by Brian de
Lore
Published 28th March 2020
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.
