Dedicated this week to the memory of my long-time friend, confidant, and all-round good guy Bob Morris who passed away last Thursday one month short of his 92nd birthday. He was an outstanding stockman, the best horseman I ever met, an inspiration to scores of horse people, proud, humble, highly respected, and my mentor and source of strength for the past 40 years. Bob was courageous and lived and died by his own rules – the finest man I ever knew. RIP Bob, your memory will live long.
by Brian de Lore
Published 25 October 2019
Do the research, speak to reliable people, and gather trustworthy information, and it’s not that difficult to discover the truth. It takes time and common sense and a bringing together of facts to point you in the direction of sound conclusions.
That’s all this blog is about. No delight is gained from a weekly barrage of hand-grenade tossing to administrative authorities to encourage them to act in the best interests of the industry stakeholders. Negativity is depressing in every language, but if you see something worthwhile slipping away that is salvageable, are you not morally obliged to do something about it.
Every week that passes by, I want to give up writing this stuff and do something more fulfilling with happy outcomes, but every week I receive more and more phone and email encouragement to continue the penned fight to hold industry decision-making to account.
One of the major problems is lack of industry awareness through want of a publication. Jonny Turner of the Otago Daily Times – the only major independent newspaper left in New Zealand – is perhaps the only writer left prepared to highlight these serious issues.
The loss of The Informant has been catastrophic. NZRB/RITA’s Best Bet’s is hard to find and hardly worth finding, and showed its colours last week when published on Thursday with no Caulfield form. How low does it have to sink? Do these people not correlate the formguide’s potential to stimulate betting turnover.
Boring it may be to bring back the Titanic analogy again, but this is a snapshot of New Zealand racing. The NZ First guy is on deck talking to the DIA guy, and both are oblivious to the third and fourth class passengers scurrying for lifeboats after the ship has struck the iceberg. One says to the other, “I hope this North Atlantic weather improves tomorrow so we can have that game of deck tennis.”
On radio last week Racing Minister Winston Peters claimed he was spending far too much time on the racing portfolio which is in contrast to his Chief-of-Staff and political scientist Jon Johanassen’s revelation to The Optimist about five months ago when he said that if the Boss had to spend more than two hours a week on racing matters, then it was excessive and something was wrong.
Well, something is wrong, drastically wrong. Perhaps the Minister needs to increase his input from two hours to two days a week, but we all know he won’t. That leaves his right-hand-man Johanssen at the helm and steering the course while only giving Winston the co-ordinates once a week during that two-hour session. It’s evident Johanssen is the man plotting the course.
No skin in the game, no knowledge of racing, and no consequences for Johanssen when they blow the whistle for full-time on racing. On the other hand, Johanssen is the man who will advise and steer NZ-First policy or at least enact the policy, towards the supreme goal of NZ-First getting over the five percent threshold in the election next year, and retaining Winston’s position as power-broker for further coalition deals. That appears to be his prime focus.
Racing, like it or not, will be a political football for the next 12 months and the outcome for our industry will be inconsequential to all political parties – only the election result will matter while racing gets a further battering – if by that time the bank hasn’t called in its loan.
Aspirant National Party leader Judith Collins has already started, telling members of the Gore Racing Club a couple of weeks ago a vote for National will save their Club from being victimised in the venue closure plan. Shadow Minister for Racing Ian McKelvie has been talking about ‘nationalism’ and keeping the TAB for ourselves – a poorly conceived statement, Ian, showing you haven’t grasped the most crucial component of the Messara Report.
McKelvie may not have remembered that Nathan Guy espoused identical sentiments during National’s nine-year reign during which racing received nothing in return – treated like a colony of lepers. During his five-year stint as Racing Minster, Guy paraphrased the McKelvie view and also appointed Glenda Hughes as Chair who, in turn, appointed John Allen as CEO in that John Key/Hughes sideways shift deal.
Did racing ever thank you for that, Nathan? Well then, “thank you’ on behalf of racing. It was a minus $200 million decision for racing – we got the colony of lepers sidestep. No one is going to forget National’s nine-year treatment of racing in a hurry but, then again, we have to weigh it all up against the benefits racing has derived from NZ-First, the coalition, and Winston as our Minister over the past two years.
Imagine a set of old-fashioned scales; the dish on both sides is empty. No weight either side! That’s not to say our Minister in this two-year-old stint hasn’t made an effort and put in place a multitude of things such as reviews, committees, meetings, boards, legislation, working streams, etc, etc. But the tangible benefits for the industry, so far, is zero.
Anyone adding up the benefits accrued over the past 11 years from either side of the political spectrum, may elect not to vote at all at the next election. Or as an alternative, find some obscure party with no hope, but with a leader who makes a real-time contribution by going racing or just having a punt.
The aforementioned notion of seeking the truth in a world full of fake news was further dented this week when perusing the Grant Thornton five-year Racing Board Performance and Efficiency Audit. I would describe it as shallow, soppy, non-investigative, friendly to NZRB, and a complete waste of effort and, more importantly, money.
It’s not worth reading. If a non-racing person read it independently and bereft of industry knowledge, he/she would be lulled into believing that with some minor tweaking, the racing industry is going along okay.
Here’s an excerpt that demonstrates its shallowness: “The Fixed Odds Betting Platform cost $1.1m more than in the original business case (3% overrun) and was delivered 5 months later than planned. The cost was reported as $40.8m by the CEO to the industry and to the NZRB Board (sources: RITA website “June 2019 – Industry Update” and 29 January 2019 FOB Board Update).”
Grant Thornton used the RITA website as it’s ‘source’ on claiming the FOB exceeded budget by only three percent. Yet I can produce a recording of CEO John Allen claiming at one of his industry conversation meetings at Riccarton that the cost of the FOB would be $25 million. Later, in the letter from Glenda Hughes to the Trainers’ Association, the former Chair said it was $30 million. Over time it crept up to $40 million as the overruns became more evident – why don’t we just make it up as we go?
And then the exorbitant costs of the 125 or so contract IT people that was not capitalised, hiding the actual cost of something in the vicinity of $50 million. Grant Thornton has accepted the fake news on the website just as we are all supposed to accept it. Isn’t it disrespectful of these people to think the racing participants could believe it Why didn’t they engage Deloitte who have extensive subject knowledge, and would have produced a credible document?
Here’s another example of some soppiness in fake efficiency and performance reporting: “Other than investments in the key strategic initiatives, the NZRB maintained a strict approach to cost management. Excluding strategic initiatives and turnover related expenses, operating expenses have reduced over the last 5 years from $127.8 million in FY15 to $126.5 million in FY19 (unaudited).”
No further need to quote from this painful, drawn-out poorly presented document. It needs binning rather than reading, the same bin the RIU Review should be in after its release in July. The RIU review recommended the RIU should have autonomy and its own board – the exact opposite of what we need.
The Messara Report says the codes should manage themselves, control their own finances and determine their own future. The Burgess RIU Review, written by an ex-policeman, is recommending the integrity component of racing be disenfranchised from the thoroughbred code which flies in the face of the devolvement of power to the codes, and ultimately would prove unworkable and costly. Racing needs fewer boards, not more.
In last week’s blog, I quoted from the last RITA update which included this excerpt: “We expect DIA-led workshops to get underway with the Codes and betting operators later this month.”
Information received this week suggests that meeting will occur today, Friday 25th. It’s the meeting that could have taken place a long time ago, and it’s only about getting the DIA workshops underway and likely to be about setting the rates and collecting the levies which under DIA direction is almost sure to be a tortoise-like journey.
DIA is also writing the legislation for the Racing Reform Bill No.2 which will have to be completed anytime soon if it’s to have chance becoming law before the year is out. Information gathered suggests it’s being rushed to get it ready for a first reading – not an ideal situation if National is prepared and waiting to disrupt the process for political gain. And not ideal if you want something good set in concrete.
RITA is probably powerless when it comes to expediting the process, but on other matters, it played a part in the appointment of Malcolm Burgess to do the RIU Review, was party to engaging Grant Thornton for the Five-Year Performance and Efficiency Audit, and failed to take the opportunity to clear out all the NZRB executives including CEO John Allen on Day One, July 1st.
But back to the subject of net tangible assets. When a company’s net tangible assets in the business world are less than its level of debt, it’s called insolvency. Perhaps, in racing it’s called something else because no one else has mentioned the word.
Racing is in a negative state to the tune of around $20 million on that score. Betting Information User Charges and Point of Consumption may be coming next year, but how about the present? This industry is closer to the cliff’s edge that most would realise, and no one is talking about it.
