New boards for racing a chance to get transparency and accountability

by Brian de Lore
Published 4th December 2020

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

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 21^st 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 1^st, 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 1^st – 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.