the industry, which is the very reason we have a body called NZTR.
If a stand-off does develop, it’s because one group wants what’s best for everyone in racing, and the other what’s best for the privileged few and their patch. Gallop South makes the point that the NZ in the acronym stands for New Zealand (meaning all of New Zealand) and not Northern Zone as they believe some would have you think.
Consider the ‘great leap backwards’ that New Zealand Racing has taken in the past dozen years. The single-most contributing factor was bringing in people ill-qualified for overpaid jobs, and those people have come mainly from political appointments via the Minister of Racing.
Government interference costly
If racing thinks it should be feeling grateful because the current Minister of Racing recently slipped $50 million into the coffers to keep the industry afloat, it shouldn’t. Government interference with their political appointments has cost the thoroughbred industry fives time that figure. They are still in arrears.
Government is not entirely to blame, though, because the apathy of the racing community borders on pathetic. Leadership has been absent with an inability to rally the racing troops, collectively sing a song of demands, and go into battle with the mindset of Vlad the Impaler. Instead, the resistance movement came with powder puff intensity. Why haven’t we taken a leaf from the V’landy book of ruling with strength?
If that alone isn’t a reason to seek improved governance, then what is? Poor governance has been the downfall of this once great industry, and while a glimmer of hope has come with new legislation, everyone should remember only good people will turn around racing’s fortunes. Six years ago, we had $75 million in cash and assets, and now the TAB owes the ASB $45 million – did you notice no one wants to talk about that?
Why do you think RITA hasn’t posted a full half-year report ended January 31st with a full balance sheet? Simple answer: It looks dreadful. RITA answers only to the Minister of Racing who will not be looking to release any bad news stories before the October election.
Gallop South Incorporated has support for a change in the NZTR Constitution throughout New Zealand because it would provide the opportunity for a voice that represents every club from Whangarei to the length and breadth of the country.
Gallop South: There is a groundswell of opinion amongst clubs to amend the Constitution
Its memorandum on Friday stated: “There is a groundswell of opinion amongst clubs to amend New Zealand Thoroughbred Racing Incorporated’s (“NZTR”) Constitution to change the composition of the Board to a more regional representative model.
“With the passing of the Racing Industry Act 2020 (the “Act”) into law, each Code Governing Body has a greater role in decision making that affects club assets, dates, funding, etc. To make informed decisions, the NZTR Board needs input from all regions and from members with local knowledge and racing experience.
“NZTR has control of club assets, yet at the moment no club has any input or voting rights as to the selection of the NZTR Board
“It must be stressed this is not a criticism of NZTR’s Board or Members Council. Both have worked well under the current Constitution, but now is the time to consider a change.”
A full proposal for changes to the Constitution was attached to the letter and clubs were asked to provide feedback by September 30th. In part, it included the following:
Gallop South diplomatically says it’s not a criticism of NZTR personnel, but it’s obviously suggesting NZTR’s method of appointing board members in light of the new legislation is outdated and unfair, is far from representative of the stakeholders, and requires a major panel beating job to get it roadworthy for an industry that’s on the bones of its financial backside.
Racing as a whole should not have a problem with change if a better system of the administrative process can be written into the Constitution. If a genuine improvement is available and opposition to it is forthcoming, the reason for objections might only represent expressions of self-interest.
On Tuesday of last week, Gallop South General manager Jo Gordon sent a letter of concern to NZTR Chair Alan Jackson, arising from the cancellation of the NZTR Roadshow due to COVID-19, and thus the loss of a forum for a discussion on those concerns.
In another letter on Friday to club managers, Gallop South said:
“With the passing of the new Bill into law, each Code Governing Body has a greater role in decision making that affects club assets, dates, funding etc., and to make informed decisions the Board of NZTR needs input from all regions from members with local knowledge and experience.
“…yet no club has any input or voting rights in the appointment process…” – Gallop South
“NZTR has full control of club assets (section 21[1] of the Act) yet no club has any input or voting rights in the appointment process of the board. This proposal addresses that situation by amending the NZTR Constitution.
“Gallop South Inc. intends promoting a resolution at the next Annual Meeting or Special General Meeting to amend the Constitution but before doing so would like feedback from clubs.”
Also on Friday, an NZTR Media Release stated that Chair Alan Jackson would be retiring from the NZTR at the AGM in November. The final paragraph of that release stated: “The Members’ Council will incorporate seeking a replacement to fill the vacancy left by Dr. Jackson’s retirement as part of the selection process around other rotating and retiring directors.”
If Gallop South and supporting clubs achieve their goal, however, the Members’ Council will be abolished, and an entirely new NZTR board will be up for election.
A battle may be looming.
Footnote:
Quote of the Week:
“You have enemies? Good. That means you’ve stood up for something, sometime in your life.” – Winston Churchill
John Costello’s article in Bloodhorse Magazine in December 1996 when he described the changes made by Racing Industry Board Chairman Garry Chittick as watershed in New Zealand racing
Racing can’t sit on its hands and wait forever – we have the legislation; it won’t happen on its own!
by Brian de Lore Published 9th August 2020
Moves are afoot; the winds of change are airborne. The Racing Bill of 2020 has been passed into law, and the changes in the new legislation have opened the door for positive change, and perhaps some people now need to step aside and make way for a new thoroughbred racing code beginning.
A burgeoning groundswell of supporters familiar with the new legislation are gathering and now calling for significant structural changes to NZTR that will reinvolve the industry through the clubs and the regions – give the industry back to the stakeholders and participants to determine their own future.
The feeling is that NZTR in its current regulatory form is no longer fit for purpose and the industry should once again come together and reorganise itself for fairer board representation, greater transparency and improved lines of communication.
The Racing Minister himself alluded to future change in a press release on June 25th, which stated: “For too long our domestic racing industry has been left to fade into obscurity at the expense of jobs and the passionate people and communities that support it.”
Winston Peters:With this Bill, responsibility for the future growth of the industry sits with the people who know it best
“The Coalition Government has now delivered on its promise to create a framework that enables the industry to take the reins and move itself forward. With this Bill, responsibility for the future growth of the industry sits with the people who know it best,” said Mr Peters.
The Minister also said: “With the passing of the Bill the Racing Industry Transition Agency (RITA) will be dissolved. TAB NZ will be established as the commercial betting operator, while administrative functions will be devolved to the three racing codes.
“The changes were welcomed, and are consistent with the overall intent of the reforms, namely to give the industry the tools to better manage itself,” said Mr Peters.
Driving the movement to invoke the intent of the Winston Peters press release is former Racing Industry Board Chair Garry Chittick. Years ago, he brought in positive industry changes that the late and great John Costello highlighted in a New Zealand Bloodhorse magazine, dated December 1996. Costello described it as watershed in New Zealand racing.
Garry Chittick is calling for the abolition of the Members’ Council
Chittick is calling for the abolition of the Members’ Council, and that a new NZTR board be drawn from regional representation which is the way things used to happen under the New Zealand Racing Conference in the days before the Racing Act of 2003 became law and initiated the gradual decline in racing’s health. That decline has accelerated markedly over the past dozen years.
Speaking to The Optimist this week, Chittick said he had already had discussions with NZTR Chair Alan Jackson about changing the board structure and was subsequently disappointed when the industry supported plan was not tabled at last NZTR board meeting.
He said: “The passing of the new racing act is something for which we have to be very grateful to the Minister, not just for the industry to run itself but for the changes to get the POC (Point of Consumption), and racefields, and the elimination of the betting duty – there is no question the Minister has done the best he possibly could for us.
“The initial draft of the legislation was clearly not in the industry’s best interests, and fortunately for us, the Select Committee recognised that and the Minister took due cognisance of that indifference and signed off the changes. So we now have a situation where the responsibility for the industry has landed back on the people at the coalface like it used to be 20 years ago.
The industry is calling for change at NZTR – Garry Chittick
“The industry is calling for change,” continued Chittick, “and if this doesn’t come up, and the industry wants to have a vote on how the board is created, then fine, it will happen.
So how does Garry Chittick summarise the past performance of the NZTR board and how does he see it in 2020?
“I have no personal gripe with the performance of the NZTR board under the previous legislation because I believe it was difficult for them to function because, from 2003 onwards, the NZRB board didn’t only believe their role was wagering, but a wagering and run-racing role, which meant you had two organisations trying to run racing. Quite clearly that didn’t work.
“Whereas, under the 2020 legislation, we are going to have an independent wagering board, and the responsibility of running racing has been handed back to the racing people – the racing industry generally – meaning all three codes. Accordingly, my belief is that the existing structure of NZTR will not function correctly.
“I have no criticism on how they have functioned previously because they have been completely stymied by the previous NZRB board, and how they were allowed to act.
“And that was the failing because they had no skills to run racing…”
We had the CEO and the independent chairperson on NZRB board come out and say ‘they’re running racing.’ And that was the failing because they had no skills to run racing which the evidence clearly shows.
“And the changes made from the first draft to the second reading of the 2020 legislation is saying that racing needs to be run by people who understand racing. Accordingly, the NZTR board, and the process on how it’s appointed, needs to be restructured because if we are going to be held accountable for what’s good and bad in the future, then we need to be in a position to affect that decision-making process with regional representatives.
Now on a roll, Chittick continued, “Not only do I believe a full review of NZTR is imperative, but I have also canvassed industry people to seek the support of others to bring about change.
“I am so encouraged by the industry support for change that if a remit was required for a motion to be moved at the annual meeting of NZTR, I am very confident the remit from the members would request a change in the structure – I am absolutely confident we are way past any voting requirement in terms of numbers required.
Garry Chittick: The only two clubs that I haven’t got confirmation from at this point in time are Waikato and Auckland
“The only two clubs that I haven’t got confirmation from at this point in time are Waikato and Auckland. I have raised the issue with Waikato Racing Club President Karyn Fenton-Ellis on more than one occasion, and she certainly appears supportive, but confirmation hasn’t come back from the Waikato committee.
“A few people have suggested to me that the industry still needs a Members Council to sit in judgement of who will be on the board, but I don’t agree with that.
“I’m in total disagreement because if we have regional representation as we had when in the days of the NZ Racing Conference, the calibre of the people elected from the regions onto the Conference was outstanding – they were all exceptional people in their own field.
I remember as a young man, I was quite intimidated when I first sat amongst these highly knowledgeable people, but learned a lot from them, so I have absolute confidence that if the regions are asked to find the right people in their jurisdiction – they will. The calbre of person elected when it was NZRC was never disappointing.
“What I am saying is that we need a fairer spread of representation”
“I’m not saying that the people elected by the Members’Council are not capable. What I am saying is that we need a fairer spread of representation, and we are struggling to get people to come forward because of their understanding of knowing how the Members’ Council functions.
“Also, if the regions are given the opportunity, they will understand the importance of it and will make sure the right people are selected onto the board.
“Having canvassed a significant cross-section of New Zealand racing people, and having put a lot of thought into it and talking to administrators, I have an idea of how it would be done although the nuts and bolts in the detail can be fine-tuned.
“My view is that representation should be divided into five industry regions– three from the North Island – south of Taupo, Waikato and Auckland, and two from the South Island – one for Canterbury/West Coast and one for the rest of the south.
“In addition, I strongly believe there should also be three independents who would be nominated and appointed by the five regional members on the board. That way, you can accommodate the particular skills that are required. The Chair would be appointed from within the board, and there is no reason why it couldn’t be one of the independents.”
On the obvious question of how the current board and Members Council will collectively react to the proposal, Chittick was deliberate in answering:
“No one who is supportive of the concept is trying to pick a fight” – Garry Chittick
“No one who is supportive of the concept is trying to pick a fight. We are promoting this to achieve the best result for the racing industry under the new Act – the Act is asking us to do this; it’s asking the codes to run their business, and for the codes to run this business properly they require access to greater industry representation.
“We need more dialogue in racing, which we used to have when it was regional under the Racing Conference system. When I was appointed to represent the Manawatu/Wanganui region, the voting was counted per race day allocation and I don’t see any reason not to reintroduce that – even though the big clubs have more weight, there are plenty of small clubs around to be adequately represented.
“Back in the day when selecting these regional representatives it was always a contest, so very rarely did the wrong person get the board appointment.
Garry Chittick: Racing is only going to survive if the people who are at the coalface are encouraged enough to stay there.
“People in racing are looking for a better deal and they are owed a better deal. The overwhelming reaction is positive for this change. The only objections is not about what we are aspiring to do but the technical side of how we might do it – the nuts and bolts.
“My view is that the process should be commenced now, bearing in mind that if it was put to the vote it would pass overwhelmingly. It should be driven by the NZTR board as quickly as possible so we can address it and implement the changes at the next annual meeting. Otherwise, it will be fobbed-off, and we will see it dragged on for another year or 18 months.
“If the NZTR board don’t support it, it will go to the vote.”
Footnote:
Clause 22 of the NZTR Constitution
22. Alterations to Constitution This Constitution may be rescinded, amended or added to only by resolution in that behalf passed by a three-fifths majority of all representatives present and voting at an Annual General Meeting, or a Special General Meeting convened for that purpose.
Nick Wigley and Victoria Woodley at Riccarton last Saturday. RIGHT: Phar Lap’s close relative Monte Carlo wins the 1956 Victoria Derby for Nick’s grandfather owner-breeder Ken Austin
by Brian de Lore Published 31st July 2020
The grandfathers of both Nick Wigley and Victoria Woodley between them made two purchases between 80 and 90 years ago that determined the destiny of the family of Phar Lap and set the scene for the future success of Inglewood Stud in North Canterbury.
Nick Wigley and Victoria Woodley are both long-time members of the Canterbury Jockey Club and, for many years, knew one another by sight only, but had never had a formal introduction. Both were oblivious to the fact that their respective grandfathers were well-known to each other, and one would sell to the other a mare in 1939 that would bring to the fore the vision and genius of Ken Austin.
Last Saturday at Riccarton, they met for the first time, via an introduction through The Optimist, and traded notes on their respective grandfathers who, between the two of them all those years ago, controlled most of the family of the immortal Phar Lap.
Nick had only minutes previously as an owner-trainer won the two-year-old event with his impressive debut runner Matchmaker, a daughter of Makfi and the Australian bred mare Somebody, by Fastnet Rock.
KEN AUSTIN inspects foals at Elderslie Stud in the 1930s
And just as a by-the-way, some of the occurrences revealed in this story won’t be found in any of the books on Phar Lap and are only available here as a result of hours of research in studying the Wigley family records of Ken Austin and searching meticulously through old newspaper archives.
Victoria’s grandfather was highly successful Christchurch businessman Fred Armstrong who owned two large draper-milliner stores that traded as T.J Armstrong & Company. In 1932, he decided to enter into the horse breeding business with a purchase at the Kaituna Stud dispersal sale – held eight days after Phar Lap had won his final race in the USA at Agua Caliente.
Phar Lap’s breeder A.F (Alick) Roberts had died in August of 1931, and the sale held at Addington showgrounds was a dispersal of all his Kaituna Stud stock, which included Phar Lap’s sire Night Raid and his dam Entreaty.
Although Phar Lap was by now world-famous, the sale took place at the height of the Great Depression and was so soon after the Agua Caliente success, prices reflected the times and disappointed the trustees of the estate. The local Press reported that “over 500 attended and while the bidding generally was brisk, prices were low.”
Phar Lap’s then 13-year-old sire Night Raid was passed-in at 2,500 guineas and his dam, Entreaty, two years younger at 11, sold to Fred Armstrong for 1,500 guineas – the buyer making his first-ever thoroughbred purchase. The Press reported that Armstrong had often expressed his wish to own a thoroughbred, and anticipating a depressed market, he instructed Riccarton trainer Fred Jones to go up to 1,500 guineas for Entreaty – she had a colt foal full-brother to Phar Lap at foot and was in-foal to Night Raid again.
It was an inspired purchase. The 1,500 guineas Armstrong paid, converted on the CPI government Reserve Bank calculator has a 2020 value of $182,000. It was the time of the Great Depression, a domestic market only and, therefore, cannot be compared to today’s globalised market prices for mares, which regularly sees $1 million sales and up to $4.2 million in the case of Sunlight earlier this week.
Eight days after the Kaituna Stud dispersal sale on April 5th, Phar Lap was dead from arsenic poising, which made headlines in racing pages around the world and, if anything, substantially increased the value of the Entreaty three-in-one broodmare package.
Fred Armstrong was a businessman more than a breeder. He had a small property Riccarton property at 106 Waimari Road on which he kept horses, including family ponies, and on which he would later build-up his small band of mares – Mick Murfitt was the groom looking after all the horses.
Retired veterinarian CORIN MURFITT, son of the late Mick Murfitt photographed this week standing approximately on the spot where Phar Lap’s dam Entreaty was buried when this University Club rugby ground was a horse paddock in October 1943. Entreaty at 23 years had a week earlier foaled her 12th and last foal, a bay filly by Nightmarch later named Sable.
The stables on the property are still standing today, converted into a sports pavillion, and the property is now the Ilam playing fields used by the University Rugby Club and cricket in the summer. The unmarked burial plot of Entreaty lies near the 10-metre line on the rugby field adjacent to the old stable block.
The Alick Roberts Kaituna Stud dispersal sale was also significant in that Night Raid was passed-in for 2,500 guineas. It opened the door for Nick Wigley’s grandfather, Ken Austin, to negotiate a standing arrangement for the stallion to take-up residence at Elderslie Stud near Oamaru. In 1931 Ken Austin moved to the stud from Australia to take over full management and was subsequently instrumental in turning Elderslie into the most successful stud in the country.
Entreaty’s new owner was also to send his black mare back to Night Raid to consummate their ninth union in nine years, but after foaling a filly full-sister to Phar Lap (later named Te Uira) she would miss getting in-foal for only the second time. Entreaty would stay on at Elderslie for a tenth consecutive mating to Night Raid, which in 1934 produced a filly foal named Raphis. This filly would become the foundation mare upon which Ken Austin would pivot Inglewood Stud’s future success.
Raphis didn’t go to the yearling sales or get to the races after sustaining an injury at two years. Fred Armstrong bred her as a three-year-old to the stallion Man’s Pal, but she failed to conceive, and when she also missed to the same sire in the 1938 season, he decided to quit Raphis at a Christchurch Easter Bloodstock Sale along with her two-year-old half-brother named Ilam Way (by Iliad) and Entreaty herself.
PHAR LAP‘s sire Night Raid looks out over his box door at Phar Lap’s dam Entreaty with her full-sister to Phar Lap at foot (later named Raphis and bought at auction by Ken Austin for 40 guineas). At left is Phar Lap’s two-year-old full sister Te Uira which later that season (1934-35) was sold to a UK stud for 2,000 guineas but failed to produce anything of note.
World War II was only six months old, and the sale low-key as a result. Ilam Way made only 25 guineas, Entreaty (empty for two years and now 18 years old) was passed-in at 100 guineas, and Phar Lap’s four-year-old full-sister Raphis went to Ken Austin’s winning bid of 40 guineas. It was a bargain buy that would ultimately bring years of continued success for Inglewood Stud.
Ken Austin was a man of many talents, and getting barren mares in foal was one of them. Once he had her ready, she went in-foal to the first service by the Elderslie Stud stallion, Solicitor General, and the mare would conceive to Battle Song in each of the next three years, as well.
Her first-foal was the top performer in CJC Champagne Stakes winner John o’ London, the winner of nine races. Unfortunately, she slipped the next year, but the third foal, retained for racing by Austin, was the 1946 Great Northern Oaks winner Swingalong – also second in the New Zealand Oaks.
Ken Austin turned down a big offer from America in favour of winning nine races with John o’ London. But the best Raphis produce was her fourth foal, Count Cyrano (by Battle Song). As a four-year-old, he brilliantly won the1949 AJC Metropolitan Handicap as the 4/1 favourite, making up 12 lengths in the last half-mile, and was installed a hot favourite for the Melbourne Cup. Randwick trainer Frank Dalton considered Count Cyrano a certainty to win the Cup, but tragically, having his final gallop for the big race, he was killed in a devastating track accident when he collided with two horses coming through the gap onto the track in Melbourne.
The foal after Count Cyrano was the Lord Bobs filly, Bobalong, which would win at Randwick before a breeding career at Inglewood that in successive years produced the top performers in Monte Carlo and Del Monte – both sired by the ill-fated half-brother to Royal Charger in Lucky Bag.
SUN KING at Inglewood Stud led by Ken Austin. His son Prince Cortauld from the Night Raid mare Capricious was broken-in by Ken Austin and sold privately as a two-year-old. PRINCE CORTAULD was a weight-for-age star in Australia, winning 25 races over four seasons including the AJC Champagne Stakes at two years and the VATC Caulfield Stakes at five years beating Rising Fast. He was sold to the USA in 1956 where he won again and ran third in the Washington DC International. On the strength of Prince Cortauld’s success, Sun King was sold to Australia.
In the ownership of Ken Austin and trained by Frank Dalton, Monte Carlo won both the 1956 AJC and Victoria Derbies. All told, he won 13 races including the AJC Metropolitan and VRC Mackinnon Stakes but in the 1958 Melbourne Cup, Monte Carlo finished an unlucky second to Baystone after striking interference in what was recognised as a roughly run Cup. He later sold Monte Carlo to the USA for a reputed 15,000 guineas.
Ken Austin could easily have had two Melbourne Cups on the mantlepiece, nine years apart, but it wasn’t to be. Where luck and judgement did come to him, however, was through Raphis and all her daughters, which he retained, raced and bred from at Inglewood Stud.
Within ten years of purchasing Raphis, Inglewood Stud was churning out more winners than any other stud in the country. More importantly, Ken Austin went from leasing Inglewood to owning it freehold with the financial flexibility to expand his breeding empire.
Raphis daughters Swingalong, Bobalong, Raphina and Deposit all met with a share of success in the broodmare paddock, helped by judicious Inglewood stallion selections that included Solictor General, Battle Song, Sun King, Lucky Bag, Defaulter and Messmate.
ELDERSLIE STUD near Oamaru in 1925 in the midst of a dispersal sale. The auctioneer was Ken Austin.
The Raphis legacy lives on today through horses such as the recent four-times group one winner in Trapeze Artist. And the way this branch of the Raphis family found its way to Australia was through the Inglewood Stud dispersal sale in February 1960 following the death of Ken Austin the previous December.
The sale topper was expected to be the stallion Messmate which Ken Austin would saddle and ride regularly right up to the time of his sudden death at the stud at the age of 78. Jack Lindsay of Balcarres Stud bought Messmate for 4,000 guineas to replace Count Rendered.
However, the top price was 4,100 guineas paid by Mr R. Bowcock of Alabama Stud, Scone, was for Monte Carlo’s sister and Bobalong’s five-year-old daughter Del Monte in-foal to Messmate with a filly at foot by Castle Donnington. Back in the Hunter Valley’s Alabama Stud in the spring, Del Monte produced a brown filly named Lilting – the stakes-placed winner of three races and eventually the dam of Golden Slipper winner Fairy Walk and highly successful Star Kingdom sire Planet Kingdom.
She is also grandam of three times group one winner Cheyne Walk while Deposit, which also found its way to Australia, is the second dam of AJC Doncaster Handicap winner Authentic Heir.
The success achieved by the descendants of Entreaty is extraordinary but far too extensive to list here. It’s fair to say that the late Ken Austin at Inglewood Stud made the most of his opportunity with Raphis, and although much less famous, Raphis was to Ken Austin what Eulogy was to George Curry.
Inglewood Stud was producing more winners than any other stud in New Zealand within a decade of starting and in the 1954-55 season also topped the prizemoney list. It didn’t happen by accident.
The sale of Raphis to Ken Austin in 1939 for only 40 guineas was Fred Armstrong’s loss, but no one could have managed the mare better and drawn so much success as Ken Austin did. The ownership of Raphis wasn’t the only transaction that took place between the two grandfathers of Nick Wigley and Victoria Woodley, and Fred Armstrong was well ahead financially on the Entreaty purchase within a couple of years of making his investment.
In late 1934, Hailey’s Bloodstock Agency, on behalf of an English stud farm, inquired about the possibility of purchasing a relative of Phar Lap. Acting for Fred Armstrong, Ken Austin negotiated the sale of Te Uira, the then unraced two-year-old full sister to Phar Lap, for the sum of 2,000 guineas – 500 guineas more than he had paid for the three-in-one package when Te Uira was in-utero.
The PRINCE OF WALES closest to Camera in a track gallop with Ken Austin on the Randwick course proper in June 1920.
Fred Armstrong also rejected several offers for Entreaty, including a proposal to breed to Night Raid to English time. The offer was for the 1935 season when the mare was rising 15-years and hadn’t been bred the previous spring after foaling Raphis.
The newspaper report of the day said that Fred Armstrong would agree for a fixed-price for a living foal irrespective of its condition or conformation. It also stated that “Mr Armstrong considered he was justified in asking a good figure.”
But when the letter came back from England it rejected the proposal owing to the large amount requested.
Ken Austin was undoubtedly one of the most gifted horsemen God ever put breath into. But he was also multi-talented on many fronts – an extraordinary horseman both as a rider and blessed with his own version of ‘horse whispering’ – able to do anything with any horse. His full story could only be done justice in a book, and this blog is merely a snapshot of what he achieved.
He was also an accomplished auctioneer, polo player, artist, bloodstock agent, administrator, studmaster, and commanded so much respect he literally ‘walked with kings.’
In 1920 he was officially entrusted with the task of finding suitable mounts for the Prince of Wales (aged 26), Lord Louis Mountbatten and Admiral Halsey when they visited Sydney on the battleship H.M.S. Renown, and he and the Prince (Edward VIII who was then heir to the throne but abdicated in 1936) rode a full track gallop on the course proper at Randwick.
AT RANDWICK in June 1920: The Prince of Wales, later bestowed the title of the Duke of Windsor (aged 26) is on the left with Lord Louis Mountbatten (aged 20) following on the grey, and Ken Austin on the right.
The New Zealand-Ken Austin connection started in 1916 when he received in Sydney a letter from Canterbury owner George Greenwood requesting he inspect the Melton Stud yearlings at the Melbourne sales and select a colt that would be value-for-money. Together with his boss, H. Chisholm, they conducted the inspection and purchased for 230 guineas a colt by The Welkin from Light, which would be sent to New Zealand and later named Gloaming – the winner of 57 of his 67 starts.
In 1946, Ken Austin, along with J.G Alexander of Cranleigh Stud, Alister Williams of Te Parae, and T.C. Lowry of Okawa founded the New Zealand Thoroughbred Breeders Association – Ken Austin was elected its first president. His list of achievements is extensive.
Today, Inglewood Stud operates under the astute management of Ken Austin’s great-grandson, Gus Wigley. There is a noticeable spring in Gus’s step as he looks optimistically forward to the first yearlings of War Decree and runners in 2021-22 season, and continuing the tradition and standards set on this historic property by his highly esteemed forefather.
Gus Wigley carries on the tradition at Inglewood Stud, seen here with the impressive War Decree who will have yearlings in 2020-21
Chris and Susanna Grace with the 1884 Wellington Cup. Graphic is a Grace-bred horse to have won the Wellington Cup but dual Flemington Group One winner Shillelagh is the best horse they have bred
by Brian de Lore Published 17 July 2020
When you’re a descendant of one of the most successful owner-breeders this country has ever known, pressure may exist to uphold the family tradition, but the truth is Christopher Grace QSM isn’t a man who was ever looking back, and for most of his youth he was blissfully unaware of the racing and breeding successes achieved by his great-grandfather, G.G.Stead.
Chris was undoubtedly influenced by his father, though. George Grace showed he had racing in the blood but was also a dedicated farmer and family man and much more measured about horse ownership. He introduced Chris to racing on a rationed basis with a limit of one horse only on the farm for a then enthusiastic teenager.
In 1957 George took the then 16-year-old Chris with him to attend the Alton Lodge dispersal sale and funded the young Grace into the purchase of the then seven-year-old mare Tenderfoot for 350 guineas. It was a purchase that would set Chris off on a thoroughbred career path to countless breeding and racing successes.
Since that Alton Lodge Dispersal, Chris Grace has quietly built a thoroughbred empire with consistent success as a breeder, and has raced over 200 winners as an owner. The green, gold and white colours of Chris and Susanna Grace in more recent times were carried to victory in two group ones by their outstanding mare Shillelagh at Flemington, and last year in New Zealand by Hinerangi in the listed James Bull Rangitikei Gold Cup – a win that meant much more to the Graces’ sentimentally than it did for the stake or black type.
But Chris had a tough start to ownership – one that would have demoralised most enthusiastic young breeders trying to make their way with one broodmare. In consecutive years Tenderfoot was bred to Chatsworth II, and those matings produced fillies that he was required to sell to comply with his father’s one horse limit.
The first one sold was the 1961 weanling, in the birdcage at Awapuni, bought for 50 guineas by an astute judge and breeder Lorraine Jamieson
In those days, an auction of horses would often take place in the birdcage after the last race on selected race days. The first one sold was the 1961 weanling, in the birdcage at Awapuni, bought for 50 guineas by an astute judge and breeder Lorraine Jamieson. And no purchase could have been more astute as that filly would be subsequently named Chantal and would sweep all before her both on the racecourse and at stud.
Chantal won nine races, including three group ones – the George Adams Handicap at Trentham at three, before Sydney where at four years she took the 1965 Epsom Handicap by five lengths from subsequent Melbourne Cup winner Galilee, and the George Main Stakes. At stud, she was sensational, producing seven winners of which four were stakes winners and two stakes-placed.
The year older yearling Chatsworth II filly was also sold in a birdcage following another race meeting and fared better at 150 guineas. Named Like Fun at home and Our Fun in Australia, she won seven races including the VRC Edward Manifold Stakes and was second in a Doncaster handicap and both the AJC and VRC Oaks, and later produced two top performers in Go Fun and Such Fun.
Our Fun and Chantal were the last two named foals out of Tenderfoot who died at a relatively young age before she could produce a foal from her final mating to Le Filou.
With the two Chatsworth II fillies sold, the now 21-year-old Chris attended the following Trentham Yearling Sale (1963) where he would make his first big purchase, after scraping together every pound he could muster, running three little businesses and moonlighting whenever possible. It was the O.E. savings for a trip that would never happen.
Hakawai won seven of her 12 races
For 230 guineas, he purchased a Le Filou filly out of the ARC Railway Handicap winner Foxbridge mare Te Awa (11 wins). Named Hakawai after a farm owned by his grandfather, she was trained by former top jockey Billy Aitken and proved top-class at two years, winning the inaugural Wakefield Challenge Stakes over seven furlongs at Trentham, and the Eulogy Stakes. She won seven of her 12 races but bad luck struck soon after her retirement when she died aged only four years.
Being by Le Filou who was known for siring stayers, Chris later lamented his decision to race Hakawai as a two-year-old, but conceded that when you’re only 21, and you’ve virtually been sleeping with the horse, there was no thought of being patient.
In those days training fees were around £10 a week which was twice Chris’s weekly pay. But the blow of losing Hakawai was at least softened by the insurers – Lloyd’s of London who paid out £10,000 which financed Chris into his first farm. It would take him another ten years to get the money together to make a serious broodmare purchase.
In the ensuing ten years, Chris and Susanna would owner-train 14 winners and have many more seconds – getting the horses fit with hill work on the ups and downs of their Hunterville farm.
South Australian trainer Colin Hayes purchased a four-times winning mare named Clearaway, which was a three-quarter sister-in-blood to Hakawai
Around the time of buying the farm, at one of those birdcage auctions at Fielding South Australian trainer Colin Hayes purchased a four-times winning mare named Clearaway, which was a three-quarter sister-in-blood to Hakawai, and Chris had never forgotten it. He had put his capital into the farm but now, ten years hence, he decided he would contact Colin Hayes to see if he could buy back into the family.
It had been an inspired purchase by Hayes for Clearaway founded her own South Australian dynasty by producing three stakes winners including the SA Derby winner Clear Prince, So Clear, Well Clear and the stakes-placed Clear Queen amongst her seven winners.
Following a trip to Lindsay Park Stud, Chris purchased Clearaway’s three times winning daughter Clearness which had contributed to Without Fear’s record-breaking first crop two-year-old season. And a year later he went back to Colin Hayes and bought Clear Queen by Ruantallan, so confident he was about the family.
He paid $100,000 for Clearness, returned her to New Zealand and bred from her the winning Zamazaan mare Hinewai which in turn produced the eight times winning Telegraph Handicap and Matamata Breeders’ Stakes winning mare, Morar (Otehi Bay).
More than forty years on and six generations after Clearaway, the Grace broodmare band is still dominated by the No.13 family that produced Hakawai, and success has been rewarded with the arrival of each and every generation.
The ecstatic young jockey that day was non-other than an apprentice experiencing the winning highlight of his career – Dave O’Sullivan.
As a point of interest, Hakawai’s dam Te Awa won her Railway Handicap at Ellerslie on Boxing 1953 witnessed by HM The Queen. The ecstatic young jockey that day was non-other than an apprentice experiencing the winning highlight of his career – Dave O’Sullivan.
Hinerangi’s win in last year’s listed James Bull Rangitikei Gold Cup was significant for Chris and Susanna Grace for many reasons including Chris having been awarded the Queen’s Service Medal in 2014 for his services to the Hunterville community. Also, the race was named in honour of the late James Bull who Chris farmed alongside and who he was closely associated with during Chris’s long tenure as a committeeman of the Marton Jockey Club.
In 2001 Chris decided he needed to diversify and add new blood into the broodmare band. He commissioned Roger James to look at the Sydney Easter Yearling Sales at which he bought the Flying Spur filly later named Trocair. On the track, she didn’t progress beyond winning a maiden, but when bred to Savabeel, she produced Tullamore which won five races including the 2011 Brisbane Cup for Gai Waterhouse.
The fifth foal of Trocair was Shillelagh, and while fate again played its part, this time, luck was in favour of the Graces. Chris had planned to sell Shillelagh as a yearling, but she came up with a haematoma at Christmas time about a month before the sales and was withdrawn.
Shillelagh currently resides in Australia and is in-foal to I Am Invincible to which she will return this coming season.
So, while George Grace may have denied his son the chance to keep Chantal all those years ago, that decision ultimately led to the purchase of Hakawai and later the pursuit of her family which has produced a numerous flow of top-class winners over so many years.
George Grace won two Grand National Steeplechases in 1939 and 1940 with a horse gifted to him named Clarion Call
Chris says his father couldn’t afford to have many horses although his did race and win two Grand National Steeplechases in 1939 and 1940 with a horse gifted to him named Clarion Call. He had 672 acres, a wife and four children, all of which he sent to private schools, and he determined that one horse at a time was enough. His mother also raced a jumper named Hi There and with him she won a Wellington Steeplechase and a Pakuranga Hunt Cup.
George Grace and Bob Stead of Sasanof Stud fame were first cousins and good friends, and Chris recalls the story of when Bob’s good Star Kingdom filly Starlit raced against Hakawai in the 1963 Champagne Stakes at Ellerslie, with Starlit winning. The two cousins and Auckland Racing Club President Alexander McGregor-Grant sat around a table with some open bottles and never saw another race.
Chris’s grandfather was a very active owner. He passed away when Chris was only three-years-old but in his time William Russell Grace had raced many good horses including the Great Northern Guineas winner Smoke Screen, the top two-year-old of her year, Mother Superior, Avondale Guineas winner View Halloo and the Wanganui Guineas winner and granddaughter of Eulogy, Russian Ballet, a filly by Nightmarch bred in 1935.
W.R. Grace was also a prominent committeeman at the Wanganui Jockey Club and was its president at the time of his death. He had farmed the property named Hakawai at Pahiatua before buying a 650-acre farm on the Borough at Wanganui.
Great-grandfather George Gatonby Stead won the New Zealand Derby 13 times
Great-grandfather George Gatonby Stead won the New Zealand Derby 13 times and the New Zealand Oaks nine times. He won the Auckland Cup three times, The NZ St Leger four times, the CJC Champagne Stakes 16 times, the ARC Royal Stakes 10 times, the Wellington Cup four times and the Great Northern Foal Stakes 10 times.
He also made many successful raids to Australia and was well known for relieving the bookmakers of their wealth. He won the inaugural NZ owners premiership in 1892-93 and repeated that feat 11 times in the ensuing 12 years.
Good thoroughbred families keep coming up with class racehorses. Christopher Grace has spent many years studying them, and has cashed in on the Bruce Lowe designation of No.13 which keeps coming up on his roulette wheel despite the number’s superstitious undertones.
He may not have looked back too seriously on his own pedigree, but it’s difficult to believe it hasn’t played a prominent role in the success story outlined above.
The End
Fake racing news only paints the glossy picture
by Brian de Lore Published 17 July 2020
Truth is stranger than fiction as the saying goes but the problem with racing today is that no one is telling the truth, and therefore the racing public cannot make the comparison.
We know the fiction dished up to racing people is strange but it’s becoming even more curious, and the fiction was again on show this week when some non-des-plume writer posing as ‘Newsdesk.’ wrote a story entitled, ‘Outgoing McKenzie hails Racing Industry Act.’
Subsequent inquiries to NZTR has revealed the author of this advertorial journalism is Andrew Birch.
It’s a hard headline to swallow given that Dean McKenzie and RITA was diametrically opposed to most of the changes made to the legislation between the first and second reading (and there were a lot of changes), but he is now displaying his versatility by adapting to it like a chameleon and is happy to accept the credit for all the gains made in legislation, given he is the boss of racing’s reform.
New Zealand racing administration has seen plenty of chameleons
The ability of the chameleon to change colour and adapt immediately to the environment in which it resides has long mystified the scientific world; in New Zealand racing administration, however, we have seen plenty of chameleons come and go.
The opening salvor in this article fails to convince in saying, “McKenzie believes his time at the helm of NZ racing is ending on a high with the passing of the Racing Industry Act.”
Let’ s get this straight! The Racing Bill reads only the way it reads because of a focused Transport and Infrastructure Select Committee who met most of the wishes contained in the well over 900 diligently written submissions including almost 100 who fronted personally for the oral hearings. They are responsible for this legislation – not the lines of arguments put forward by RITA, which performed poorly at the hearings (McKenzie) and was against many of the issues the industry wanted, such as retention of the IP (Intellectual property).
Further on in this story, McKenzie continues to use the pandemic excuse by saying, “COVID-19 was the ultimate curveball,” but Treasury throws cold water on that excuse in a paper that appeared on it’ s website that can be found at:
On Page 4, Clause 5 says: “note, that due diligence on the RITA has confirmed that there were significant commercial and ownership issues that existed prior to COVID-19, and that the long-term commercial viability of RITA may be in question unless significant reforms are made.”
Treasury had PWC looking at the RITA books in March and Clause 5 confirms everything The Optimist has been saying about RITA’ s financial state over the past year.
Clause 6 confirms what Minister Peters alluded to in his pre-budget announcement: “note, that RITA is likely to require further additional support in the future to position the industry for recovery.”
It’ s not that difficult to conclude if you’re the recipient of $50 million from the Budget 2020 but still require further funding with a big question-mark on the long-term commercial viability, according to Treasury’s advice from PWC, then you’re skint.
…budget figures disclosed did not add up to delivering the funding for the codes for 2020 ($139.6 million)…
RITA still hasn’ t posted the full half-year report on their website, only an abbreviated version in News. It was put up briefly but taken down quickly and has not reappeared. The reason possibly because the budget figures disclosed did not add up to delivering the funding for the codes for 2020 ($139.6 million) committed to by Dean McKenzie and RITA. You can only cover up for so long – the truth will have to come out but no one is telling it at the moment.
McKenzie talks about how well he’s done with the legislation but fails to mention RITAs debt level to the ASB which is still reputed to be at $45 or $47 million.
Remember, it’s election year, and our Minister will not want any bad news for racing until at least September 20th. To catch the votes, lousy news must be toned down to a minimum, and that’s why we are supposedly racing for the same stakes – the $139.6 million – although there’s nowhere near that amount of money available coming in on current revenue levels.
The get-out clause of a quarterly review on stakes money is sure to be used. And that’s why this good news story about McKenzie, who like Allen before him, is only fake news, strangely posted on the NZTR website.
Why would such a story appear on the website of NZTR promoting someone who has caused them the most grief in the past 18 months? NZTR supposedly represents the participants of the industry, and in fact, is in place to serve the industry in the best manner possible.
Where is the leadership? Racing people in New Zealand at the very least deserve some honesty, but no one from any organisation is currently providing it.
True Enough’s 87-year-old owner-breeder Mick Preston is the only man remaining on the planet today who can claim he was once the ‘handler’ for the great English Derby-winning sire and worldwide thoroughbred influence in Hyperion.
Greatness in the thoroughbred world is often contentiously debated, but on the score of sheer racecourse talent coupled with success in the breeding barn, Hyperion easily ranks in the top dozen horses ever foaled, if not the top six.
The year 1933 was pivotal in this story. Brendan Arthur Vivian (Mick) Preston was born in May of that year, and less than a month later, the diminutive racehorse Hyperion would come out in the first week of June at Epsom and trounce a talent-laden Derby field by four lengths. Fast forward 19 years and Mick and Hyperion would come together for an unlikely liaison in quirky circumstances.
Someone decided Brendan should instead be Mick at a very young age, and the nickname stuck, just as his well-known dad, Arthur Edmund, was always known as Ted which may well have come from the need to differentiate Ted from his father who was Arthur Edward.
This well-known family of Wellington butchers were also successful horse-breeders and owners, but it was Ted who founded West Derby Stud at Levin and stood the highly successful Knight’s Romance who made his stud debut in the spring of 1952. Mick was absent from West Derby for the arrival of Knight’s Romance because he had arrived in England after the long sea voyage from New Zealand to spend most of the year learning from the best at Lord Derby’s Woodland Stud at Newmarket.
Mick’s nine-month UK stint at Woodland Stud had been arranged by J.G. (Jack) Alexander of Cranleigh Stud
Mick’s nine-month UK stint at Woodland Stud had been arranged by J.G. (Jack) Alexander of Cranleigh Stud fame and financed by Mick’s father, Ted. Jack Alexander was the man who bred La Mer amongst many good horses but was also internationally recognised for his Romney ram breeding operation near Wanganui from which he had developed contacts all over the world.
After his arrival in February of 1952, still only 18-years-old, Mick remembers handling the teaser in freezing-cold conditions with snow on the ground. The stud was divided into blocks, and Mick’s duties at Woodland revolved around the Arab stallion teaser, leading him from block to block to tease the mares, which took more than three hours every day.
Using his Kiwi number eight wire inventiveness, Mick decided he could shorten-up the teasing time if he rode the Arab teaser from broodmare block to broodmare block. The problem for Mick was that no one on the stud knew if the smallish Arab chestnut stallion had ever had a rider on his back, but Mick gave scant consideration to the possibility of any adverse consequences.
At the age of 87, you could forgive anyone for struggling to recall the detail of things that happened almost 70 years ago, but not Mick Preston. Not only can Mick recall all the dates, but his answers are all swift and eloquently delivered in good voice with deliberation as if it happened yesterday.
“I landed in England on 23rd February 1952, and it was the first time I had ever ridden in snow,” said Mick, which proved that point.
My research for this yarn took place at Mick’s home in Taupo, where getting back to the question of riding the Arab stallion, I asked, “Did you think it might be risky?”
Mick Preston: We cut the teasing time to just over an hour
“No,” retorted Mick with speed, “I was thinking about how far I was walking – We cut the teasing time to just over an hour.”
Mick related the story of how he borrowed a saddle and bridle and a girth strap in which he tied a knot to use on the skinnier girth of the Arab. Once saddled up, he climbed aboard to discover this was one well-behaved stallion who adapted to the role quickly apart from his habit of stumbling as he circumvented the stud.
As he said, Mick had never previously ridden a horse in snow but soon discovered the snow was compacting into a ball of ice beneath the hoof, causing the stumbling. From that time, he found himself regularly dismounting to remove the build-up of snow.
Soon afterward, Mick’s riding plan came to an abrupt halt when Woodland Stud had an outbreak of strangles, and one of the blocks had to go into lockdown quarantine. The Arab teaser had been visiting each of the blocks daily, and as a consequence had to quarantine in his box for the next six weeks.
Mick’s replacement teaser meant he was back walking the length and breadth of the stud, but it was worth it because the new teaser was the then 22-year-old Hyperion himself – given that job as well as serving the mare’s when ready to cover.
When asked how he saw that situation, Mick said, “I’m probably the only human being left alive that handled Hyperion, and I consider that to be a great honour.”
HYPERION was so small and weak looking when foaled his breeder considered having him put down. When put into training he was 14.2 hands and when fully grown was just over 15.1 hands, yet he won the English Derby by four lengths and became one of the greatest sires of all time.
Mick considered that it was already an honour just working at Woodland Stud for most of 1952 – that hallowed breeding ground having previously been the home of great stallions such as Chaucer, Swynford, and Pharos before Hyperion. In Mick’s year of 1952, Hyperion had already been Champion Sire on five occasions, and he would capture a sixth title in 1955 when aged 25 as well finishing second four times.
To get Mick to Woodland Stud in 1952, his father Ted had arranged to have Mick’s compulsory three-months military training deferred until the following year. Mick arrived home in November and was required to commence his training in an early January intake, causing him to miss the National Sales at Trentham at the end of the month.
The Preston family story as Wellington butchers, horse breeders and owners is remarkable for many reasons, not the least for its longevity which goes back almost 130 years to original settler Arthur Edward Preston who arrived from Liverpool in the 1890s. Two generations later, Mick watches every race from his Taupo home and has had Group One success this season as an owner-breeder with his six-year-old gelding, True Enough.
The lightly raced True Enough has won nine of his 22 starts, including the Cambridge Stud Zabeel Classic Gr.1 on Boxing Day after taking out the Coupland’s Bakeries Mile Gr.2 at Riccarton in November. His last and only two starts this year has produced seconds in two group ones, and despite earning prizemoney in 20 of his 22 starts including seven seconds, his career prizemoney earnings amount to only $559,225 – a further inditement on prizemoney levels in New Zealand racing.
Mick Preston isn’t complaining, though, because True Enough was an accidental mating when the dam Valda’s Dream was inadvertently bred to the wrong stallion (Nom Du Jeu), and True Enough was the result.
The Preston dynasty began with Arthur Edward Preston (1873-1947), who arrived on the Petone foreshore with nine pence in his pocket from Liverpool in the 1890s. His family were butchers in Liverpool involved in the meat markets.
Arthur Edward Preston walked over the Rimutaka Range to Tauherenikau in the 1890s, which today would take more than 12 hours
He walked over the Rimutaka Range to Tauherenikau, which today would take more than 12 hours, but in those days would have been on a very rough track, to try and get a job in a sawmill. With no jobs available, he made the walk back to Petone. Eventually, he secured a job with the Gear Meat Company, where he worked for several years before starting his own business in Wellington. His subsequent success at butchery saw him open several shops around Wellington.
When financial enough, Arthur bought a filly he named White Cliffs, named after the last piece of land he saw before leaving England, and achieved some success with her as a broodmare
Mick’s father, Arthur Edmund (Ted) Preston (1905-1992) carried on the butchery business, expanding it and also inheriting his father’s interest in horses.
Mick remembers that his father always had horses, including a mare and also some showjumpers. While his business was butchery, he expanded his horse interests by leasing a block of land at Ohau just south of Levin and over some years leased several stallions, including Defoe, which he had for three years.
Ted then bought Tararua Road as the Preston family called it before it was named. It was 1945, and he paid £8,000 for the 83 acres for the property he would later call West Derby Stud. The name came from his father’s birthplace of West Derbyshire, which was just over 100 kilometres east of Liverpool where Arthur had learned the butchery trade, and not far from Aintree Racecourse where one could imagine the Preston family took an interest in proceedings.
Ted Preston kept his butchering business going in Wellington and never lived on West Derby but would go there on weekends. He was meticulous about the horses and their welfare. He raced a lot of horses and would travel up to the farm every Friday to check on the horses but never had any other interests in life outside his business other than horses.
Ted had six sons of which Mick was the eldest. All the sons did their apprenticeship in butchery, and while at school, they all worked in the butcher shop, but weren’t allowed to leave school until the parents considered they were ready.
Mick was keen on farming and talked his mother into letting him leave one May school holiday when barely 17, but the first job he ever got paid for was plucking wild ducks. All the doctors and accountants would bring them into the butcher shop to get dressed in the duck shooting season.
Ted had gone back to Wellington because he still had seven butcher shops, and less than two years later, a young Mick was at Woodland Stud in Newmarket using Hyperion as the teaser.
Nothing would ever have deviated Mick Preston from a career in horses after that experience.
As of this week, racing has new legislation which the Minister has designated for enforcement from August 1st. That will be the day the Racing Act of 2003 gets consigned to the dustbin and the day the new Racing Bill comes into effect.
Few in racing will have read the legislation for its reworded second reading (103 pages), and of those that did read it, few will be aware of the SOP (Supplementary Order Papers) introduced by the Minister on Tuesday which made quite a few changes to the Bill.
How much influence the three codes had on those changes is unknown. Very little information of that nature is coming out of Petone.
Today, prizemoney of $139.6 million was announced for the 2020/21 season for less races in both thoroughbred and harness racing which is a retention of the amount allocated over a year ago for 2019/20. Owners and trainers will be relieved about the commitment not to reduce, but it is hard to know precisely how this is being funded.
The $10 million saved in recent redundancies may be budgeted into prizemoney, and so it should be. After paying the outstanding debts of $26 million and keeping the clubs in idling mode during COVID-19, $15 million out of the $50 million bailout might be left for stakes money but that would mean none of the debt to the bank of $47 million has been paid down.
Throw in the $4 million of betting levy for this season, and budget in the $8 million of betting levy for next season and a flaky SOI can be visualised. Then budget-in some Betting Information User Charges (Racefields) yet to be earned for the coming season, and you might get to $139.6 million – how else do you get there?
No one wanted to talk today, so the above is a bit of guesswork. But if you know the profit is heading for the small figures and prizemoney is announced for $40 million more than it should be on previously used distribution protocols, the top-up has to have come from somewhere.
Don’t get me wrong, it’s an outstanding announcement for owners after what’s happened. But if it’s based on allocation of profits not yet earned, then it’s fundamentally flawed and might have serious repercussions if something goes amiss.
The success of any operation is reliant on the people running it, and racing needs to bear that in mind as it enters the uncertainty of the 2020/21 racing season , already facing a financial cliff face of jagged edges to climb.
About 18 months ago, Cabinet approved the Messara Review as its guide for the reform of racing. Has Cabinet’s resolution been followed? Here’s a comparison of the 17 recommendations of the Messara Review with what appeared this week in the Racing Bill.
The Messara Review recommendations are in bold:
1 Change the governance structure, so the NZRB becomes Wagering NZ with racing responsibilities devolving to the individual Codes. This will sharpen the commercial focus of TAB operations and improve the decision-making and accountability of the Codes.
Many of the responsibilities have devolved to the codes but not all. The opportunity for Ministerial intervention appears everywhere in the Racing Bill but more importantly the makeup of the board of TAB NZ will be the crucial factor in the future governance of racing.
The Messara Review (MR) recommended the following:
The existing NZRB should be renamed Wagering NZ and all of its racing regulatory functions should be transferred to the Racing Codes.
The Board of Wagering NZ should comprise 7 members as follows: • Independent Chair appointed by the Minister on the recommendation of the Selection Panel appointed by the Minister, 14
• Chairs of three Racing Codes or their delegates,
• Three Independent members appointed by Panel comprising above four members. • All Independent members including the Chair of Wagering NZ must meet the following criteria: • have experience in a senior administrative role or experience at a senior level in one or more of the fields of business, finance, law, marketing, technology or commerce; and
• have a proven knowledge of the Racing or Wagering Industries; and
• are not members of the Board of a Racing Code, a Race Club or a kindred body.
The Chair and the independent Directors should be appointed for three year terms and be eligible for re-appointment with a maximum period of appointment of six years.
The legislation should also stipulate that a member of the Board appointed in the member’s capacity as Chair of a Racing Code does not have a conflict of interest merely because of the members’ role with the Racing Code.
The Racing Bill says:
Governing body of TAB NZ
(1) The governing body of TAB NZ consists of up to 7 members appointed by the Minister, as follows:
(a) 3 persons appointed by the Minister on the recommendation of the selection panel following:
(i) the nomination of New Zealand Thoroughbred Racing Incorporated, Harness Racing New Zealand Incorporated, and New ZeaPart 3 cl 45 Proposed amendments to Racing Industry Bill 36 198—2/SOP No 516 land Greyhound Racing Association Incorporated (or by Racing New Zealand acting on behalf of the racing codes); and
(ii) the process described in section 46A; and
(b) the rest of the members appointed by the Minister on the recommendation of the selection panel following the nomination and consultation process described in section 46A. (1A)
The Minister may veto a nomination made by the racing codes under subsection (1) but, if the Minister does so, the codes may make 1 or more further nominations until the Minister and the codes agree on the nominee.
2 Establish Racing NZ as a consultative forum for the three Codes to agree on issues such as entering into commercial agreements with Wagering NZ, approving betting rules and budgets for the integrity bodies, equine health & research, etc.
Originally left out of the first draft of the Racing Bill, the overwhelming support of the submissions and the Transport and Infrastructure Select Committee, this MR recommendation was reinstated for the second reading for very good reason. The MR said:
There are several facets of racing administration where the Codes will need to act collectively for the efficient operation of the overall Racing Industry. These include:
• Entering into commercial arrangements with Wagering NZ • Development of racing calendar in conjunction with Wagering NZ
• Approving budgets, plans and administrative support for the JCA, RIU and the Laboratory where required. 17
• Consulting with Wagering NZ on whole of industry issues such as Betting Rules, and financial support of the NZ Equine Research Foundation and the Equine Health Association.
To effectively manage these functions, it is recommended that the Codes participate in a body named Racing NZ. This body would not be established as a separate administrative body but would merely act as a consultative forum between the Codes. It would not be empowered to act unilaterally without the approval of the Codes.
3 Change the composition and qualifications for directors of regulatory bodies.
The Racing Bill has not followed the recommendation of the MR. Instead, the powers that be have penned their own wording but that is not say that it isn’t satisfactory as it specifies a representative from each of the codes plus two who are appointed by the racing codes acting jointly.
4 Request that a Performance and Efficiency Audit of the NZRB be initiated under section 14 of the Racing Act 2003, with particular emphasis on the operating costs of the NZRB.
This recommendation wasn’t followed as specified as no emphasis was placed on operating costs. As well, John Allen engaged Grant Thornton – a company with no previous experience in the thoroughbred industry – who produced a five-year performance and efficiency report at great expense which has been of no value to the industry.
5 Amend the Section 16 distribution formula of the Racing Act 2003 to a more equitable basis for fixed 10-year terms.
Recommendation 5 has not been followed and the wording in the new Racing Bill leaves the door open for Sport to cease being a customer of the TAB by participating on the board and taking a larger slice of the profits. The Racing Bill offers no formula to guarantee racing’s take which may be reduced as a percentage of revenue.
6 Initiate a special review of the structure and efficacy of the RIU and allied integrity bodies, to be conducted by an independent qualified person.
This recommendation was not carried out in the manner prescribed because the MR implication was that the Reviewer be a person who had previous experience in the integrity side of racing. The MR stated: “…it is recommended that the Minister retains the services of an appropriate person well versed in stewarding policies and procedures to review the overall Integrity model for its efficacy, independence and accountability.” Instead, an ex-policeman unfamiliar with the racing industry was appointed which rendered his report toothless due to his lack of experience.
7 Begin negotiations for the outsourcing of the TAB’s commercial activities to an international wagering operator, to gain the significant advantages of scale.
Rated by John Messara as the most important of all 17 recommendations, this clause has not yet been attempted in any shape or form.
8 Seek approval for a suite of new wagering products to increase funding for the industry.
The introduction of new wagering products hasn’t occurred. It would have been an automatic follow on from a partnering/outsourcing agreement by piggybacking on the partner’s IT development
9 Confirm the assignment of Intellectual Property (IP) by the Clubs to the Codes.
The IP stays with the clubs/codes after Clause 81 to assign full control of it to TAB NZ was deleted from the legislation after appearing in the first reading in December. Strong opposition to Clause 81 came through the submissions and the Select Committee complied.
10. Introduce Race Field and Point of Consumption Tax legislation expeditiously. These two measures will bring New Zealand’s racing industry into line with its Australian counterparts and provide much needed additional revenue.
The MR devoted four full pages of the 82 pages of the Review as a blueprint on the procedure to make it work. Two years on, New Zealand is receiving some voluntary Betting Information Use Charges (Racefields) but the lack of urgency to get the rates set and finalise the whole deal has cost millions. Feeling the need to change the name from Racefields to BIUC and also Wagering NZ to TAB NZ is suggestive of the RITA insecurity in putting its own stamp on the changes or its reluctance to follow the MR, as was the brief. The bottom line is that RITA has been found wanting on wagering issues and particularly on setting these revenue earning streams in place.
11. Repeal the existing betting levy of approximately $13 million per annum paid by the NZRB, given that the thoroughbred Code is a loss maker overall, with the net owners’ losses outweighing the NZRB’s net profit.
This Recommendation was enacted at the next May Budget when Minister Peters negotiated the repeal of the Betting Levy, even if he had to compromise and claw it back gradually over three years. This season’s levy ($4 million) and next season ($8 million) are likely to be part of the make-up of the promised prizemoney pool for next season of $139.6 million.
12. Clarify legislation to vest Race Club property and assets to the Code regulatory bodies for the benefit of the industry as a whole.
The most controversial and emotional Recommendation is 12. Most people in racing want to see racing thrive nationally but for some not if it means taking something out of their backyard. The legislation to achieve a national result is well covered in the legislation from Clauses 22 through to 27 but despite it becoming law on August 1st there is little doubt we have not heard the last of it.
13. Reduce the number of thoroughbred racetracks from 48 to 28 tracks under a scheduled program. This does not require the closure of any Club.
Recommendation 13 is in the process of happening, as much from the NZTR venue reduction plan had already commenced when research commenced for the writing of the MR. On publication, the MR stated: “Our research indicates that there are too many tracks for the scale of the industry — a conclusion also reached by a number of previous reviews and reports dating back as far as 1965. I believe that the number of thoroughbred racetracks can be reduced from 48 to 28 tracks progressively over the next five years commencing 2019/20; this will free up property assets which can be realised for the benefit of the industry as a whole.”
14. Upgrade the facilities and tracks of the remaining racecourses with funds generated from the sale of surplus property resulting from track closures to provide a streamlined, modern and competitive thoroughbred racing sector capable of marketing itself globally.
Little if any upgrading has happened in recent times due to the parlous state of racing. The MR was clearly relying on the upgrading of facilities through increased profits and John Messara has repeated many times it is a suite of recommendations that will be effective only if all are adopted.
15. Construct three synthetic all-weather tracks at Cambridge, Awapuni & Riccarton with assistance from the New Zealand Government’s Provincial Growth Fund. Support the development of the Waikato Greenfields Project.
One of the first recommendations adopted by Minister Peters was funding to be made available from the Provincial Development Fund. The Cambridge track is in the process of completion while Awapuni and Riccarton are guaranteed funding, albeit both clubs are cash strapped but need to find the funds to accommodate racing’s side of the agreement. Again, the activation of this recommendation was dependent upon the new revenue streams of other recommendations in the MR.
16. Introduce robust processes to establish traceability from birth and the re-homing of the entire thoroughbred herd, as the foundation stone of the industry’s ongoing animal welfare program.
Traceability of foals from birth to re-homing has not yet happened and may not for some time at the current rate of progress. The MR stated: “…we recommend the introduction of robust processes to establish traceability from birth and the re-homing of the entire thoroughbred herd, as the foundation stone of the industry’s ongoing welfare program.”
17. Increase thoroughbred prizemoney gradually to over $100 million per annum through a simplified three-tier racing model, with payments extended to tenth place in all races.
The MR did a significant amount of work on the distribution and tiering of prizemoney, but again the size of the prizemoney pool increasing was dependent upon the adoption of all the recommendations, and especially Recommendation 7.
The MR stated: “It seems that the NZTR have a very complicated minimum prizemoney matrix with minimum prizemoney for the same class of race varying across 6 different meeting categories and for minimums to be different for different classes of race at the same meeting.
We have proposed to NZTR that they adopt a different model with minimums being the same for all classes of races for each venue Tier that we propose should apply in the future in New Zealand, that is for what we call Tier 1, Tier 2 and Tier 3 venues. Given the different qualities of meetings at each Tier level, and particularly at different times of the year, we propose that Tier 1 and Tier 2 meetings be divided into A and B categories.
We have also taken into account a potential doubling of prizemoney in New Zealand to about $100 million, arising from the initiatives described in other Parts of this Review, and determined what the appropriate allocations of prizemoney between the Tiers should be given the likely number of races run to be at each tier level.”
Footnote:
The completion of the legislative process and the passing into law of the Racing Bill 2020 is the end of a long, drawn-out process that began three years ago when Minister Winston Peters campaigned to the racing industry for reform and won the racing vote.
The end result is this Racing Bill. The arguments of what it should be, how it should happen, and what benefits it should provide have been long and tiring, and win, lose or draw the time comes to withdraw from the battle. These pages have attempted to inform, highlight the injustices and present the best options for the stakeholders, but barring the failure of the final process of ‘Royal Assent,’ the industry has a new set of rules ready for the new season.
No more flogging a dead horse. I’m consigning this episode to the history side of my bookcase, and moving on to write about something else. Thanks for reading this far.
Here is racing’s biggest ever certainty: That TAB NZ is not a sustainable business for the long-term benefit of New Zealand racing and finding an overseas betting operator with which it can enter into a partnering arrangement is an inevitability more for the immediate future than the long-term.
Events of the past three months have underlined the urgent need for New Zealand racing to think globally rather than nationalistically about how it can manage this business sustainably as it enters the third decade of the 21st Century. Narrow-minded detractors have resisted the basic concept of entering into a mutually beneficial arrangement with the belief they are giving something away for nothing.
COVID-19 hasn’t held racing back as much as this ‘old boys neurosis’ about partnering the TAB, which might be a better description than the word ‘outsourcing’ as stated in the Messara Review. The difference is only subtle; semantics, as one is obtaining services from an outside supplier while the latter might be defined better as a strategic relationship to achieve a sustainable, competitive advantage. In both cases Kiwis retain full ownership of the TAB.
Resistance to partnering comes from people scared of the dark; the anti-entrepreneurial who imagines the bogeyman is hiding under the bed when they switch the light out at night. How can anyone be against a partnering arrangement before negotiations even commence? – but the flat-earthers are definitely out there alive and well.
…the gambling world has consolidated with mergers…
In a short space of time, the gambling world has consolidated with mergers and takeovers rife in 2019 and this year. Scale is everything and the May completion of the merger of Flutter and the Stars Group to form a Dublin based company with a market cap of £10 billion is proof enough.
The Stars Group released this statement on April 30, 2020: “With the overwhelming approval of our shareholders last week and receipt of all remaining regulatory approvals, we look forward to completing our combination with Flutter next week. We are very excited about the potential of this combination, which will create a global leader in online betting and gaming with a portfolio of trusted brands, complementary best-in-class products, diversified revenues, stand-out technology and, most importantly, outstanding teams of exceptional people around the world.”
The point is, such mergers are based on the pooling of resources and synergies to save the group hundreds of millions of dollars, particularly in the areas of IT development and marketing. Recognition of the advantages comes with shareholder approval who only ever vote with their pockets.
Australian based betting operators, including Tabcorp, are still showing an interest in a partnering (partnering, not a merger) arrangement with our TAB. I say still because in the two years since John Messara in his review strongly advised the New Zealand industry to start negotiating, betting revenue in New Zealand has been stalled or declining, and the deal in 2020 might not be as good as the one that was possible in 2018. Nevertheless, partnering is a better option than seeing a further reduction in prizemoney distributions and the inevitable depletion of racehorse ownership and defections to Australia.
Even the smaller Australian corporate bookmakers will struggle to survive long-term and trends world-wide suggest more mergers or thinning by natural attrition. Long-term, New Zealand wagering can neither afford to market itself against the corporates or go it alone.
Marketing costs are increasing faster than betting revenue
Marketing costs are increasing faster than betting revenue, making smaller operators less competitive – between all Australian betting operators the spend annually has risen from very little to in excess of $300 million. The movement away from the tote to fixed-odds has also reduced margins.
The advantages of partnering go something like this: Instead of TAB NZ funding its own FOB platform with commitments for ongoing payments for the next 10 years – total cost in the vicinity of $200 million, they do what RWWA in Western Australia did and pay a flat fee of $7 million annually to plug into Tabcorp’s FOB and benefit from their ongoing IT developments.
Or, New Zealand negotiates a larger package and includes all of its betting services and 100 percent comingling of the pools, and achieves massive cost savings on salaries and wages, IT development, turnover related expenses, advertising and promotions, comingling, rent, repairs and maintenance, accountancy, consultancy, travel and accommodation and a $14 million cost shown as other expenses.
Three years ago, Deloitte prepared a report to assess the potential from a partnering arrangement and concluded $70 million in cost-saving synergies were available. But cost saving is only one-half of the potential benefits of partnering because a good agreement will provide an avenue for saving future capital investment and opening up several new revenue streams.
Using the most advanced technology by plugging into Australia might bring back a sizeable proportion of the 35 percent loss in the TAB customer base. The service from the TAB would go from woeful to wonderful. The failure of the FOB and its dodgy website may see it written off and red carded into history, and yields would likely improve with a competitive FOB coupled with better risk management and hedging processes. As well, customers would have available a full range of betting options that our TAB only dreamed of introducing but could never afford.
…potential for a much-improved phone app and website
Plugging into Tabcorp’s or a Sportsbet computer also has the potential for a much-improved phone app and website. The TAB website was launched only 18 months ago with the FOB, but from day one it has never been satisfactory and is not fixable, or the funds aren’t available to fix it – the latter the more likely of the two as not all the Openbet updates have been done due to lack of money.
Below budget turnover and the onset of COVID-19 has surely dampened-down the negotiating limits on a partnering deal, but such an arrangement could also include a worthwhile upfront fee and an agreement that provides a guaranteed level of income annually and a profit share of the additional profit generated by the partnership over and above the benchmark.
A sophisticated betting partner will also utilise the value of New Zealand’s unique global time-slot – an opportunity that won’t materialise under the present regime. That would mean a consolidation of New Zealand venues to produce better racing surfaces and aesthetically improved visuals of New Zealand racing on which the Asian market can bet at 9.00 AM in Hong Kong. The potential for New Zealand racing to develop that Asian market is massive.
The business of betting in New Zealand would be better served under the control of a good commercial operator and run separately to the organisation associated with running racing – the Australian system proves it works. New Zealand is infested with government control which is still visible on every page of the wording put forward for the second reading of the Racing Bill.
In a letter written to Minister Peters recently, I asked five questions of which he answered two. One of the Minister’s answers said: “The Government does not accept the success of all recommendations rests solely on the recommendation of seven (meaning Recommendation 7 of 17 in the Messara Review). Having said that, the Bill will allow the industry greater commercial freedom to explore options such as outsourcing and partnerships.”
The opposition to partnering is gradually disintegrating. The IP (Intellectual Property) is coming back to the codes, and the landscape is changing, and the passing of the Racing Bill will hopefully lead the industry closer to a TAB run commercially and profitably for the stakeholders of racing and a brighter future.
The Transport and Infrastructure Select Committee should be extolled for all the hard work applied to the rewrite of the Racing Bill, which released last Monday, has seen a transformation from the dog’s breakfast it was in December at the first reading to a much more acceptable document for the racing industry.
But concerns still exist that racing risks forever dancing to the tune of the Minister of Racing, whoever that might be in the future, or an unsympathetic left-wing government, because the door is still ajar for an administrative intrusion of non-racing directors that have been the blight on this industry since 2008.
If you think about racing’s ills, it’s all about people and poor decision making. How else do you go from an equity position of $104 million to owing the bank $47 million in a dozen years? A beautiful result from running a business that can’t help but make money – they didn’t even have to send out invoices – only turn up on Monday morning and count the cash.
That’s how incompetent the directors of NZRB have been – grossly negligent to the extent that a class action should be taken against them (like Mainzeal) by the racing industry for incompetence and dereliction of their duties as directors. Between them all, they have all but wrecked the business by failing to accept good advice to set policies to maximise revenue streams, contain costs, and also to exacerbate the decline with a bunch of under-qualified and overpaid executives.
If racing has a future, the possibility of a repeat of previous directorship/management behaviour needs to have the door slammed shut treatment. Clause 46 of the legislation doesn’t entirely prevent that happening and relies to some extent on the goodwill of the Minister and his abhorrence of using the position for cronyism or political leverage of any description – pigs might fly?
…synergy of introduced clauses that will make for a better system…
The Select Committee doesn’t share those concerns. It views the Racing Bill changes as a synergy of introduced clauses that will make for a better system of spreading the governance that inevitably will give the industry more accountability and improved administrative flow.
In an email from a member of the Select Committee this week it stated, in part: “We have amended the TAB board appointment arrangements to ensure all the Racing Codes and sports bodies have the ability to make specific nominations (based on merit) to sit on the TAB board and we have also built in an appropriate degree of accountability in setting the TAB’s Statement of Intent and reviewing its Business Plans.”
It also went on to say: “Intellectual Property (IP): We have removed the proposed transfer of the IP to the TAB (it is currently owned by the Codes), a move which was heavily supported by the industry.
“Racing NZ: John Messara recommended a coordinating body called Racing NZ (to represent the Codes) be established to undertake a number of roles, such as setting race meeting dates and to act as the bridge between the TAB and the Codes. The initial draft of the Bill only provided for this as an option, but the Bill now specifically incorporates this arrangement and clarifies Racing NZ’s role and responsibilities.”
My argument to the Select Committee that we would end up with too many lawyers and graduates from the Institute of Directors and not enough industry knowledge was countered by the concern that industry knowledge alone wouldn’t suffice and needed to be balanced by a degree of governance and wagering experience which would be fully accountable to the Minister and the House of Representatives.
Let’s remind ourselves of a sampling of former Ministers of Racing…
Let’s remind ourselves of a sampling of former Ministers of Racing – John Falloon (1990-96), Tau Henare (1996-98), Clem Simich (1998-99), Damien O’Connor (2003-05), John Carter (2008-11), and Nathan Guy (2011-17). Most of the damage talked about in these pages occurred during the Nathan Guy reign, but the point is, would anyone in racing want to rely on any of the above names having carte blanche on the appointments panel for the board of the TAB.
The rewrite of Clause 46 says the Minister appoints a three-person selection panel for the appointment board of TAB NZ, and according to the Select Committee, that selection panel will be highly-skilled in deciding on the selection of the make-up of the TAB board. The Minister then has a power of veto any nomination made by the racing codes, but if he does so, the code has the right to make one or more further nominations.
That three-person selection panel is not part of the board TAB board of seven. Also part of Clause 46 is (4) below which seems poorly worded with ‘must have regard to the need, collectively, knowledge of, – an opening as wide as the Sydney heads. It says:
(4) In appointing members, the Minister must have regard to the need for the governing body to have available to it, collectively, from its members, knowledge of, or experience in,—
(a) racing and sport administration at a national level:
(ab) sport administration at a national level
(b) the betting industry and market:
(ba) broadcasting:
(bb) technology related to betting or gambling:
(c) preventing and minimising harm associated with gambling:
(d) business, marketing, or economics.
What the Messara Review recommended was that the Minister appointed the chair and added to him/her would be the chairs of each of the three codes. They would become the panel of four who would then sit and appoint three independent board members of strict criteria to make up the board of seven. The Messara concept of the board would ensure the three codes of the racing industry would achieve adequate representation, and ‘skin the game’ would be revived in the administrative ranks.
…the professional directors and ex-civil servants will continue to arrive to tell the industry how to suck eggs.
But this current wording in Clause 46 relies on the Minister and Racing NZ, keeping everything on the straight and narrow. Inevitably, the racing industry will be only as good as the people in charge. If it gets more of what it’s had in the past, the professional directors and ex-civil servants will continue to arrive to tell the industry how to suck eggs.
Good people are capable of fixing inadequate governance procedures, but bad people will fix nothing and are always present for the wrong reasons.
The government has warned us that getting this legislation correct is a one in 15 to 20-year window of opportunity. But racing is bleeding so severely an industry won’t exist by the time Halley’s Comet comes back, so consider this the last waltz. And the last waltz was summed up by Frederick Nietzche when he concluded, “And those who were seen dancing were thought to be insane by those who could not hear the music.”
The fear is that not enough racing people are hearing the music and therefore are dismissive of the immediate danger. It’s an incredibly apathetic industry. The TAB has been trading as insolvent since about Christmas, and the $50 million lifeline thrown to RITA three days before the Minister said it was going into administration should have been warning enough.
RITA Executive Chair Dean McKenzie’s website Update this week talks about the “Positive signs ahead: While we are certainly not out of the woods yet, the progress of the Racing Bill, an early return (and full) programme of domestic racing and revenues returning, in some cases, to pre-Covid levels provide enough reasons to be optimistic that RITA and the wider industry can come out of this crisis with some confidence.”
Not out of the woods yet? More like deep in the Amazon jungle!
Not out of the woods yet? More like deep in the Amazon jungle! And…the wider industry can come out of the crisis with some confidence. What has occurred to give the industry any confidence when communications are both rare and unbelievable.
Three and a half months after the cut-off date, the Half-Year Report has not been posted, and no explanation offered. But should anyone be surprised given the world has moved into the age no accountability or transparency in which the right to protest overrides all rules of COVID-19 distancing. A world that makes the destruction of statues acceptable or at the very least understandable (Mayor of Hamilton) and you may have seen Gone with the Wind for the very last time.
In March at the Beehive during the oral submissions to the Select Committee, Dean McKenzie’s submission on behalf of RITA was diametrically opposed to almost every other submission with that opposition primarily ignored in the rewrite.
Despite that stance, McKenzie wrote this week in his update: “Our initial view of the Select Committee’s recommendations is that the overall direction and structure of the Bill remains the same as it was before the Committee and is still in line with the direction of the Messara Report. The TAB will be established as a pure betting, broadcasting and gaming entity, and the Codes will have greater roles and responsibilities for developing and promoting their sport.”
Everyone’s entitled to change their mind and write their own history.
If you have a successful business you’re looking to run into the ground and send broke, the New Zealand TAB has almost completed writing the perfect blueprint, but don’t call its helpline for the recipe because it’s become famous for providing no help.
In fact, the helpline at the TAB has brought to light numerous recent stories of the phone ringing unanswered or operators arguing with disgruntled punters rather than appeasing them, and even hanging it in their ear.
Punters consulted to write this blog produced one who claimed eight of his previous ten calls to the helpline had gone unanswered.
An overabundance of stories about the poor treatment of customers and a reduction in services can only be a reflection of a leadership team that doesn’t care about the bottom-line result.
Rumblings about a toxic culture within the walls of the TAB from various disgruntled TAB employees…
It’s not a new thing. Rumblings about a toxic culture within the walls of the TAB from various disgruntled TAB employees have been audible most the way through the John Allen reign of terror, and since. Good people are known to have left voluntarily, and others who have expressed disagreement in policy direction have experienced the shove.
And now, the customer interface which is where any successful organisation meets its customers and keeps them happy, has been dismantled to save around five percent of the TAB’s annual cost. The reason offered to The Optimist: Executive Chair Dean McKenzie didn’t tackle the problem of redundancies himself but gave the cost-cutting assignment to his executive team, hence Stephen Henry addressing the staff at redundancy meetings and not McKenzie himself.
Any well-run organisation displaying strong leadership would have started with the executive team and worked its way down – not the other way around. The TAB has lost its way because it has focused on IT development with a strange, misguided and overblown self-belief they had the expertise to develop a FOB that would compete in the global wagering market.
Vanity overcame logic, however, and the customer became the casualty. Strange is it not, that of all the businesses that should require extra careful customer attention, The TAB NZs focus on its VIP and Elite Customers while ignoring all us ‘mug punters’ has surely backfired with the loss of 35 percent of its customer base. Don’t accept that COVID-19 was the cause.
John Allen: …the top 1.5 percent of our customers produce 56 percent of our turnover.
Two and a half years ago, the then CEO John Allen said the most accurate thing he ever said: “We need new customers otherwise we are vulnerable to that very small number of elite customers – the top 1.5 percent of our customers produce 56 percent of our turnover. And they are being sought by every betting agency in the world.”
Needing them and getting them were two separate destinations, but Allen never accepted that scale was against all his plans, and overseas IT development and massive marketing budgets were obstacles too big to conquer. Between Tabcorp and Australian betting operators, the spend on marketing is currently $300 million per annum.
Allen should have heeded his own advice, which in reality, was the advice of his executive team because he didn’t know the business. But his executive team was made up of several former associates at NZ Post/Kiwibank brought with him from his days of NZ Post and a couple of relatively inexperienced employees from Tom Waterhouse Bookmaking in Sydney.
Punters have never been loyal animals, and the depletion of customers has been across the board. Allen, at that time, also talked about his VIP customers: “the VIP customers who are very large punters – 20 or 30 of them around the world – they are betting on our products if we are competitive as long as they get all the data they require.”
Sportsbet in Australia offered the same man a free $1,500 bet if he deposited $1,000.
Offering substantial rebates to the biggest punters has proved a false economy, and it raises the question of how many of the VIPs remain? One of the Elite customers was this week offered a free $50 bet on the TAB NZ if he deposited $100 into his account. On the same day, Sportsbet in Australia offered the same man a free $1,500 bet if he deposited $1,000. Who’s winning that battle?
The so-called ‘mug punters’ now have no weekly printed formguide to purchase, no radio trackside interviews and talkback, a FOB platform that offers poor odds on a poorly designed website that continually gets ‘hung,’ the closure of more TAB retail outlets and the promise of no live betting operators on-course but instead ‘betting pods’ or self-service terminals that are cumbersome to use and don’t payout.
It’s hard to fathom why years ago the television exposure of racing to the general public was extinguished when Trackside went from free-to-air to pay-TV with the Sky package. How do you get new racegoers interested if the product isn’t free to view?
Then consider that all telephone betting has ceased, including the exempted special cases, and TAB NZ is the only betting operator that charges a debit/credit card fee of $2.15 regardless of whether you deposit $10 or $100, and you reach the conclusion it must now be really managed by the Women’s Christian Temperance Union which has set out to discourage all betting.
…two earn just under $300,000 while the other six earn over $300,000 and reputedly up to $620,000
But that was last week’s joke. This week we still have to consider that the people making these decisions are basically the same eight executives, of which two earn just under $300,000 while the other six earn over $300,000 and reputedly up to $620,000 (McKenzie).
McKenzie said in his Update on May 26th, “An independent review of the structure of the Executive Leadership team is underway with consultation on any proposed changes expected to start next week.”
Why an independent review? McKenzie is in the job and should by now have worked out how to run it on a shoestring, which he really should have had worked out a year ago. But if making a decision is the issue, then using a paid consultant is historically typical for this organisation.
One former employee passed the comment that if the entire executive team stayed in bed for a month, it would not be detrimental to the TABs performance. The inference was that if the computer was operational, the business would run itself – and as good a cash business as the TAB could be, it was only ever big enough to feed a few platoons, not an entire army.
Getting the customers back and revenue up to a sustainable level is problematic. COVID-19 has interrupted racing and changed habits, which may never result in a return to our former ways and, in particular relevance to racing, betting practices. Punters have generally concluded they are getting no service and a lousy deal from TAB NZ, and anecdotally the evidence suggests they are looking off-shore in greater numbers.
The saving grace could be the content of the legislation which will be tabled in parliament early next week
The saving grace could be the content of the legislation which will be tabled in parliament early next week and hopefully get its second reading soon after that. If the rewrite favours the consensus of the almost 1,000 submissions and is passed into law by July 1st as scheduled, racing gets its chance to see the early exit of RITA and the implementation of some positive changes.
A throng of stars needs to align for that rare possibility of hope to become a reality. But while Minister Peters did renew RITA for a further year in a statement he released on Wednesday, when the same announcement appeared on the RITA website later that same day, the caveat on the renewal of RITA appeared in a footnote.
The footnote stated: “The Directors’ terms will end on the enactment of the Racing Industry Bill or on 30 June 2021 – whichever comes first.” The enactment of the Bill is imminent if we are to get a second reading next week.
The Select Committee wasn’t available for comment this week because, under its protocols, it is inappropriate to make comments before the legislation comes up for its second reading. But in previous conversations with both National Select Committee members Andrew Bayly and Ian McKelvie (Shadow Minister for Racing), they are positive about the content.
All this means nothing, however, if an under-performing TAB on the top of RITAs $47 million debt to the ASB Bank trivialises racing in the coming season, because of NZRB/RITAs point-blank refusal to properly investigate the outsourcing/partnering of the TAB and restructuring as outlined in the Messara Review two years ago.
The Review clearly warned the Minister and all of New Zealand that it didn’t have the luxury of waiting, but that warning went unheeded, and today New Zealand racing is paying the price.
Minister of Racing Winston Peters has today announced the departure of RITA henceforth and from June 1st racing will fall under the administrative control of WCTU NZ (Women’s Christian Temperance Union of New Zealand).
The Minister said he was forced to put the WCTU in charge when he came to his senses and realised it would be better, both for his image and for racing, to go bankrupt under the control of an organisation with good Christian values, which they exemplified on the website in their stance against the use of alcohol, tobacco, drugs, white slavery, child labour, and army brothels, than to fail under RITA which he embarrassingly appointed as MAC 18 months ago.
Peters also said that it would be healing for racing folk to follow these Christian beliefs of giving up drinking and smoking rather than go broke under the administrative ineptness of…
Of course, I’m making this up. It’s a spoof. None of the above is true except the bit about going broke – that still seems to be happening; listed on racing’s agenda and perhaps progressing at a faster rate than previously expected. What we have yet to discover is, is RITA going broke the cheap and fast way or will the Minister do what he alluded to in his pre-budget speech, and string it out for a more expensive canter into the sunset?
Either way, it seems the same destination has been dialled in on the GPS and getting there is looking more and more conclusive, the more you examine the finances.
Betting turnover at the TAB is well down – almost fifty percent below forecast according to the May 26th Update
Betting turnover at the TAB is well down – almost fifty percent below forecast according to the May 26th Update posted on the RITA website. But the loss of betting revenue is off-set by RITA not having to pay stakes money to the codes with harness and dogs only recently restarted and no thoroughbred racing until July.
The result of that could mean a positive cash-flow position for the TAB from April through to season’s end on July 31st. A hiatus of sorts during which time the TAB has been acting as an agent for Australian racing.
Costs are still incurred in idling mode for the codes and clubs, though, but might be only in the order of $3 million as opposed to an estimated $14 million had 2020 race meetings been numerically on par with 2019.
The $50 million isn’t going to save TAB, so something more has to be coming because the Minister must know the business model is broken and even though this week’s TAB redundancies are saving $11 million, it’s only five percent of RITA’s annual costs. The TAB has gone past the tweaking stage – it’s akin to mouth to mouth resuscitation while complying to the two-metre rule.
…the $50 million hasn’t yet turned up at RITA, so the owed $26 million remains unpaid…
To compound the situation, the $50 million (like a lot of other promised Government bail-outs) hasn’t yet turned up at RITA, so the owed $26 million remains unpaid, and this week was said privately by one observer to have been understated and the true amount was $35 million.
We’ll use the amount quoted by the Minister of $26 million for this exercise. Add $4 million for the redundancies and another $3 million for the codes and clubs sustainability in idle-mode, and that leaves $17 million from the 50 without thinking about repaying any of the ASB bank debt of $47 million.
That’s approximately the insolvent position of the TAB at the end of July. All the economists are saying we are heading into a recession post-COVID-19, so from August 1st, the level of revenue generated by the TAB is the big unknown. The loss of continuity, the loss of service by the TAB through media shutdowns, the loss of 35 percent of the customer base, and fewer races with smaller fields at fewer race meetings will all impact on TAB revenue in a downward spiral.
That unknown factor must make setting a calendar with stakes levels a tough assignment. It’s a given we will see numerical declines everywhere and especially in total stakes money for the season – based on a result of a $100 million bottom line season, the reduction is probably in the order of 40 to 50 percent.
To retrieve market share, customer-facing employees are vital but few remain after this week’s redundancies which impacts 30 percent of roles but saves only five percent of overall costs and leaves the executive team in place for the time being.
The FOB (Fixed Odds Betting) platform is an unqualified disaster and more than anything else is responsible for a decline in turnover and a loss of customers to Australian based corporates. They have better and more advanced technology, do far better promotions, and from sheer scale alone cannot be outperformed by anything east of the Tasman Sea.
…a one-time big punter who once turned over an average of $250,000 a month on the NZ TAB
For an independent view, I consulted a one-time big punter who once turned over an average of $250,000 a month on the NZ TAB. He said: “I won’t be going back as it makes no sense whatsoever when there are much better options off-shore.
“The TAB has lost focus on customer support. They have lousy pricing and no price boosts. The corporates offer price boosts and multi boosts on every race day, which is really looking after the customer and makes a whopping difference to the bottom line for punters.
“The New Zealand TAB go unders on every horse in a race, so punters searching for the best price will never bet with them again. That means they can dump anything they don’t want at a better price in Australia and turn a profit on the wager.
“Also, most off-shore corporates offer up to six ‘money back’ second or third (up to $200) a day, which is a great incentive if you horse places.
“To put it simply mate,” he said, “they saved a bit of money in salaries but sacked all the wrong people and took away on-course presenters so that we can no longer read trainers and drivers body language which was my go-to – and totally ruined any chance of redemption.”
In Australia, the market competitiveness of the corporate bookmakers sees some spend as much as $100 million annually on promotion. How are we supposed to compete in New Zealand trying to ‘lone it’ with no balance sheet and a $50 million FOB that is already breaking down and half obsolete?
The $17 million per annum committed to Paddy Power-Betfair and Openbet wasn’t fully paid up in year one…
The $17 million per annum committed to Paddy Power-Betfair and Openbet wasn’t fully paid up in year one of the FOB because of the lack of funds, which is just one of the many reasons why the whole thing has failed. We have Hughes, Allen and Saville to thank for that as the three protagonists who preferred job security in preference to the industry interests and seriously considering the authoritative Deloitte Report – it was the classic case of experts being reviewed by mugs.
RITA has existed for just on 11 months and unless the Minister extends their tenure, the Agency will wind up by June 30th. The Minister has to give 28 days notice in advance for an extension of time, so the announcement is required by this coming Tuesday, June 2nd. The following Monday, June 8th, is the day the rewriting of the legislation is tabled for the second reading.
The word in the corridors of the Beehive is, the Transport and Infrastructure Select Committee has done a sterling job for the racing industry and has changed most of that contemptuous proposed legislation in the first reading, which was early December. They have not achieved everything asked for, but a rewriting and substantial changes will mostly be in the interests of the submitters, and the participants of New Zealand racing.
At his pre-budget speech, the Minister said, “…an immediate grant was the most effective means to prevent default. PWC also advised close consideration should be given to recapitalising RITA. This work will proceed over the next three months.”
We want the legislation to say the codes and the clubs own the TAB, and the decision-making is devolved to the codes and the IP retained.
The racing industry doesn’t want recapitalisation of RITA because that would mean an extension of tenure. Where would the money come from, anyway? We want the legislation to say the codes and the clubs own the TAB, and the decision-making is devolved to the codes and the IP retained.
The Minister’s speech also said, “ More New Zealanders are turning to the off-shore online gambling through off-shore platforms. It is our intention to regulate the off-shore online gambling sector, and reset the on-shore online gambling sector. If there is going to be gambling by New Zealanders then it is our country that will benefit, not another.”
The Minister should probably know that the merger of Sportsbet and BetEasy was made official in the first week of May. It was a $10 billion merger which means Flutter, which owns Paddy Power, Betfair and Sportsbet, has merged with Stars Group which owns BetEasy.
The group has 13 million customers worldwide. They expect to save millions in costs and taxes. They are pooling all their resources for a better result; they understand that scale wins every time. How will the NZ TAB compete against them, is the question?
Politics, self-interest, hidden agendas, lies, charlatans, nepotism, egotism, creative accounting, jealousies, incompetence, lack of vision, hatred, arrogance, foolishness, self-indulgence and ignorance – traits that have reared their head in various individuals that have played a part in the decline of racing over the last dozen years.
Plenty of good people who have done their best and contributed positively to racing have come and gone. But few of those have been the big decision-makers and administratively-speaking racing has a disastrous history under NZRB (New Zealand Racing Board) and now RITA (Racing Industry Transition Agency).
It’s the only conclusion you can reach when you look at the table below and see how far the decline has come in 12 years. The second line of the table shows that in 2008 the industry had net tangible equity of $104 million, which has declined to a deficit today of $40 million.
That was before last Tuesday week’s bail-out by Minister Peters who handed over $50 million to RITA so they could pay bills of $26 million and halt administration three days later. The balance of $24 million will, in part, need to be used by the clubs and codes just to ensure their survival while in idling-mode as racing comes back. How much will be left to reduce debt is unknown.
The TAB is fundamentally a good cash business that should be in good shape and servicing the racing industry well with maximum prizemoney levels while keeping its costs to a minimum
The TAB is fundamentally a good cash business that should be in good shape and servicing the racing industry well with maximum prizemoney levels while keeping its costs to a minimum, like any well-run business. But for a long time now, it has been servicing itself well on the pig’s back, and on a gradual basis, lessening the percentage returns to the codes for prizemoney distribution.
Why was it allowed to happen? Go back and read the first paragraph of this blog and you have your answer or answers. Politics played the most significant role followed by cronyism, and before long, we had racing run almost entirely by non-racing people. Having no skin in the racing game, these charlatans thought it was pretty cool, and it presented an excellent opportunity to bring some mates in and put them on big salaries.
The Racing Act of 2003 was supposed to protect the racing industry from these acts of human frailty, but nothing was ever policed, and the era of no accountability and no transparency commenced.
The Act said: 8. Objectives of Board The objectives of the Board are— (a) to promote the racing industry; and (b) to facilitate and promote racing betting and sports betting; and (c) to maximise its profits for the long-term benefit of New Zealand racing.
9. Functions of Board (1) The functions of the Board are— (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.
No piece of legislation was ever ignored more than those clauses, but no one ever contested NZRB’s actions or demanded accountability. Why?
Now
2019 (4)
2017 (3)
2013 (2)
2008 (1)
Net Cash (DEBT)
($45m)
($25m)
$40m
$40m
$65
Net tangible equity
($40)
($20m)
$56m
$62m
$104m
Profit
$135m
$148m
$140m
$130m
Expenses
$211m
$200m
$173m
$141m
Salaries/wages
$61m
$59m
$41m
$36m
Employees on $100k plus
136
136
93
38
Summary of the financial results of years of mismanagement of the TAB. Key: 1. Nathan Guy takes over as Minister of Racing – NZRB 2. Nathan Guy is Minister for Racing, Glenda Hughes (Chair) and John Allen CEO – NZRB 3. Winston Peters commences as Minister of Racing – NZRB and RITA 4. RITA is formed – Dean McKenzie appointed Chair and then Executive Chair
Have another look at that table and imagine an out-of-control gravy-train roaring down the tracks while the starving coal-face of racing look on in despair. Then, the new Minister Winston Peters arrived and engaged Messara to write the Messara Review and everyone thought Christmas had arrived early. Alas, it wasn’t Christmas, it was Armageddon Day and the nightmare was starting over again.
MAC was briefed to operationalise the Messara Review but decided it knew better and would fix things its own way. MAC became RITA (Racing Industry Transition Agency) and has since ignored the Minister’s Letter of Expectation and the needs of the racing industry as a whole.
Here’s what the first part of the legislation said, which became law last July: The objectives of the Agency are—(aa) to reform New Zealand racing in a manner that supports effective governance and improves industry sustainability; and (a) to promote the racing industry; and (b) to facilitate and promote racing betting and sports betting; and (c) to maximise its profits for the long-term benefit of New Zealand racing.
Please raise your hand if your think RITA has done its best to achieve the above. Please raise your hands if you think they have both carried out the terms of reference for MAC and Letter of Expectation from the Minister. I don’t see anyone raising their hand.
McKenzie was informed of the bail-out from going into administration only a day or two before it happened.
The second-hand hotline tells me that Executive Chair Dean McKenzie hardly ever gets to talk with Minister Peters, and that Minister Peters gave him a bollocking just before his announcement last Tuesday week. It also tells me that McKenzie was informed of the bail-out from going into administration only a day or two before it happened.
Whatever way you look at it, McKenzie and RITA have been a disaster. Sure, they received a hospital pass from NZRB, but the Agency knew what they were getting into well before that, and in horse parlance, have failed even to raise a remedial canter. RITA is the unqualified disaster for racing of 2020 but is using COVID-19 to stay afloat.
They cannot stay afloat for very long, however, because as already explained, the $50 million does not alter the long-term prognosis without any appetite for changing the structure, the people or the executive team that has already failed NZRB. Where is this industry heading in the next few months?
We know RITA is heading for a budget miss of $65 million or over
We know that the codes are all broke and the clubs mainly destitute, bar the Auckland Racing Club, and Riverton. We know RITA is heading for a budget miss of $65 million or over, and that the TAB won’t bring in very much profit even with the resumption of racing in July on a restricted calendar. And here we are on May 22nd and RITA is still holding back its Half-Year Report – albeit we don’t expect it to be riveting reading.
We know that COVID-19 has been a blow, but the TAB was trading as insolvent before the virus took effect. We know that available prizemoney on 2019/20 assessments will be down 40 to 50 percent for the 2020/21 season on the expected result.
But we also know that by August-September, the TAB turnover will be significantly down as we go into recession caused by Covid-19. No one knows how detrimental it could be, but estimates from educated sources suggest perhaps only half of the previous year.
Then, thinking bad news had run out of momentum, the piroplasmosis detected in a mare about to be exported to Australia has halted all thoroughbred exports across the Tasman and left the industry isolated with an equine equivalent of COVID-19. The borders are closed which has left the immediate future of horse exports in the balance.
Price Waterhouse Cooper’s stated that RITA ‘has a very weak equity position.’
When the Minister made his speech last Tuesday week he admitted that Price Waterhouse Cooper’s stated that RITA ‘has a very weak equity position.’ He also said that they advised that RITA should be recapitalised and this work will proceed over the next three months.
The Minister further said, “we are calling upon the industry to deliver serious reform, and that is necessary for the Government to be confident that any future investment is well directed.”
What? What is the Minister expecting when no structural change to governance has taken place, and he is dealing with the same team of failed executives that built the already redundant Fixed Odds Betting platform? Why do we keep coming back to Einstein’s definition of insanity: Doing the same thing over and over again and expecting a different result.
As well, don’t forget the contribution TAB makes to the NZ tax base which is $100 million annually -plus GST, betting, training fees, sale of horses, PAYE, Gaming duty, which more than offsets the $72.5 million donation made last week. Also, add the $10 million racing gets for sports annually which the government would need to front up with if racing wasn’t doing it for them.
That’s not to even mention compensation for the gross mismanagement of the TAB over the past 12 years by Government appointees who were nothing more than civil servants with zero qualifications.
Winston Peters: We have had enough of old men leaning against the rails scratching their derriere and blaming everyone else. Fortunately, common sense is prevailing.”
The Minister in his speech went on to say: “RITA and the codes have tightened their belts. Sadly, there has been some internal squabbling in racing circles. Some blame the transition agency for the problems it inherited. We have had enough of old men leaning against the rails scratching their derriere and blaming everyone else. Fortunately, common sense is prevailing.”
Well, sorry, Minister, but unfortunately, common sense is not prevailing because you have grossly missed all the points. The codes are now united but your RITA represents neither your brief nor the interests of the racing industry, and we can only presume they represent themselves.
Tuesday’s announcement by Racing Minister Winston Peters contained some very interesting messages, but none more so than his delivery of $72.5 million which is a feat only Winston Peters could do for an industry about to go bankrupt.
Peters has to be given credit for his ability to pull a rabbit from the hat at the eleventh hour but will the participants of racing receive any tangible benefits from this windfall, or is it too late?
COVID-19 took the blame for racing’s state of affairs,but anyone following this racing industry closely for the past few years will know about this lengthy spiral of decline, which has continued unabated.
In his speech on Tuesday, he said, “Our response is driven by an attitude that with the right investment it can be a fast recovery. Today’s Pre-Budget announcement is the initial response – not only critical to racing but critical to our national interests.”
The problem I have with that statement is that this is not an investment; it’s a bailout. And it’s not a bailout of the racing industry; it’s a bailout for RITA, which has failed to produce any decisive decision-making since it came into being on July 1st, last year.
Winston Peters: RITA’s lenders advised they could no longer extend credit. It means RITA has faced the risk of defaulting on supplier commitments by this Friday.”
RITA’s Executive Chair Dean McKenzie’s recent denial that RITA was insolvent was shattered by the Minister’s admission, “RITA’s lenders advised they could no longer extend credit. It means RITA has faced the risk of defaulting on supplier commitments by this Friday.”
No one should be surprised the ASB was refusing to extend credit on the debt now reputed to be $47 million, or that RITA hasn’t been able to settle supplier commitments which have mounted up to a staggering $26 million.
McKenzie’s blaming of COVID-19 and the Minister backing that up by saying, “RITA, was partway through a reform programme and then COVID-19 arrived and created the perfect storm,” isn’t going to wash with a racing industry that’s been listening to excuses and hearing unfulfilled promises of better times ahead for the past decade.
It’s common knowledge that RITA inherited a hospital pass from NZRB when they took control last July, but RITA has delivered no tangible benefits since that time and McKenzie’s leadership has been indecisive and far less communicative to the industry than was promised when they began as MAC 17 months ago.
promise of ‘clarity and certainty to the racing industry,’ – RITA
The Minister appointed RITA and will defend the Agency until the end. But taking the helicopter assessment of RITA reveals increased debt, poorly conceived budgeting, failing to deliver on their Interim Report promise of ‘clarity and certainty to the racing industry,’ non-inclusiveness with the codes and diverting from the original brief to operationalise the Messara Report.
The writing was on the wall when RITA failed to clean-out the executive team of NZRB. Here was the team which advised CEO John Allen and Chair Glenda Hughes to make decisions that were not only poor but have ultimately cost the industry above $200 million – wasted. Yet, RITA, in its wisdom, kept this same team on to advise McKenzie.
A former industry leader and well-retired octogenarian with a lifetime of experience in bloodstock recently told The Optimist that in his long experience, the best leader he ever encountered during his career was Sir Woolf Fisher of Fisher and Paykel fame. Fisher started the company with partner Maurice Paykel and managed a vast team of staff, and also founded Ra Ora Stud and stood Champion Sire Sovereign Edition.
In a book named ‘Defying Gravity, ’ which gives a detailed account of the complete history of Fisher and Paykel, an excerpt relevant to the leadership skills of Sir Woolf Fisher is worth repeating here.
‘Where there are problems, the last person you get rid of is the little guy; you start at the top.’ – Sir Woolf Fisher
In the book it states: “Woolf Fisher may have ruled with an iron rod, but recognised the contribution from the bottom up, insisting: ‘Where there are problems, the last person you get rid of is the little guy; you start at the top.’”
RITA has done the opposite by getting rid of the little guys and keeping that seemingly bulletproof team of high rollers at the top. The strange thing is the redundancies include people who are the conduit between the TAB and the punters – the voices that directly encourage betting.
Tuesday’s announcement by the Minister was for $72.5 million which included a $2.5 million allocation for DIA to work on drafting some new betting options to come into play which allegedly will increase TAB turnover. Apparently, RITA had hoped to bring these options in by February and allowed for increased profit margins when budgeting this season for $165.8 million profit, but which now could realistically result in a figure as low as $100 million. That equates to a new season total stakes money decline of about 40 percent.
This pie-in-the-sky, crystal ball gazing belief that new ways of betting will increase the TAB betting revenue and provide higher profits flies in the face of the conservative and more believable industry view that Kiwi punters don’t bet as much as Aussies, and have only so much discretionary cash with which to place their bets after payday has arrived.
The contention that exotic betting options at the TAB would increase revenue to the extent they could budget for increased profits is very John Allenesque.
The contention that exotic betting options at the TAB would increase revenue to the extent they could budget for increased profits is very John Allenesque. It’s also unproven and likely born out of a complicated non-gambling brain that possesses a brilliant and never previously used algorithm.
The $20 million allocated for the two synthetic tracks at Awapuni and Riccarton Park poses new problems for both Race Incorporated and the Canterbury Jockey Club. Like all race clubs throughout New Zealand, the cupboards are bare, but each will have to front up with approximately $6 million to complete these projects and get the tracks in place.
In a phone call to CJC CEO Tim Mills to inquire as to the possible whereabouts of this potential deal-clinching windfall, Tim Mills admitted the Club did not have the money available, but the committee would soon be meeting to discuss all available fund-raising options.
In referencing the allocation for the synthetic tracks during his speech, the Minister stated: “The Messara review into our racing industry urged greater use of synthetic tracks.”
…of a suite of 17 recommendations and all had to be adopted to make it work… – The Messara Review
He indeed did. But it’s also true the Review said it only worked as one of a suite of 17 recommendations and all had to be adopted to make it work to see a revival of the industry. Messara was doubtless not recommending the building of synthetic tracks without all the revenue-driving streams in place such as outsourcing, racefields, and the point of consumption tax.
The Messara Review is a book of 82 pages, and the probability is that very few people have bothered to read every word of it and digest it properly. In the frontispiece letter to the Minister in the Review dated 31st July, 2018, it says at the start of the second last paragraph on page 10, “I emphasise the integrated nature of the recommendations.”
Many times I have heard John Messara himself say, if New Zealand does not adopt recommendation seven, then you may as well bin the other 16 because seven is pivotal. Number seven says, “Begin negotiations for the outsourcing of the TAB’s commercial activities to be an international wagering operator to gain the significant advantages of scale.”
In the Terms of Reference given to MAC (Ministerial Advisory Committee), the committee was asked specifically to operationalise the Messara Review. Seventeen months hence, they have never looked like taking that instruction seriously, and that lack of action should have embarrassed the Minister, albeit he doesn’t appear to embarrass easily.
It should also be remembered that Cabinet approved and signed off on the Messara Report. Their approval did not occur without due consideration so RITA’s ambivalence towards it is more than mysterious.
The point is this; John Messara did his Review in record time on a pro bono basis. To commission such a review on a professional basis from someone of his track record and standing, would have cost our industry in excess of $500,000. The fact that he did for free, and has continued to offer free advice, says something about the string-pullers currently ignoring Cabinet and the codes and claiming they are following the Messara Review, but only cherry-picking it to the tune of 25 percent.
The $50 million allocated to RITA is nothing more than a RITA bailout and nothing for participants to get excited about. Racing people, owners, at the coalface of the industry who are back working with horses won’t benefit by a cent. The fact that RITA owes $26 million to square up with suppliers adds credence to the claim I made in the middle of last year that RITA would be insolvent by Christmas. They were and had been accruing debt ever since.
The $26 million to square up will leave only $24 million.
The $26 million to square up will leave only $24 million. But what do you do with that when you owe $47 million to the bank and have no more credit, leaving the industry only in a less sharp corner than it was previously.
Turnover related expenses in last year’s annual report amounted to $69 million. Add those to the total operating costs of $142 million, and total expenses amount to $211 million. Redundancies just done will save $10 million in year one, but in the current financial year it will cost $3.5 million to pay out those redundancies.
The bailout will keep RITA going who otherwise would have gone in administration today. But will that bailout be followed by the Minister declaring an extended life for RITA, which on its current performance is no more than delaying the inevitable?
One puzzling comment from the Minister was, “…more New Zealanders are turning to online gambling through offshore platforms.
“It is our intention to regulate the offshore online gambling sector and reset the on-shore online gambling sector.” – Minister Peters
“For that reason, the Government is fast-tracking a programme of work to identify how we can mitigate these concerns. It is our intention to regulate the offshore online gambling sector and reset the on-shore online gambling sector.”
Does the Minister mean the Government will block New Zealanders from betting with overseas-based betting operators as Australia did about three years ago, and allow Kiwis only the monopoly of the NZ TAB, thereby ruling out any question of outsourcing?
He added: “If there is going to be gambling by New Zealanders, then it is our country that will benefit, not another.”
On RITA, the question is this: We have the same executive team running racing. We have the same business model. The five-year shift in equity has gone from plus $75 million to minus $23 million, even with the $72.5 million bailout. Where are we heading with outsourcing and a major change in structure and cost-cutting?
The old idiom of ‘throwing good money after bad,’ which simply means spending money on something problematic in the futile hope of fixing it, seems relevant to racing’s current dilemma.
The loss of venues announced today and the legislation getting ready for its second reading, are all irrelevant if the quicksand is already up to neck level.
Better late than never, but Wednesday’s announcement by RITA that it’s finally decided to reduce costs is a classic case of ‘too little, too late.’
It may be a short-term respite for RITA’s chronic cash-flow condition, but it neither addresses the long-term competitiveness of the racing industry in any shape or form and nor will it off-set the expected substantial decline in code distributions, hence the pending prizemoney decline for 2020-21.
That predicament is notwithstanding RITA’s application to Treasury for a COVID-19 bailout for a figure purported to be $80 million. Should it be approved with Minister Peters giving it his solid support, the bank debt of $45 million and current liabilities might be covered, but it would leave little for anything else.
The brief COVID-19 Update which appeared on the RITA website on Wednesday, states: “The proposal includes a reduction of approximately 30 percent of roles across all areas of the organisation and is in addition to other cost-saving measures aimed at reducing total expenditure.”
NZ Rugby has announced job losses for its full-time staff of 180 at 50 percent, with the remaining 50 percent having to reapply for their roles.
According to New Zealand employment law, the proposed cuts will have to be presented to staff for consideration, then be up for discussion with feedback taken before the final decision in late May. NZ Rugby has announced job losses for its full-time staff of 180 at 50 percent, with the remaining 50 percent having to reapply for their roles.
NZ Rugby lost more than $7 million last year but is estimating a fall in revenue this year of around $100 million. By comparison, NZRB/RITA lost $28.5 million last financial year, and increased bank debt, but did nothing about its ridiculously top-heavy employee level. It has carried them through to May 2020 where they have reached the point of no choice.
When NZRB became RITA on July 1st last year, a great opportunity existed for the widest Bunnings broom to go through and clear out the blatantly obvious deadwood and instill some confidence in the stakeholders of racing. A great opportunity missed, and ever since, the rise in debt is paralleled only by the decline in industry morale.
Wednesday’s Update from RITA clearly blames COVID-19. Executive Chair Dean McKenzie is quoted as saying, “The TAB has taken a major hit from COVID-19 with revenue last month 47 percent below forecast and customer numbers down more than 35 percent.
“Despite far reaching efforts to reduce costs across the TAB, including salary reductions, staff taking leave and reducing all non-essential expenses, it simply was not enough to offset the blow COVID-19 has had, and will have, on our industry.” – Exec Chair Dean McKenzie
“Despite far reaching efforts to reduce costs across the TAB, including salary reductions, staff taking leave and reducing all non-essential expenses, it simply was not enough to offset the blow COVID-19 has had, and will have, on our industry.”
My version is quite different. RITA was insolvent before COVID-19 turned up. It’s a simple matter of tangible assets failing to equal the size of the mounting bank debt. And while revenue might be down 47 percent as claimed by McKenzie, having no New Zealand racing since the day Alert Level 4 commenced has meant having to make no payments to the codes for stakes money. Then, with the wages subsidy supplementing salaries, the TAB has been accepting bets on Australian racing on a ‘betting information use charge’ – a far less onerous form of conducting business.
McKenzie goes on to say, “The reality is the TAB will need to be a leaner, more efficient business with fewer roles, and focused on driving our core wagering and gaming business.” Why wasn’t he heard to say that last July?
The Update concludes rather tersely with, “No further comment will be made until a final outcome is confirmed.” It’s a relatively short Update that fails to mention the monetary savings which would accrue from the downsizing which is the most important figure.
…it would be surprising if savings annually on this move exceeded $10 to $12 million or only five percent of the total costs.
Thirty percent of roles sounds significant but given they have 700-odd employees including the RIU which doesn’t include consultants which numbers 70 in this cost-cutting measure, it may not make too much of a dent on the total running costs of 2019 which amounted to $211 million. Drawing information from the Annual Report and last SOI, it would be surprising if savings annually on this move exceeded $10 to $12 million or only five percent of the total costs.
In the Budget of 2019, the Government provided $3.5 million to the racing industry to: “make the best use of the $3.5m Crown contribution to the cost of industry change ensuring that this funding buys change.”
Has the $3.5 million been used for anything yet or saved for this RITA debut of cost-cutting, which seems unlikely given the parlous state of its financial position over the past year. We don’t know – RITA has never mentioned it.
Racing needs a revolution with a business-savvy leader to get rid of the deadwood, address the skill level required, understand IT on a global level, and deliver a balance sheet for New Zealand’s racing future. No sign of it yet!
The Deloitte Report was dismissed out of hand by an NZRB which adopted a contemptible ‘we know better’ attitude towards the codes.
The Deloitte Report is now three years old (May 2017) but is as relevant now as it was then – it was authoritative but was dismissed out of hand by an NZRB which adopted a contemptible ‘we know better’ attitude towards the codes. Deloitte had significant experience in the thoroughbred business and drew upon its Australian expertise to compile the report.
Deloitte said: “The lack of scale means it is unlikely NZRB will be able to achieve a sustainable competitive advantage against international wagering competitors. Based on our experience of the benefits achieved with industry consolidation in other settings and our analysis of the NZRB current cost structure, we are of the view material cost synergies would be achievable if a more substantive outsourcing or similar initiative were to be pursued with an appropriate party. Our initial assessment is that gross annual benefits could be in the vicinity of $63 million.
Since NZRB ignored that advice, the racing industry in New Zealand is something like $250 million worse off when you take into account the lost opportunity and a commitment towards a $50 million FOB platform plus ongoing deals with Openbet (10 years) and Paddy Power-Betfair (5 years). That may have been about the time they made the movie, Dumb and Dumber.
The RITA SOI (Statement of Intent ) released last November stated: “We are optimistic this result (previous year) will be a one-off and we will deliver on our forecasted net profit in 2019/20 of $165.8 million.” That budget currently looks like missing by $55 million or so with a bottom-line result of between $100 million and $110 million. They can blame COVID all they like but the industry isn’t that dumb, or dumber, to swallow that one.
We only have to go back and compare New Zealand with Western Australia to realise what a pig in the trough scenario we have endured.
The 2019 Annual Report says NZRB/RITA spent $22,500 per week on consultants. Travel and Accommodation amortised out at $54,000 per week. Other expenses were totalled up at $14.25 million or $273,396 per week. In the notes to discover what they were, the list is shown but the final item reads as ‘Other Operating Expenses, ’ which is $2,047,000 or $39,400 per week.
To have ‘Other Expenses’ and then a sub-title under that listing another ‘Other Operating Expenses’ which amounts to $39,400 per week with no notes as to how the money was spent, is symptomatic of the lack of proper accounting, transparency and accountability to which the participants of New Zealand racing have been subjected to for many years.
Finally, have a look at what happens in Western Australia to which I have made comparisons on numerous previous occasions. RWWA (Racing and Wagering Western Australia) has one organisation running wagering and racing whereas New Zealand has five. Under RWWA’s board they have five committees. By their own admission they believe it’s far from perfect, but compared to NZ, WA is efficient.
NZ Racing (2019)
Racing Western Australia (RWWA) (2019)
Net Betting Margin
$285m
$305m
Salary & Wages
$63m
$40m
Employees
~700
370
Senior Managers (Note 1)
23
7
Margin/employee (Note 2)
$400k
$800k
Notes 1. NZTR, NZ Harness, NZ Greyhounds and the RIU do not disclose salary information for senior managers. For the purposed of comparison with RWWA have assumed two managers each paid $200k 2. Key racing industry efficiency and competitiveness measure
New Zealand
Western Australia
Population
4.886m
2.589m
No. race meetings
311
283
No. races
2,582
2,140
No. starters
4,744
3,197
$Loss for $2018-19
($28.5m)
($3.12m)
NZ has a much larger population, but otherwise, the racing statistics are closer to us than any other state in Australia. The big difference is they are leaner, have a better model, and perform better.
Footnote:
The Optimist has learned that a pre-budget announcement will be made next week by our Minister of Racing, the Rt Honourable Winston Peters. I am told it is big and a game-changer for the industry. Could it be about the bail-out application? Might it be fake news? On the previous form on big announcements, in a head to head it’s $2.60 on the loan approval and $1.40 on the fake news. All bets accepted as soon as my betting license arrives.
Last week we highlighted protest letters and OIA (Official Information Act) requests to the Minister of Racing and RITA (Racing Industry Transition Authority) from the Trainers’ Association, the Owners’ Federation and the Next Generation of NZ Thoroughbred Racing.
The letter not mentioned but also written around the same time on April 22nd, was sent to Minister Peters on behalf of the New Zealand Thoroughbred Breeders’ Association (NZTBA) and signed by its CEO Justine Sclater. The letter was not a long one but very much to the point and hopefully will have struck a raw nerve with the Minister.
It expressed concern about future funding from RITA, how little information was coming back to the codes and how this uncertainty would prevent owners from bringing their horses back into work for a resumption of racing. It also dragged up the Winston Peters quote from the launch of the Messara Report in referring to the administration as a ‘dead horse’ – a euphemism that no one in this game will let the Minister forget.
The livelihood and businesses of our 1400 members and their employees is at stake here and RITA have given us nothing to reassure us that we will in fact have an industry post-COVID-19 – NZTBA
The Breeders’ letter also said: “The livelihood and businesses of our 1400 members and their employees is at stake here and RITA have given us nothing to reassure us that we will in fact have an industry post-COVID-19. Owners will not return their horses to work in local stables without some indication of what they are racing for, and many will in fact send their horses off-shore.
“Our association had grave concerns around the solvency of RITA prior to COVID-19 but were optimistic that your new Racing Act would solve that problem. We appreciate that the Minister has other portfolios to maintain, but we know how much you have invested in the Racing Industry in New Zealand recognising the old Racing Board was a “dead horse”, and presenting us with the Messara Review as a way forward.
“We find this situation with RITA unacceptable,” the letter continued, “and seek your help in making RITA accountable to our industry stakeholders. This is a view shared by our fellow stakeholders the New Zealand Trainers Association and the New Zealand Thoroughbred Racehorse Owners Federation.”
If we were to summarise what the Breeders’ letter says and add the thrust of the intent of the other three letters from last week, the strong message to the Minister is simply, “we have all had enough – fix the problem or the racing and breeding industry in New Zealand will be annihilated under your watch.”
Above, I tongue-in-cheek made the suggestion the letter might strike a raw nerve with the Minister. The question is, are there any raw nerves to strike? – it’s very doubtful! Wiley old politicians have their raw nerves removed very early in their careers and forever-after, it’s water off a duck’s back. With all due respect to the serious nature and good intentions of the Breeders’ letter and the three aforementioned letters from the other groups, history would suggest they are likely to receive scant consideration upon reaching their final destination.
…in the one to two decades of the stealthful hijacking of the racing industry by Government appointees or their ex-civil servants/managers…
History, indeed, tells us that in the one to two decades of the stealthful hijacking of the racing industry by Government appointees or their ex-civil servants/managers ( the ones who required shifting sideways because once you’re a civil servant you don’t get sacked) the codes and racing’s sector groups have had virtually no say in the selection of the NZRB board (now RITA) and the senior executives of RITA.
And while on the subject of civil servants getting the sideways shift, readers will be delighted to learn that our esteemed former NZRB CEO John Allen has been appointed chief executive of WellingtonNZ. The Wellington Mayor said, “He’s a big-picture, creative thinker which are exactly the skills Wellington needs at this time.” Another councillor said, “John’s track record speaks for itself,” which is a sentiment upon which most racing people would agree.
I digress, however. But still in Wellington, the Government should be continually reminded that racing is an industry that employs something like 15,000 people full time, another 13,000 part-time, and between all employees and volunteers, the number involved is more than 57,000. That was according to the last Racing Size and Scope Report that was released exactly two years ago (May 2018).
When you add up what Treasury rakes in from racing’s betting levy, PAYE on employees, and GST, the figure amounts between $80 and $100 million annually. As a consequence, shouldn’t Government have treated us better? Minister Peters did racing the favour of clawing back a third of the betting levy in this financial year ($4 million), and eventually (three years), we get it all back. But, two questions arise on the betting levy rebate.
The first is this: When you owe the bank $45 million, it’s hard to make a case to say racing’s participants should be giving the Minister a round of applause, especially considering the debt has doubled under his Ministerially appointed RITA and his watch as Minister. A third of the betting levy is only a drop in the ocean of debt.
…why would the Minister not go back to Treasury and make a COVID-19 hardship argument for racing to get the full $13 million this financial year…
Secondly, why would the Minister not go back to Treasury and make a COVID-19 hardship argument for racing to get the full $13 million this financial year instead of waiting for the incremental claw-back over three years? Wouldn’t that be a better option than the Minister promoting to Treasury that racing be granted an Air NZ-like bail-out loan that would forever see racing under Government control?
The $15,000 a race with stakes money back to 14th place announced this week by NZTR is for a limited number of race meetings in July only and offers no guarantees for the stakes level to be set for the new season from August 1st. It won’t continue at that level but is an incentive to get owners to put their horses back into work. But remember, RITA is insolvent, and with a miserable end of July result looming, racing for half that amount is a possibility for August.
Ideally, RITA could be replaced by a racing commissioner who would restructure the TAB and immediately commence an outsourcing/partnering agreement funded by the recently announced Grant Robertson interest-free loan facility for two years.
The 2019 Budget granted racing a $3.5 million for efficiencies, which apparently was available for leadership redundancies but isn’t yet utilised and will be available only until June. Is it held over by RITA to affect layoffs at the TAB which by all accounts became known to employees at a meeting on April 20th? Why RITA didn’t see the necessity for such an action last July or didn’t immediately use the COVID-19 crises when they applied for the Wages subsidy six weeks ago is a mystery – delaying the inevitable.
Politicians are renowned for not keeping promises, but how could the industry have been so blatantly deceived?
With an ever-increasing regularity, The Optimist has since the last election tried to be a constant prodder to the conscience of our Racing Minister Winston Peters – to no avail. Politicians are renowned for not keeping promises, but how could the industry have been so blatantly deceived? Racing fell into the trap of voting for NZ-First after they released a racing manifesto full of the reform the industry so badly needed.
Implementation of the racing policy hasn’t occurred. Subsequent promises made through documents such as the Messara Report, the Minister’s speech at the Messara Report Launch at Claudelands, the Terms of Reference for MAC, the MAC Interim Report, The MAC Final Report and the Ministerial Letter of Expectation, so far have not been acted upon.
Taking a helicopter view of all that carry-on leads you to the only possible conclusion– the slow and methodical and stealthful hijacking of the racing industry from its true and rightful owners – the codes, clubs and racing participants – is no less a crime than the Great Train Robbery or the French Bank Vault Tunnellers.
Today, racing codes and stakeholders appointed by racing people have zero say, and in 175-years of racing in New Zealand, the industry is in its worse financial state and affectively bankrupt both morally and financially.
…raising of the flag of revolutionary reform…
The small window of opportunity in this cascading graph of racing’s decline was the release of the Messara Report almost two years ago. We all thought, for a second or two, the Minister’s excitement on the day of its release was a raising of the flag of revolutionary reform and everything from that point forward would be a positive for our ailing industry.
The appointed RITA failed to carry out the Minister’s Terms of Reference, and why has the Minister has not held RITA to account as outlined in the conditions of his Letter of Expectation? The course upon which this ship was plotted has neither changed nor has it given racing’s stakeholders cause to believe that what should be a simple fix based upon sound business principles is ever going to happen.
If you doubt that claim above, here are some quotes from the Minister speech at Claudelands on 30th August 2018:
“As Racing Minister, I commissioned this report because for far too long this once great industry has been sitting on its hands.”
“It is being killed by inertia.
“Mr John Messara’s report confirms our worse fears.
“Not only is the industry in a state of serious malaise but it has reached, in his view, a tipping point.
“That means we are staring at a downward spiral from which we may never recover.
“The vital signs of our industry are dreadful.
“In other words, it is an industry in a self-perpetuating decline which is nothing short of terminal.”
“By comparison to New South Wales the returns to New Zealand owners are low:
2016/17 Return to NZ owners 22.9%
2017/18 Return to NSW owners 48/1%
“In reality the numbers are against us. Add it all up and the NSW owner’s returns are double that of a NZ owner.
“Messara was given, in effect, a blank sheet with this review.
“He has been allowed to develop his own thinking on what the New Zealand racing industry needs.
“He has had the chance to talk to a lot of people about what this industry needs.
“This is what an independent review does. It wasn’t an exercise of ghost writing for a Ministerial office wish list.
“What you have in the following recommendations is a clear view on what needs to be done.
“In summary the recommendations:
Current governance structure needs to change
Outsourcing TAB commercial activities to an international operator to help increase prizemoney
Amend the distribution formula to the codes on a more equitable basis
Repeal the betting levy paid by NZRB to the Government
Construct three synthetic all-weather tracks
Increase thoroughbred prizemoney, potentially doubling to about $100 million per year
Reduce the number of thoroughbred race tracks
“This choice is yours. This choice is whether, as an industry, you accept that you are at a crossroads.
“Do you accept the status quo which evidentially offers a continual, gradual decline? Or do you accept a need to adopt change, and are willing to approach that change in a constructive way?
“The government’s next steps: When receiving the report, one of my staff members advised me the racing industry was going to “freak out” from this report.
“The reason being is that the Messara report pulls no punches and offers a very prescriptive plan on governance, licensing, and particularly on consolidating race tracks.
“It is a matter of public record that many aspects raised in this report are matters which, as Racing Minister, I’ve expressed concerns about before. In particular, governance structure and incentivising ownership investment.
“If you think I’m a harbinger of doom of gloom, read the Racing Board’s annual report out this year.
“Here’s a fact. Some of your code distributions and activities are being funded from cash reserves and borrowing.
“Does that sound promising? Or is that ominous? But to be honest you all know that alarm bells have been ringing for industry for years now.
“Here is a fact. This year a three-year revolving debt facility was established to supplement the NZRB balance sheet.
“And total equity is budgeted to decline by $15.6 million this year.
“Some will argue that the Racing Board is turning the industry around.
“But my bet is, like me, this hall is packed with people seriously concerned with the status quo.
“Mr Messara has today offered a blueprint, especially on race-course consolidation. It’s going to focus the attention of many of you.
“And the Government will take a look at it. We accept the need to make a real effort to restore the industry.
“Change is challenging and difficult, but real reform is also the pathway to the restoration of this once great industry.
“These are John Messara’s 17 recommendations. The main ones of which we’ve covered in tonight’s presentation.
“Ladies and gentlemen, as John Messara said in his introductory video, we have a chance to turn racing’s ominous present and future around.
“We all know that so much of the legislation governing your industry was written not for the industry’s benefit, but for the convenience of politicians and bureaucrats. And all of us are to blame for allowing that to happen.
“Tonight we have set before your industry a liferaft of reforms. It is over to all of you now – sink or survive and flourish.
“It is to be hoped that the industry seizes this chance as comprehensively as possible.It’s a now or never moment.
“In the words of the genius of human motivation Shakespeare – “there comes a tide in the affairs of men which is taken at the flood, leads on to fortune”.
A massive groundswell of discontent has emerged from racing’s various stakeholders in the past week. It comes from the New Zealand Trainers Association, the New Zealand Racehorse Owners Federation and the ‘Next Generation of New Thoroughbred Racing’ who have all expressed a total frustration at being subjected to a continuance of decline through poor leadership.
The common theme coming strongly from all of these three groups is they have reached a tipping point and total frustration at an administration of racing which has failed them, and allowed the industry to further regress during a period that was designated by the Minister for racing’s revival.
It’s not far off two years since Messara completed his Messara Review of the New Zealand Industry which in a subsequent round of submissions was acceptable to 80 percent of the industry. And, despite Minister Peters at the launch of the Messara Review on August 30th,2018, saying all the right things and promising reform, we have seen only a continuance of the decline – mainly through RITA’s inability to put in place a workable structure for reform and recognise the people best equipped to operationalise it.
RITA has failed miserably and everyone knows it. Executive Chair Dean McKenzie in a relatively short time, has displayed a level of arrogance equalled only by his inability to perform the role of Executive Chair – a position that demanded a severe change of industry direction and a level of communication with racing’s stakeholders which has never looked like materialising.
This week’s outcry by the industry with a flurry of letters and OIA (Official Information Act) requests is supportive of that view
Harsh words but the truth! McKenzie neither has the skill-set or the leadership attributes to do the job – he needs to go and so does the board. This week’s outcry by the industry with a flurry of letters and OIA (Official Information Act) requests is supportive of that view. In the five years that the industry has gone from a plus $75 million equity to a $80 million debt ($45 million to the bank and the rest to pay up the bills) every appointment in racing’s administration has been a government one. Racing needs to take back control of itself. The Minister appointed McKenzie and his board but they are not representative of the requirements of the racing industry.
Thirty-one-year-old Michael Smith of Waterford Bloodstock was involved in two letters to the industry this week. The first on behalf of the group of almost 100 young New Zealanders known as the ‘Next Generation of New Zealand Thoroughbred Racing’ which had every name listed at the bottom and was sent to Minister Peters and copied to numerous others.
In part, it stated: “…we put our full weight, confidence, ambition and trust behind the Report and implore you and all relevant officials to support and implement the Messara Report on our behalf.
“As members of the next generation of New Zealand racing, we represent a wide variety of jobs, backgrounds, and geographic regions that are united by a shared passion for the industry. Racing is our life and livelihood, a part of the history and social fabric of this country, a significant employer and a key contributor to the overall economy. We are also a provider of an elite sporting product that Kiwis can be proud of the world over.
“…for too long ours has languished at the hands of those too short-sighted or ill-equipped to make the tough decisions and necessary changes.”
“The future belongs to those who prepare for it,” Smith’s letter continued, “and for too long ours has languished at the hands of those too short-sighted or ill-equipped to make the tough decisions and necessary changes.
“We are undoubtedly at a pivotal moment and acknowledge what this means for the future of our industry in general, and in particular for our generation which will ultimately prosper or decline based on the decisions you make now. While we know that change will not come easily, we are fully committed to implementing the recommendations of this Report and will play our part in their execution. If the reforms recommended by Mr Messara are not enacted soon, many of us will be forced to join other young New Zealanders already forging successful thoroughbred industry careers in Australia and beyond.”
The letter reverberated the group’s frustration in no uncertain terms and can be seen as a final-straw plea to the Minister to step up to the plate and make something positive happen for these young people before it’s too late.
Smith’s second letter was addressed to the Chair and Board of RITA, and was copied to 11 others including the Minister, John Messara and NZTR.
“…incredibly despite the support and clear direction of the Racing Minister to RITA, NZ Racing finds itself an even more dire position today than then.”
It began poignantly with: “I write to you as a frustrated stakeholder. We are nearly two years on from the Messara Report, one year on from RITA’s appointment (1.5 years if you include the time as MAC) and incredibly despite the support and clear direction of the Racing Minister to RITA, NZ Racing finds itself an even more dire position today than then.”
The letter didn’t hold back in asking RITA three questions: 1) Is the RITA Board a viable vehicle to deliver the changes necessary to revitalise racing in New Zealand? 2) Why has RITA veered so far from the direction of the Racing Minister to follow the Messara Report?, and 3) Where is the transparency regarding the status of RITA and actions to be taken?
On the first question, Smith elaborated with this comment: “In my opinion, it has to date, demonstrated that it is not viable. To borrow a phrase from the Racing Minister during his speech regarding the former NZRB at Claudelands, “I know a dead horse when I see one.” I was very hopeful upon the board’s inception but have been bitterly disappointed to date.
“The only difference between the RITA and the former NZRB as evidenced by its actions has been in name as since its commencement we have only experienced more of the same. Outside of the RITA Board Members, the same staff has stayed in place doing the same things that have led us to the place we are today (now $45m in debt and insolvent?). Aptitude, transparency, and appetite for the kind of restructure and change we need to cut the bloat, right the ship and get back on track seem to be nowhere in sight.”
Only a small part of Michael Smith’s letter is reproduced here but in summing up he also said: “To be honest I am beginning to think that RITA is working against the industry and not for it. The glimpses of the future I see for Thoroughbred Racing in New Zealand based on RITA’s actions to date without serious stakeholder intervention are that there will not be a ship left to steer in near future.”
President Bernard Hickey’s letter is a plethora of complaints around the activities and the direction taken by RITA.
Racehorse Owners Federation President Bernard Hickey’s letter to RITA was three pages and very comprehensive. It listed a plethora of complaints around the activities and the direction taken by RITA. It also requested documentation on eight aspects of the Agency’s financial dealings to provide information which it said would “…allow ‘Owners’ or the ‘Industry stakeholders’ to decide whether any formal Judicial process should be commenced to revoke Cabinet’s appointment of RITA upon non-compliance of due process and neglect to meet the requirements of the Minister’s expectations.”
The tone of the feeling at the Owners’ Federation is clearly evident in the above paragraph. The Trainers’ Association expressed a similar concern for themselves and their owners, in its letters stating: “Due to the uncertainty and lack of information coming from RITA the following questions need to be answered. To be fair and accountable to our owners who race horses at considerable expense, we need to assure them that putting their horses back into work is justified.”
“We need to be assured that RITA is in a position to support our participants going forward. We are aware of many trainers considering alternative careers, moving their operations overseas or being forced into premature retirement. The consequences of this are clearly a loss of horses, massive reductions in staff and racing industry support staff.”
The questions the Trainers’ asked revolved around solvency, certainty of distributions, reduction of costs, wage reductions, an inefficient RIU, joint venturing the TAB, Government security of racing, the Racing Reform Bill and clarity of ownership of the TAB.
The letter requested urgency of reply, and an email response was forthcoming within three hours. But it neither came from the Chair to which the Trainers’ letter was addressed nor did it answer any of the questions. It instead referred to its published Updates which it maintained contained the answers to the questions – typical of the RITA arrogant attitude and inability to communicate and display any goodwill to the stakeholders.
“This letter clearly shows the lack of respect for our Association and the stakeholders…”
The Trainers’ went back to its members in an email that said: “This letter clearly shows the lack of respect for our Association and the stakeholders within. We do not agree that our questions have been answered in their previous updates (that have previously been forwarded to you via this newsletter).
“It also does not provide any certainty around immediate or future stakes, or the liquidity of our industry. While we requested responses to our questions by midday Monday 27th April, prior to the move to Level 3, this has totally been disregarded.”
One of the current problems for the industry is the waiting for the result of the application for a supposed $80 million bail-out/loan. If it was approved, it would stave off insolvency but possibly extend the life of RITA which can be done if the Minister deems it necessary – he has that option under the Terms of Reference.
Racing doesn’t want RITA for an extended time period. It also cannot justify further debt – it’s possible the Government might approve a loan to RITA under similar conditions to which Air New Zealand was granted its COVID-19 loan at an interest rate of between eight and nine percent.
For that to happen would be a disaster for reasons that RITA would continue with the same business model, and the Government would require security which could only be the TAB – the only asset of any value. For that to happen, we might see all the Government and Ministerial controls that were present in the first reading of the Racing Reform Bill, not be changed per the February submissions, but be reinstated to a forever Government controlled industry doomed to fail in the long-term. That would be the final nail.
In everything stated above, you may have detected not one mention of NZTR (New Zealand Thoroughbred Racing). They supposedly represent the best interests of the stakeholders and all the participants of the thoroughbred code – but how well do they do it – poorly I would suggest. They are a pussy-cat organisation that needs to go eat some iron bars, harden-up, bang a few heads and turn into tigers.
Why hasn’t NZTR developed some steel and demanded more from the Minister?
Why hasn’t NZTR developed some steel and demanded more from the Minister? NZTR told The Optimist a week ago they are not permitted to deal directly with the Minister and all communiques must go through RITA or the Minister’s office. That’s rubbish, and it should be a cue to them to deal directly and ignore the RITA directives and develop a bulldozer mentality – the board table has never worked for them.
The sector groups that have surfaced this week are showing NZTR up. In its ‘Proposed programme for a return to racing’ news release on April 21st, NZTR said the following:
“We can’t confirm industry funding or stakes levels until we get more information from RITA on its 20/21 budget. We felt it was important that the industry get some draft racing dates so we can start getting horses ready for racing.”
Yes, we know, so what is RITA doing about it? Last year RITA’s budget came out in November so why would you even contemplate getting it this year in April. RITA hasn’t yet announced its half-year result, which had a final date of January 31st. RITA missed budget by $35 million last year, so it’s budget is irrelevant. RITA is broke so what level of stakes do you expect? These are the real questions to be addressed.
An estimate I have seen based on the back of an envelope calculation is stakes may have to be reduced by 40 to 50 percent on 2019 levels (economically unsound prospect for any owner).
An estimate I have seen based on the back of an envelope calculation is stakes may have to be reduced by 40 to 50 percent on 2019 levels (economically unsound prospect for any owner).
The same news item also stated: “These are incredibly challenging times and we must focus on what is best for thoroughbred racing and what will get the most horses back racing as quickly as possible.”
Coming back quickly in the middle of winter may not be what’s best for thoroughbred racing. How many horses and numbers of races will any given meeting attract, and to get back quickly for the sake of getting back quickly (in lieu of a cunning plan) isn’t going to suit too many owners who are up for $3,000/month for a horse in full work and two to three months to get a horse race fit ($6,000 to $9,000 outlay).
As usual, the owners will bear the full brunt of the cost for a product that could make ‘mediocre’ racing look like the new ‘impressive.’
…owners who pay for the show, along with punters who provide the stakes through betting, are the two most important yet least considered groups…
Racehorse owners who pay for the show, along with punters who provide the stakes through betting, are the two most important yet least considered groups in this business known as the racing industry.
The solution: Bring back one of the world’s most respected racing administrators in John Messara to coordinate the recruitment of a task force to fix this problem. De-commission RITA and allow Messara to complete the job he was asked to begin two years ago – exactly two years ago on 27th April 2018 I wrote a story entitled ‘Messara Report will be the job only half done.’ Nothing has changed in the ensuing 24 months.
We have no racing; we have no idea when Jacinda & friends will permit the resumption of racing; the TAB is likely to be in breach of the law for trading while insolvent; racing falls further into debt as each week passes.
The 135 employees quoted in this headline is really 136 but because Executive Chair Dean McKenzie who took over from John Allen on January 1st is on an unknown remuneration, he is left out of the calculation. They are not my figures but come from a reputable accountant equally concerned about the current state of racing and its apparent inability to adjust to the moving floor beneath it.
Salary Range
Employees
Cost per annum
Average cost
NZ$100k-$150k
98
11,690,000
122,000
NZ$150k-$200k
28
4,870,000
174,000
NZ$210k-$390k
11
3,265,000
297,000
Total
135
$19,825,000
The cost of the infamous gravy-train. If 50% of the cost of these employees were gone tonight it would save the stakeholders of racing enough money to run an extra Saturday weekly eight-race card at $24,000/race.
A second, reputable and long-standing accountant in the industry, John Aubrey, has made an assessment of the fiscal state of the industry from last year’s Annual Report which is reproduced below. He also emphasises that the 2019 figures now have some age while expressing concern that the half-year result to January 31st has not yet surfaced despite the fact that we are now in the second half of April.
You don’t have to be Einstein to understand that New Zealand racing right now is flyblown (as the Aussies would say), destitute, insolvent, impecunious, penniless, impoverished, broke or on the rocks. Everyone knows it, but whatever adjectival description you prefer, no one wants to say it.
Let’s maintain the stiff-upper-lip they would say, as Kiwis with English and Scottish ancestors would have done; maintain your dignity, never say die and carry on to the bitter end. For NZ racing, however, the bitter end might be avoidable if we could only extract the truth and recognise those in charge are clueless.
RITA is awaiting the outcome of an application for a Government bail-out, citing the COVID-19 as the issue, no doubt. Will the people at Treasury with the Minister of Racing pushing the issue buy into it and give racing an estimated $80 million hand-out/loan?
If it was a level playing field the answer would probably be, no! But in New Zealand politics nothing much is on the level, I would suggest, and the forthcoming answer isn’t one to bet on without inside knowledge.
NOTES ON RITA FINANCIALS by John Aubrey
WHAT IS THE BOARD’S FINANCIAL POSITION?
NOTE: The figures below have been taken from the 31 July 2019 Financial Statements. The statements for the half year to 31 January 2020 are not yet available.
The financial statements of the NZ Racing Board (now called Racing Industry Transition Agency, or RITA ) do not show a strong position. As at 31 July 2019, the reported net profit before distributions was $136 million, down on 2018 by $9 million. Distributions to the Clubs and Gaming totalled just on $162 million.(2018, $159 million)
The equity or capital (assets less liabilities) of RITA has at 31 July 2019 dropped to a disturbing $24.8 million. In 2016 the comparable figure was $74 million. Go back to 2011 and the equity was $81 million.
Where have the funds gone ? The accounts disclose that some $105 million was spent on computer software. Presumably, most of this is on the fixed odds betting platform. This author’s calculation differs from that set out in the notes to the financial statements. Of the total cost, $65 million has been amortised to date leaving a book value at 31 July 2019 of $40 million.
In addition to expenditure on betting software RITA was propping up the codes/clubs by payments exceeding the available profit. In 2019 the payments to the codes and sports bodies exceeded the net profit by $28 million and in 2018 by $16 million.
The question that must now be asked is simply “is a second-hand betting software worth the $40 million?” Note 19 to the financial statements states that the software has an estimated useful life of 3-7 years and the amortisation is charged annually on a straight-line basis. Note 19 also states that “Intangible assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.” Given the current liquidity issues and the COVID 19 outbreak would the auditors insist on an increased amortisation sum? If the amortisation was for some reason to be “speeded up” the equity of RITA would be getting close to zero, or worse.
On a straight assets less debts calculation, the TAB, or RITA, is worth nothing, However, the real asset is the monopoly right to conduct betting in New Zealand. This comes in two forms. Firstly, the sole or exclusive right for this country. Secondly, the ability to conduct betting over a number of years. In Australia this latter sum is huge, but most of the funds paid have gone to Government for payment of a gaming licensing fee for 20 or 30 years. The value of this intangible asset can be realised only by an outsourcing arrangement or an outright sale of the TAB to another operator.
The notes to the 2019 RITA financial statements say only that the broadcasting licences are carried at cost less accumulated amortisation and impairment losses. There is no mention of the term of the licences but the original costs amounted to $2.9 million. The current book value, cost less depreciation or amortisation, is just over $1 million.
The RITA has an unsecured revolving credit facility totalling $45 million. $10 million was drawn in the 2018 year and $25 million in 2019, leaving $10 million undrawn. Rumour in the industry has it that this has been drawn down subsequent to balance date.
Disturbingly, the 2019 Statement of Financial Position discloses Current Assets of $49 million but Current Liabilities amount to $71 million.
Quick Assets ratio. This is the ratio of liquid current assets ($18.1 million) to all current liabilities ($47.8 million). As at balance date 31 July 2019 the ratio is .38. This is very poor. The betting account deposit and vouchers, ($23.4 million) balanced by the trust term deposit of $25 million have been removed from this calculation.
The RITA update of 2 April 2020, following the COVID 19 shutdown, makes distressing reading. RITA advise that the product available for betting is down about 75%. The telling comment is on page 2 – “…when we can’t sell any bets we can’t make any money and in fact with the fixed costs of the business (rent, insurance etc) continuing we are losing money.“ Not making a profit means no funds for the clubs.
RITA obviously have grave financial issues. If betting cannot be restored to reasonable levels in the next couple of months RITA must surely be close to insolvency. One definition of insolvency is “unable to pay debts as they fall due in the normal course of business” and another, “having liabilities in excess of a reasonable market value of assets held”.
The state of racing depicted after Nathan Guy’s term as Minister
by Brian de Lore Published 11th April 2020
It wasn’t a Dick Turpin* ‘stand and deliver’ robbery, condoned by an opportunist Government that reigned for nine long years until the last election, that has stripped the racing industry of its wealth.
It was more reminiscent of the stealth of an undercover petrol-siphoning operation that trickled the fuel out slowly but surely over many years until the gauge was displaying the red light and illuminating ‘reserve tank’ by October 2017.
And at that time in history when National was usurped by a Labour Party Coalition and Winston was entrusted with steering the ship, racing was hopeful the siphoning operation would be suspended in the interests of the future health of the racing industry, and the pre-election promises would slowly bring about a refilling of the tank.
Alas, the siphoning has continued. Mismanagement and self-interest is endemic in the administration. Everyone knows the problem but no one talks about it, at least publicly. The people in charge don’t want change – they’re looking after their own interests – we have a business model that defrauds the people it was set up to benefit, and the culprits carry on as though nothing is wrong.
The question is, to what are we transitioning?
The Government appointed RITA stands for Racing Industry Transition Authority. The question is, to what are we transitioning? Whatever it is, it does not resemble recovery. Neither does it resemble the outcome visualised in MACs Terms of Reference or later outlined in the Racing Minister’s Letter of Expectation to RITA.
Since the appointment of MAC 15 months ago, which became RITA on July 1st last year, the industry debt has gone from $25 million to $45 million. The realisable tangible assets are few, and the daily running costs continue unabated with only token efforts at reducing costs from either RITA or NZTR (New Zealand Thoroughbred Racing).
Last Tuesday, Tabcorp announced that due to the impact of the Covid-19 pandemic it was taking the action of the “temporary standing down of over 700 Tabcorp employees to 30 June 2020 in businesses of the Group where there is no work as a result of COVID-19 shutdowns.”
By comparison, RITA and NZTR have only tweaked staff costs with no apparent downscaling of numbers, and have been slow even to tweak. We have no racing in New Zealand but have basically maintained staff levels, yet Australia continues to race but is appropriately downsizing – go figure that one out!
Is it because the Wages Subsidy is paying salaries to keep those people fully employed? The answer is unclear. The last round of annual reports showed that the administration costs of running racing are as follows: $200,000 a week each for Greyhounds and Harness, $400,000 a week for thoroughbreds, and $4.1 million a week for RITA – quite a lot for an industry not operating and one likely to return as a ‘cottage industry.’
Does anyone dispute the potential for substantial cost savings?
Does anyone dispute the potential for substantial cost savings?
Australian racing is all that’s keeping our TAB afloat. Since I mentioned the weekly cost of ~$ 5 million last week, we are another ~$5 million worse off.
My information says punters have been leaving Tabcorp in droves in favour of the corporate bookmakers because all Tabcorp’s retail outlets at clubs, pubs and franchised TABs are closed due to Covid-19. Tabcorp is reputably down as much as 40 percent in GBR (Gross Betting Revenue). The NZ TAB with a markedly reduced GBR is also struggling to compete (with no local racing) with the Australian corporates offering more attractive fixed betting odds due to their luxury of scale in a diminished marketplace.
RITA is now awaiting the outcome of an application for a cash bail-out of the industry from the Government. Whether or not its granted is problematic either way. To get the bail-out will put money in the hands of an administration that has been recidivist mismanagers and shown no inclination to restructure and outsource the TAB. It would be BAU, which projects a prolonged but inevitable outcome.
To be rejected exacerbates an already dire predicament. RITA is currently not paying its bills with debt maxed out at $45 million and, therefore, must be close to going into administration. Not knowing who would be in charge of our industry’s future decision-making, particularly in relation to outsourcing the TAB, would be of major concern given the astonishingly poor record of government appointments to racing over the past 15 years.
It was Nathan Guy who became the ultimate ‘Dick Turpin’
It was Nathan Guy who became the ultimate ‘Dick Turpin’ for the National Party when appointed Minister of Racing in 2011, a position he held for six years until David Bennett replaced him in 2017. Nathan Guy showed zero interest in racing despite his position and did the industry two massive disservices when he sat on the ‘racefields’ legislation throughout his entire tenure and did nothing with it despite a visit from Australia’s Peter V’landys to convince him otherwise.
But then in 2015, Guy committed the ultimate offense when appointing National Party Director Glenda Hughes as Chair of the NZRB. Hughes did not qualify under the Racing Act of 2003 terms of appointment (‘no racing experience’) but nevertheless the appointment wasn’t challenged by any of the codes.
That was the most blatant ‘jobs for the boys’ appointment of them all. But it was soon followed in turn by the double sideways nepotistic shift of John Allen, who arrived as a present for racing from Hughes and the then PM John Key. He came via the Department of Foreign Affairs and New Zealand Post – the former euphoric to see the back of him after a 42 Diplomatic signed petition to get rid of him.
…not one with an ounce of racing knowledge or previous experience in racing…
The John Allen ruse was consummated by the infiltration of his civil servant workmates who like all good troopers trundled along after him in the spirit of the Pied Piper to join the circus. And like Allen himself, not one with an ounce of racing knowledge or previous experience in racing on their cv.
Nathan Guy was also the MP who stood up in parliament less than a year ago and declared the unconditional ownership of the TAB to be the Government, amongst his other deprecatory and uninformed remarks that further unendeared him to the stakeholders of racing – as if he hadn’t put the boot in enough during his six years as racing’s ‘mute’ minister.
This bunch of National Party freeloaders and failed civil servants became known as the NZRB gravy-trainers who have since thundered down the railway tracks of New Zealand, slowing only to throw scraps from their champagne luncheons to the grass-roots participants of racing as they passed each of the 58 thoroughbred racecourses throughout the country.
Incredulity is to the fore when considering the Racing Act of 2003 opened the door for this siphoning of racing’s blood. It was a heinously poor document but even worse was the one offered to racing as its replacement in the first week of December last year. It was nothing but an invitation to hand gratis control of the TAB to Sport NZ.
…blatantly insulting the racing fraternity with a document so appallingly anti-racing…
No apology or explanation has been offered as an excuse for blatantly insulting the racing fraternity with a document so appallingly anti-racing – but not knowing the origins of its purpose or the original authors, one can only be suspicious to the extreme.
Regurgitating all this government bashing of racing, which you will all be so familiar with, leads us to raise two important questions. How will New Zealand racing get through this current Covid-19 lockdown predicament and come out the other side – in what sort of shape?
Secondly, what and who will put a new administrative model in place and reverse the graph’s steep line of descent which is the one and only thing in racing that’s been constant?
History tells us racing can’t trust anything orchestrated by a government. The second albeit delayed reading of the Racing Reform Bill will be eyebrow-raising. Will it be a reflection of the 960 written and 90-odd oral submissions that were painstakingly processed in February, or will the rewriting for its second reading have again been infilrated by that same anti-racing, pro-sport lobbyists that authored the original?
NZTR is promoting a return to racing by July 1st which could only happen if the lockdown is relaxed on Wednesday week. That seems unlikely given the PMs inclination for erring on the side of caution and the conservative nature of Kiwis as a nation.
Even if racing did return on that date, does anyone know what we’ll be using for prizemoney? Sacks of potatoes are out due to the off-season unless leftovers remain from last season.
A cash hand-out from the Government would represent compensation for past misdemeanours but offer only an interim solution. It would be out of character, however, and show a benevolence towards racing against all manner of recent and past history.
* Dick Turpin (21 September 1705 – 7 April 1739) was an English highwayman whose exploits were romanticised following his execution in York for horse theft.
Racing Minister but more poignantly Foreign Affairs Minister Winston Peters, who turns 75 tomorrow week, was talking-up a post-COVID-19 pandemic economy for New Zealand in the press earlier this week.
He was comparing our current predicament to that of the Great Depression of the 1930s in the USA from which the then-President Franklin Roosevelt with his New Deal turned things around and made the USA the most powerful economy in the world.
The USA in the 1930s had the scale New Zealand lacks, however, and no constrictions from an economy dependent on tourism and trade with China. Scale is racing’s most crucial issue with an administrative mindset shown to be reluctant to join a globalised wagering market and bring in the New Deal for New Zealand’s racing future.
Since the Messara Report was released two years ago this July, its author John Messara has openly emphasised the importance of recommendation number seven: “Begin negotiations for the outsourcing/partnering of the TAbs commercial activities to an international wagering operator to gain significant advantages of scale.”
“Begin negotiations for the outsourcing/partnering of the TAB’s commercial activities to an international wagering operator to gain the significant advantages of scale.” – recommendation seven, Messara Review
Messara has consistently stated that without the implementation of this recommendation, you may as well bin the others. He emphasised the importance of adopting all 17 as a suite of remedies that were not for cherry-picking.
Minister Peters acknowledged the Messara Review at its launch by saying he didn’t commission an Australian expert to ignore the advice. And in appointing MAC/RITA, it was clearly the intention of the Minister to adopt the Messara Review and RITA’s instructions in the ‘Terms of Reference’ to operationalise it.
However, RITA’s actions haven’t reflected the recommendations of the Messara Review or displayed an inclination to seriously investigate the prospect of outsourcing/partnering the TAB. Establishing that the ownership of the TAB resides with the codes, would enable outsourcing/partnering to commence as part of a major restructuring of the industry.
In a text to the Minister earlier this week, my request for a discussion on the subjects of ‘ownership of the TAB, the progress of the legislation, and racing post-COVID-19 and RITA,’ was rhetorical as much as hopeful of a return text.
Winston Peters: It is likely the racing bill will face delays
But a response did arrive by email in which Peters said: “It is likely the racing bill will face delays. Parliament is not sitting because of the alert level and all parliamentary business is slower as a consequence. Timelines have to be taken with a grain of salt. The bill is before the select committee for consideration, and ultimately the committee members will determine the timing.
“The existential threat for racing at present, like all New Zealand industry and sport, is surviving the economic consequences of COVID19. And being in a fit state to pick up the reins when the time comes.
“RITA is a commercial operation and its leadership has been taking the necessary commercial decisions. The Government has been doing its bit. The wage subsidy scheme – which is likely to cost up to 12 billion dollars overall – is being utilised by many in racing. The Government will consider other measures as well, but no further decisions have been taken so far.”
Peters made no mention of the ownership of the TAB, however. For the past month, he has been in possession of and conducting due diligence on, a copy of the 1950 document ‘Off-Course Betting Scheme’ which outlines the formation of the TAB and conclusively determines the NZ Racing and Trotting Conferences started the TAB with the approval with the Minister of Internal Affairs.
In an ideal world, the Minister would publicly state the codes to be the true owners of the TAB
In an ideal world, the Minister would publicly state the codes to be the true owners, and the matter put to bed once and for all by having it written into the Racing Reform Bill. That would stop the tail wagging the dog as it has done for many years, place the codes in a position to commence outsourcing/partnering which is the main source of revenue to rescue this now destitute business.
Even the COVID-19 pandemic, which is a dagger in the side of an already crippled racing industry, hasn’t been enough to move racing administrators to look at reducing costs seriously. In particular, to follow other industries with which have adapted with significant pay cuts and downsizing to skeleton staffing.
Consider a week’s worth of news: Woolworths and Michael Hill Jewellers announced 9000 job losses between them; Job losses in New Zealand may number 67,000; Radio Sport is no more; Air New Zealand is letting go around 3,500 staff; MediaWorks is asking all staff to take pay cuts, Newstalk ZB and The New Zealand Herald is warning of job losses; Forestry is saying 4,000 logging jobs are going; Bauer has just closed its NZ operation with the loss of about 250 journalists.
What’s RITA doing? This is what the Executive Chairman of RITA, Mr Dean McKenzie, said in his latest Update dated April 2nd: “I’ve spoken previously of the steps the TAB has taken to cut costs and we continue to maintain this focus. The Board and executive management team have taken pay cuts and a significant number of the organisation’s staff are voluntarily taking leave, while in some cases we’ve had to ask staff with high leave balances to use them”
In an organisation more top-heavy than Humpty Dumpty…
In an organisation more top-heavy than Dolly Parton, McKenzie’s statement says nothing about staff reductions or how much the pay reductions are – if they were significant they would be stated.
Saying “…while in some cases we’ve had to ask staff with high leave balances to use them,” is bordering on pathetic. Further evidence of McKenzie’s inability to show decisive and strong leadership in a desperate financial situation where most properly run businesses have leaders who make morally responsible decisions in the best interests of industry stakeholders.
Even worse is what McKenzie wrote in his opening paragraph. He said, “the overwhelming message I’ve heard is that the measures in place provide us with the best opportunity to return to normal – even if it’s clear that it will be a ‘new normal.’
McKenzie needs reminding that in this calamitous epoch, where cash is king, RITA is indebted to the bank for $45 million! The last thing we want to do is a return to normal or what McKenzie’s idea is of a ‘new normal.’ Today’s normal or reality is that we are a racing industry with no racing and only a small percentage of our usual income. We are also a racing industry that between the codes and RITA costs ~$250 million annually, and they’re acting as though its business as usual – it’s lunacy.
Look at the situation in more simple weekly terms. The average running costs of the racing industry (RITA + codes) is $4.5 million a week. Even with a booming week last week at $3.7 million (GBR) the industry went backward by a further $800,000.
Without brutal cost-cutting, if racing in Australia stopped because of COVID-19, the industry without The Championships to bet on is bankrupt within a week. Racing’s inability to react quickly in this dire state of the current economics could mean our industry becomes the most spectacular casualty of all the sports – nearly all of which has been man-made.
Three years ago, when the NZRB 2017 Annual Report was released, cash on hand and assets amounted to $38 million. Winston Peters became Minister but the big-spending of CEO John Allen on the FOB was already set in stone. Less than three years later, racing has no tangible assets of any value and owes the ASB (new bankers for whatever reason) $45 million – how was this allowed to happen?
Racing
shouldn’t be falsely lulled into believing it’s having a month off and will be
back by May or June. The epidemiologists are saying the coronavirus pandemic could
be a couple of months off peaking which means the racing season is as good as
over, and it may be the middle of spring or even beyond before post-coronavirus
life returns to a state of reasoning that will justify the return of horse
racing.
No sensible
owner in New Zealand will keep racehorses working, and six weeks in the paddock
for all horses will determine that racing won’t resume for at least six months.
And any restart at that point may be determined by having the numbers to stage race
meetings and a reduction in stake money.
The onset of Covid-19 is the knock-out blow to an industry that was already financially destitute thanks to a marathon run of incompetent and seemingly untouchable administrators. This time a year ago, NZRB was mutating into RITA with a new board – that mutation barely discernable to the average racing stakeholder because racing’s downward slide on the graph has continued its journey unimpeded.
…level of debt has risen from $35 million to $45 million
Since last
week’s blog, The Optimist has become aware that RITA’s level of debt has risen
from $35 million to $45 million, and this relatively recent increase in debt-level
was dovetailed with a change in RITA’s bankers from the ANZ to the ASB.
Having to dig
around to find these disheartening facts makes a mockery of what MAC, which
became RITA, told us almost a year ago when they delivered to the Minister their
Interim Report. In that report, MAC said, “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.”
Well, the
truth is, MAC/RITA did not engage openly nor was it transparent. Also, it was
neither inclusive nor robust which begs the question of accountability – why
has RITA failed so miserably when it promised so much. What was the plan? Was
there a plan?
Two
paragraphs later, the same report said: “The work the committee does, in the coming
months, will deliver a racing industry that benefits all New Zealanders. By
growing the sport of racing in terms of breeding stock, racing activity and
turnover, racing will increase its contribution to the New Zealand economy.”
The claims were baseless and nothing came to pass. The point is, how can you make these types of statements and expect not to be challenged on the score of sincerity – or is this sort behaviour acceptable today? Fake news and fake claims are all around us but this was as fake as it gets.
When you owe $45 million, and it costs at least $9 million per month just to keep RITA going…
The challenge to pay current creditors will be one of RITA’s immediate headaches. When you owe $45 million, and it costs at least $9 million per month just to keep RITA going in its current gravy-train form, and your income is severely impacted by the curtailment of most sports and racing – where does that leave you? Heading for administration, wouldn’t you say?
If you owe the bank $45 million, and you holding $20 million of punters’ deposits, does that leave RITA with an inability to pay if punters withdrew all their deposits at once?
The
plethora of RITA’s suit-wearing employees will gain respite and buy more time
for themselves through the Covid-19 Wages Subsidy, but surely the Government
will not be propping up racing with a hand-out to an industry in steep decline
on a failed administrative model, especially when the health of the nation is
at stake. RITA’s latest website statement, however, does not own up to the
serious issues and clearly outlines its intention to exit the coronavirus pandemic
with the current structure in place
Identifying
the real problems is the first step to a remedy. But Dean McKenzie’s Industry
Update posted on the RITA website on March 24th was written with a complete
lack of sensitivity. It began by
comparing the cancellation of the American NBA season on March 12th
as a never forget event in his memory behind his wedding, the Christchurch
earthquake and the Mosque Shootings. A poor taste comparison, I thought.
The
inference from further reading this Update is that Covid-19 is the
culprit and to blame for racing’s current woes – a shallow excuse delivered in bad
taste. McKenzie then goes on to say that even if we had “reserves tucked
away” as we once did, “it wouldn’t come close to solving all our troubles.”
Summarising this Update of 12 paragraphs is to conclude it delivers nothing. It’s loaded with all the cliches of the past including: “Things are literally moving in real time at present…We are presently talking with all the people you would expect us to be talking to, with the aim of mitigating the downside of what we are facing. We’re working closely with the Government to highlight the impact on our industry and presenting options on how the industry responds. These conversations are taking place daily, but we know we are not on our own in seeking support from the Government and we know there is no magic bullet.”
More gobblygook!
More gobblygook!
RITA has
already been to the Government for a cash hand-out, but with the prospect of no
racing for six months or longer, and the Country in the uncharted territory of
a pandemic that is threatening the lives of everyday New Zealanders, racing will
understandably be low on the list of Government priorities.
The bottom
line for this season right now might be as low as $120 million ($136.7 million
last season) on a $165.8 million budget. Racing cannot expect to get a
life-line hand-out from the Government when racing is still unfairly considered
by a large section of New Zealand parliamentarians as the sport of kings.
Even if you
go back just five years, racing had about $40 million in cash and realisable
assets and no debt, and on that basis could have raised about $75 million. Fifteen
years ago we had over $100 million. If we get through this crisis with the same
administrative model, then racing is dead because of the debt. It’s simply called
bankruptcy.
The Racing Reform Bill legislation which was the hot topic of discussion just a few weeks ago is now on the backburner – a distant memory. The crisis is now Covid-19, a top-heavy administration with little income and no domestic racing.
Racing Queensland has already cancelled the Brisbane Winter Racing Carnival
Racing Queensland has already cancelled the Brisbane Winter Racing Carnival and to get through the three days of The Championships at Randwick will be fortuitous in light of their increasing number of positive tests to Covid-19 and the inevitability of Australia going to Level Three.
Our balance
sheet situation will be further impacted by the complete cancellation of racing
in Australia, and at that point, administration might be the best option for
RITA in the event of zero Government assistance. It might also be the best option
because it will immediately mean a deconstruction of the gravy-train administration
and an immediate investigation into outsourcing/partnering the TAB to change
the model.
Going into
administration would be helpful in that the ceiling for redundancies is
$24,000. Meanwhile, many trainers will struggle to survive six months of no
racing and the battered New Zealand racehorse owner will become a scarcer breed
after a six-month hiatus.
A new start
for racing in the spring might mean racing on only Saturdays and Wednesdays, a
major cut in the number of races with reduced stakes at a reduced number of
venues.
It sounds
terrible but at some point racing needs to face the reality of its true
position. It’s time to stop the continual practice of borrowing and living in
hope.
The September 1950s publication that says the TAB was the concept of The New Zealand Racing Conference and the New Zealand Harness Conference and was underwritten by the race clubs of New Zealand.
The good
news: the codes own the TAB!
The bad news: the TAB is broke!
by Brian de
Lore
Published 20th March 2020
Today’s stuff.co.nz
article blaming the coronavirus for RITA having to go to the Government, cap in
hand, for a cash hand-out to save the TAB is yet another blatant example of
attempting to pull the wool over the eyes of racing’s long-suffering stakeholders.
RITA is today
saying it needs a Government bail-out to alleviate a projected $14 million loss
through sporting event cancellations and a $3.8 million error they made from
offering bonus bets, but the truth of the matter is that the TAB was broke before
coronavirus cancelled most sports.
It brings
to mind that famous quote from American politician Rahm Emanuel: “You
never let a serious crisis go to waste. And what I mean by that it’s an
opportunity to do things you think you could not do before.”
Coronavirus has thrown RITA a life-line excuse – or they think it has. It will also become a matter of fact the yet to be released half-year result (ending January 2020) will show RITA was about $4 million behind budget and regardless of the Covid-19 explosion worldwide was heading for another disastrous end of year result.
In the SOI (Statement Of Intent) RITA said: “Net profit before distributions for the 2019/20 financial year is budgeted at $165.8 million, an increase of $29.1 million (+21.3%) on the net profit before distributions for 2018/19 of $136.7 million. It is underpinned by a combination of revenue growth including full-year benefits from the new Fixed Odds Betting platform, recovery in elite betting activity, growth in gaming and other key revenue initiatives, and a reduction in operating expenses.”
The $165.8 million is a pipedream and is now likely to be closer to $130 million
That appeared
on the RITA website on 12/11/19. The $165.8 million is a pipedream and is now
likely to be closer to $130 million; a budget-miss result of something like $35
million – it’s inevitable the TAB will soon announce stakes money decreases
because it’s hard to see the Government fronting with any cash.
The reason
it gets worse between now and year’s end is because the RITA budget took into
account increased profits from two new sport betting options introduced from
February, which included something called ‘hockey stick.’ But it hasn’t happened and now with sport
cancelled the budget falls into the ‘miss by a mile’ category.
The other thing about this story is that it reeks of stage-management by RITA. How else could this story have gone to Stuff had it not been sent in a press release to the media website or a Stuff staff reporter had not received an invitation to attend?
Stephen Henry: Coronavirus is threatening to bring down the TAB, which has asked for a cash injection from the Government so it can keep operating.
In the
story, it said: “Coronavirus is threatening to bring down the TAB, which has
asked for a cash injection from the Government so it can keep operating.
“It’s
serious enough that we have briefed Government today on what it means for us
and how they can help, and that includes injecting cash into the business so we
can continue to operate.
“Henry
told stunned workers that everything was being done to minimise its operating
costs, including:
* Using fewer cameras at race meetings, doing away with Trackside presenters on course, sending fewer production staff, and not operating betting totes. * Cutting a wide range of expenses like travel and overtime – “we should have cut the sausage rolls today.”
Chief Operating Officer Stephen Henry quoted above has been part of the leadership team for a considerable period and coincidentally was with the Ministry of Foreign Affairs with John Allen before arriving at NZRB – not long after John Allen made the shift.
Everyone in racing should be offended by the Henry joke about saving the sausage rolls
Everyone in racing should be offended by the Henry joke about saving the sausage rolls when he has been part of the NZRB gravy-train that over two-and-a-half years ago was earmarked for ‘urgent review of the operating costs.’
Needless to say, that review never happened, and Henry remains one of six in the RITA leadership team on a $300,000/year or above salary, and the costs of RITA according to the last annual report was $211 million. Also, Henry mentioned saving travel expenses – that shouldn’t be too difficult given the same annual report says they have been spending $54,000 a week on travel and accommodation.
A decent CEO could have gone into NZRB/RITA at any stage in recent history and slashed the costs, but no one in power has displayed either the know-how or the appetite to do it, or both. John Allen was politically appointed, and his tenure cost the industry $200 million when you consider the cost of building the FOB was $50 million and the on-going commitments to pay Paddy Power and Open Bet for five and 10-year terms.
Henry’s cost-cutting is too little, too late, and his plea to the Government for a hand-out is certain to get some eyes rolling at the Beehive
Henry’s cost-cutting is too little, too late, and his plea to the Government for a hand-out is certain to get some eyes rolling at the Beehive. If three years ago, we’d had a CEO saving just 10 percent per annum of costs – a very achievable target – today we would be $64 million better off.
Just 10 percent per annum for three years and racing would not owe the ANZ Bank $35 plus million and wouldn’t be asking the Government to bail-out an institution that is now flat broke. But the thing that racing can say to the Government is that “you have been making all the appointments and this gravy-train is full of ex-Foreign Affairs and Post Office employees – so it’s mostly your fault.’
Since NZRB finished and RITA arrived, the fortunes of racing
have continued to decline. Racing was let-down by the failure of RITA to put a
big broom through the management and start with Messara’s blank sheet of paper.
Nothing changed of any consequence which brought to mind Einstein’s definition
of insanity – ‘doing the same thing over and over again and expecting
different results.’
That definition is now a cliché in racing. Dean McKenzie replaced
John Allen in January, but on appearances, he looks to have become part of
their team rather than making any waves with the introduction of an alternative
style of leadership to turn the tide. RITA’s submission to the Select Committee
was a massive disappointment to the industry, and McKenzie’s decision to leave
the building immediately afterwards and not listen to the three-code submission
was rightly viewed with some derision.
Information received today tells a different story to the $3.8 million error on bonus bets that Hendry is claiming. And that is, it wasn’t an error but involves some creative accounting that requires an independent investigation. The word of description was ‘smokescreen.’
The original intention this morning wasn’t to write any of the material you have read above. The focus was intended to be a document entitled ‘NZ Racing and Trotting Conferences Off-Course Betting Scheme,’ which came into my possession about three weeks ago. It’s possibly the most important paper for New Zealand racing’s future if indeed it can survive the immediate issues of coronavirus, insolvency, and the prospect of racing closing for a period.
The document sets out the formation of the TAB – it’s dated 20th
September 1950. It clearly states that the New Zealand Racing Conference and
the New Zealand Trotting Conference came together to start the TAB and that the
start-up costs were underwritten by the racing clubs of New Zealand.
Racing has said this anecdotally for years, but to see it in writing is a big deal – it’s proof the codes and the clubs own the TAB and that the tail has been wagging the dog for years, and that now needs to change. The document is 70-years-old, but unless a subsequent paper exists which cedes the ownership to the Government (and none exists), racing is the rightful owner.
The beautiful thing is it makes the proposed legislation of the Racing Reform Bill redundant. The Bill at its first reading can be summarised as a paper that took away all of racing’s rights and decision making, stole the IP, provided the Minister with the eternal right of interference and control, and opened the door for sports to come in and be a partner in the business at no cost to them. It did nothing to improve racing.
Ownership of the TAB means that racing can, with pride and a
significant degree of scorn towards the pretenders, hold up its middle finger
to all that nonsense and say, ‘we’ll have back what’s ours, thank you very
much.’
The Transport and Infrastructure Select Committee had a meeting yesterday with the PCO (Parliamentary Counsel Office) to initiate the Bills rewriting, which is expected to incorporate something like 120 changes and became a document far more acceptable to the needs of racing.
The second reading of the Racing Reform Bill could now be by mid to late April – that’s if Covid-19 hasn’t closed down parliament by that time?
After
900 written submissions and around 90 oral submissions, the Transport and Infrastructure
Select Committee will now deliberate and adjudicate the changes required to
panel beat the proposed Racing Bill legislation into a more acceptable shape.
Some
hefty blows with a sledgehammer in this instance will be more appropriate than
a few taps with the rubber mallet. An impeccable source of information tells me
the alterations will be substantial and far more acceptable to the codes than the
diatribe put to parliament in that first reading in December.
Collectively,
the weight of all the submissions presented by the industry sent a strong
statement to the Select Committee, which to its credit, listened intently to most
arguments at the hearings. They also asked many searching questions, and will
now complete the process by penning new wording the racing industry can not
only live with but can take with them into a sustainable, future-proofed period
of recovery.
The relationship between codes has a history of disagreement, but in the past month they have displayed more unity, especially in their almost unanimous rejection of the first reading of the legislation which was serving only to keep racing on the path to poverty. Even blind Freddy could see that.
“…if that was presented as a paper by a law student in an exam, I would say try again.” – Judge Clapham
Former
racing administrator and owner-breeder, Judge John Clapham, projected a similar
theme in his oral submission. He said, “It takes courage to make decisions. I
think you have been poorly served by the legislation put in front of you. It is
not fit for purpose. I bluntly said (in my submission) that if that was
presented as a paper by a law student in an exam, I would say try again, or do
you want to take up another industry.
“It’s
very, very poor,” Clapham continued. “You need to ask yourselves why it is
presented to you in such form, and I suggest there are people in the background
who are endeavouring to take over in a bureaucratic way the functions of what
is known as the TAB.”
Shadow
Minister of Racing Ian McKelvie responded by asking Clapham: “Why do you think
the RITA submission has basically supported the propensity of this Bill and no
one else has done the same, and the RITA board was officially appointed to
design the Bill?”
Clapham responded: “I don’t know the personalities, but my dream was this – this Bill would have provided you with clarity and incisiveness about where you are going with the legislation – and I ask myself, why doesn’t it do that? And I would suggest that they have misunderstood their role. They should have presented you with a Bill that certainly may have needed fine-tuning, but you shouldn’t have had to be asked to start from square one, surely to God, assuming people have been paid to carry out that function. If it were a lawyer doing it, I suggest I wouldn’t pay the Bill.”
McKelvie’s question pigeonholed RITA as a committee dressed in the emperor’s new clothes
McKelvie’s
question pigeonholed RITA as a committee
dressed in the emperor’s new clothes as it contradicted the overall industry
view by supporting 80 to 90 percent of the original legislation. It also
demonstrated that had RITA consulted racing’s stakeholders and grassroots
participants for the first writing, then this whole process of angst could have
been avoided.
RITA
and the DIA between them concocted the content in the first instance. This latest
process, however, was between the industry people and a representative
committee of parliamentarians who will eventually pass this whole thing into
law – passionate people in racing dealing with the lawmakers – a far more
sensible system.
The hearings provided a good insight into the potential for racing to run its own business without government interference – that message was made loud and clear to the Select Committee, and they appeared to take it on board. Poor industry governance in the past dozen year or so has included some racing people, but 90 percent of the personnel disasters have resulted from political appointments, nepotism, non-racing Directors’ Institute graduates, and others even less qualified.
Racing Industry Bill hearing of evidence – part 2 (5 March 2020)This bill finalises the post-transition governance structure of the racing industry, creates a legislative framework to enable property to better benefit the racing industry, and enables new ways of seeking approval for betting products. Read more: 👉 https://bit.ly/38L8zHk
The John Messara oral submission on Thursday, 5th March may be viewed here
Racing
should steadfastly refuse to put up with that nonsense in the future. And in
the legislation rewriting, an arbitrator should be installed to ensure all
appointments are within the strict guidelines of qualification. NZRB appointments
in latter years, including a Chair, were outside those guidelines, but the
codes displayed a lack of strength by allowing them to proceed. Also, why
should someone who has never stepped inside a TAB or ever placed a bet in his
life, and is mainly interested in playing Mozart on a Saturday instead of
watching Trackside, take charge of wagering – that’s the 21st-Century’s
new definition of insanity.
Getting
rid of the ex-civil servants on massive salaries from racing is just one tiny
part of the problem alongside the panel beating of this legislation. The real
issue today is our current financial state, which is one of insolvency – the
TAB cash flow keeps tiding things over, but recent information coming to The
Optimist also says the facility of a floating-line above the $35 million debt
is in place for reason of no interruption to paying the bills.
The
three codes annually cost $40 million and NZRB/RITA $211 million. Total $251
million annually for a business that returns the three codes only $100 million
for prizemoney. Salaries at RITA amounts to more than NZTR dishes out in
prizemoney. If it were a public company, the shareholders would be baying for
blood and demanding resignations.
The
simple business principle of maximising income and reducing costs is still on
the backburner.
It doesn’t matter what excuse is given to stakeholders for that lack of incisiveness in dealing with the issue of costs; no genuine excuse really exists; it’s unacceptable.
John Messara has always said that the fix for New Zealand racing is a relatively simple one
John
Messara has always said that the fix for New Zealand racing is a relatively
simple one, but it requires someone strong who will roll-up their sleeves and
do a hatchet job for the greater good. RITA has already advertised for a new
CEO of the TAB, but it’s unknown if they used the word ‘testosterone’ in the
advert – probably not.
Both racing and breeding’s immediate problem is to keep its current level of clientele. The anecdotal evidence suggests owners and breeders as a group is in a state of shrinkage. Any good news coming from the Select Committee cannot come fast enough because confidence in racing badly needs a repair job.
As
of today, the Select Committee expects the rewriting of the legislation to be
completed by March 19th with the second reading taking place in early May, and
the third in June. By July 1st, the entire process should be complete
with legislation passed into law.
As
John Messara said in his oral submission, printed below, this is the last
opportunity New Zealand racing will get to put the vital changes in place that
will resurrect the industry, and New Zealand can ill-afford to pass up on that
opportunity.
John
Messara’s impressive presentation may also be viewed in the second half of the video
link shown above:
JOHN
MESSARA
PRESENTATION TO THE NZ SELECT COMMITTEE ON THE RACING INDUSTRY
BILL
THURSDAY
5TH MARCH 2020
May I thank the Members of the Select Committee for
the invitation to appear before you, on this, the last day of submissions.
I am mindful that I am not a stakeholder in the New Zealand Thoroughbred Industry and that submissions are a privilege of industry participants. However, with the Select Committee’s indulgence, I will make some observations and explain the underlying objectives of my 2018 Review of the New Zealand Racing Industry.
Let me firstly confirm that after all of this time, I still stand firmly behind my 2018 Review and all of its recommendations.
NZ Racing was a jurisdiction that was batting “way above its average” for a long-time last century, enjoying great respect from its Australian counterparts and beyond. The renowned expertise of its participants and its famous grazing pastures made the NZ Racing and Breeding Industry an icon of the 20th-century horseracing world. As a young lad, I clearly remember how my family and racing friends would speak with trepidation, year after year, of NZ invaders, plundering Australia’s major races. The NZ Yearling Sales, in those days held at Trentham, was nothing less than a rite of passage for any aspiring investor in thoroughbreds in our region….. of which I was one. Trentham was a veritable pilgrimage of owners and trainers from around the globe, with Aussie breeders looking on in awe as their NZ competitors dominated the Australasian bloodstock market.
So much so that in 1985 Australian breeders, led by the late Colin Hayes, lobbied the Hawke Government to amend the breeding stock provisions in the Tax Act specifically “to enable Australia to compete with NZ.” The 1985 Federal Budget did bring in the changes sought, and this heralded the beginning of a long period of sustained reform in the Australian industry, with the obvious benefits being enjoyed today.
Ironically, I was the person who authored that submission to Treasury in 1985, on behalf of the industry.
And yet today, the boot is on the other foot, with NZ
breeders and trainers thinking of abandoning the industry here in order to survive
and you can imagine the consequences of this on direct and indirect employment.
The 2018 Review resulted from an approach from Minister
Winston Peters, who like the late Bob Hawke, has a real interest in racing. I
was commissioned to undertake the Review by the Minister because of the poor
state of Thoroughbred Racing in NZ which is the result of a 30-year gradual
slide. The Minister made it clear that he wanted a full review, warts and all,
of the problems of your industry and the solutions to turn it around. It was also clear
to me that the Minister sought recommendations that would make
the industry sustainable into the future and independent of government.
At first blush, it appeared to me that your industry was suffering from a paucity of revenue, shortage of capital and a sub-optimal governance structure, but I also felt that this situation could be righted with a reform program aimed at modernising the industry, introducing new revenue measures and maximising the use of existing assets.
I then sought the assistance of three experienced racing & wagering administrators: John Rouse, a previous CEO of the Australian Jockey Club and currently a Trustee of Randwick Racecourse working on racetrack consolidations; Darrell Loewenthal, a retired senior public servant in NSW, who was responsible for a number of legislative changes and is a consultant to Racing NSW to assist on governance and structure; and Craig Nugent, the recently retired CEO of Tabcorp to assist on wagering. I am very grateful for their input.
We live at a time when the racing and wagering worlds are globalising when horses travel around the world to compete in feature events, and when wagering operators are consolidating to form international corporate wagering giants. It is also a time when Asia is emerging as a big player in our region. These factors represent opportunities for NZ.
Also, racing here, like everywhere else, is facing growing
competition from other forms of leisure and gambling, as well as continuous
attacks from the animal welfare lobby. These are challenges for NZ and for every
other jurisdiction.
The Review recommendations seek to arm the NZ industry
to deal with these factors but this will necessarily mean change, and in some
cases that change will be profound. It will be the willingness of stakeholders
to focus unselfishly on the wellbeing of NZ Racing as a whole that will
determine the success of the reforms.
All the 17 Review Recommendations can be categorised
under three major headings:
Industry Modernisation
Revenue Enhancement
Better Utilisation of Industry Assets
I note that some of the revenue recommendations
requiring legislation have already been passed and that the Bill now under
consideration contains a number of clauses related to other recommendations
in the Review. Given that prizemoney is the single most effective
lever available to reinvigorate the NZ Thoroughbred Industry, I would encourage
the government to expedite arrangements for Racefields
Fees and Point of Consumption Tax, and I urge the industry
to make a serious commitment to negotiate an advantageous TAB NZ outsourcing
deal. These are all new sources of much-needed industry revenue.
I do not wish to take issue with the current Bill on a
clause by clause basis; however, I should advise that this is not a time for
compromise on matters that go to the thoroughbred industry’s sustainability and
its independence from government. A number of the Review’s modernisation
recommendations relate to the devolution of power to the Codes, and I still
hold firmly to the belief that this notion is fundamental to the success of the
reform package.
I do
want to comment on the recommendations made in Part 3 of my Report because I believe that
racecourse consolidation is critically important to the reform package. Various
independent reports on the NZ Thoroughbred Racing Industry dating back to the
Reid Commission on Racing in 1965 and the McCarthy Royal Commission on Racing
in 1969 have all recommended the importance of a significant rationalisation of
NZ Thoroughbred Racing venues, but little has been done. In relation to this,
the work we did as part of the Review in 2018 showed that many clubs, if
looked at on a stand-alone basis, would not be able to afford current
prizemoney levels without the subsidies provided by NZTR. That said, most
venues and tracks are also in a state of disrepair. Against this, we estimated
that total capital expenditure required to bring all 48 operating venues up to
an acceptable standard in terms of tracks and facilities was $294m, and for the
28 tracks we recommended to be retained plus new synthetic tracks our estimate was
$190m.
I would like to assure the Select Committee that this rationalisation is not
proposed as a cosmetic exercise. Better tracks and facilities will better
showcase NZ Thoroughbred Racing to domestic and international audiences,
provide for more consistent form lines and ultimately give a boost to wagering
turnover. Currently, much of NZ Racing on TV and on smart devices looks
somewhat shabby by international standards. Thus, a consolidation of tracks,
including the sale or closure of surplus tracks and the investment of any
proceeds into the remaining tracks, is a priority.
I also note that mention was made in submissions to the Select Committee that a rationalisation of venues had not occurred in my home state of NSW. It is definitely arguable that there should be rationalisation in NSW. However, the extraordinarily strong financial position of racing in NSW has not made that an imperative. This is not the case in New Zealand.
In the light of all this, I commend the submission of NZTR to the Select Committee [and similar submissions from the other Codes], as it summarises the final amendments that need to be made to the Racing Reform Act to reach the goals of the Reform Program I have recommended.
I have two final comments:
The 17 recommendations in the Review were designed to work as a matrix to reverse the fortunes of your industry, and any significant departure from them will affect the ultimate outcome. Simply put, cherry-picking the reform program will compromise the future success and prosperity of the entire industry, and such is the pace of progress & competition in global racing & wagering that New Zealand will be permanently left behind. This is, quite literally, your industry’s last chance to secure a vibrant & successful role in 21st-century racing.
These recommendations are based not on theory or ideological conviction, but on the real, practical experience of what works, based on my time as Chairman of Racing NSW, and then as Chairman of Racing Australia, leading the Australian thoroughbred industry through a period of deep reform. I know exactly how much effort, passion, and courage is required to enact the recommendations in the Review, but the rewards are immense. Australian racing now has the kind of prizemoney, facilities, events, integrity & leadership that makes people from across Australia & around the world want to be part of it as owners, punters, breeders, trainers & jockeys, and all the many other roles our industry can offer the next generation.
I have no doubt that the NZ Industry, with its
illustrious history, its expertise, its natural assets and its favorable time
slot in the Asia Pacific region is well poised to regain its mantle as a leader
in the region, if it can be transformed into a viable, independent, modern industry
with its racing capable of being marketed competitively outside of NZ.
I believe this process is underway, and a beneficial
resolution of this Racing Reform Bill
will quickly create an atmosphere of confidence in the industry from within New
Zealand and beyond, with all the attached economic, social & community
benefits.
The oral submission hearings held on each of the past two Thursdays have sent a strong and impassioned message to the Transport and Infrastructure Select Committee, and that is: that the racing industry is far from happy with the Racing Bill legislation in its current form.
And the process is far from complete with further
submissions taking place in Auckland this coming Thursday before the Select Committee.
Following that, and no doubt in consultation with Racing Minister Peters, the next
phase of making the necessary alterations with a degree of rewriting to be done
before a second parliamentary reading expected to be scheduled sometime in
April.
All going well, the legislation will then be up for its
third and final reading in June, and hopefully in a narrative much more acceptable
to racing’s participants than the government stranglehold theme of control
currently on offer.
The elephant in the room is now RITA which has continued its
stance with a submission that says 80 to 90 percent of the legislation is okay
by the Agency – a claim overwhelmingly in conflict with industry submissions
which by and large are supportive of the recommendations of the Messara Review.
Interestingly, the debate on the detail of the 123 clauses
of the legislation has taken the heat off racing’s current dire financial
position as we move into the second half of the 2019-20 season with the
half-year result due to be announced in the next few weeks.
The latest information I have is that RITA needs something like a 21 percent increase ($30 million) to meet the budget it forecast in the SOI, and after the first five months of the season was only two percent ahead of last year. And remember, the TAB received a windfall bonus of $17 million when the All Blacks got eliminated at the quarter-final stage of the World Cup.
The failure of this Bill to address the issues of increased revenue streams and cost-cutting was an omission that didn’t go unnoticed by several oral submitters
The failure of this Bill to address the issues of increased revenue
streams and cost-cutting was an omission that didn’t go unnoticed by several oral
submitters and, in particular, RACE Incorporated CEO Alasdair Robertson and
Stan Alexander representing the Manawatu Racehorse Owners.
The oral submission from RACE is reproduced at the bottom of
this blog. Stan Alexander in his statement began by saying he had entered the
racing industry only 15 years ago but obviously having a lengthy corporate
background, he alluded to how much cash and property value the industry had
only 15 years compared to its position today:
He said: “…and now what we have is a betting platform with
no tangible value as it sits there, but $35 million of debt. I am not concerned
about individual clauses in the Bill, but I am concerned about how this Bill
got to this stage.
“When Cabinet approved in principle that the best approach was the Messara Report, and at the same time the Letter of Expectation from the Minister to the RITA board, it said that this Report was providing the best approach to New Zealand Racing to make it financially sustainable, internationally recognised and competitive.
“… how is it we are sitting here now looking at a draft Bill that does not deliver those key factors which said Mr Messara would be the salvation for this industry.” – Stan Alexander
“And as part of this close working relationship,” continued
Alexander, “the Minister understands the DIA will attend the RITA board
meetings as an observer. If that was the guiding principle of what was to
happen, how is it we are sitting here now looking at a draft Bill that does not
deliver those key factors which said Mr Messara would be the salvation for this
industry.”
Stan Alexander went on to quote Judge Clapham’s submission
which also asked why the legislation did not reflect the Messara Review, and then
also quoted a number of the Messara recommendation culminating with the failure
of RITA to begin outsourcing negotiations.
“It comes back to having confidence in what you are doing,”
he continued. “It goes without saying that no industry, business enterprise or
activity succeeds when confidence is eroded, and confidence has been eroded
dramatically with the arrival of the proposed legislation which fails to
deliver the expectations of the Minister and the industry – which has continued
that eroding of confidence.
“Clearly, over time, decisions made by NZRB have led to a massive decline in industry solvency. Mr Chairman, as I sit here today I honestly believe the industry is insolvent. We have no hard assets left, but we have a $35 million debt to a bank. Surely, any business sitting in that position – any director sitting that position in a commercial world – should be thinking pretty hard on what they should be doing and what is happening around them.
“If we as an industry continue to operate without full accountability in a truly commercial environment, the same mistakes and decisions will continue.”
“If we as an industry continue to operate without full
accountability in a truly commercial environment, the same mistakes and
decisions will continue. The proposed legislation does not reflect the truly
commercial, competitive approach that the Messara Review envisaged.
“And I, for one, don’t have any confidence when I hear a comment like this. It came from the Chairman of RITA at a public meeting, ‘we are tracking along for the first six months in line with budget.’ Then came the caveat, which was, ‘but the next six months will be challenging.’ End of story, just that. So I say to myself, what does this mean while we are staring down the barrel of $35 million bank debt and no hardcore assets.
“What would be the attitude of the bank when RITA has not commenced the outsourcing which was recommendation number seven – in other words, the bank would be saying to the RITA board, ‘are you exploring all your options.’ The bank won’t be at branch level; it won’t be at credit level, it will be at asset management level, and I’m sure some of you understand what that means.
“RITA want exclusive rights to the I.P. and to delay outsourcing for another five to six years – I ask the question WHY? – Stan Alexander
“RITA want exclusive rights to the I.P. and to delay
outsourcing for another five to six years – I ask the question WHY? Debts
within thoroughbred racing are increasing, the debts in the training sector to
the trainers are increasing – those are symptomatic things of the total financial
position of the total industry. Breeding is in decline, and it’s all reflecting
a decline in confidence.
“Ï say this, why don’t we ask Mr Messara to come back and
discuss and clarify how, when, and why, etcetera. His credentials are such that
we ignore them to our peril.
“Finally, I just want to put up this scenario: We have a new
TAB, it owns all the I.P. We have a banker overlooking them, and if things don’t
improve then we have set up the perfect scenario for the bank to say ‘we are
taking over and we will sell everything you have got’.
“Mr Chairman, I don’t understand the industry, but I have a
little understanding of the commercial reality of this world, and we have a
very serious problem. Thank you.
RACE Incorporated Oral Submission:
Select Committee on Behalf of RACE
Incorporated
Racing Industry Bill No 2
Good morning, my
name is Alasdair Robertson Chief Executive of RACE Incorporated. I am
accompanied by Paul Humphries Chair of RACE Incorporated.
RACE is an organization
that comprises 5 Clubs being Manawatu, Rangitikei, Feilding, Marton and
Wellington Racing Clubs.
Depending on your chosen metric, RACE is NZ’s largest or second-largest club with in excess of 10% of total domestic turnover.
The racing industry in New Zealand is at a watershed/tipping point in terms of its survival and sustainability.
The racing industry
in New Zealand is at a watershed/tipping point in terms of its survival and
sustainability.
The proposed Bill
to go before the Select Committee is the last chance for the industry to be
re-structured for survival and to maintain its economic contribution to
employment of over 14,000 FTE and over $1.6 bn to the NZ economy.
The importance of
getting this right cannot be overstated. We are facing:
Declining returns in real terms over time. Return to owners in New Zealand 22.9% or expressed another way -77.1%
Foal crop reduction. In 1995 5,264. In 2017 3,448 (34.5%)
There has been years of mismanagement and lack of performance from the NZRB
The proposed Bill facilitates a situation where a business as a usual structure can continue.
To put that in context and why the Codes need to be empowered to efficiently and economically run their industry as recommended by the Messara Review, in 2016 an analysis was done of the operating cost difference between the NZRB / RITA and its nearest comparison in Western Australia.
This was found to be in excess of $50 million against a total thoroughbred prize money pool in New Zealand of $50 million at the time.
We are competing in a global market with our largest competitor, and opportunity, in Australia exponentially bigger and stronger than we can ever be.
Australia has 5.4 times the population of NZ but 13.2 times the amount of wagering turnover with an inherent propensity to spend of over 4 times that of New Zealand.
To enable NZ to survive competition and to access the opportunities that exist, this Bill must empower the Codes and provide them with flexibility to meet the market head-on without bureaucratic constraints and parochial thinking.
The Messara Review was commissioned at the behest of the Minister of Racing the Hon Winston Peters and was welcomed by the Industry.
John Messara is the most respected racing administrator in Australian history and has presided over a boom in the racing industry not just within New South Wales but within Australia overall.
In the last 20 years Australian turnover on thoroughbred racing has climbed from $8.6 billion to $19.5 billion AUD +126%, and prizemoney from $273 million to $603 million +120%.
A number of key elements
were critical to turning around the NZ industry in the Messara Review:
Change the Governance structure such that NZRB is to become Wagering NZ with racing responsibilities devolved to the individual codes.
Establish Racing NZ as a consultative forum to agree on issues
Amend section 16 to a more equitable basis for fixed 10-year terms
Begin negotiations for outsourcing of the TAB’s commercial activities
Confirm the assignment of Intellectual Property by the clubs to the codes
Introduce Racefields and Point Of Consumption legislation
Repeal the betting levy
Clarify vesting of club assets in the codes for the benefit of the industry
Reduction in venues without the closure of any club
Unfortunately, the proposed Bill does not honour the intent or detail of the Messara Review.
The Bill is also significantly at odds with the Minister’s letter of expectation sent to RITA.
It is important that the Committee realizes that the industry is struggling to survive and we need real dollars and not just a re-arranging of the deck chairs.
So to turn to the Bill. I have confined my presentation to three key items. a. Industry Governance and appointment of Directors to the TAB
The intention of the Messara Review was to confer broader powers on the codes to govern and administer their industry.
Consistent with the Messara Review, Racing NZ was proposed as a consultative forum to agree all internal issues that needed group resolution. This would include outsourcing negotiations.
The Messara Review proposed the devolution of Governance responsibilities to the Codes.
The current Bill, however, proposes the dilution of control from the codes to the Minister and to Wagering NZ/TAB NZ.
This is seen in:
i. The governing body of TAB NZ consisting of up to 7 members appointed by the Minister (46) ii. TAB NZ is to determine the Racing Calendar for each betting year and issue betting licences (48) iii. TAB has exclusive rights within NZ and Australia to all intellectual property associated with all betting information etc (81)
It is recommended that the Bill be amended to have a code body representative or adopt the nominations advisory panel mechanism used in the Racing Act 2003 (Pre Amendment) for the appointment of independent Directors.
b. Intellectual Property
Clubs and Codes have never surrendered their Intellectual Property
2. The MAC Report acknowledges ownership of IP in the Club.
3. Intellectual property can never be surrendered by the clubs and the codes.
4. To do so will disenfranchise and emasculate the clubs and codes permanently and empower a 3rd party to conduct themselves in any way they see fit.
5. The Codes and TAB NZ must collectively be able to negotiate all outsourcing and related matters that requires IP by having it assigned to the respective negotiating team.
6. The mechanism is that the Clubs vest their IP in the Codes who Licence the joint negotiating team of the Codes and TAB / Wagering NZ.
7. We have a supportive person in our Minister. However, that may not be the case in future and the loss of IP from the clubs and codes endangers our very existence and the potential sale or Joint Venturing of the TAB.
It is recommended that Clause 81 be deleted to preserve the status quo in relation to the use of Racing’s intellectual property.
c. Outsourcing structure or more accurately joint venture or partnership structure
This Bill has been drafted by people who appear to crave control and do not understand the global wagering market.
i. There needs to be a separation between TAB NZ and Government. An outsourcing decision is a commercial decision in the best interest of the industry.
ii. This Bill has been drafted by people who appear to crave control and do not understand the global wagering market.
iii. The codes and the TAB must have the ability to make a commercial decision regarding joint venture outsourcing. If there were any Government concerns over inappropriate periods or similar, a Ministerial caveat could be included for any decision relating to sale or contractual commitment beyond a specified term eg: 15 years etc.
iv. Australia is forging ahead because the Codes operate as commercial negotiating entities with independence of Government.
v. It is interesting that Tabcorp has been used as an example by RITA to say it follows the same commercial model as has been proposed in the Bill, and has professional Directors on its Board.
vi. Nothing could be further from the truth in terms of the commercial model and demonstrates the lack of understanding within RITA and within the Bill.
vii. Tabcorp is a commercial entity BUT is accountable to the Codes and the contractual agreement and licence negotiated by the codes.
viii. This commercial tension is enabled by the retention of IP within the codes which is 180 degrees different from what is proposed. ix. What is proposed is to insert a 3rd independent party into the process that has no checks and balances on its direction or philosophy and has exclusive control over the Codes intellectual property.
Most people do not understand the implications of this Bill. It threatens the Messara Review and could be likened to a monopoly without any of the suppliers having shares or any representation.
Summary:
Most people do
not understand the implications of this Bill. It threatens the Messara Review and
could be likened to a monopoly without any of the suppliers having shares or
any representation.
Thank you for the
opportunity to present.
P Humphries, Chairman A Robertson, Chief Executive
Join the Transport and Infrastructure Committee for a hearing of evidence on the Racing Industry Bill (20 February 2020)This bill finalises the post-transition governance structure of the racing industry, creates a legislative framework to enable property to better benefit the racing industry, and enables new ways of seeking approval for betting products. Read more: 👉 https://bit.ly/38L8zHk
The first day of the hearings of evidence from RITA and the codes in Bowen House Wellington this past Thursday, before the Transport and Infrastructure Select Committee, was a game of two halves – the first a very shakey and at times indecipherable presentation and Q and A from RITA Executive Chair Dean McKenzie, and the second a well-orchestrated presentation from all three codes on a united front.
It was a well-produced
Facebook live stream and the Select Committee had very obviously done its
homework and were ready with some pertinent questions for Dean McKenzie and
RITA’s Head of Risk and Regulatory Affairs lawyer Jessica Meech who sat
alongside McKenzie throughout the address and Q and A.
The address
by McKenzie was sometimes hard to follow, and the Q & A afterwards produced
a series of convoluted answers that at times bore little relevance to the
question asked.
On the
other hand, the joint submission by the codes was generally fluent, was far
easier to follow, and the Q and A seemed to go a long way towards giving the
Committee a better understanding of the issues in the legislation at odds with
the three codes.
Join the Transport and Infrastructure Committee for a hearing of evidence on the Racing Industry Bill (13 February 2020). This bill finalises the post-transition governance structure of the racing industry, creates a legislative framework to enable property to better benefit the racing industry, and enables new ways of seeking approval for betting products. Read more: 👉 https://bit.ly/2tRIN4N
The Facebook link to watch all the action from Thursday’s Transport and Infrastructure Select Committee hearings on the Racing Industry Reform Bill
But strange things seem to be happening. A little over two weeks ago in a chat with Minister of Racing Winston Peters, he said he was staying true to his word and giving racing the reform it needed – that was so badly overdue. It was a comforting conversation from an industry perspective. And again yesterday, on radio, the Minister said he knew of about seven things that needed change in the legislation to get it right.
Contrastingly, also about two weeks ago in a written questionaire to McKenzie, one of the questions was: “You have stated at your industry meetings that RITA agrees with 80 to 90 percent of the legislation in its current form. Can you please detail the 10 to 20 percent that requires changing?.
McKenzie’s written
reply came back: “While supportive of the Bill, RITA has identified a few
aspects of the Bill which we believe require amending, including (but not
limited to) the following :
Changes to the Offshore Betting
Charges provision as the legislation does not currently allow the degree of
flexibility the industry requires. However, as indicated in the First Reading
speeches, we understand this is an area the Government intends on proposing
amendments to during the Select Committee;
The Bill intends on introducing a
framework for new products that RITA is not currently able to offer (subject to
satisfaction of specified criteria). Unfortunately, the wording of the Bill
potentially reduces the scope of existing betting permissions. This outcome is
at odds with the intention of the reforms, and in the Board’s view an
unintended consequence of these provisions. We are engaging with officials on
this matter and are hopeful of constructive change;
“Furthermore,
there are a number of amendments required which are technical in nature, but
nonetheless necessary. The purpose of the Select Committee stage is to make
these types of technical changes.
“We are still working with the Codes on a few
aspects of the Bill and our preferred position is to reach industry consensus
where possible.”
From that response, and taking into account the 80 to 90 percent agreement with the legislation, one can deduce that RITA is happy with the legislation’s wording for the TAB board appointments, the IP, the Ministerial oversight, the regulation clause for funding distribution to the codes, the RIU, etc. Not only is this a contrary position to the three codes and almost all the participants of racing, but it’s also at odds with what the Minister is saying– why are they not singing from the same song-sheet. After all, the Minister appointed RITA.
During his address to the Select Committee on Thursday, McKenzie also alluded to the same two items mentioned above as important, and towards the end of his address added, “there is also an opportunity for Sport NZ to make representations to the Minister for TAB representation on the board.
“Easter Sunday racing is an issue for RITA in technical changes. The Board of the TAB has the discretion to determine the amount of profit available for distribution to the industry. This was the case for the NZRB board before the Racing Bill Act – RITA has considered the Bill in detail and believes that with the proposed amendments, it will revitalise the racing industry.”
The problem with Dean McKenzie’s position as Executive Chair of RITA may be that he employs the same team of executives for advising him as did NZRBs John Allen, whose legacy to racing’s history books will be devoid of having made any meaningful contribution. If you work for RITA and you want to keep your job, you won’t be promoting cost-cutting or too much change.
A big positive taken from Thursday’s hearing was the attentiveness and knowledge coming from the Select Committee, which paid the racing industry a complimentary degree of respect during the proceedings. This wasn’t just another laborious government process requiring some tempo before moving on to the next item of the agenda.
“You said you had been in constant contact and in dialogue with the industry ongoing; what’s been the feedback from the industry?” – Darroch Ball to Dean McKenzie
After the
McKenzie address, the Q and A didn’t go so well for RITA when Chair Darroch
Ball began by asking, “You said you had been in constant contact and in
dialogue with the industry ongoing; what’s been the feedback from the industry?
McKenzie answered
with this, taken from the audio verbatim: “As I referred to in our comments,
the change process of the significance has corresponding views on a number of
those key issues around IP, governance, those types of things, and certainly
the advisory committee, and the RITA board since the first of July have heard
both sides of those arguments, and not all cases arguments but discussions, and
have come down in the view that’s in the submission, on balance, there’s been a
lot of robust discussion, and I’m sure you will find there are alternate views,
from the codes, and within the codes, to a lot of the important issues that are
within the Bill.”
Ball
followed with a second question: “When you say there are alternate views, is
that the minority or majority?
McKenzie
responded, again verbatim: “It’s difficult to talk in terms of majority and
minority when they are generational issues, for example, venues – the issues
around venues go back into the late 1960s when the Royal Commission Inquiry was
undertaken for the racing industry; so when you talk about significant systemic
issues that go back decades there are always going to be very contrasting views
even through the generations when it passes through 60 years.
“Venues is
a good example to show the differing views, I think everyone accepts that our
capital base needs reform, that’s its inefficient and antiquated, but then when
you go past that about how we resolve that, and how we get on to tackle that
and move forward with it, there is certainly different views into how that’s
best undertaken, but what I would say is the answer to a lot of those
questions, and the venues example is a good one, then someone would have solved
it in the last sixty years if it was a simple equation.
“They are very difficult, long-standing industry issues that a reform program of this significance has to address. So, when they are addressing such serious, long-standing systemic issues, there’s naturally going to be differing views on that – that’s why they have been what they have been for so long.”
If that answer hadn’t baffled everyone in the room, then nothing would.
If that answer hadn’t baffled everyone in the room, then nothing would. Darroch Ball, seemingly not wanting to risk further questioning, passed the baton. Pukekohe MP Andrew Bayly, who has a very strong corporate background, later made a very good comment on the replacement clauses for Section 16.
Bayly said:
“You talk about regulation powers, for most MPs regulation powers are the
things that worry us the most because we never get to see them; they never come
back before the committee; they haven’t been posted in the legislation, so we
spend all out time worrying about the legislation and the regulations get made
later, and we never have the oversight
“So, your
arrangements for the distribution are in regulation powers. Is the original
distribution which was agreed between the three codes plus the sporting formula
going to be enshrined from the outset, or do we have a new opening position?”
The Facebook video provides the answer to this and many other questions from the Select Committee. During the next session, the codes gave a very well co-ordinated presentation with all three codes making strong arguments on a united front.
NZTR Chairman Alan Jackson during his address said, “As our major source of income comes from the wagering operator, there is no immediate prospect of any significant improvement in code payout, in our view, and perhaps there is even the risk of further decline
“I trust you can appreciate the industry is at an absolute crisis point.” – NZTR Chair Alan Jackson
“Racing NSW
had the same serious issues as we did, but they addressed the funding issue
front-on and have delivered an 84 percent increase in prizemoney over the last
decade, and they now run 60 races worth $1 million or more.
“The
factors that drove this turnaround are the same factors highlighted in the
Messara Report – a code-driven industry, enhanced sources of income, being
racefields and Point of Consumption tax, and joint ventures with globally
competitive wagering operators. This allowed a strong balance sheet to invest
in the areas key to improvement.
“It was underpinned by clear performance accountabilities and positive government support and action without undue interference. Unfortunately, in our view, the majority of the Bill before us today is an organisational solution to the financial challenge. In its current form, NZTR believes it will not address the key financial challenges to allow the codes to deliver on their potential and may make us worse off than we are today.”
Jackson
went on to talk about NZTRs key issues of concern which were IP, the TAB board appointment
process, self-determination of the codes, the RIU issue
“He
concluded by saying, “Finally and most importantly though, the Bill is excessive
in government involvement and control and there is no clear pathway to addressing
the financial issues
“I trust you can appreciate the industry is at an absolute crisis point.”
At Karaka 2020: the industry’s ex-jockeys now trainers who would love to see a rise in NZ prizemoney: From top left Stephen McKee (one trial ride), Graham Richardson (one race win), Lance O’Sullivan (Champion Jockey), Bob Vance (Outstanding Jockey) and at right Grant Cooksley (outstanding Jockey)
by Brian de Lore Published 31 January 2020
When Racing Minister Winston Peters made his speech to open
the Karaka Yearling Sales last Sunday at 10.50 AM, it was a typically hot and
humid Auckland summer’s morning in rising temperatures.
But within seconds of commencement of that speech, The Optimist blog was the focus of the Minister’s attention and the heat went up to furnace temperatures.
However well researched you are as a blogger, if you generate an opinion from that research and then put your name to it and publish it, your readership can form into categories ranging from avid fans to ardent enemies.
Only a day or two before in a conversation with Cambridge
Stud owner Brendan Lindsay, it was suggested The Optimist had been a bit tough
on the Minister in recent times in suggesting he had dropped the ball and was
missing in action; citing the examples of Winston’s recent appearance at
Trentham and his commitment to attend the Karaka Millions meeting and open
Karaka 2020. The feedback was good.
We all know that the Hon. Winston Peters is not only
Minister of Racing, but is deputy Prime Minister and often acting PM, and has
three more significant portfolios above racing in Foreign Affairs, State-Owned
Enterprises and Disarmament and Arms Control. The average Kiwi might suggest racing
is trailing in a long last in priority – another one we have to concede.
On the other hand, sometimes the bird won’t fly unless you ruffle the feathers. The Optimist has no intended agenda other than to point out the glaring problems of the racing industry, and by doing so hopefully generate a groundswell of support to make changes for the betterment of the participants, to keep it sustainable and to achieve change in the fastest possible time – I make no apology for that – but neither am I pretending I have all the answers.
…the only bad publicity you can get is the publication of your obituary…
Going on the old saying that the only bad publicity you
can get is the publication of your obituary, I decided that the best course
of action would be try and get the Minister back on the phone after a hiatus of
nine months. However unlikely the chances seemed, it was worth a shot, and
enlisting the help of NZ-First list MP Clayton Mitchell, on Wednesday of this past
week, the agreement finally came in the form of a text.
From the outset, any sign of dropping the ball was gone; the
demeanour coming down the phone line was saying I had been watching the wrong footy
match, and here was a focused Winston Peters crashing through a pack of DIA
forwards for a try under the goalposts and a seven-pointer.
The Minister on the phone exuded an air of positivity. I firstly asked about that meeting: “One of the things I talked to John Messara about was the question of industry involvement in its future management and when I said that we are setting out to ensure they control their own destiny – I meant exactly that.
“And there are parts of the legislation that we have looked hard at for a month now – in treating a range of those issues so to remove the possibility of a conflict with the industry’s sanctuary involvement going into the future. The secret is not to duplicate, though, what happened post-2003 with that legislation, because it’s clear that – the way it was constructed – it did not have the skills of the industry foremost in the provisions going forward – we have to fix that up.
“…the biggest legislation fix is the ministerial report summating what Messara said because there are points in there, which I can say, this draft does not reflect – and we’re going back to that original report”
“And we’re going to ensure that the biggest legislation fix
is the ministerial report summating what Messara said,” continued Winston, “because
there are points in there, which I can say, this draft does not reflect – and
we’re going back to that original report.”
Suggesting to Winston this promise would be music to the
industry’s ears, I then ventured into the controversy on the Intellectual
Property.
“Now what happens is that the IP – the legislation
improperly reflects what we were seeking. We’re not seeking to take anything
from any industry at all. That’s another thing we want to fix up.
“The third one was on the clubs and venues going forward,”
said Winston. Again, we are saying to the industry, it’s over to you to decide about
the continuance and viability of race tracks and clubs, but amalgamation or
combining with other race clubs will see them in a far more helpful situation
where they don’t have to rely on central core funding for operational support.”
What can you do to ensure that we have strong industry
representation on the board of TAB NZ, I asked.
“There is a range of structures to go in to ensure that the industry stays in control, but it requires the industry to appoint and nominate their best – and not just your mate. We want the best of them at the top, allied to Tabcorp – not just my mate ‘let’s put him on’ – that’s no good.
“All I can do is put a structure in place and put a criterion alongside it to ensure we do get the best people” – Winston Peters
“All I can do is put a structure in place and put a criterion
alongside it to ensure we do get the best people,” the Minister emphasised
strongly. “So that’s what’s being worked on – in fact, I have a team working on
this and the amendments as we speak, and we hope to have that ready for the
closure time of submissions on February 11th. When we have all the
submissions in, then we can quickly dossier it in, and as John Messara said, it’s
a matter of the correct messaging and tweaking the words to reflect the spirit
and the objectives of his report in the first place, and I agree with him
entirely.
“I’m here to listen,” retorted Winston to my suggesting the
feeling was that thoroughbred racing code felt they had needed more
consultation on these issues. “I’m not here to ram something down people’s
throats and if they think that the drafting does not reflect their intent, then
we’re here to listen to them and ensure that it does.”
When I remarked to Winston that the issue of who owned the
TAB had raised its head once again, he said: “Here we are in 2020 and the industry
doesn’t know the answer as to who owns the TAB. Is it foremost in my mind, but I
wouldn’t want to report on it now because it makes far more sense for me to
wait and see all the submissions and then address that issue.”
My next question on the codes brought this response: “I have just been through the annual report for the dogs; we have trotting in a serious plight and that’s two out of three. I’ve also got to ensure the integrity unit is bolstered as well, and all these things have to be balanced out. What I’m seeking to do is have, by the end of this budget round, and to get through parliament, all the structures that we can go forward on in the spirit of the Messara Report which after all, is very similar to the McCarthy Report of 1965.
“…spend $42 million getting this betting system going – this is an appalling situation to inherit.” – Winston Peters
“In 2008 racing had something like $130 million in reserve
and then they spend $42 million getting this betting system going – this is an
appalling situation to inherit. However, looking at what can be done alongside
other breeding industries in New Zealand such as cattle and sheep – I just want
the same kudos for the racing industry.
“All I can do is ensure that we have the legislative structure and the criteria in it to bring out the very best of the industry and have it central to any decision making, but I do not want to see another situation which I encountered in 2005 when I became the Racing Minister – and had a good hard look at who was giving all the advice, and I was alarmed at that time, and I was still alarmed when I came in again in 2017.
“We’ve gone back to first principles and that’s why I got the Messara Report done, and I’m going to nurse this through parliament – and get it through I will.”
“We’ve gone back to first principles and that’s why I got
the Messara Report done, and I’m going to nurse this through parliament – and
get it through I will.”
On the subject of the submissions and how much weight they
carry, Winston responded thus: You have to see the submissions first, you never
know who might have a really bad idea. And I’m bound to follow the process and
give them the respect they deserve.
“I wouldn’t advise you to tell your readership to trust the
process entirely,” he continued. “You should more properly say that it’s the
international examples of success they should go by, and the present powers
that be, will respect and listen and draft what has to come, and clearly
understand what we need to do.
“We’ve got an industry that is barely $1.6 billion and has been there for 12 years at the same level according to what I have read, while Ireland for the gallops alone is an industry worth $3.2 billion – that’s what we are setting out to do.
” …serious pathway in the future for many young people who all they want to do is work with horses…” – Winston Peters
“We’re going to do an exercise on what the industry is actually worth, and then make sure that the political system understands that racing is a huge employment creator and it’s a huge provincial boost to economic welfare and is a serious pathway in the future for many young people, who all they want to do is work with horses bearing in mind that the number one person is the owner, and then the punter.”
Winston concluded by saying: “I meant what I said at the Karaka Sales opening; there’s never been a better time to buy into the industry than right now; I’m very confident to where we are going in the future, and if all things go well in the 2020 election as we intend them to, we can do so much more.”
Postscript Interview with John Messara AM during his four-day visit to attend the Karaka Sales this past week:
John Messara Q&A
Racing Minister Winston Peters has reassured the industry this week that it will get the legislative change to fix the problems by the end of June. What would be the impact of getting this second Bill through in an acceptable form?
The first thing that would happen upon the passing of the Bill is a sense of relief, then confidence would return among thoroughbred industry stakeholders who have been so resilient for so long, and who will respond quickly when they see the legislation deliver genuine major reform.
Once the Bill is passed into law, what in your view should happen immediately afterwards?
I believe that a ‘war cabinet’ of pragmatic industry leaders should be established to execute the major financial imperatives, beginning with the process leading to the possible joint venturing of the TAB operations.
What else would you do
as a matter of priority?
The next thing would
be to execute the new governance arrangements, including the selection of new
boards based on the NSW model, so that the detailed reform process can begin.If all that was seen to
be done, I think there would be a mini-boom in the industry, led by New Zealand
and Australian investors, followed by Asian investment.
Arrowfield Stud was the leading vendor on aggregate at the
recent Magic Millions Gold Coast Sale, and you were an observer this week for
Book One of our National Yearling Sale at Karaka. How would you compare the two
sales?
My team at Arrowfield and I are
always analysing yearling sale statistics, and this year’s comparison of the
Magic Millions with Karaka Book One shows how far the New Zealand industry has
fallen.
Only three of the
top 25 sale prices this year at Karaka and Magic Millions combined were
achieved at Karaka – and none of the top15. Also,
only two of the top 25
yearling sale prices at Karaka and Magic Millions have been achieved by the
progeny of a New Zealand-based sire – and none of the top 18.
Then, looking at
the dams: only three of the top 25 yearling sale prices registered so far this
year have been paid for the progeny of New Zealand-bred mares – and none of the
top six.
Looking at the first day of Book 2 at Karaka, a $34,000 average simply doesn’t
represent a return for most breeders and vendors, including the private,
small-scale operations that have produced many of New Zealand’s very best
horses in the past.
This is not a failure of the sales company which has worked tirelessly to sustain and enhance the Karaka Sale. The reason for these results is that New Zealand breeders have not had the encouragement or the returns on their investment required to upgrade the national gene pool over the last twenty years of industry decline. However, I believe this can change quite quickly.
How do we turn that
decline around even with the advent of acceptable legislation?
I expect that in
anticipation of a racing industry upturn, breeders and owners would start to
re-invest in mares, stallions and young horses soon after appropriate
legislation is passed. Overseas investors will also look again at New Zealand
as an attractive place to set up a breeding or racing operation. This will
start the process, which would then feed on itself as the reforms take effect.
Remember, historically, NZ has been a great horse racing and breeding nation,
and the National Yearling Sale was the No. 1 sale in Australasia.
I recall the late Colin Hayes lobbying the
then Australian Prime Minister, Bob Hawke in 1985, to amend the Australian Tax
Act to “enable Australia to compete with NZ” in racing and breeding. I have a
vivid memory of this as I was the person who wrote and presented the submission
to Treasury! This and other reforms in Australia set that industry on the path
to major recovery and success.
In an ideal world that
would begin in July with everything you have outlined above, how long will it
take for the financial benefits to impact on the industry?
I believe that the joint venturing of the TAB (which I emphasise does not
require the sale of the TAB in any shape or form), the sale of surplus
property and the suite of other changes including those introduced in the first
Act, will have a positive and immediate impact on industry morale, and
ultimately viability. The industry’s leadership should be able to negotiate and
execute much of this, including increased prizemoney, within a two-year time-frame
from the passing of the second Act, underpinning the upturn ; and then the
upgrading of tracks and facilities etc. would begin in earnest.
Back in July 2018 when I delivered my Report to the Minister, I was excited by
the future ahead of the New Zealand industry, because the necessary reforms
were clear to me and my colleagues, and so achievable. Today, I am encouraged after
chatting with Mr. Peters’ last week that he will make it all happen and after
that we’ll be relying on the work of those appointed to leadership roles.
At Karaka 2020: the industry’s ex-jockeys now trainers who would love to see a rise in NZ prizemoney: From top left Stephen McKee (one trial ride), Graham Richardson (one race win), Lance O’Sullivan (Champion Jockey), Bob Vance (Outstanding Jockey) and at right Grant Cooksley (outstanding Jockey)
by Brian de Lore Published 31 January 2020
When Racing Minister Winston Peters made his speech to open
the Karaka Yearling Sales last Sunday at 10.50 AM, it was a typically hot and
humid Auckland summer’s morning in rising temperatures.
But within seconds of commencement of that speech, The Optimist blog was the focus of the Minister’s attention and the heat went up to furnace temperatures.
However well researched you are as a blogger, if you generate an opinion from that research and then put your name to it and publish it, your readership can form into categories ranging from avid fans to ardent enemies.
Only a day or two before in a conversation with Cambridge
Stud owner Brendan Lindsay, it was suggested The Optimist had been a bit tough
on the Minister in recent times in suggesting he had dropped the ball and was
missing in action; citing the examples of Winston’s recent appearance at
Trentham and his commitment to attend the Karaka Millions meeting and open
Karaka 2020. The feedback was good.
We all know that the Hon. Winston Peters is not only
Minister of Racing, but is deputy Prime Minister and often acting PM, and has
three more significant portfolios above racing in Foreign Affairs, State-Owned
Enterprises and Disarmament and Arms Control. The average Kiwi might suggest racing
is trailing in a long last in priority – another one we have to concede.
On the other hand, sometimes the bird won’t fly unless you ruffle the feathers. The Optimist has no intended agenda other than to point out the glaring problems of the racing industry, and by doing so hopefully generate a groundswell of support to make changes for the betterment of the participants, to keep it sustainable and to achieve change in the fastest possible time – I make no apology for that – but neither am I pretending I have all the answers.
…the only bad publicity you can get is the publication of your obituary…
Going on the old saying that the only bad publicity you
can get is the publication of your obituary, I decided that the best course
of action would be try and get the Minister back on the phone after a hiatus of
nine months. However unlikely the chances seemed, it was worth a shot, and
enlisting the help of NZ-First list MP Clayton Mitchell, on Wednesday of this past
week, the agreement finally came in the form of a text.
From the outset, any sign of dropping the ball was gone; the
demeanour coming down the phone line was saying I had been watching the wrong footy
match, and here was a focused Winston Peters crashing through a pack of DIA
forwards for a try under the goalposts and a seven-pointer.
The Minister on the phone exuded an air of positivity. I firstly asked about that meeting: “One of the things I talked to John Messara about was the question of industry involvement in its future management and when I said that we are setting out to ensure they control their own destiny – I meant exactly that.
“And there are parts of the legislation that we have looked hard at for a month now – in treating a range of those issues so to remove the possibility of a conflict with the industry’s sanctuary involvement going into the future. The secret is not to duplicate, though, what happened post-2003 with that legislation, because it’s clear that – the way it was constructed – it did not have the skills of the industry foremost in the provisions going forward – we have to fix that up.
“…the biggest legislation fix is the ministerial report summating what Messara said because there are points in there, which I can say, this draft does not reflect – and we’re going back to that original report”
“And we’re going to ensure that the biggest legislation fix
is the ministerial report summating what Messara said,” continued Winston, “because
there are points in there, which I can say, this draft does not reflect – and
we’re going back to that original report.”
Suggesting to Winston this promise would be music to the
industry’s ears, I then ventured into the controversy on the Intellectual
Property.
“Now what happens is that the IP – the legislation
improperly reflects what we were seeking. We’re not seeking to take anything
from any industry at all. That’s another thing we want to fix up.
“The third one was on the clubs and venues going forward,”
said Winston. Again, we are saying to the industry, it’s over to you to decide about
the continuance and viability of race tracks and clubs, but amalgamation or
combining with other race clubs will see them in a far more helpful situation
where they don’t have to rely on central core funding for operational support.”
What can you do to ensure that we have strong industry
representation on the board of TAB NZ, I asked.
“There is a range of structures to go in to ensure that the industry stays in control, but it requires the industry to appoint and nominate their best – and not just your mate. We want the best of them at the top, allied to Tabcorp – not just my mate ‘let’s put him on’ – that’s no good.
“All I can do is put a structure in place and put a criterion alongside it to ensure we do get the best people” – Winston Peters
“All I can do is put a structure in place and put a criterion
alongside it to ensure we do get the best people,” the Minister emphasised
strongly. “So that’s what’s being worked on – in fact, I have a team working on
this and the amendments as we speak, and we hope to have that ready for the
closure time of submissions on February 11th. When we have all the
submissions in, then we can quickly dossier it in, and as John Messara said, it’s
a matter of the correct messaging and tweaking the words to reflect the spirit
and the objectives of his report in the first place, and I agree with him
entirely.
“I’m here to listen,” retorted Winston to my suggesting the
feeling was that thoroughbred racing code felt they had needed more
consultation on these issues. “I’m not here to ram something down people’s
throats and if they think that the drafting does not reflect their intent, then
we’re here to listen to them and ensure that it does.”
When I remarked to Winston that the issue of who owned the
TAB had raised its head once again, he said: “Here we are in 2020 and the industry
doesn’t know the answer as to who owns the TAB. Is it foremost in my mind, but I
wouldn’t want to report on it now because it makes far more sense for me to
wait and see all the submissions and then address that issue.”
My next question on the codes brought this response: “I have just been through the annual report for the dogs; we have trotting in a serious plight and that’s two out of three. I’ve also got to ensure the integrity unit is bolstered as well, and all these things have to be balanced out. What I’m seeking to do is have, by the end of this budget round, and to get through parliament, all the structures that we can go forward on in the spirit of the Messara Report which after all, is very similar to the McCarthy Report of 1965.
“…spend $42 million getting this betting system going – this is an appalling situation to inherit.” – Winston Peters
“In 2008 racing had something like $130 million in reserve
and then they spend $42 million getting this betting system going – this is an
appalling situation to inherit. However, looking at what can be done alongside
other breeding industries in New Zealand such as cattle and sheep – I just want
the same kudos for the racing industry.
“All I can do is ensure that we have the legislative structure and the criteria in it to bring out the very best of the industry and have it central to any decision making, but I do not want to see another situation which I encountered in 2005 when I became the Racing Minister – and had a good hard look at who was giving all the advice, and I was alarmed at that time, and I was still alarmed when I came in again in 2017.
“We’ve gone back to first principles and that’s why I got the Messara Report done, and I’m going to nurse this through parliament – and get it through I will.”
“We’ve gone back to first principles and that’s why I got
the Messara Report done, and I’m going to nurse this through parliament – and
get it through I will.”
On the subject of the submissions and how much weight they
carry, Winston responded thus: You have to see the submissions first, you never
know who might have a really bad idea. And I’m bound to follow the process and
give them the respect they deserve.
“I wouldn’t advise you to tell your readership to trust the
process entirely,” he continued. “You should more properly say that it’s the
international examples of success they should go by, and the present powers
that be, will respect and listen and draft what has to come, and clearly
understand what we need to do.
“We’ve got an industry that is barely $1.6 billion and has been there for 12 years at the same level according to what I have read, while Ireland for the gallops alone is an industry worth $3.2 billion – that’s what we are setting out to do.
” …serious pathway in the future for many young people who all they want to do is work with horses…” – Winston Peters
“We’re going to do an exercise on what the industry is actually worth, and then make sure that the political system understands that racing is a huge employment creator and it’s a huge provincial boost to economic welfare and is a serious pathway in the future for many young people, who all they want to do is work with horses bearing in mind that the number one person is the owner, and then the punter.”
Winston concluded by saying: “I meant what I said at the Karaka Sales opening; there’s never been a better time to buy into the industry than right now; I’m very confident to where we are going in the future, and if all things go well in the 2020 election as we intend them to, we can do so much more.”
Postscript Interview with John Messara AM during his four-day visit to attend the Karaka Sales this past week:
John Messara Q&A
Racing Minister Winston Peters has reassured the industry this week that it will get the legislative change to fix the problems by the end of June. What would be the impact of getting this second Bill through in an acceptable form?
The first thing that would happen upon the passing of the Bill is a sense of relief, then confidence would return among thoroughbred industry stakeholders who have been so resilient for so long, and who will respond quickly when they see the legislation deliver genuine major reform.
Once the Bill is passed into law, what in your view should happen immediately afterwards?
I believe that a ‘war cabinet’ of pragmatic industry leaders should be established to execute the major financial imperatives, beginning with the process leading to the possible joint venturing of the TAB operations.
What else would you do
as a matter of priority?
The next thing would
be to execute the new governance arrangements, including the selection of new
boards based on the NSW model, so that the detailed reform process can begin.If all that was seen to
be done, I think there would be a mini-boom in the industry, led by New Zealand
and Australian investors, followed by Asian investment.
Arrowfield Stud was the leading vendor on aggregate at the
recent Magic Millions Gold Coast Sale, and you were an observer this week for
Book One of our National Yearling Sale at Karaka. How would you compare the two
sales?
My team at Arrowfield and I are
always analysing yearling sale statistics, and this year’s comparison of the
Magic Millions with Karaka Book One shows how far the New Zealand industry has
fallen.
Only three of the
top 25 sale prices this year at Karaka and Magic Millions combined were
achieved at Karaka – and none of the top15. Also,
only two of the top 25
yearling sale prices at Karaka and Magic Millions have been achieved by the
progeny of a New Zealand-based sire – and none of the top 18.
Then, looking at
the dams: only three of the top 25 yearling sale prices registered so far this
year have been paid for the progeny of New Zealand-bred mares – and none of the
top six.
Looking at the first day of Book 2 at Karaka, a $34,000 average simply doesn’t
represent a return for most breeders and vendors, including the private,
small-scale operations that have produced many of New Zealand’s very best
horses in the past.
This is not a failure of the sales company which has worked tirelessly to sustain and enhance the Karaka Sale. The reason for these results is that New Zealand breeders have not had the encouragement or the returns on their investment required to upgrade the national gene pool over the last twenty years of industry decline. However, I believe this can change quite quickly.
How do we turn that
decline around even with the advent of acceptable legislation?
I expect that in
anticipation of a racing industry upturn, breeders and owners would start to
re-invest in mares, stallions and young horses soon after appropriate
legislation is passed. Overseas investors will also look again at New Zealand
as an attractive place to set up a breeding or racing operation. This will
start the process, which would then feed on itself as the reforms take effect.
Remember, historically, NZ has been a great horse racing and breeding nation,
and the National Yearling Sale was the No. 1 sale in Australasia.
I recall the late Colin Hayes lobbying the
then Australian Prime Minister, Bob Hawke in 1985, to amend the Australian Tax
Act to “enable Australia to compete with NZ” in racing and breeding. I have a
vivid memory of this as I was the person who wrote and presented the submission
to Treasury! This and other reforms in Australia set that industry on the path
to major recovery and success.
In an ideal world that
would begin in July with everything you have outlined above, how long will it
take for the financial benefits to impact on the industry?
I believe that the joint venturing of the TAB (which I emphasise does not
require the sale of the TAB in any shape or form), the sale of surplus
property and the suite of other changes including those introduced in the first
Act, will have a positive and immediate impact on industry morale, and
ultimately viability. The industry’s leadership should be able to negotiate and
execute much of this, including increased prizemoney, within a two-year time-frame
from the passing of the second Act, underpinning the upturn ; and then the
upgrading of tracks and facilities etc. would begin in earnest.
Back in July 2018 when I delivered my Report to the Minister, I was excited by
the future ahead of the New Zealand industry, because the necessary reforms
were clear to me and my colleagues, and so achievable. Today, I am encouraged after
chatting with Mr. Peters’ last week that he will make it all happen and after
that we’ll be relying on the work of those appointed to leadership roles.
The broadening and noisy furore coming from the
racing industry, after getting its head around the implications of Racing
Reform Bill No.2, is symptomatic of the current parlous state of racing and
breeding in New Zealand.
Racing Minister Winston Peters has been in the
job for two-and-a-half years but today, as you read this blog, racing is in the
worst state it has been in its 175-year history. No tangible benefits have
accrued back to the stakeholders in this Minister’s term of reform despite all
the policies, promises, reviews, tax duty repeals, committees, submissions,
agencies, industry discussions, board meetings, and now this proposed
diabolical legislation.
Saying the industry is worse today than ever
before means that it will be worse again tomorrow, and worse again the day
after. Today’s stakes money level set on NZRB/RITA borrowings and a $35 million
overdraft at the bank is static against a raft of exponentially rising costs
which are suffocating owners and squeezing the lifeblood from the business as
every day passes.
Need a personal example; here’s one: A syndicate
in which I am one of 20 individual five percent owners to race a filly trained
in Matamata, formed in November, has just had the fee at the stable increased
from $87.50/day to $92.50/day on a current zero potential for a prizemoney
increase in the foreseeable future. Everyone in racing is sure to be able to supply
a similar story if asked.
On the other hand, it was the late Herbie Dyke who once said, “I don’t know why owners complain about stakes money, 90 percent of them never get any.”
…the racing industry is writhing in pain on the ground after a good 15-year beating…
The racing industry is entitled to be angry. The treatment it’s taken from years of ministerial dysfunction, and a nepotistic government-filled NZRB gravy train created from political appointments is still speeding towards the genocide of racing. And while the racing industry is writhing in pain on the ground after a good 15-year beating, DIA comes along in 2020 and puts the boot in with a document that takes complete control of the three codes as well as stealing the crown jewels (IP).
The detractors will be saying racing has itself
to blame because they couldn’t come together in unity and agree on everything
for the future. But thoroughbred racing, harness racing, and dog racing are
three different sports and are diverse activities. It would be no different than
asking rugby union, rugby league and soccer to combine under one board of
administration – hell would freeze-over first!
This week I once again tried in vain to get the Minister on the phone again by inviting him to provide readers with a solution to the current item of discontent causing industry apoplexy – the DIA and its Bill. He declined but at least sent a text reply, saying, “I’m speaking at the Karaka Sales. Submissions on the latest Racing Bill close mid-February. They will be listened to, etc..”
The Optimist has been holding the Minister to account for everything promised and not operationalised since he became our Minister of Racing in October 2017. But we need always to remember racing voted for Winston on the back of a solid racing manifesto which amongst many promises said, “an urgent review of the costs of the NZRB.”
…governments are useless at running businesses – take NZ Rail and Kiwibuild as examples
A fundamental promise to address escalating
costs in a declining business. It never happened then, or has it happened since
which tells you why governments are useless at running businesses – take NZ
Rail and Kiwibuild as examples.
Last September The Optimist predicted the NZRB/RITA
financial year loss would be $27 million – a prediction mocked by a member of
the agency. They were right, I got it wrong; the damage was worse at $30
million and total expenses were $211.3 million – they missed budget by $40
million.
The appointment of John Messara to review the
industry was potentially a stroke of genius on the Minister’s behalf, but not
to follow through with it and allow all these deviations contained in this
latest legislation, is to drop the ball in front of an open try line as stated
here in a previous blog – why that
occurred remains a mystery. The reason it happened is less relevant than what
the Minister could have been so close to achieving had he and RITA stayed
focused on operationalising the Messara Review which was the RITA brief.
When RITA tells racing participants in 2020, it is following the Messara Review; it’s a reasonably loose statement that doesn’t reflect the intent of the Review’s author John Messara. One should carefully read what Messara outlined, and then read this legislation; there’s barely any resemblance, so Messara’s name is being used only as leverage to promote this legislation. That claim is backed-up in Mary Burgess’s blog, Racing Thoughts, entitled, ‘Industry blueprint unrecognisable in Racing Industry Bill.’ Here’s the link:
When appointed, RITA was given Terms of
Reference. An excerpt from that paper says: “The Government is committed to
reforming the New Zealand racing industry and seeks the scoping up of a
detailed plan to operationalise the Messara Report, the ‘Review of the New
Zealand Racing Industry’s’ recommendations once approved by Cabinet, to deliver
better governance and economic outcomes for the industry.”
Perhaps the Terms of Reference gave RITA room for deviation, but why would they have deviated unless they knew better? The Agency collectively holds limited administrative experience in racing and governmental racing matters compared to Messara who has been internationally awarded (Longine) for his achievements, yet they incorporated changes and overrode and diluted recommendations.
Cabinet: 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
In approving RITA’s Interim Report, Cabinet last April used this wording: “On 15 April 2019, Cabinet:1
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.”
When it came to RITA’s Final Report to the Minister which was presented to him by June 30th but not posted on the DIA website until late last year, RITA on the Messara Review’s 17 recommendations was deviating from ‘strongly support the recommendation’ to ‘support the recommendation in principle’ – saying you support something but carrying it through to a conclusion isn’t going to happen.
When MAC became RITA on July 1st 2019, the first thing expected but not executed was a clean-out of the gravy-train but, no, the gravy-train rolls on and the only change seven months hence is that John Allen is gone and replaced by interim CEO Dean McKenzie who, like his predecessor John Allen before him, will be reliant on the advice of an executive team that decided to build the FOB platform and has a proven record of incompetence under the NZRB label – Mckenzie is getting guidance from the same people as Allen, and history tells us it was flawed advice.
When English football managers fail over time, they get the sack. When NZ racing CEO’s fail over time, they stay employed with a pay rise
When English football managers fail over time, they get the sack. When NZ racing CEO’s fail over time, they stay employed and get a second and third chance with a pay rise.
Yesterday I trekked the Karaka Sales grounds,
looked at numerous yearling parades, and saw very passionate New Zealand horse
people who have devoted their lives to thoroughbred horses, plying their
talents and proudly displaying the quality horses they have bred, to an
annually diminishing buying bench of trainers and owners from Asia and Australia.
These people are the lifeblood of an industry the Minister promised to reform,
but the offer of reform has been traded, forgotten, shelved, postponed,
reversed or cancelled. It doesn’t matter what you call it, Racing Minister
Winston Peter’s hasn’t yet come through, but still has an opportunity to step up
to the plate by supporting significant changes to this legislation.
The proposed legislation offers those good
people in racing no future and that is the point so far missed by everyone,
including and especially a nebulous and nameless DIA. Like any start-up or
reform, the igniting flame for a flourishing business is the incentivisation of
participants coupled with the potential to attract industry investment. What
this legislation says is don’t participate, don’t invest, and go away!
RITA was a ministerially appointed agency and primarily, RITA works for the Minister. But the problem is Winston Peters’ preoccupation with other governmental duties such as Deputy PM and Foreign Affairs hasn’t allowed him time to devote to racing – no question he’s out of touch and has relied on delegation and his office.
The Minister’s instructions to RITA in his July Letter of Expectation were: “Work with the Department of Internal Affairs (the Department) to develop the second Racing Reform Bill …
The Minister’s instructions to RITA
in his July Letter of Expectation were: “Work with the Department of Internal
Affairs (the Department) to develop the second Racing Reform Bill and implement
the regulations enabled by the Racing Reform Act 2019.” But in a recent communique
to NZ Harness, Dean McKenzie stated: “While RITA was
consulted in the development of the Bill, this is the Government’s legislation…”
That statement would suggest RITA has
some major issues with the Bill, but in this week’s industry discussions at Awapuni,
Invercargill, Cambridge, Karaka, and Pukekohe, Mckenzie has been telling stakeholders
that RITA supports between 80 and 90 percent of the contents of the Bill.
On January 10th on the RITA website, Dean McKenzie stated in his Industry Update: “This is a very significant and comprehensive Bill and reflects a determined focus and commitment from this Government to the racing industry. The RITA Board welcomes the Bill and the opportunities it presents for everyone connected to racing in New Zealand.”
No one is capable of supporting
this Bill if they have the long-term survival of the racing industry a primary
objective. It needs major surgery on top of the fact that it’s a very poorly
written document that contains a considerable number of errors in the
cross-referencing of clauses.
Submissions for the Bill will close in 18 days time on February 11th, and while the weight of protests needs to be made loud and clear by racing in the most assertive fashion possible, the government process of calling for submissions doesn’t mean the Select Committee will adhere to them. Seventeen months ago the majority of submissions were in favour of the Messara Review, but here we are in January 2020 dealing with a document that says something completely different and undermines the sustainability of the industry.
Prioritising the problems with the Minister’s legislation and delivering a united racing industry rebuttal
by Brian de Lore
Published 17 January 2020
The racing industry currently
faces the biggest challenge of its existence because it has only until February
11th (25 days from the day I write this blog) to unite in every
sense of the word and issue the strongest possible objection to the most draconian
aspects of the Racing Reform Bill No.2.
The keyword is ‘unite’
because, without an agreed and united approach, it’s unlikely a fragmented ‘herding
cats’ response to the issues will produce the desired effect and prevent racing
from sinking further into the mire from its already ignominious position of
frailty – to an irreversible decline.
Club committees proposing
to write submissions that defend only their district, club or racecourse, will
be hindering the possibility of change rather than helping it. Self-interest
above the national interest will do nothing more than squander this small
window of opportunity to change or snuff out the legislation because only the
weight of a united document with an unequivocal rejection of the main
injustices will achieve a positive result.
The codes together must unite unilaterally and lead a charge to rebut this legislation and demand that racing is allowed to control its own destiny
The codes together must unite unilaterally and lead a charge to rebut this legislation and demand that racing is allowed to control its own destiny rather than have it forever in the dubious and possibly nepotistic hands of an unknown incumbent Minister of the future and his unknown government. Why would anyone even consider this outcome for racing?
The Magna Carta (Great
Charter) was famously introduced in the Middle Ages with 63 grievances against
the then rule of King John of England, which challenged his autocracy and was seen
as a cornerstone document for a practical solution to the crisis. Racing is in
crisis and needs its own Magna Carta to challenge the proposed 64 instances of
Ministerial domination in the second Racing Bill.
Can you believe the autocracy
proposed by Winston Peters is outdoing King John’s autocracy of 800 years ago? The
core principles of the Magna Carta are now echoed in documents such as the US
Bill of Rights and the Universal Declaration of Human Rights – racing is
entitled to its basic right of self-determination and ownership of its intellectual
property (IP).
The document
contains so many issues unacceptable to all racing’s stakeholders
The legislation is long
and complicated and to read all of it, and absorb all of it, will bring
side-effects remedied only with Panadol x 2, a cup of tea, and a lie-down. The
document contains so many issues unacceptable to all racing’s stakeholders, it’s
hard to know where to begin but, nevertheless, here’s how The Optimist views
the most critical issues:
Clause 46 gives the Minister the sole right to appoint the seven members of the TAB board and appoint the Chairperson. That edict is completely unacceptable as it leaves the codes in the worst-case scenario with zero representation and opens the door for Sport to infiltrate and take a bigger share of the pie. It’s contrary to the recommendation in the Messara Review, which said automatic code appointees and a panel for appointing remaining members.
Clause 81 gives the TAB NZ exclusive rights to the IP (Intellectual Property) associated with racing betting information, racing betting systems, and any audio or visual content derived from a NZ race. These items are the rightful property of the clubs and codes and should be managed by them and not the possibility of seven non-racing people appointed by the Minister. Clause 81 is straight-out theft.
Clause 63 replaces Section 16 of the old Racing Act 2003 which, provided a formula for the distribution of funds for prizemoney and the running of the three codes. Contrary to the Messara recommendation, no formula now exists in this legislation, but it allows for the writing of a regulation that can be changed by the Minister at any time (just as the Minister may be changed at any time) – no guarantees, and it provides the Minister with an easy path to water down money the racing codes receive in favour of sport. Total Ministerial control of the distribution of money to the codes is not acceptable.
Clauses 8, 45, 46, 47 and 48 of the new Bill all give TAB NZ too much power which conflicts with the Messara Review recommendation of devolving the power to the codes to run themselves. Under this arrangement and taking into account Clause 46 mentioned above, racing is exposed to the possibility of coming under the control of seven non-racing, political or nepotistic appointees to run racing’s business.
Clause 45 (4) requires the Minister to approve any partnering arrangement made by the TAB. Because a partnering/outsourcing arrangement could provide the single biggest financial windfall for NZ racing, you cannot have the power of veto available to a Minister that does not understand the business of wagering. Commercial business decisions such as this are not the domain of politicians and bureaucrats.
The five points above and much of the rest of the proposed
legislation is not about reform; it’s about total control by the Minister with
Marxist-type bureaucratic regulatory conditions for an industry that simply
needs to get government out of its life, as the now Minister Winston Peters
promised would happen.
the base-power for industry decision-making is
not devolving down to the codes as the Messara Review recommended
Points one and four above are a double-edged sword. You don’t have to go as far as playing the devil’s advocate in analysing those clauses to realise that the result will be that racing will be run by people fundamentally unacceptable to the stakeholders of the industry. And because the power-base for industry decision-making is not devolving down to the codes as Messara recommended in his review, points one and four together place the codes in a very weak position.
Point Two above addresses Clause 81, which concerns the
Intellectual Property rights (IP). Placing the IP in the hands of TAB NZ is
straight out theft. No question it belongs to the clubs, and you could make a
case for the owners, and nothing but full control by each of the codes should
be acceptable.
How this has come about is interesting. The Messara Review said
the IP should be assigned to the clubs and the codes, but in the Final Report
by MAC (Ministerial Advisory Committee) which went to the Minister at the end
of June last year, it said the following:
Legislation required
If agreement can’t be reached between the
domestic betting operator and the three racing codes for the assignment of IP,
the Minister may be required to approve the drafting of legislation (Bill No.
2) to allow for the domestic betting operator to have the exclusive right to
use all intellectual property generated domestically, to maximise revenue for
the racing industry
The agreement wasn’t reached because it was
never negotiated
The agreement wasn’t reached because it was never
negotiated, and DIA has just written this MAC/RITA recommendation into the legislation.
When I questioned RITA Chair Dean McKenzie weeks ago about the reasons for assigning
the IP to TAB NZ he said it was because the betting operators wanted to deal
with only one NZ body and not three codes. How can you accept that as a reason?
The clubs in particular should be ropable about the IP, and
it may be a good point to raise at the coming series of industry conversation
meetings with Dean McKenzie starting next week.
Point three is Clause 63 which in the old Act is Section 16. The Messara Review presented a formula to deal with the old Section 16 and although in MAC’s Final Report to the Minister, they say they supported the recommendation principle, the legislation says otherwise. In fact, the legislation sits on the fence in failing to determine any formula and leaves the serious matter of distribution of funds for stakes money completely open-ended and subject of a regulation not yet written.
How could that arrangement be satisfactory to any of the codes? Stake money is for what every owner races to pay the training bill, and with no guarantee of a formula to divide it, and Sport NZ lurking in the shadows, the lack of certainty is yet another worrying aspect of this very flaw-ridden document.
…outsourcing or partnering the TAB to provide the industry with a substantial up-front payment and save the industry somewhere between $50 million and $70 million a year in costs
Point five on the prospect of outsourcing or partnering the
TAB to provide the industry with a substantial up-front payment and save the
industry somewhere between $50 million and $70 million a year in costs, has
never seriously been contemplated. Current and previous ministers, opposition shadow
ministers, and MAC/RITA appear conjoined at the hip in their lack of enthusiasm
to outsource.
The following quote from MAC’s Final Report contains more written enthusiasm that can be found elsewhere: “The committee considers that the potential to outsource, or not, all or some of the commercial activities of TAB NZ needs more analysis. We have set up a sub-committee, the Racing Industry Outsourcing Evaluation Committee (RIOEC), to do this.
“…outsourcing is not a foregone conclusion. Our terms of
reference for the RIOEC included considering the option of retaining these
services in New Zealand, as well as considering any joint venture
opportunities.”
In the same report it also says:
“The legislation required
Make legislative provision for outsourcing the NZRB’s commercial activities, or providing for variations on this proposal (Bill No. 2)
Allow for TAB NZ to have the exclusive right to use all intellectual property generated domestically by the racing industry to maximise revenue for the racing industry (Bill No. 2)”
And further on in the document, it says: “What the RIEOC
has to protect against, at all costs, is some future ‘shock’ or ‘event’ not
clearly covered in the outsourcing agreement, or the non-performance of the
outsourcing partner, which would result in the New Zealand racing industry
being left with little control over its destiny and a declining revenue base
for both racing and sports.”
Excuse me, RIEOC; can you please wake-up to
yourself! It’s us that’s going down the drain, not them!
Excuse me, RIEOC; can you please wake-up to yourself! It’s us
that’s going down the drain, not them!
Reading this document on and on, as one learned person told
me, has the effect of making you lose the will to live. RIEOC is clearly
made up of nerds who have no conception of the racing industry, and their input
in this process of reviewing the reviewer is an exercise in time-wasting
futility.
Finally, look at the example of the New Zealand Rugby Union, who have no Minister to govern them, despite the level of betting, and self-ownership of all their own IP property, and deal with it themselves commercially.
NZ Rugby board has a sensible means of
appointing its board members
They appoint rugby people as directors using a similar mechanism
that John Messara has recommended for racing. Cricket does the same.
The point to be made here is that rugby and cricket appoint
rugby and cricket people to make good decisions on rugby and cricket. If racing
went back to geographical representation and appointed racing people to make
good racing decisions, we would all be far better off than having the bureaucrats
making incompetent decisions on racing’s behalf and thinking they know best.
The legislation is not acceptable. Rise up against it, and
sign the Racing Magna Carta – someone has to start this decree and get everyone
to sign it. Who is it?
Whatever degree of
decline you thought racing was in before December 5th, the entire
future landscape of the racing industry changed for the worse on that date upon
the release of the proposed legislation after its rubber-stamping by both Cabinet
and Racing Minister Winston Peters.
What this 100-page document is essentially saying is that racing is not capable of running itself, so here’s a Marxist left-wing decree that dismisses the majority of the recommendations of the Messara Review and negates the serious part of devolving control to the codes, and firmly grips the testicles of all three codes in a bureaucratic-DIA-operated vice.
Winston: …positive reform and increased prizemoney – Yeah right!
The message communicated
to the racing people of New Zealand by our now Minister Winston Peters, both
pre-election and for a year post-election, was that we would get positive reform,
increased stakes money, and return to self-determination with racing people
running racing.
For a time, Peters and Racing
were deeply in love. They became engaged to be married when the coalition
government was formed in October 2017, and the relationship was developing marvellously
until he met a new girl on the block named Rita. Now he’s in love with Dia, and
as Princess DIAna once said, “three in a relationship becomes a little crowded.”
Hardly surprising was it to learn that the engagement between Peters and Racing is now off, and a kiss and make-up reconciliation is looking unlikely. Peters isn’t speaking to Racing (failure to respond to any of The Optimist’s last nine texts is proof enough) and Dia is now the Minister’s sweetheart despite being not so attractive plus a pro-1917-Russian Revolutionist, Marxist supporting and bourgeoisie hating gender-neutral dunce. There’s no accounting for taste, but it is what it is!
The latest speculation is that Winston’s are now firmly gripped in a DIA operated vice on the workbench, but that can’t be confirmed. What can be confirmed, as it is a matter of public record, is that Winston not only whispered sweet nothings in Racing’s ear but loudly declared his love and devotion to Racing when he made his speech to launch the Messara Review at Claudelands on August 30, 2018.
“We all know that so much of the legislation governing your industry was written, not for the industry’s benefit, but for the convenience of politicians and bureaucrats – you all know that, and all of us are to blame for allowing that to happen.”
In that speech, Winston
said: “We all know that so much of the legislation governing your industry was
written, not for the industry’s benefit, but for the convenience of politicians
and bureaucrats – you all know that, and all of us are to blame for allowing that
to happen.”
It just goes to show you that when you are in love, you will say anything to get your wicked way. Winston’s quote retrospectively is a reminder of famous 19th-century writer Nathaniel Hawthorne who once said, “No man, for any considerable period, can wear one face to himself and another to the multitude, without finally getting bewildered as to which may be the truth.”
What we do know is the
quote from Winston above from Claudelands is taken verbatim from his speech,
but the legislation says the opposite. It isa document written
by the bureaucrats for the politicians and the bureaucrats, and the only thing
it will do for racing is retard it. We all lose unless this legislation is
drastically changed or thrown out – racing loses the opportunity to distance
itself from government control, and Winston loses all chance of keeping the
racing vote.
In the Minister’s speech on the Messara Review launch, he also said:
“Tonight
we set before you a liferaft of reform – it’s reform or die, there’s no
off-course substitute.
It
wasn’t an exercise in ghost-writing for a ministerial office wish-list. What
you have in these recommendations is a clear view of what needs to be done.
We
didn’t commission this report from an expert to strip it of its value.
The
status quo has an inevitable outcome – a sad, not happy one at that.
As
John Messara said in his introductory video, we have a chance to turn racing’s ominous
present and future around.”
It all sounded brilliant at the time, especially the bit about not commissioning an expert to do the report only to strip it of its value. But that’s exactly what’s happened – the expert discarded with advice taken from non-experts and the legislation written by the DIA with no industry knowledge. If adopted, racing will be exposed to further TAB board infiltration by sporting bodies looking for cash and the protestant groups – some of which would like to see racing banned altogether.
Let’s say, Jacinda wins the October election and Labour can
govern alone, and she appoints as Racing Minister, a left-leaning, religiously motivated,
animal rights sympathiser with beliefs fundamentally opposed to gambling. We know
these people exist – they are out there waiting in the wings, Jacinda’s wings.
People appointed to the TAB board are entirely the decision of the Minister of Racing under this proposed legislation – how could we possibly take that risk. In NSW under their legislation, Part 2, Clause 5 says: “Racing NSW does not represent the Crown and is not subject to direction or control by or on behalf of the Government.” Also, they have a selection panel for board appointees, and all the Minister has to do under the NSW system is approve the appointments.
You can’t call what this New Zealand legislation is saying as ‘reform.’ It is ‘regression’
You can’t call what this New Zealand legislation is saying
as ‘reform.’ It is ‘regression,’ and that will be Winston’s legacy to racing if
it gets passed into law. The truest thing the Minister ever said to The Optimist
in all our conversations was that he knew a whole lot more about politics than
he did about racing.
The Messara Review launch in its entirety from August 2018 is viewable on the Youtube video link below. Also listed at the bottom of this blog is a table containing 64 occasions within the proposed legislation in which the Minister has the power to intervene and make the final decision. Where is the Ministerial accountability in this episode of unfortunate events – it will be a disaster if racing rolls over and allows this legislation to proceed. If it does, then kiss the game goodbye, and if you are young enough, head for Australia.
The word on the streets is that the three codes are united in their opposition to it, apart from Section 16 which, is about the distribution of the profits to each code for stakes. Unless they make a strong, combined, and unanimous protests to stop it, the writing will be on the wall. The Minister has to be convinced to stop listening to bad advice, dump DIA and resume his love affair with Racing, and be accountable for past promises.
It’s an election year,
and it’s hard to fathom why the Racing Minister wouldn’t keep faith with racing
people and fix it. The socialists in the DIA are unlikely to vote for NZ First
but nor will racing unless the Minister intervenes and simply does what he
promised to do.
RACING INDUSTRY BILL, December 2019
THE ROLE OF GOVERNMENT
MINISTER OR GOVERNMENT “CONTROL NUMBER”
CLAUSE OF THE BILL
DESCRIPTION OF THE MINISTER’S ROLE
1
Clause 5 (3)
Interpretation. Minister recommends to Governor-General, for Order in Council, to add or remove names in the list of recognised industry organisations.
2
Cl. 9
Minister must receive a statement of intent and present the statement to the House of Representatives.
3
Cl 10
Minister must receive from each racing code a business plan and present the plan to the House.
4
Cl 12 (1)
If requested by the codes, Minister appoints a body to assume the role or functions of the codes.
5
Cl 12 (2)
Minister may set appointment process for the directors of a code if the Minister determines this is necessary.
6
Cl 13
Minister may appoint a Commissioner to resolve significant disagreement between any of the codes.
7
Cl 14
Minister recommends to Governor-General; for Order in Council to make regulations to impose a levy following appointment of a Commissioner.
8
Cl 17
Minister recommends to Governor-General; for Order in Council, to specify the date on which restrictions on transferring racing club land shall cease to apply.
9
Cl 25 (2)
Minister recommends to Governor-General, for Order in Council, to approve proposal to transfer a code’s surplus land.
10
Cl 25 (3)
Minister may request a transfer proposal of surplus land.
11
Cl 25 (6)
Minister recommends to Governor-General, for Order in Council, to amend a transfer proposal;
12
Cl 26
Minister must have regard to certain matters and appoint a reviewer before recommending a transfer order. [there are 6 lengthy sub-clauses setting out a complicated procedure]
13
Cl 26 (2)
Minister must appoint a reviewer before determining whether to make an order.
14
Cl 26 (4)
Minister mustreceive advice from the reviewer about making payments in terms of a transfer order.
15
Cl 26 (5)
Minister determines the apportionment of reviewer’s costs for transfer order.
16
Cl 27 (7)
Minister authorises “a person” to instruct the Registrar – General of Land to register the code as the owner of a surplus venue and record an entry on the title.
17
Cl 30
Minister must receive a copy of new or amended racing rules.
18
Cl 31
Minister must approve the rules for racing.
19
Cl 35
Minister must receive a report, as required, on the operation and effectiveness of the racing integrity system.
20
Cl 36
Minister appoints up to 7 members of the Racing Integrity Board.
21
CL 37
Minister must approve a budget in accordance with the Racing Integrity Board business plan.
22
Cl 38
Minister recommends to Governor-General, for Order in Council, regulations setting out the annual funding by the TAB of the Racing Integrity Board.
23
Cl 39
Minister must receive before the start of a racing year a Racing Integrity Board statement of intent for that year and each of the 2 subsequent years and present a copy to the House.
24
Cl 40
Minister mustreceive a copy of the Racing Integrity Board business plan for that year and present a copy to the House.
25
Cl 45
Minister must approve any partnering arrangement by the TAB.
26
Cl 46 (1)(6)
Minister appoints up to 7 members, and casual vacancies, of the “governing body” of TAB NZ
27
Cl 46 (3)
Minister appoints a chairperson of TAB NZ from amongst the 7 members.
28
Cl 46 (5)
Minister must notify the appointments to TAB NZ in the Gazette.
29
Cl 52(1)
Minister must receive a copy of the TAB NZ statement of intent.
30
Cl 52(4)
Minister must present a copy of the statement of intent to the House.
31
Cl 53
Minister must receive a copy of the TAB NZ business plan.
32
Cl 53
Minister must present a copy of the business plan to the House.
33
Cl54
Minister must receive a copy of the TAB NZ annual report and financial statements
34
Cl54
Minister must present a copy of the TAB NZ annual report and financial statements to the House.
35
Cl 61
Minister recommends to the Governor-General regulations describing the method to be used by the TAB for distributing to the codes surpluses from various sources.
36
Cl 63 (1)
Minister recommends to the Governor-General regulations prescribing the method to determine payments to the codes and Sport & Recreation NZ of betting profits.
37
Cl 63 (4)
Minister must consult with Minister for Sport and Recreation before making a recommendation under sub-clause (1).
38
Cl 64(2)
Minister must receive a copy of the TAB NZ rules and any amendments.
39
Cl 64(3)
The TAB NZ rules must be notified in the Gazette.
40
Cl 65
Minister must approve the promotion, conduct or control of a race meeting by the TAB NZ.
41
Cl 77(1)
Minister must receive a copy of the TAB betting rules, and amendments, for race betting and sports betting. and must present these to the House
42
Cl 77(2)
Minister must present a copy of the rules or amended rules to the House.
43
Cl 91
Minister may recommend to the Governor-General, who by Order in Council, may make regulations relating to gambling harm and minimisation, including requirements for the design, layout and furnishing of a TAB venue.
44
Cl 92
Minister may recommend to the Governor-General, who by Order in Council, may make regulations controlling admission to and exclusion from TAB venues
45
Cl 93
Minister may recommend to the Governor-General, who by Order in Council, may make regulations for exclusion of problem gamblers from TAB venues and racecourses.
46
Cl 99
The Department [currently Internal Affairs] is the designated authority to implement betting information and consumption charges.
47
Cl 100
The Department has power to delegate any functions or powers as the designated authority.
48
Cl 103
Minister must set the rates of betting information charges.
49
Cl 102
The Bill sets out a range of items that must form a betting information use agreement, including the payment of sums received direct to the designated authority, ie, the Dept of Internal Affairs.
50
Cl 104
Designated authority has power to enforce betting information use agreements.
51
Cl 105
Sums received from consumption charges are paid to the designated authority.
52
Cl 106
Minister must set rates of consumption charges.
53
Cl 108 (1)
Minister must take into account various matters before setting the rates of betting information use and consumption charges.
54
Cl 108 (2)
Minister must publish a statement of reasons why the betting information use and consumption charges are fair and reasonable.
55
Cl 109
Minister must review, at least every 5 years, the rates of betting information use and consumption charges.
56
Cl 112
Minister may exempt offshore betting operator from certain requirements.
57
Cl 119
Minister recommends to the Governor-General the financial and other information the offshore betting operator must provide to the “designated authority”, ie, the Dept. of Internal Affairs.
58
Cl 123
Minister recommends to the Governor-General regulations for a variety of matters including terms and conditions for TAB commercial agreements, the process for transferring surplus venues, administration of Racing Integrity Board, appointment of judicial committees, the minimum amounts payable to sporting organisations etc.
59
Schedule 1, Part 1,
Clause 5
Minister appoints establishment board of up to 5 members for transition of racing integrity system under the old Act to the new system established under the new Act.
60
Schedule 3,
Clause 2
Minister appoints a deputy chairperson of TAB NZ
61
Schedule 3,
Clause 3
Minister may remove from office any TAB NZ member.
62
Schedule 3,
Clause 5
Minister determines remuneration of TAB NZ members.
63
Schedule 4,
Clause 2
Minister consults with TAB NZ on terms of reference for a performance and efficiency audit.
64
Schedule 4,
Clause 3
Minister must consult with TAB NZ on appointment of the auditor for the performance and efficiency audit.
Someone phoned Newstalk
ZB talkback radio earlier this month and said, “Don’t be fooled into believing
the elected government is running this country; it’s the bureaucrats, the
bosses of the 45,000-odd public servants in about 35 government departments –
they are the people really in control.”
Numerous lunatics call talkback, but that remark resonated and is probably truer today than it’s ever been. Think about the control exerted by Treasury, the State Services Commission and Internal Affairs (DIA), and especially the DIA in racing’s case – evident with this latest legislation that will take us straight out of the frying pan and into the proverbial fire.
… this legislation does not reflect the gravity of the circumstances racing finds itself in today.
The very first thing to
say about this legislation is that it does not reflect the gravity of the
circumstances racing finds itself in today. It’s political rather than a fix-it
document.
Then, the structure is
nothing like the vision Messara had in his Review. On page six he said: “…the
current structure and regulatory hierarchy do not lend themselves to the necessary
level of code accountability or to sound decision-making and this can lend
itself to unnecessary government involvement in the industry.”
The legislation
currently provides far less devolution of power to the codes than the Messara
Review recommended and far more government control, not less, that the Racing
Act of 2003. Why would the authors want to give the Intellectual Property Rights
to TAB NZ and not the codes – it’s the rightful property of the codes and
morally belongs to the codes. To have the IP controlled by a government-appointed
board will have serious long-term consequences for racing.
The excuse given to The
Optimist for such a move was that overseas betting operators wanted to deal with
only one body, not three. That’s a lame-duck excuse if ever one was made, and is
unacceptable on all levels. Racing Victoria, for example, has successfully negotiated
47 separate contracts on their IP.
Worse still, the legislation is suggesting the Minister has sole discretion to make the TAB board appointments as opposed to the Messara Review which recommended a Minister appointed panel of three to appoint four of the seven appointees, with the remaining three board members coming from the Chairs of each of the codes or their delegates.
Are we not trying to get away from the system that gave us Nathan Guy, Glenda Hughes and John Allen, Minister?
Are we not trying to
get away from the system that gave us Nathan Guy, Glenda Hughes and John Allen,
Minister? The National Party threw racing under the bus with those three, and then
Winston promised us reform and self-governance and racing voted for it – read the
NZ First Racing Policy. But now the Minister is dishing out the same stuff
disguised as new legislation – hypocrisy!.
The anti-racing codes
theme in this legislation is even more blatant with its failure to finalise the
formula for the distribution of funds – section 16 in the Racing Act of 2003. That
very same Minister-appointed TAB board will decide after the regulation is
written (not legislation but changeable regulation) on how the distribution is
done, which gives no guarantee to any of the codes, or even if any the codes have
board representatives.
The bottom line is that
control of racing will rest more with the TAB than the codes. The door is now
ajar for sport to get a second foot in it, and gain greater representation and
put both hands out for a bigger share of the pie. The possibility of more sport
board members than racing ones is very real and would be a decision in the
hands of any future unknown Minister – that’s a bad joke when you consider
sport has contributed nothing to the set-up or running costs of the TAB but is
now infiltrating with the assistance of the DIA.
The Section-16 of the
Act mentioned above has treated thoroughbred racing unfairly since 2003 when
separate pools should have been established to give thoroughbreds it’s fair
share of funding. Racing anticipated the Minister would correct that imbalance but
instead, he’s opening the door for diminishing returns on percentage and
control of our code by more non-racing people of the kind that have shafted the
thoroughbred game over the past decade.
Completely ignored from the Review was Messara’s concept of a Racing NZ, a body of code representatives that would not be established as a separate administrative body but would act as a consultive forum for the codes to garner a cooperative understanding on all matters common to all three codes, and liaise with Wagering NZ on those matters.
Two-and-a-half years ago, Winston was saying he wanted racing to have self-determination
Two-and-a-half years
ago, Winston was saying he wanted racing to have self-determination with
legislation that would distance it from government and be safe from a disinterested
racing minister’s claws in 30 years. He engaged Messara to write the Review,
and the blueprint to achieve that goal was delivered in that review 18 months
ago. Then he appointed MAC, which became RITA, firstly to advise and then to
enact the Messara Review and transition it into legislation.
Littered through the
last 25 years of racing are disinterested Ministers – another one is certain to
be knocking on the door anytime soon. Racing should at all costs resist this
legislation which on important issues gives the Minister carte blanche control.
Rugby has become a mammoth betting medium but doesn’t have a Minister – why does
racing even need one?
The plan may have
worked if Minister Peters had, firstly, stayed interested and not handed over
the management of racing to his political scientist Chief-of-Staff, and
secondly, had kept John Messara involved in an overseeing role to ensure his
Review was faithfully represented in the contents of all the legislation and
enacted in the parts that required no legislation.
In retrospect, the
failure of the Minister to follow up with Messara was a negative statement in
itself. His approaching Messara and then accepting his offer to do it
free-of-charge, receiving the Review in record time, and then cutting the umbilical
cord without even a phone call of gratitude must be way outside the accepted
protocols of a Minister of Foreign Affairs. Something else was going down.
Someone or some people
have been in Minister Peter’s ear, it seems, and advised him poorly. Why else
would Peters not ever have picked up the phone and spoken to Messara since, and
even before the time Messara delivered his Review on July 31st,
2018. Not one word has verbally passed between them since; yes, a couple of
emails only, but that’s all despite the Review having been completed on a pro
bono basis in record time by the foremost experienced and successful racing
administrator Australian racing has known.
If you sight an official press release saying they are following the Messara Review, it will be nothing more than the lip service racing has been getting for years. The claim may say 90 percent adoption of the Review but in reality, it’s only about 30 percent in its present form, and that 30 percent, which is described in the Bill’s explanatory note as ‘resolving historic property issues,’ is saying the closure of the designated clubs will have their assets transferred to the codes.
The TAB will still have far too much control and will be made up of Racing Minister appointees
Even if the clubs
earmarked for the sword had previously been in support of the Messara Review for
the overall good of the industry, which is doubtful in most cases, they would
be furious now after reading the structural part of the legislation which is
full of government control, ministerial intervention and is a step backwards
from the Racing Act of 2003. The TAB will still have far too much control, will
be made up of Racing Minister appointees, and in essence, that means nothing
more than a continuation of the NZRB structure which has been a substantial
cause of the decline that necessitated the Messara Review in the first place –
Catch 22.
The Messara Review
clearly outlined a goal to double prizemoney, and to go about achieving that
aim it listed 17 key recommendations. Messara alluded to previous reviews that
had been completed and shelved, going back to the Reid Committee in 1965. He
said on Page 45, “…McCarthy Commission recommendations are as relevant today in
2018 as they were in 1970.”
The Minister himself blatted-on
for a time about the owner being the most important person in racing,
saying current prizemoney levels were unacceptable. The concept of doubling
prizemoney may have appealed then, but the Minister has since gone missing on
racing – how many race meetings did he attend in 2019, and passing on the
racing portfolio to his office and no longer being available for comment has
been to the detriment of this entire reform process.
No one seems to be talking about the goal anymore. It’s about the process only, which to date has only been a bit of tweaking here and there to sustain current prizemoney levels. No talk about partnering the TAB despite that non-legislation required process offering the single biggest financial windfall of all the Messara Review recommendations.
Could we have expected bureaucrats with no particular interest in racing to come up with legislation that was fit for purpose? The answer is a simple ‘NO’!
Could we have expected bureaucrats
with no particular interest in racing to come up with legislation that was fit
for purpose? The answer is a simple ‘NO’! It was never going to happen, and we may
all have guessed that outcome? From a good source, one particular bureaucrat
involved in the process has voiced his contempt for the Messara Review and also
described partnering/outsourcing the TAB as a ridiculous idea – that someone
has zero knowledge of the industry and its problems but carries more weight in
this process than anyone involved with racing knowledge. That’s the irony and
the downfall of the whole, damn tragic business.
Isn’t that the issue
causing all this discontent? The total disconnect between the authors of the
legislation and the racing industry itself – people with no conception of what
it will take to fix racing’s problems empowered with writing the rules for it? A
reliable source says RITA read the legislation for the first time only six days
before we got it and immediately identified 50 plus issues in the narrative. What
does that tell you?
Rumours abound the
Minister will make a racing reappearance at Trentham on Wellington Cup Day. If
you see him, then voice your concerns. This shoddy document isn’t legislation
until it passes through Select Committee and goes on to a third reading and is
again supported. Everyone in thoroughbred racing and the other two codes has a
small window of opportunity to help stop it or get it changed – make it count
and get your submissions in by February 11th.
Finally, be aware this
is racing’s final chance for a positive correction. Racing is under siege from
animal activists, anti-gambling lobbyists, left-wingers of every description, greedy
sports organisations, the greenies, vegans, government departments and
especially the DIA, a group called the Coalition for the protection of
Racehorses, and a plethora of other internet-driven groups equally endowed in
ignorance.
The protestants are
gathering their troops and the Empire needs to strike back. In the immortal
words of Obi Wan Kenobi, “May the force be with you, always.”
Shown below, some of
the poor racing-code serving DIA written legislation:
61 Regulations for amounts of distribution to
codes
(1)
The Governor-General may, by Order in Council made on the
recommendation of the Minister, make regulations prescribing the method to be
used for determining the amounts that may be distributed by TAB NZ to the
racing codes from any surpluses referred to in section 69(2) or 74(2) or
any other source, whether capital or income.
(2)
For the purposes of subsection (1), the amount must
not be less than the total of the surpluses referred to in section 69(2) or
74(2) for that racing year less the total amount credited to reserves for
that year from those surpluses.
Compare: 2003 No 3 s 16
62 Distribution to codes
TAB NZ may, during or as soon as practicable after the end
of a racing year, pay to the racing codes the amount determined in accordance
with regulations made under section 61 to be distributed among the codes
for that year.
(3) Unless a
majority of the racing codes otherwise agrees in writing, the amount referred
to in subsection (1) must be distributed among the racing codes in the same
proportions that the Board considers are the proportions to which the codes
contributed to the New Zealand turnover of the Board for that racing year.
(4) In subsection (3), New Zealand turnover of the Board
means the total gross amount received by the Board from racing betting placed
in New Zealand on races run in New Zealand.
81 Protection of intellectual property rights
(1)
TAB NZ has exclusive rights within New Zealand and
Australia to all intellectual property associated with all racing betting
information, racing betting system (or systems), and any audio or visual
content derived from a New Zealand race.
(2)
In subsection (1), intellectual property
means all patents, designs, copyright, know-how, trade secrets, trademarks,
service marks, and other intellectual or industrial property rights of any
kind, and any rights in relation to them whether enforceable by Act or rule of
law.
Winston Peters playing rugby for the Parliamentary team in 1988 aged 43
by Brian de Lore
Published 20 December 2019
From all accounts, our Racing Minister Winston
Peters was a pretty good rugby player in his day. He played alongside All Black
number ten Mac Herewini when the captain of Auckland Maori and regularly turned
out for the University Club in the early 1970s before he graduated as a lawyer
later that same decade.
In those days, he could obviously catch the
ball and one could imagine he had a snappy sidestep. However useful he was at
rugby, he has been a better politician – longevity is the proof of that claim. Forty
years in Parliament and although never an elected Prime Minister, he has been
‘Acting’ and ‘Deputy’ PM in the current government and a significant player in
previous terms of power.
When the 2017 General Election came around,
Winston got the racing vote which was critical in the final result whereby NZ
First assumed the position of powerbroker to form the Coalition Government. The
analysts said the racing vote made the difference and the anecdotal evidence
supports that view.
By mid-2017, NZ First distinctly had the best racing
manifesto, and after nine years of National Party neglect it was, for many racing
people, Hobson’s choice. Winston Peters had been a previous Minster of Racing
in 2005-08 and during those three years achieved a substantial tax rebate for
the industry of $33 million in the first year which has continued annually and
is today worth no less than $65 million each year – without that money, the
industry would have gone broke – an alternative view is that without those
funds the NZRB would not have mushroomed into the rudderless, money-wasting, nepotistic
organisation it became.
And on the subject of NZRB, today is CEO John Allen’s last day in the job, and nothing comes to mind more than good riddance along with the thought that racing should fess-up and be accountable for three CEO disasters in succession. Accountability has been an ever-increasing shortcoming of this industry, and administrative mediocrity has been the norm – legislate against that!
Winston Peters: a good rugby player, an outstanding politician and the best previous Minister of Racing
But I digress, back to Winston – a good rugby
player, an outstanding politician and the best previous Minister of Racing,
although he had nothing much to beat. In this term as Minister, however, he has
seemingly dropped the ball close to the try-line, and so far, the referee
hasn’t blown the whistle.
In several conversations with Winston during
the pre and post-2017 election period, our now Minister clearly outlined the
legacy he wanted to leave on the racing industry. He envisaged a revitalisation
of racing with self-determination at arms-length from government interference
with the legislation set in stone so that whoever the Minister was in 30 years
hence, racing would be protected and independent.
The second part of the legislation released on
December 5th is the antithesis of Winston’s preconception outlined
above. The document appears to be blatantly lacking input from industry-savvy
people because it’s overflowing with government control measures and is riddled
with ministerial interference, and in its current state would send racing back
to the dark ages.
“How could this be happening?” is the echo bellowing
loud and clear from industry pundits. How could we get so close to seeing the
Winston Peters vision for racing as outlined in 2017 come within reach only to falter
at the eleventh hour? Even a top rugby player who practices only two hours a
week will sooner or later drop the ball and ‘knock-on’ with an open try-line
beckoning.
Winston’s concentration on the racing industry has been interrupted to the extent that he may not have seen the pass coming, hence the knock-on. The result is the writing of racing’s future has come from the NZ First management team but mostly the Department of Internal Affairs (DIA) who have penned this appallingly worded document.
…another bureaucratic load of confusion explicitly designed to cure insomnia rather than enlighten.
The document is murky on meaning and detail, ambiguous
and looks like a rush job with loads of cross-referencing. In other words, it’s
another bureaucratic load of confusion explicitly designed to cure insomnia rather
than enlighten.
Here’s an example: “Ministerial powers in relation to racing codes (1) The
Minister may, on joint written request of the racing codes, appoint a body by
notice in the Gazette to perform any or all of the collective
functions of the codes under section 8(1) in place of the codes for a
specified period or indefinitely. (2) The Minister may, by written notice, set
the appointment process for the directors of a racing code if the Minister is
satisfied on reasonable grounds that it is necessary to do so.”
Sources close to RITA say that Agency’s first
look at the legislation came only six days before it became public on Thursday,
December 5th. Under the Terms of Reference for MAC which then became
RITA on July 1st, all the business of the Agency happens only
following the approval of the Minister which, more likely than not on most occasions,
would mean Winston’s Chief of Staff and political scientist, Jon Johansson.
No doubt RITA will be looking into these issues
to have them remedied, and industry submissions on the legislation are to be
accepted by the Infrastructure and Transport Select Committee up until February
11th which is the same day parliament sits for the first time in
2020. A RITA roadshow with Executive Chair Dean McKenzie is also in the
planning.
It’s poignant to reemphasise the gravity of racing’s current state of destitution. Many are in denial, but go and talk to a cross-section of owners, trainers and breeders to gain a true understanding of the state of this industry. Racing has to insist that the legislation is fit for purpose because this is the last opportunity we get as an industry to stem the bleeding.
“The single most effective lever available to reinvigorate the New Zealand thoroughbred industry is prizemoney.” – John Messara
Let’s not lose sight of what John Messara said in
his review: “The single most effective lever available to reinvigorate the New
Zealand thoroughbred industry is prizemoney; it rewards and supports owners,
trainers, jockeys, stable hands, and the entire supply chain including
breeders, vets, farriers, feed merchants etc.”
In the Terms of Reference for MAC/RITA the
brief was to enact the Messara Report but this legislation is more about bureaucratic
control and ministerial intervention than about Messara’s Review. A chasm of
disparity between the racing industry and these bumbling bureaucrats is the
fundamental problem which is a total disconnection – how do we get rid of these
dopes? Only God and Winston knows the answer to that one.
If you read through the legislation you may
also fail to see a connection to this part of the Messara Review: “A solution
which I favour is for the commercial activities of the TAB to be outsourced on
advantageous terms to a suitable major wagering operator enabling the TAB to
improve its product offerings, upgrade technology, improve customer service
etc. This process should drive cost savings and incremental revenue, and offer
New Zealand customers a compelling global product.
“This outcome will assist in the provision of
significantly increased prizemoney. In May 2017 Deloitte conducted an ‘Options
Analysis’ for New Zealand Thoroughbred (NZTR) which indicated that an
outsourcing agreement would generate significant potential benefits. In my
view, these benefits may be sufficient, if added to the positive financial
outcomes generated by the other recommendations in the Review, to enable New
Zealand stake money levels to be doubled.
“I calculate that the cumulative impact of the reforms recommended in this Review can enable a near doubling of prizemoney in the thoroughbred sector from $59.4 million in 2017/18 to $100 million. The overall approach to prizemoney has to be aimed at supporting investment and participation in the sport through equitable funding for the lower tiers of racing, while ensuring that aspirations are fuelled by lifting the rewards of the Group and Listed program.
“…this Review is only the beginning of the reform process and it is critical that the implementation of the recommendations be pursued urgently and in their entirety,” – John Messara
“Finally, this Review is only the beginning of
the reform process and 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 appear to have faltered.”
When John Messara wrote those lines 18 months ago,
he was showing empathy for the plight of the people in racing in NZ, had fixed similar
problems previously in NSW and knew the way forward. But read the legislation
on offer now and you realise the author possesses none of this knowledge – yet
is attempting to have the final say – how come Winston with all his cunning hasn’t
woken up to that?
Finally, here are some Winston Peters pre-election
quotes from 2017:
If you are losing the war, you don’t go out and start firing the platoon commanders; you fire the generals.
The problem is going to be solved at a higher level. A new government and a minister changing the structure from top to bottom and changing the financial structure as well, so this industry comes back to being a paying proposition for an owner. We are going to have to change the whole legislative structure and with the greatest of speed possible.
There’s been a lack of leadership from the top; those things don’t happen when a campaign is organised properly.
John Allen has only been symptomatic of the problem; my question is, ‘who appointed him.?’ Start with the Minister, start with the government; you have got to get rid of them.
The industry better start with a bit of damn humility and realise their specialty is horses and not politics. My message to the industry is, ‘had enough, then vote NZ First.’
Anybody helping me in this campaign is going to get it back ten-fold. It’s now or never. I used to go to the races and look at these politicians and think, these politicians have got no frecking idea what they’re looking at.
It’s now or never; you can’t go another three years of this stuff.
Ten days out from the election Winston said, this is seriously appalling – they have squandered it all the reserves and they’ve got no answers.
I want to say to the industry you have got to make up your minds whether they want a change and start shouting from the rooftops.
We need a flush-out with the greatest of speed and the moment the election is over we need to know who’s in the administration and what’s to be done.
This business is getting like going to a Casino and offering all your money and then being okay with getting only a bit of it back.
There is a salvation, and the salvation is in some cost-efficient changes, and the second one is you need more of your tax money back. The industry will not survive unless it happens.
The Last Word from the Messara Report:
“I acknowledge the challenge that this Review and the associated recommendations present to you, your Government and the overall industry. However, I am confident that with strong leadership, and the support and commitment of all sectors, organisations and participants, the industry can be turned around and achieve sustainability with consequential favourable impacts on the New Zealand economy.”
Douglas Black is widely acknowledged as one of the best racehorse veterinarians in New Zealand.
He is a specialist in performance issues in young racehorses and has done exceptional work for a number of leading stables, and has been for many years has been the ‘go-to‘ vet for Te Akau Stables at Matamata.
This week I asked Doug a few questions, and this is what he had to say:
You graduated from Glasgow University Veterinary School in 1983 What is the background story that brought you to NZ, and when did you come? After graduating, I worked in North Yorkshire for two years, then did locum work around London for six months to save some cash for travelling. After 12-months working in various practices, and travelling the east coast of Australia, an Irish friend and I were sitting in a bar in Sydney – he told me about two jobs that were advertised in New Zealand (our Australian visas were running out the following week). He suggested a coin toss – he lost and went to Whanganui, I arrived in Hamilton on the 5th of October 1986. I’ve been in the same practice ever since.
How does the veterinary profession differ in NZ from the UK and were there any obstacles for you becoming a partner in NZ? In the UK, as with the other professions, things are a little more collar and tie. It’s definitely more relaxed in New Zealand. Veterinarians graduating from New Zealand have an excellent reputation overseas. There were no real partnership obstacles – like everywhere else it’s about doing your time the right way, and convincing the other partners you were worth holding onto.
“The Waikato would be one of the best places to practice as an equine vet, anywhere.”
You have been in NZ for a long time now. What was it that determined your decision to settle here permanently? I have been in New Zealand for 33 years. It really wasn’t a difficult decision to settle. The Waikato would be one of the best places to practice as an equine vet, anywhere. I love the country and the people and have three grown-up kiwi kids – game, set, match (that’s not their names!).
What was the single most memorable professional achievement through all your years as a veterinarian? Would have to be developing a state of the art equine facility, the Waikato Equine Veterinary Centre, with my three other directors (Alec Jorgensen, Noel Power and Greg Quinn). It opened in November 2016 and I pinch myself every time I drive in. It’s fantastic.
What attracted you to specialise in performance and lameness in racehorses over other areas of veterinary practice. Really the difference you can make to these amazing athletes at every level. Veterinary practice now offers so much in the way of diagnostics, medicine and surgery.
You do the work for one of NZ’s biggest racing stables in Te Akau Stables. How does that work for you, and does it present any added pressure? It does bring its own pressure, but David Ellis and I have been good mates for over 30 years. We have a good professional understanding and like the other clients in the practice, I love to see them do well at the highest level. A large amount of assistance comes from other vets in the practice too, especially Ronan Costello and Alec Jorgensen – they’re absolutely top class.
You do a lot of pre yearling sales examinations for Te Akau and other buyers. What in your experience are the main criteria for a tick or fail on yearlings and does that criteria differ from buyer to buyer? There are some significant x-ray issues (especially knees, stifles and some fetlock conditions) that concern us. Personally I like to see yearlings that are correct, but just as importantly are athletic, walk well and seem to have a good temperament. I leave pedigrees to agents and owners.|
“So much of the guess work and hocus pocus has been removed.” – DB on nutrition
What’s your view on the advancement of nutrition over the years and where do you most identify the benefits of that science in young racehorses? Nutrition has advanced hugely in the last 10-15 years, primarily with individual property complete feeds. So much of the guesswork and hocus pocus stuff has been removed. The results show this, especially with young under three-year-old horses where the incidence of developmental orthopaedic disease has reduced significantly.
Some conditions in young horses such as osteochondrosis (OCD) seem less prevalent today in young horses that in days gone by? Do you agree and what would you put it down to, and are there other conditions less common than they used to be? Guess the previous question answered that, but there is no doubt we see far less knee fractures (‘chips’ primarily) than we used to. That’s multi-factorial but nutrition is part of it. I think young horses feet are getting better too.
“The single thing would be better and more consistent track surfaces.” – DB on soundness
As a racehorse vet, what in your view is the thing or things the racing industry could be doing differently to keep horses in training sounder and achieve a better result? The single thing would be better and more consistent track surfaces – for training and racing. That would be priority number one.
Degenerative joint disease (DJD) is a potential issue for all horses in training. How much of it do you see in the course of your working week and how much is management and how much is genetic? I see enough of it but less than say 15 years ago. Trainers working closely with vets identify issues much earlier with eg. gait analysis and radiographs, so a lot of the more serious conditions are avoided. Some is definitely genetic but that is often conformation related.
Stem cell research is rapidly advancing in the horse industry globally and is being used to treat lameness of horses in training with the advantage of keeping them in training rather than spelling. Where are we at in NZ with this advancement? In New Zealand, we are very fortunate to have the involvement at research level of Dr. Wayne McIlwraith. He’s a global leader in this field and his orthopedic research facility in Colorado has been working closely with Massey University in Palmerston North and private practice here. Stem cell therapy will have an increasing role in the future treatment of some lameness conditions.
How do you view the x-ray and scoping of horses at yearling sales today compared to the old days when most buyers took their chances? It’s all down to buyer beware and risk management but both these things have helped eliminate some issues for buyers. There’s no doubt some horses are unnecessarily criticised on x-rays particularly, but everyone has their opinion and acceptance level. It has without a doubt made it tougher on the vendors though.
What’s the biggest single advancement for veterinary science in recent years? Probably portable (and now cordless) digital radiography.
“… horses trained at two years had a lower incidence of significant injury than at three and four years.”
What’s your view on spring two-year-old racing given that the epiphyses in young horses do not close up until 24 to 27 months of age. Are some horses pushed too hard too early, more so in Australia than NZ, which places enormous pressure on relatively immature joints? Well that’s a fair question, but there have been several extensive studies done, including Australia, which have shown that horses trained (some of which race) at two years had a lower incidence of significant injury than at three and four years. Trainers are by and large pretty smart today and the tell-tale signs when any horse, especially two-year-olds, have had enough – anything from shin soreness to inappetence or subtle changes in coat appearance. They know these horses individually. Training methods have improved too, with the use of treadmills and water walkers.
How big an issue is stress fractures in our racing? Are they difficult to diagnose and do you think some go undetected with the horse’s loss of form the only symptom? Stress fractures are an issue in racehorses, just as they are in human athletes. They can be difficult to diagnose – for example, in the pelvis, but the use of bone scanners (scintigraphy) is enormously helpful.
“… parochialism. It’s holding back so much progress.”
Taking off your veterinary hat, what would you do to change NZ racing for the better? Try my utmost to rid the industry of parochialism. It’s holding back so much progress.
Why do New Zealand horses punch above their weight so well overseas? Pasture, climate, horsemanship, patience.
Do you have a view on the management of the racehorse’s mind? We know some horses go sour on racing, and others always try hard. Is this more genetic or management and how do you stop a racehorse from switching off? That was a tough one. Some thoroughbreds just don’t want to be flat racehorses no matter what. Some might be genetic? Not sure about that. Management – yes, keeping the horse interested, eating well, pain-free and in the hands of good track riders all probably helps.
What’s your view on the use of the whip? How much pain in your opinion does a horse feel with a strong whip rider hitting behind the saddle, and would you ban the whip or keep it? Very topical subject. I think it’ll go sooner than later purely due to public perception. Hopefully, it’s permitted as a ‘steering’ device. Bottom line – it’ll change and probably go in the next five years, I’d say.
Dr. Douglas Black with more thoughts on life and horses…
Personal at a glance
Professional at a glance
My superstition is… Number 13
The biggest lesson I have learned… Never say never in this game. Horses don’t read textbooks and love to make a fool of veterinarians
Four dinner party guests… Charlize Theron, Rowan Atkinson, Robert de Niro, Mick Jagger – now would that be a fun dinner party?
Racing and breeding has taught me… It’s a very tough sport. As a good friend of mine said to me when his best filly came back after a sensational gallop with blood at both nostrils – “it’s no game for sissies.”
I am annoyed by… Parochialism
Favourite holiday destination… Italy is sensational – all of it
Best bet I’ve had… A $3k trifecta one day at Randwick at the autumn carnival
Best book read… The Vietnam War by Ken Burns. He’s the only Western Historian the Vietnamese recognise. It’s a great understanding of disasterous politics in South East Asia
Best horse I’ve had… Easy – Scrutinize – never saw the best of him
My racing hero… The racing industry – it’s full of characters
Favourite movie… The Hunt for Red October – Sean Connery and Sam Neill at their best
I like to relax by… Having a glass (or three) of beer or champagne with good friends on a warm summer evening
Person with the biggest influence… My first boss in Yorkshire. He taught me plenty including a lot of good basic vet medicine
My sport is… Golf. The handicap system makes it a level playing field, the competitors are brilliant and it was created you know where. I had my first hole-in-one last week
Favourite racecourse… Ahh, that’s a tough one. Probably Ellerslie but I love York in England – flat as a billiard table with a straight 1400 metres, great facilities, and the Ebor Meeting in August is one of the best
Favourite Food… Seafood – in NZ we are totally spoilt by the best in the world. Washed down with a nice white burgundy
Alternative career… Probably politics. Everyone says I have an opinion on everything; usually I’m convinced it’s the right one
Saturday at Ellerslie saw one of the worst decisions seen
on a New Zealand racecourse for some years when stipendiary stewards reversed
the first and second placings in race two, the Executive Travel Maiden
Two-year-Old over 1100 metres.
To add insult to injury, the Judicial Control Authority
(JCA) ratified the mistake by rubber-stamping the decision – bringing into
question both the competence of the JCA officials on the day and the entire
Racing Integrity Unit (RIU) structure which has in the past been the subject of
criticism from key stakeholders.
Protests, upheld or dismissed, race interference, jockey
penalties, etc., isn’t a domain to where The Optimist would typically venture.
Too many grey areas exist, and too often, decisions are made on narrow margins
of a controversial and debatable nature which often polarises racegoers. It’s
better to stay away from the debate in those cases, and this blog has always
attempted to deal with facts and make a neutrally fair evaluation.
It wouldn’t be an easy job being a stipendiary steward.
Race day responsibilities are wide-ranging, and the requirements would generate
a reasonable degree of pressure, often thought to be the reason why stipes are
rarely seen to smile. Rule 204 of the Rules of Racing says:
“The functions of Stipendiary Stewards and Investigators
are to: (a) maintain the integrity of Races and racing; (b) regulate and
oversee all Race day matters and all matters related to Races and racing; (c)
investigate potential breaches of the Rules; (d) assist in relation to
licensing matters; (e) generally, to do all things necessary so that Races and
racing are conducted efficiently and with integrity and in accordance with
these Rules.”
But Saturday’s episode was blatant. It was a clear-cut error of judgment; should a protest even have been lodged? Grandstand critics are never wrong, and from the safety of a green leather lazy-boy chair in front of the big flat screen, I watched the race live. When the siren went, my thinking was that it would take only around 60 seconds to reach a ‘protest dismissed’ verdict.
How wrong can you be! Incomprehensibly the stewards and JCA
went with it and turfed-out first-past-the-post horse Taroni and promoted Bordeaux
Le Rouge into first place. Since the live viewing, I have revisited the video replay
on the Love Racing website no fewer than a dozen times.
On every occasion, the same conclusion was reached. The two
horses briefly came together right on the winning post, but Bordeaux Le Rouge
was never ever going to run past Taroni and win the race. Had Taroni kept a
straight line it would have won by more than a length.
So why did the stipes change the result and the JCA ratify it? Firstly, Rule 642 of racing says that to change the result: “the Judicial Committee is of the opinion that the horse so interfered with would have finished ahead of the first mentioned horsehad such interference not occurred.”
In my view, that criteria had not been met – nowhere close to it. Could I be so wrong, after all, I had been studying races for over 50 years since the days of such greats as Palisade, Eiffel Tower, Kumei, Weenell, Daryl’s Joy, Jazz, Star Belle, Laramie, Royal Bid, Piko, Game Call, Spray Doone, Koral, Lindred, Teak, Pep and Brazil to name a few – what a fabulous era of great horses. Perhaps the years have dimmed my vision and fogged my judgment?
“If the punters out there don’t have any confidence in our judicial system they are not going to bet.” – Nigel Tiley
The only way to determine this was to consult others. As a
top-class ex-jockey and now a highly experienced trainer, Nigel Tiley was my
first call. Nigel also sits on the committee of the Trainers’ Association
Committee and is the trainers’ representative on the NZTR Members’Council, and
few horsemen would be better credentialled to review the incident.
Nigel said: “On Saturday’s decision, the fact that I had two phone calls from Australia questioning what the rules were in New Zealand. These were two experienced race watchers who could not get their heads around the reversing of the placings. They were both adamant that under their judicial system the protest would not have been upheld.
“But under our rules, it also should have been dismissed.
We have discussed it in a conference call of the Trainers’ Association Executive,
so I can’t speak on behalf of the Association, but I have spoken to a lot of racing
people, and it’s 100 percent unanimous that the stipes made the wrong decision.
I was appalled.
“If the punters out there don’t have any confidence in our
judicial system they are not going to bet,” concluded Nigel Tiley.
Next, I phoned Racehorse Trainers’ Association President Tony
Pike who was also willing to express his concern at the outcome of the race.
“I had no problem with the siren going off,” commented
Tony, “but it should have been dismissed. There’s a lot of backlash out there and
it will be interesting to see what the final outcome is.
“I was on-course in Perth watching on TV and didn’t see the
head-on film until later but I was disappointed with the process in the room.
The stipes shouldn’t be asking or assuming the connections are going to lodge
the protest and when the connections didn’t lodge it, and they had to lodge it
themselves and have gone down that path, they probably felt the need to uphold
it.”
The process of which Tony Pike referred to went like this:
In the hearing room, the Chairman John Oatham stated mistakenly that the
connections of the second horse had lodged the protest. It was soon established
that was not the case and that a protest would not be forthcoming from them, so
the Stewards lodged it themselves. The siren sounding before the horses had
returned to scale was also initiated by a steward, but Oatham was apparently not
aware of that which raises a serious procedural question.
Other questions arising are: Was that initial mistake in the room a mitigating factor in making the final decision? Was the fact that Bordeaux Le Rouge was the hot favourite at $1.30 for the win a sub-conscious pressure on the stewards, and would that pressure not have been present had it been a $20 shot? No one is suggesting that this was anything but an honest mistake, but it should be noted the loser here has no grounds for appeal.
“My experience with the JCA is that they lack racing experience and an ability to read races.” – Tony Pike
Further second-hand anecdotal information received is
suggesting that not all four stewards officiating agreed with the decision, but
that cannot be confirmed. The same source also said that Bordeaux Le Rouge’s jockey
Sam Collett was not questioned at all.
Tony Pike further commented: “My experience with the JCA is
that they lack racing experience and an ability to read races, and they have gone
and upheld it. They are obviously intelligent people, but on the subject of
reading races, they’re not really qualified.
“Mistakes are made and this may be a one-off case, but we
have to make sure the process and the rules are adhered to – the decision by
the JCA was blatantly wrong. It was a lower-level race, and the ramifications
were not great, but racing is lacking confidence in getting good decisions,
especially from the JCA, and there will come a time and place when this will
happen in a significantly bigger race with far greater ramifications.”
The Stewards Report Said:
“Following the race a protest was lodged by the Stipendiary
Stewards alleging interference by the 1st placed horse TARONI (D Johnson) to
the 2nd placed horse BORDEAUX LE ROUGE (S Collett) inside the final 100 metres.
After viewing films and hearing submissions the Judicial Committee upheld the
protest relegating TARONI to 2nd placing. The final placings now read – 1
BORDEAUX LE ROUGE 1st, 8 TARONI 2nd, 6 DRAGON QUEEN 3rd, 5 TARGHEE 4th.
BORDEAUX LE ROUGE (S Collett replaced T Harris) – Promoted to 1 st placing
after suffering interference inside the final 100 metres. TARONI (D Johnson) –
Relegated from 1st placing after causing interference inside the final 100
metres.”
Interestingly, if Danielle Johnston had failed to keep her mount
straight enough to stop the second horse from winning and the interference was
severe enough to warrant a change of placings, one might have thought that
Johnson would at the very least received a warning if not a fine or suspension.
But not a mention.
Further to that, the Stewards Report above is very sheepish
in its wording. It states a reversal of placings takes place but doesn’t go as
far as saying that, “in the opinion of the stewards the horse so interfered
with would have finished ahead of the first-mentioned horse.”
Everyone with an interest in the judicial system of racing
should review the race themselves and make a judgment, Depending on your
opinion, you may have a future on the JCA panel because they are clearly having
problems with people who boast a series of letters behind their names.
Footnote:
On Thursday 5th December, Racing Bill No 2 was released which is due to have it’s first reading before Parliament adjourns for the year. Here is the link to read it:
