Month: January 2022

This lone fisherman’s take on the new TAB CEO appointment cleared the early morning mist before a successful catch

by Brian de Lore
 Published 20^th January 2022

TAB NZ’s Monday announcement of its new CEO revived memories of more than seven years ago when John Allen’s name occupied the press release as the new CEO of the New Zealand Racing Board (NZRB), name-changed to RITA in 2019 and now known as TAB NZ.

The obvious common denominator between John Allen and the appointment of new man Mike Tod is no wagering or racing knowledge. The similarities go deeper in that both gained the appointments from new boards with chairs possessing no wagering or racing knowledge.

And those chairs, Glenda Hughes then, and Mark Stewart now, have come as selections from Ministers of Racing, Nathan Guy and Grant Robertson respectively, two politicians from diverse backgrounds but with scant understanding of the business and certainly no wagering or racing background.

Seven years ago, the Guy, Hughes, and Allen trifecta proved financially crippling. Against all industry advice, they exhausted all available industry cash reserves and guided racing recklessly into massive debt and insolvency, and then they left to do other things. Recently it has come to light that the same team turned down a massive offer for partnering in 2017 without consulting the industry.

The new seven-year cycle trio of Robertson, Stewart, and Tod couldn’t possibly do worse, but history is against them turning around an industry with a multitude of problems of which they have a meagre understanding. It’s the not sticking to your knitting senario, having no skin in the game, and repeating failures – revalidating Einstein’s definition of insanity.

The view of the lone fisherman

Repeating those criticisms brings on more delirium for this writer. Better to seek an independent opinion and ask a thinking lone-fisherman with a lifetime of racing experience both here and in Australia; a man who fully understands the vagaries of the TAB and its strengths and shortfalls; a man with an ability to clear the fog and articulate his thoughts with clarity; a man who in his time would have made an ideal CEO of the TAB.

His name withheld for obvious reasons, but for this blog, let’s call him Sherlock Holmes due to his extraordinary skill in ‘detection,’ an adroitness he uses primarily today to seek out Snapper, Kahawai and Kingfish in our better fishing waters.

On Monday, I emailed the press release to my fisherman friend, Sherlock, and asked if he had any thoughts?

“What gets me is this sort of stuff” – fisherman

Sherlock aimed his first retort squarely at the language: “What gets me is this sort of stuff . . .’deeply customer-centric leader with extensive experience in key areas of focus for our organisation, including product and service innovation, marketing, brand and consumer engagement. His appointment and those areas of focus will allow us to drive further revenue growth for our racing and sporting stakeholders.’

“I have never in my entire life (and I’m three-quarters of the way to a century) heard anyone talk like this. It is as removed from everyday English as a passage from Hamlet. But Shakespeare’s works are confined to the stage. This Stewart fella is writing a press release. Can he not communicate with racing people in their own language and manner of speaking. Why this bureaucratese, this gobbledegook? My guess is that it is designed to obscure rather than illuminate.”

The full press release may be found at: https://www.tabnz.org/tab-nz-appoints-mike-tod-new-ceo

But what about Tod’s long list of jobs, I asked Sherlock?

“Yes, you are correct to bring up Tod’s constant changing of jobs. If he was a whiz at TVNZ, Fonterra, and Air New Zealand, why is he not now on a path to become CEO of one of those organisations?

“He’s a non-racing person in an industry where everybody involved has to be committed to the sport. Unlike air transport, banking, television and dairy produce, there is no reason for racing to exist. That it does exist comes down to its participants being passionate about it. Their lives would be empty without it. It’s their faith.

“On that faith note, all the great religions of the world insist that their Popes, Archbishops, Grand Muftis, Dalai Lamas and so on kick off their careers at the basic entry-level and work their way up. The military — another area of life that people join because of their love of the life it provides — is strict about this, too.

“On a brighter note, a Harvard Business School education would have contained lessons on how to keep a bureaucracy — which the TAB undoubtedly is — lean and streamlined. Here’s hoping Tod was focused on the days those lectures were given.”

The Sherlock Holmes observation that racing needs a commitment, and racing exists only because of the passion, poses the next question – do the mainly non-racing, non-passionate people now running racing see it as dispensable with sport increasing its percentage of turnover and increasing its share of the pie?

When Mike Tod arrives in March, he will discover the TAB’s best period of profitability in recent times came when NZ racing went into lockdown, during which time betting turnover rose but the industry saved the distribution of prizemoney until racing recommenced.

Another worry for all racing today is the government threat of banning greyhound racing in New Zealand (like the ACT in Australia). Twice now, the industry has received a ministerial warning on animal welfare issues, and in this ever-increasing woke-world of political correctness and increased polling by the Greens, who knows if the dogs will go to the dogs.

After banning greyhounds, the nutty animal activists would then come after the horse industry in increased numbers. The non-racing, mercenary graduates of the Directors’ Institute that currently dominate racing’s administration might not care if a new TAB business plan identified NZ greyhound racing as dispensable and could have a replacement in waiting in the form of other overseas betting mediums.

Racing has no reason to exist other than a passion for horses

Sherlock the fisherman has reminded us that racing has no reason to exist other than its participants’ love of horses and their passion for racing them. But the game has declined, and the divide between the participants and the game’s administration has created increased tension, especially in light of unsustainable increased running costs at NZTR.

Very little information has flowed from TAB NZ to interested parties since the new board took control on August 1^st. The codes have failed in their duty as specified in the Act to draw up a commercial agreement, take it to TAB NZ, and stop the tail wagging the dog. Yet, the legislation will be two years old in July.

The TAB supposedly acts as a service provider to the racing -The Racing Act 2020, clause 57 says: The objectives of TAB NZ are—

(a) to facilitate and promote betting; and to maximise—

(i) its profits for the long-term benefit of New Zealand racing.

But that isn’t happening; administrators ignore the legislation at their convenience, and the codes collectively have failed to come together for a show of strength and invoke the part that would devolve the power base.

Instead, NZTR concentrates on compliance issues. This past Monday, a party of six NZTR employees went Air NZ to Christchurch and Dunedin (at what cost?) to preach regulatory changes to horse trainers about coming restrictions on the issuing of trainers’ licences. Is this just another exercise in increasing bureaucracy while adding no value to the racing product?

While NZTR sweats the small stuff, the TAB hasn’t changed its ways. Why, for example, in its 2021 annual report notes to the financial statement, does it say on page 43, “$16 million relates to TAB NZ general cash funds invested in term deposits as part of TAB NZ’s normal investment strategy.

The TAB has never had a financial strategy (or should it have) to invest funds – they have simply made that up as an excuse to withhold funds for uses other than distribution to the codes for prizemoney.

TAB NZ is a body corporate, not a private investment company acting for shareholders. And under the influence of this government, it has made less than a wholehearted effort to maintain an equilibrium for a sustainable racing future – a blight on all those involved.

Most people involved, including the Racing Minister and the majority of the TAB board, will not understand the meaning of a sustainable racing future – they are simply not au fait with the real issues confronting racing to point this failing business in the right direction.  

 

by Brian de Lore
 Published 7th January 2022

The thoroughbred racing industry in New Zealand continues to plot its own path to penury with hapless decision-making, a lack of empathy for the stakeholders, and an apparent inability to recognise ‘the fix’ or the changes required to make racing sustainable.

The dawning of 2022 hasn’t thrown up any new hope, in my view, for a failing industry run by lightweights incapable of righting the course of the ship. Essentially, it comes back to leadership and the quality of the people in charge. Too many involved today have entered racing from the outside because of directors’ fees or the offer of an executive position with a hefty salary.

It’s no longer about people with a racing passion. Whatever way you assess it, the system and structure is broken and badly needs a trip to the ‘The Repair Shop.’ Only a major overhaul will suffice; the Racing Act of 2020 is not the panacea Winston Peters said it would be – it opened the door for more government control and a faster decline.

The narrative and tables that follow in this blog show conclusively that racing’s future is financially unsustainable with the current structure using the same people. The factual figures drawn from industry publications are uncontestable. They come from Size and Scope Reports, Annual Reports, Stallion Registers, etc.

Let’s compare two figures and try and make sense of it. In 2004 we had 1,434 registered trainers, and the Racing Integrity Unit cost $1,188,214 for the season. In 2021 the number of registered trainers had reduced to 790, a decline of 44 percent. But the RIU, which is now the RIB, will cost $14.2 million this season – an increase of almost 1200 percent from 2004.

Racing in the 2004 era didn’t particularly have an integrity problem out of the ordinary, and the scrutiny of trainers is only a tiny area of its jurisdiction, but how do you equate an almost halving of the number of trainers over 17 years during which time there’s a 12-times increase in the cost of integrity?

Over-indulgence in the use of industry money for administrative expansion over and above putting it into stakes isn’t a new trend for racing. NZRB, when run by Glenda Hughes and John Allen, blew $200 million of potential stakes money when they signed up the TAB for the Fixed Odds Betting Platform instead of outsourcing the service to TABcorp or Sportsbet. They walked free, and we inherited the legacy – that’s justice for you?

When they departed the carnage, we all thought the ‘gravy-train’ had finally derailed itself. But no, NZTR had already climbed aboard. In the 2004 to the present era of comparison in the accompanying tables, it’s safe to say racing has declined by 25 to 30 percent overall. But against that trend, the cost of running NZTR far exceeded the CPI index by rising to $10,890,239 or just on $210,000/week for last season, an increase of 271 percent on 2004. Salaries for the same period rose 631 percent to $4,124,624.

If a counter-argument to justify current costs could be mounted through a revival of industry fortunes, my accusations would be less impactful. But exponentially rising costs for an owner to go racing against the potential return, tells us the angle on the descent graph has steepened in the last year.

Worst still, NZTR costs will rise again this season. It has created a new position and employed a Chief Operating Officer, one rung below CEO Bernard Saundry. The board also plans to open an office in Cambridge (and at what cost?) because Waikato is the hub of the industry, and the location better suits the Auckland-dominated board. Given the state of racing, the move has no justification.

The board apparently had initially planned to shift the entire NZTR staff to Cambridge, but when several said they wouldn’t go, having two offices became the plan which has remained reasonably hush-hush. Chairman Cameron George, who has resided in Australia for the past year, said when elected in November 2020, he would run NZTR transparently, but quite the reverse has resulted.

Missing in Australia for an entire year, George now isn’t alone. CEO and fellow countryman Bernard Saundry flew to Melbourne the week before Christmas, so will either ever get back? Unless Minister of Racing Grant Robertson has issued a pre-departure return pass for Saundry, the COVID-19 website states that a ‘critical purpose to travel’ to New Zealand is required to enter New Zealand – and that’s for New Zealanders.

Saundry’s replacement will soon be announced, as will replacements (2) for the NZTR board. Short of Peter V’landys, who could turn this shambles around and make it work?

Today is January 7^th, but if you’re a trainer looking to plan a campaign for your horses, after March 21^st, nothing appears on the website for race programming or stakes money. My information is that NZTR’s promise last July to announce winter prizemoney from April onwards by Christmas did not happen because ‘they forgot.’

In a lame-duck press release sent to stakeholders on December 23^rd, NZTR blamed the Delta variant and its effect on gaming income as the reason the stakes announcement didn’t happen and isn’t happening now until February. Why did they say that when gaming income has never factored in providing stakes for racing – someone made it up, with both George and Saundry’s signature on it dated the 23^rd  and neither in the country.

Like other press releases, they told readers how wonderful they’re doing with the usual spin that makes your eyes glaze over.

Last October, they sent stakeholders an NZTR Directions Update after receiving 40 submissions. Given their past record and the fact that the board is very upper North Island top-heavy, how can they be trusted on the following themes considered for changing at their February meeting.:

• Venue classification

• Investment of increased prize money – new initiatives Vs lower grade racing.

• Venue sale/use of assets for national, regional, or local purposes.

• Strengthening of certain areas in the North and South, possibly at the expense of other areas.

• Rotation vs Permanent placement of proposed initiative events.

Sorry, but where’s the NZTR record of good money management and cost control? None exists, so why would a Dargaville or a Timaru Club gladly hand over its 100-year built-up assets to an organisation which is just as likely to build itself a flash office block in Cambridge or have another round of salary increases?

NZTR has failed to draw up a commercial agreement with the other two codes and take it to TAB NZ, despite that direction having appeared in the Racing Act of 2020. That failure has cost the codes dearly as TAB NZ has $13 million on deposit that should have come down to the codes for prizemoney. Previously I identified that problem in “What TAB NZ doesn’t want its stakeholders to know,” published on November 2^nd.

The latest NZTR’s Annual Report on page 13 says the following under, ‘nztr statutory role’:

(e) to distribute revenue received by the code to racing clubs registered with the code.

Then go to page 35 and see they have a total of $8.5 million on term deposit that, under their statutory obligations, according to the Act, should have gone to the clubs for distribution as prizemoney. NZTR had only $1 million on term deposit in the previous year. This is a cut and dry case of wrongful withholding of monies belonging to the pool of stakes money. It’s called defrauding the clubs and consequently the owners.

Racing doesn’t need this sleight-of-hand carry-on; it needs to survive and deliver everything it can to the grassroots. The clubs are the heart and soul of racing; it’s where the thousands of volunteers turn up as committees and workers because they have a passion for racing.

New Zealand can’t achieve Flemington and Randwick quality racing by selling up its grassroots to fund it – Australian racing has five levels of racing, and each exists to support the next level up. Our problem is we have five levels of administration, and none appear to be better than mediocre.  

Everyone who has thought about it knows deep down racing has to change dramatically to survive –  instead, we are in denial heading down a sinkhole. How do you keep justifying increased running costs for an industry in a severe state of numerical decline? The tables herewith tell the story.

Racing through NZTR doesn’t convey the truth; it covers up to make things look okay. And it lacks the fundamental integrity and passion of the people who ran it successfully in the previous millennium.

Footnote: The number of breeders in 2004 of 3,156 owned an average of 0.88/broodmare. By 2021, although increased in number to 3,868, the average ownership diminished to 0.34/broodmare.