by Brian de Lore
Published 8th April 2021
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!
Dear Mr de Lore,
You state that the TAB was denied the opportunity of running Lotto through its retail outlets. Can you please expand on what happened here? Is it, therefore, not true that the Racing Industry itself (those running the racing industry at that time) turned down the opportunity you allude to?
Please advise.
Thank you.
Ashoka Pandey
Good question. I always thought that racing administrators at the time turned down the opportunity of running Lotto, but when I consulted a former administrator, he said the TAB was considered but never formally offered the contract. Another old-timer from that era told me the TAB scoffed at the chance and didn’t want it. I need to ask a few others to find out the truth and will do so and let you know the result.
This is so true, I remember at the time, when Lotto was first mooted, my husband, Don McLaren was a newly elected committee member of the Auckland Racing Club. Arthur Hughes was President of the ARC and also President of the Racing Conference. Somehow, I recall having a conversation wth Arthur and commented to him that I thought Lotto would be big in NZ. I was scoffed at and the idea rejected completely out of hand!
Afterall, I was a mere woman making such a statement and they didnt feature much in the racing industry at the top in those days!
Hello Rochelle, thank you for taking the time to clear up the matter of Lotto. You were right and Arthur Hughes was wrong. On that basis, we have to reject the notion that you were ‘a mere woman’ and instead say you were ‘a woman of vision,’ and should have been on the board instead of Arthur Hughes, and racing today would be in a far stronger financial position.
You are right as usual Brian – we have always been the architects of our own misfortunes. I have said ad infinitum over the past years that we, the grass roots, should have taken action of a definitive kind instead of sitting on our backsides. It was a qualified mess when I came to NZ 46 years ago but a vaguely manageable one – now even after Messara it will most assuredly get worse and worse if we don’t take positive action. No Government of any shade that is worth its salt should even wish to govern racing. Where else does it happen to the extent sought perpetually here. The buggers even seem to have stolen the TAB .
Were I 40 years younger I would be sitting atop the barricades – SO COME TO THE FORE YOU YOUNG GUNS. SURELY SOME OF YOU YOUNG EDUCATED RACING PROFESSIONALS COULD TAKE THE LEAD. WHERE ARE YOU ALL??
The TAB run as a private entity should be right up there with Bill Gates and Mark Zukerberg profit wise.
The fact this proverbial ‘cash cow’ has been slaughtered is entirely down to Govt intervention and shocking management.
Such a shame really as with the right appointee’s with the correct foresight and knowledge of the racing game, stakes in NZ would have rivalled Aussie stakes and enticed owners to retain (and race) their horses here in ‘Gods own’ instead of cashing them up.
But what upsets me more than anything is that in a country as fertile as ours where raising young stock is second to none, less and less breeders are appearing on the landscape ……and the ones we have retained are down sizing which is a crying shame.
It all could have been avoided….and now we have an industry going downhill at the rate of knots.
As Cher sung …..’If we could turn back time’ …..but now its too late.
Graham Bruton.
Petone.
Thank you again Brian for your assessment of the current state of racing in NZ.
Your statement “Unlike Australia, racing in NZ has fallen under the shackles of the government” needs clarity.
Racing in Australia is very firmly under the governance of governments, albeit at state level and not Federally. Australia has a Federal government which oversees the running of the states as a collective. Each state has its own Racing Minister and Ministry and to some degree, is in competition with the other states which adds to self examination and scrutiny.
States realise the value that Racing adds to the economy through revenue, employment and as a recreational pastime from the city level to the outback stations. The industry is encouraged to not only be sustainable but to thrive as it is seen as a valuable enterprise.
Participation in its governance is very well organised from the grass roots level right through to major clubs and Ministry’s.
The exodus of NZ racing people over many decades to other shores has contributed to the lack of will to challenge NZ racing’s governance and stand up for what is rightfully theirs. In essence it has been hijacked by people who are happy for it to go nowhere.
Unless the people who are affected the most by the lack of funds (prize money) stand together in one strong voice to demand accountability you can expect to see further deterioration of the entire industry which is such a shame in a land that has the capacity and potential to breed the best racehorses on earth.
Clarity is simple: TAB NZ is in administration under DIA’s care who rubber-stamp any monetary decisions. Tabcorp/Racing NSW are not. TAB NZ are still technically insolvent, NSW has just announced $20 million more in stakes. NZ Racing has suffered from directionless leadership, NSW has the strength of Vlandys whose decision making has strengthened racing and added to the NSW economy. Racing NSW lobbied Government for years to strengthen their position in the community. We haven’t done that in NZ. Comparatively speaking, we are shackled, they are not – I lived in Sydney for 14 years.
Brian
Apathy is our biggest problem
This government is incompetent and with them having control of racing we are screwed!
The punter and the Owners are continually being asked to give more to get even less back!
The Owners Association is to weak to stand up and make a stand, everyone else are increasing their charges.
Without drastic stake increases Ownership will decline, this will also impact on the breeding industry
David,
New Zealanders are weak.
That NZTR meeting I attended in P North , there were about 23 questions from the floor.
I asked 12 , I had more but Bernard cut it for lunch, (I was just warming up).
The people were mostly lifeless, the meantion of stakes and when, felt like a
reply of WHAT HAVE YOU PEOPLE BEEN SMOKING.
Hey Brian, thanks again for your time in researching the historical accounts of NZTR.
No matter what we say or ask for as Stakeholder, we will not be heard , or acknowledged, nor will it be taken into account in the foreseeable future.
Others who have seen the light have grasped PLAN B and now reside in AUS, and how
fortunate our we , that AUS is there.
Right, back to the solution, THERE ISN,T ONE under the current regime, or the next
We aren,t at rock bottom yet.
Taranaki has its NZTR road show meeting on the 12th of April at the NP racecourse , I also attended the Palmeston North meeting attended by 50 people ( 46 of us, over 60 years)
Did any of you manager to watch the Mick Guran , Cameran George interview.
Mick asked great questions to do with NZTRs road map.
There are 7 items on the road map, some meantioned by Mick ( trackside ) and presented at the NZTR road show at Palmeston North meeting .
I struggled to buy in on any of them , one I labelled REDICULESS.
I will give you feed back on Brian,s forum post NZTR NP meeting in his next publication.
And please use face book Racing NZ Thoroughbred Chat Page as a conversational opportunity
Morning all
WRT the Lotto/TAB matter – my understanding is that the incumbent Chairman of the time [ one John Austin, a former owner of mine ] was given the opportunity to consider running Lotto through TAB outlets, but eventually turned it down.
…and to add, referencing former administrator D. Lloyd, he observed that Annette King was both sympathetic to racing, and a very able Minister.
She ruefully commented to him on one occasion, how much she wished she could do more for racing, but that getting consensus from the industry was like herding cats.
Having said that, we [as an industry ] have been so consumed by self-interest [ and stupidity ] that there is really no-one else to blame but ourselves.
Thanks for clearing up those points, Pam. I have to agree that racing is an industry consumed by self-interest and stupidity, but the worse thing is, nothing has changed – it’s as prevalent today as it’s ever been.
Well done Brian. A few points:
1] My information was that the Racing Board declined the opportunity to run Lotto. I know the names of the Chairman at the time and also the gentleman who informed me that he conveyed the verbal message from the Board to Mike Moore .
2] My technical paper sets out very clearly that if the TAB was run as a private limited liability company and all the accountability that requires the current mess could not have eventuated. It is not too late to change. Certainly the 2003 grab of the TAB assets could not have taken place.
3] Annette King takes the prize for Racing Minister. One example, she took all of 30 minutes to approve the tidy-up for GST of the dead horse issue.