by Brian de Lore
Published 19 May 2017
Should everyone in racing should stop what they’re doing, take a deep breath, and carefully read part of the Racing Act 2003?
Look in the section which says ‘Functions of the Board,’ the very first clause directly below that heading reads as follows:
1(a)
“to develop policies that are conducive to the overall economic
development of the racing industry, and the economic well-being of people who,
and organisations which, derive their livelihoods from racing.”
Clause 1(a) was a statement of intent that was ratified by the then government and passed into law along with the rest of the act. It was a Racing Act that promised much but in 14 years has delivered little for the people at the ‘coal-face’ in racing. In short, it has been a huge ‘fail.’
Along with the Act came the formation of the NZ Racing Board to carry out function 1(a) and the others listed below it. It is true that the Board has ‘developed policies’ over those 14 years but where is the evidence of the ‘economic development of the racing industry’ or the evidence of the ‘economic well-being of the people or organisations’ in it.
There is no evidence. It has not happened!
The racing industry needs to have a long hard look at itself and admit that’s it’s now wallowing in its own horse manure, and it needs to rid itself of the denial and the apathy that’s endemic in it. It needs to wake up to itself!
It’s not good form to be negative, but denial of the truth is the cancer that needs to be ‘cut off at the pass.’ Why, because in the 14 years since the Racing Act of 2003 came into being, and the NZRB, the cost of running racing has soared to ridiculous heights as a percentage of its turnover.
In its current form racing in New Zealand is not sustainable. We have to change, and it must be soon. The cash generated by the industry stays at the top and is eaten-up by costs and salaries, and there’s too little trickle-down revenue for the people at the bottom of the chain – the owners, the trainers, the jockeys, the stable workers, etc.
If you go to the NZRB website, it says it employs 820 people both full-time and part-time. Yes, many of those are involved in the TAB and its TAB Trackside channels, but it is still a fact that there are 138 people employed by the NZRB that earn $100,000 or more. The total wage bill is $66 million.
Does anyone need reminding that Haf Poland once ran racing and the stud book with only a dozen employees? Yes, these are different times and comparisons like that are futile, but it’s worth emphasising how far in one direction we have now gone in the other.
Recent announcements of the minimum stake going to $10,000 and the extra $24m for the three codes over the next two seasons deserved a round of applause. Racing badly needed a shot in the arm like that but from where does the revenue for the increase come?
It’s reliant upon future increased income from NZRB projects including the race fields legislation and a successful launching of the new fixed-odds betting platform – and it becoming a success.
So, the NZRB have allocated future race prizemoney increases on ventures they don’t know will work. The word on the race fields legislation has gone from confident to hopeful, and now the latest information suggests it will not be tabled in the term of this government.
The election will come first. So when will it be tabled, debated and then passed? No-one knows; perhaps next year, but we are already spending the ‘anticipatory’ future profits on increased prizemoney which we haven’t yet earned.
Post-election race fields may come before a new coalition government, but regardless, I repeat, we are already allocating prizemoney we haven’t got. That might result in a deficit of millions at the end of next season which would ultimately be levied against and eventually clawed back from prizemoney.
The increased prizemoney announcement was $24 million for two years across the three codes but what happens after that if losses are incurred in successive years?
Don’t forget that the people who ‘develop the policies’ will still collect salaries regardless of performance and even if they ‘get fired out-of-the-place,’ the severance packages will be significant.
Now, if you were the shareholder in a company that used that ‘mode-of-operandi,’ would you be keeping your shares – I think not?
The real problem is the monster the Racing Act 2003 created rather than the quality of the people at NZRB. In what they may be genuinely trying to achieve they can never get scale on the operating costs.
International competition is a big problem for little old New Zealand – as small fish how do we now compete in a big pond? We have only a tiny pool of betting money by comparison, and it’s impossible – in this business the little guys don’t win.
Once upon a time, the New Zealand TAB was safe within a domestic market, but now we have no choice but to compete globally. Everything is global.
In Australia, Crown Bet and Sportsbet spent $60m and $40m respectively on advertising for customer recruitment alone. How does New Zealand compete? Each spends around $120m a year on their IT development – we are doing a one-off project to develop a smart-phone app which won’t be launched until next year, and we are not spending anything on the tote.
Returns from the tote are just as important as the fixed-odds, and what might be gained from the new fixed-odds betting platform may be lost from tote betting –the net result may be a ‘standstill.’
Kiwis don’t have the discretionary money to bet more – the wealth isn’t here to do it. Further, when race fields legislation does eventually arrive punters are going to be more aware of the offerings in Australia, and they will become genuine competitors – a recent promotion in NSW TAB betting was the offering tote plus 20% for the first four races.
When John Allen toured the country in February and said he was going to double the number of TAB account holders; what he really meant to say was he wanted to reignite the betting of half the account holders that hold dormant accounts with only a 10 or 20 cents balance.
But that’s not possible. Punters run their balances down to nearly zero or draw money from them when things are tight. Some of those accounts may not have been used for years, or those punters might now be betting off-shore.
So, the real question to be answered is this: Is the NZRB looking at sustaining themselves or the racing industry? Nothing is trickling down to the bottom rung of the ladder and after 14 years – the money is being ‘used-up’ at the top.
Historically, there is only one conclusion to be drawn.
With race fields not a goer in the short term and the scale against their other projects, the NZRB strategy is high risk. Do all the codes fully understand this because nothing is voiced – the racing bodies are quiet and especially Harness and Greyhound.
To put an election slant on the future of racing, I this week attempted to contact Winston Peters who to date has been our most successful racing minister. So far no luck but I’m not giving up on him.
How would Winston view the racing industry if he were in a position to form a coalition government?
Three attempts to phone NZRB’s Kate Richards at John Allen’s office to draw comment on the delay of race fields all failed. No answer and no return from the answerphone message.
Better luck with the NZTR when tracking down Chairman Alan Jackson at the airport in Melbourne.
Jackson said that the appointment of Bernard Saundry as a replacement to the outgoing CEO Alan Purcell was a step in the right direction and he would be an asset for New Zealand racing.
“Bernard had done this journey before, explained Jackson. “When he joined Racing Victoria they had a poor payout and were $48 million in the red – he turned them around.
“Here’s a guy who has dealt with race fields, knows how to price a product; he knows the importance of the thoroughbred getting its best opportunity in Australia.
“He’s got very good relationships with all the organisations in Australia – we can start to address issues like strengthening our organisations, clarifying marketing and providing good support to the infrastructure.
“He has done this work before and very successfully – he has worked with metropolitan clubs, regional clubs and community clubs – everything’s got a place and we may conclude that some clubs may not have a stand-alone place for the future.”
That was an interesting comment from Jackson, suggestive that the arrival of Saundry might coincide with some long, overdue industry rationalisation. It was indicative that the racing industry was at the very least heading for some rejigging.
“Bernard is a shining light,” continued Jackson. He possesses knowledge which will be very beneficial going forward.”