by Brian de Lore
Published 7 September 2018
Almost a week on from the release of the Messara Report, its author John Messara took time out from his temporary base in New York to answer some Brian de Lore questions about the Report’s compilation, aspects of its contents and its future effect upon the NZ racing industry:
Q. It was a big surprise to most people that you even agreed to do this Review let-alone do it free of charge including paying all your own expenses. Can you say what the motivation was behind accepting to do this project?
A. I had been watching the plight of the NZ Racing Industry intensify over the last few years. When I retired as chair of Racing NSW, I was often asked by Kiwi friends what could be done to turn NZ around. Kiwis have a history of being fierce competitors, and I felt that if the framework was right racing would rise again to a globally competitive level there. Who can forget NZ’s dominance in the years when I was entering the Industry in the 1970s? The quality of NZ horsemanship and your ability to breed and train a good horse is well known. So when I received an approach from the Deputy Prime Minister I gave it serious consideration. I felt confident that Winston Peters would make the reforms necessary to achieve a result and after all, I was being asked to help part of the racing family. In any event, I regarded it as a privilege to be asked to assist such a historically significant industry.
Q. You have completed a comprehensive 82-page Review of NZ racing in around three and a half months during which you made numerous visits to NZ. That must have involved long hours and taken quite a toll on you?
A. Undertaking the Review was more demanding than I had expected because while Minister Peters had asked for a “high level “ review there was no point delivering a document which did not provide a fairly detailed road map. Also, as I launched into it the importance of presenting a sound report weighed heavily on me, given its possible impact on the lives of thousands of people. After an initial three weeks period of reading and reconnaissance, I determined a structure for the Review and targeted three people to assist me, Darrell Loewenthal (governance and legislation) John Rouse (clubs, racecourses ) and Craig Nugent (wagering & the TAB). These three men were well known to me from my period of racing administration in Australia, and I regard them as diligent, reliable and competent in their individual fields. The research, site visits, and interviews continued for about ten weeks, and then the writing began. I delivered the Review to Winston Peters by the due date of 31 July, and I have to admit that it took its toll on me. There were others within my own staff that assisted with editing, layout, etc. I am grateful to all the team.
Q. In doing this review you must have noted the differences in the psyche between European Kiwis and Aussies, the former being the descendants mainly of Scottish and English Presbyterians, while the latter descend mainly from Irish Catholics. Do you think this accounts for the difference in the betting statistics you have graphed in your review which shows over 18-year-olds bet NZ$225 per head in Australia compared to just NZ$92 in NZ?
A. I think that’s certainly part of the reason for the disparity in wagering habits between our two countries. Arguably, a more streamlined and attractive package of racing and betting options is bound to narrow the difference. However, I see the export of NZ racing to other countries as a serious growth path for the industry, once tracks, prizemoney, operating practices, etc have been improved as proposed by the Review.
Q. If the Minister adopted your review 100 percent and we carried out all the requirements to the letter, how would you envisage the state of the New Zealand Racing Industry in five years time?
A. I am very confident that in less than five years NZ racing would re-enter the global racing scene. Sustainable prizemoney will drive investment in higher quality bloodstock and breeding, grow race field sizes and local & overseas wagering on the NZ product, which gets the whole cycle going again. Naturally, you’ll need to keep your eye on the ball, but a smaller number of well appointed and maintained tracks, a sound industry structure, good leadership and accountability and a modern and competitive wagering operation certainly creates the framework to remain competitive. The NZ spirit will do the rest.
Q. You have suggested that we need to adopt your recommendations in their entirety and not cherry-pick this review. Can you say what the perils of cherry-picking it would be?
A. The recommendations are intended to work in tandem to generate the revenue for the doubling of prizemoney and provide the framework required to go forward securely to industry sustainability. They are therefore interdependent on each other, and each recommendation has been included for a good reason. Pursuing some, but not all of the recommendations will undermine the success of the whole reform programme.
Q. You have said in your summary that the NZ Industry is now at risk of suffering irreparable damage, and you have also said we need urgent action on this. How close to the edge of the cliff are we and why do you think we have allowed ourselves to get into this state?
A. Your Industry is close to the brink. Owners and trainers cannot keep operating so poorly. I take the view that people are the critical factor to success. If there is not a clear path forward supported by the industry very soon, there will be a veritable exodus of the remaining key investors and participants from the NZ Industry to more profitable jurisdictions.
Q. My perception of your review is that it will involve short-term pain in both venue and NZRB job losses, but the thrust of it is about long-term sustainability and growth and long-term security for most of our full and part-time grassroots employees. What’s your view on that?
A. I think you will be surprised what a rise in confidence will do for employment. I don’t see any overall increase in unemployment arising from the recommendations in the Review, even in the short term. However, I have recommended a Performance and Efficiency Audit of the Racing Board with particular emphasis on operating costs. This will give us a baseline on how the TAB is tracking, which is an important factor to have in hand before any negotiations begin with wagering operators regarding the outsourcing option. As for track closures, I don’t believe this will generate unemployment as the racing program will be distributed to other venues, which may require more staff, as their operations will have expanded.
Q. If our Minister of Racing did act upon it urgently from this point forward, how much progress could we make before the end of the year?
A. The Review is now the property of the Minister, and it’s entirely his prerogative to act at whatever pace on whatever part of the Review he chooses. However, most of the recommendations can be actioned quickly. On the other hand, as you’ll read in the Review, the track closures are a five-year project to minimise program & Club disruption.
Q. Changing the structure of racing will require changes in legislation, so from your experience with Racing NSW how long, at a guess, is it going to take to get the legislation we need for a sustainable future?
A. The legislation can be written quite quickly using NSW as something of a template.
Q. In achieving all you achieved for Racing NSW you spent a lot of time lobbying the state government. Do you forsee any issues going forward with the prospect of getting NZ politicians from all parties onside to get this legislation passed?
A. I think all sides of the chamber recognise the plight of the New Zealand industry. I found in my meetings with the relevant Opposition members that they are open to reform.
Q. In the second part of the Review under Wagering and the TAB, the first thing you point out is New Zealand’s lack of scale prevents us from being competitive against international wagering operators. That being the case, was it foolhardy for the TAB here to set out to build our own Fixed-Odds-Betting (FOB) in the first place?
A. I have made it my aim in this Review to look forward and not back; however, I want to stress that outsourcing some of the TAB’s commercial activities does not mean selling the TAB. In fact, I have specifically rejected the idea of selling the TAB.
Q. You also call for full operational outsourcing of all domestic wagering, broadcast and gaming operations to a third-party wagering and media operator of international scale. Does that mean you are suggesting the FOB should be scrapped now before completion to stop the hemorrhaging of the ongoing costs estimated to be $3 to $4 million per month?
A. I do not have sufficient information to comment on this one.
Q. The outsourcing proposal on page 40 of your review would clearly put all wagering responsibilities in the hands of a third party outsource operator. Using the existing infrastructure of a third-party operator would save NZ tens of millions of dollars in administrative costs but would the NZ punter, or our industry be disadvantaged in any way?
A. I can only see advantages for the NZ punter in the recommended new arrangements.
Q. Predictably, the most opposition to your Review is being voiced from racing people from the locations where you have recommended the 20 venue closures. Do you have a message for the people who will be affected?
A. I fully appreciate the disappointment being felt by the hard-working boards, members and supporters of the tracks proposed for closure. We have put forward a model of the type necessary to achieve the objectives, but this model can be altered “at the margin” if the code leadership so determines. The model we propose is based on the demographics and the financial and operating metrics of the relevant tracks. My message to those affected is that the time has come for everyone in the industry to contribute to the reform required if success is to be achieved and opportunities for all participants are to open up. Owners can no longer subsidise the operation of 48 tracks by sustaining huge losses on their investment, and the track upgrade program, essential for improving the overall product offered to punters and racegoers, cannot be implemented without reducing track number
Q. In your resurrection of Racing NSW which you did with CEO Peter V’landys, you didn’t close down one racecourse, so how do you sum up the difference between NSW and NZ?
A. NSW was awash with cash, and we had both windfall funds from racefields legislation for the capital expenditure necessary to upgrade country clubs, as well as a powerful stream of recurring revenue for prizemoney, recently augmented by parity legislation. In those circumstances, there was no need for action on tracks.
Q. Is NZ Racing with all its venues and small population the product of a bygone racing era and have we been caught in a time-warp?
A. I am afraid so.
Q. Given that you are not accustomed to failure when one evaluates previous John Messara projects, if the Racing Minister was to ask you for an ongoing involvement to oversee the initiation of your recommendations and get it up and running, would you be prepared to accept such an invitation to ensure things are tracking in the right direction?
A. That is a hypothetical question.
Q. How would you sum up this whole NZ experience in terms of the people, the structure and the prospects of our racing industry going forward?
A. I have met many decent and passionate participants and administrators during my travels in NZ. With the benefit of an outsider’s independent eye and supported by my experience & involvement in another jurisdiction, I am sure that the Review, if fully actioned, will bring about the recovery that NZ deserves for its racing industry.
