We have a board at TAB NZ dominated by non-racing people that is now blatantly disrespecting its core business of racing, and its actions over the past month paint a bleak outlook for all three racing codes.
Here is a mounting list of complaints that have accumulated against the behaviour of the TAB over the past month:
The TAB board has reduced the distribution to the codes by $15 million this season despite having $89 million on deposit.
The reduced distribution has caused Harness Racing NZ to reduce stakes by 10% from 1 February, with NZTR under threat to act similarly by season’s end.
TAB CEO Mike Tod consistently contradicts himself and displays naivety about the intricate workings of NZ racing and wagering.
A TAB NZ board member’s claims of communication between NZTR and TAB NZ reaching a level of excellence is now openly denied by the NZTR CEO and Chair, who last week complained that TAB NZ refuses to communicate and answer questions.
The 1951 formation of the TAB to specifically act as an organisation to financially support the thoroughbred and harness racing clubs of NZ has degenerated into a TAB displaying only self-preservation with diminishing concern for racing.
The cost-saving measures introduced by RITA to curtail the extravagant costs generated by the NZRB era of Hughes/Allen have gone out the window with a new ‘spend-up big’ regime with apparent impunity under Tod.
Tod’s claim in the TAB Statement of Intent 2023-2025 that: “ the 2021-22 financial year was the most profitable in the TAB’s 70-year history” is an untruth when you deduct the ‘racefields’ (BIUC) income and betting duty rebate, which came from Messara Review recommendations into legislation and had nothing to do with the core business of the TAB – all they do is collect it and distribute it on behalf of the codes.
TAB NZ produced a poor result last season, with only $140 million in profit from its core business, a figure similar to 2017.
The Australian-based Paul Bittar left the TAB board to negotiate the partnering of the TAB through his own company with the reason given as ‘conflicting interests. Does a conflict of interest become ‘insider trading’ if a commission is earned once the ‘partnering’ is finalised?
The TAB replacement director for Paul Bittar, nominated by the codes, has been rejected, and the TAB is now recommending its own choice of replacement – a move entirely contrary to Clause 45 of the Racing Act 2020 relating to the appointment of directors.
TAB had failed to post its 2022 Annual Report on its website by 28 December despite the fact I received a copy five days ago, and it’s attached.
Without the circled injection of ‘racefields’ and the betting duty rebate, the figures are poor
New Zealand racing has sunk to low depths. Self-interest, lack of knowledge, poor communication, lack of transparency, and mixed messages leads one to believe the serious malaise has developed into paralysis.
At a stakeholders meeting at Te Rapa last week, TAB CEO Tod told attendees that TAB NZ had lost its 18 to 35-year-old customer base to Bet365 because of fashion or trends, citing Bet365’s marketing practice of advertising on porn websites as another reason.
He told me the same thing in an hour-and-a-half meeting in his Auckland office two months ago. He would not accept my assertion that the betting product and odds offered by TAB NZ would not compete with any major betting agency operating out of Australia.
Tod believes that partnering and geo-blocking are the answers to all our woes. Partnering is inevitable, or the TAB will go broke – that’s why they are feathering away a nest egg now amounting to $89 million and not arresting the decline of racing and putting it into stakes.
VPN can by-pass geo-blocking
Geo-blocking betting in NZ will not work with the TAB in its current state. They’re saying it will give them a $150 million windfall, but that’s delusional. Included in the ways to bypass geo-blocking is using a VPN (Virtual Private Network) which gives the user anonymity and hides your IP address as it tunnels information between your device and the remote server.
Tod said at the stakeholders meeting that after consideration of four potential partners for the TAB, they had narrowed it to two. A decision on the successful applicant would happen at a forthcoming board meeting, but the announcement would not come until late March.
Partnering could produce an upfront windfall in the region of $100 million, but in light of recent events, how much of the money would return to racing to revitalise stakes?
Sport is pressing hard for a bigger share of the pie, and the board is sport dominated. The codes failed to get together to draw up a commercial agreement to present to the TAB, as clearly defined in the Racing Act of 2020, and as a consequence, the tail is still wagging the dog.
The commercial agreement could have pressed home The Racing Act’s Clause 57, which says, under the heading Objectives of the TAB, “The Objectives of the TAB are (a) to facilitate and promote betting and its profits for the long-term benefit of NZ racing.”
Without a commercial agreement, the codes gave up their commercial right to enforce the legislation upon the TAB, so no mechanism exists to hold the TAB to account, and that’s why the tail’s wagging the dog. That is what happens with poor leadership and too much time spent in Australia.
That miserable failure is the fault of the code directors, who appear to have failed to read the legislation, leaving the codes exposed. Where’s the accountability?
The TAB is cherry picking the legislation, and the parlous state of racing doesn’t appear to be a concern at the Chair or CEO level at the TAB, and the corporate gobbledygook messages contained in the annual report will not be understood by racing people.
Recent Tod writings might define him as racing’s new Jeykll & Hyde.
On 28 November, the TAB posted its Statement of Intent 2023-25 on the tabnz.org website in which CEO Mike Tod wrote, “TAB has weathered the storm” and “forecasts point to continued growth in distributions and payments flowing through to racing and sports in New Zealand.”
Four days later, on 2 December, Tod wrote to the CEOs of the three codes to inform them the distributions in the current season would reduce by $15 million, from $175 million to $160 million.
Statement of Intent conflicts with letter to codes
The Statement of Intent and the letter conflict; they bring to mind the infamous story of Dr Jeykll and Mr Hyde – a good and positive view on the one hand but a darker reality on the other.
The letter to the codes also warned about the possibility of future reductions in distributions while painting the TAB as the good guys in displaying leniency when considering the reduction.
It said: “The TAB NZ Board considered reducing distributions by $24 million (or 14%) but ultimately determined the balance sheet afforded the opportunity to ease the impact that will be felt by the Codes, whilst still operating in a financially responsible manner as is required under the Act. However, the board considered that a reduction of any less than $15m would likely take TAB NZ below the minimum balance sheet recommendations.”
Distributions get reviewed quarterly these days, so what if the expected downturn in the economy further reduces TAB profits during the third and fourth quarters of the current financial year? Will they further reduce the distributions?
Harness Racing New Zealand has just announced a ten percent cut in stakes commencing 1 February, the distribution reduction for the code lessening its funding by $4.4 million.
The TAB Annual Report, not yet released by TAB NZ, shows a reserve fund of $89 million
It’s laughable but not very funny that TAB NZ has $89 million on deposit because PWC and Grant Thornton advised it to do so, with Tod justifying the withholding of these TAB profits by quoting the legislation, which only says, “TAB NZ must operate in a financially responsible manner.” (Clause 61).
Tod also quotes a clause in the legislation which says the TAB may retain money for ‘harm prevention’ – what a crock! TAB NZ encourages everyone to bet more and more, and the so-called harm prevention clause exists only to satisfy the woke, politically-correct and critics of racing and gambling.
Racing has made no progress through the TAB for a decade and desperately needs Tod to successfully partner the TAB, but don’t hold your breath.
The core business of the TAB of racing is in serious decline, but the TAB continues the camouflaging-window dressing to take the heat off themselves.
Have a read of TAB NZ Annual Report (below), and remember, you read it here first. You will also find it on the Government website, but not on the TAB one, as of today 29-12-2022.
The great trainer passed away peacefully this morning at 12.15 am 23 December 2022, aged 91
Kim Clotworthy described him as a ‘genius,’ Peter Grieve said he was ‘outstanding in every way – he worked and played hard, but the horses always came first.’ Keith Haub: ‘He was half horse and half man – he understood horses and horses understood him.’
Remembering the life of Colin Jillings, by Brian de Lore Published 23 December 2022, updated from a BdL article in The Informant July 2018
Colin Jillings survived ‘the school of hard knocks’ to reach the top
Life was tough for kids growing up during World War II. Along with food rationing, it was a time of economic hardship with a scarcity of commodities and a lifestyle that required plenty of discipline, providing few luxuries.
Such was the early life of Colin Maurice Jillings, born amid the great depression on 11 March 1931 and grew up through the tough war times, which undoubtedly had a bearing on the person he became and the success he would later achieve.
When the war ended in 1945, Jillings was just 14 years old but had already been an apprentice jockey for over two years, having received his indentures for the start of the 1943-44 racing season.
“I was only 12 but put my age up to 13 to start my apprenticeship,” recalled Jillings; “they didn’t ask for birth certificates. It was different in those days – it was the war years.”
Jillings rode in 20 apprentice-only races before getting granted his full apprentice licence, allowing him to ride in open races. But that amounted to the least of this ambitious 12-year-old’s worries; his lowest weight recorded on his first licence read as six stone (38.1kg).
As a 10-year-old, the young Jillings would wander into Ivan Tucker’s stable yard at Ellerslie and be told to ‘scram’ by the leading trainer. On one occasion, after getting chased out the gate, Tucker came around the corner only minutes later to see the young rascal coming back through the gate atop a gelding named Brazilian returning from his afternoon walk.
“Brazilian was a jumper owned by Dr and Mrs Roberts from Huntly,” recalled Jillings in July of 2018. He remembered the circumstances vividly. “No, I didn’t give up going to the stable. I was only nine or ten and then later became the leading apprentice when I was still going to school.”
Jillings wouldn’t go away, and eventually, Ivan Tucker resigned himself to legging him up on the quiet horses, and the association began. Horses acted like a magnet to the young Jillings – hardly surprising with the racing blood flowing through his veins.
His father, Ledger Jillings, had a great love of horses and had spent much of his youth at a trotting stable while his grandfather Henry was a jockey, and his uncle had ridden many winners in the lightweight jockey ranks.
Before wandering through the gate at Tucker’s yard, the Jilling-kid had given the sofa at home many a whip hiding. Racing consumed young ‘Jillo’ and no doubt existed in his mind on the career path he would head down.
In those early days, no difference between discipline and bullying existed, and Jillings recalled: “Ivan Tucker was very tough – he used to get his middle finger and punch you in the muscle on the arm.”
Tucker soon recognised that horses that usually pulled hard would relax and travel for Jillings. He had a way with thoroughbreds and always showed Tucker the required potential.
Colin Jillings aboard Great Scot wins the 1947 Railway Handicap at Ellerslie
But little more than six months into his apprenticeship and just a couple of weeks before his 13th birthday, the young jockey with only a handful of rides behind him he had a horrific fall.
“Riding trackwork one foggy morning at Ellerslie on the number three grass, I fractured my skull when the horse I was riding collided with a horse ridden by Grenville Hughes – Grenville picked me up and helped me get to the hospital. I was out of action for 12 months and put on weight, too.”
Most young jockeys would not have returned, but the young Jillings didn’t lack courage and happily returned to riding a year later. “I was an apprentice jockey for a long time,” explained Jillings, “because I was still going to school.
“I used to catch the eight minutes to nine bus to go from Amy Street to attend St Peters School run by the Christian brothers, and there were a couple of mornings a Brother Lynch gave me six of the best for being late to school.”
“My mother had to write a letter to him to tell him that I had special permission to catch that bus from Ellerslie to Khyber Pass even though it didn’t get me there quite on time. I only suffered that on two mornings, and the problem was then solved.”
Jillings rode trackwork in the morning before going to school and then returned to work at the stable in the afternoon. Despite the distraction, he finished top of the class at St Peter’s in his final year, aged 15.
The young Jillings rode 13 thirds before he rode his first winner, but in his second full season as an apprentice, he notched up 28 wins, placing him second on the apprentice list in the 1945-46 season behind one of the all-time great apprentices of the time, Keith Nuttall.
“I was leading apprentice in 1946-47 but wasting hard,” Jillings proudly recalled. “By then I was walking 7st. 10lb and [G5] would ride 7st., and would start wasting Wednesday, have half a cup of tea at lunchtime, a piece of toast, and half a cup of tea at night time and do the sweatbox on Thursday and Friday nights. We had one at the stable. I used to lose the weight, but it took a lot out of you.”
He recalled the inevitable retirement for Colin Jillings-the jockey: “My last ride was on Super Vaals in 1947 at Ellerslie, and by then I was walking ten stone three pounds (65.4kg) and riding nine stone (57.1), so I was wasting 17 pounds by then – I was always pretty tall. I grew quite a lot in that 12 months I was out.”
Jillings had ridden 64 winners by this stage, was 16 years old, and would have liked nothing more than to have fulfilled his potential as a jockey. He had given his all and had grown too big, but his ability in the saddle didn’t go unnoticed.
Legendary horseman of both codes and gifted writer Clyde Conway wrote this accolade for Jillings in 1957: “One day at Te Aroha in 1946, Colin was riding Kill Fast. He literally pushed his mount up on the line to split a dead-heat with Gay Fault.
Colin follows Brockton and Baggy Hillis after an Ellerslie workout before Brockton’s second win in the Great Northern Hurdles.
“This prompted Charlie Gomer to remark to Skipper Ryan and myself (we were acting as stewards under him), That boy Jillings can ride. Even Hector Gray could not have got more out of that horse than Jillings did. If he could stay light, he could be as good a rider as this country has ever seen.”
Conway continued, “This was high praise indeed, for those that knew him were well aware that Charlie Gomer was never lavish with such comments. Furthermore, his years of reading races had made him a shrewd and hard-headed critic of jockeys and race riding.”
But as Conway himself conceded, “all the ability in the world is no good when you are walking over the nine stone mark and standing five foot 10 and a half inches in your socks.”
After discovering this long-lost quote buried in one of Jillings’ scrapbooks that his mother had carefully kept, Colin remembered Gomer: “Charlie Gomer was a chief stipe, and he was a very tough man – as tough as they come and well known for it.”
Phase one of the Colin Jillings racing career had ended, for try hard as he could to keep his weight down, and failing, a new career now beckoned. The opportunities as a hurdle jockey soon dried up.
The battle against increasing weight for any talented, young jockey with premiership aspirations is invariably about genetics more than a propensity to indulge in pizza. This was certainly the case for 16-year-old Colin Jillings when he rode his last race – a winning one which was the 64th success of his abbreviated riding career.
“My last ride was on Super Vaals in 1947 at Ellerslie, and by then I was walking ten stone three pounds (65kg) and riding nine stone (57kg), so I was wasting 17 pounds by then – I was always pretty tall,” said Jillings
“I became the private trainer for Albert Brownson when I was 19, explained Jillings. Before that, and between retiring from riding and starting training, I worked in the freezing chambers for two or three years.
“I took two horses to Australia and they both won – we sailed on the Monawai on the 1 February 1950 with Lady Finis and Gayriol, and we only took Lady Finis as a mate, but she did that well, and although she was only small, she was very good -she won three and ran 5th in the Doncaster.”
From jockey to trainer: Colin Jillings made the transition with immediate success
With these two horses and the trip away, his training ability began to manifest. As a 19-year-old, from just nine race starters, he collected four wins and two placings – Jillings, the trainer, had hit the ground running.
“In those days you had to be 21 to do anything, so Brownson had to be my guarantor for all the costs that I incurred; I was a private trainer, but all I did, really, was get a wage.
“Lady Finis was only small, but by God she was good. She won three and Gayriol won one but I had Gayriol going for £12,000 at Randwick on an all-up, and she was beaten a nose – a nose after a bad ride – well, I didn’t exactly cry, but there may have been a few tears rolling down my face.
“Lucky I didn’t win – probably would have killed myself with that much money. I came home thinking I was TJ Smith and Bart Cummings all rolled into one, and then Brownson sacked me, and it was probably fair enough, too.”
If Jillings had been feeling a little overly pleased with himself at that point of his career, he soon came back down to earth. Following that speed bump, he found himself out of racing again and down in Kinleith with his uncle to resume his career as a cable jointer.
“At the pulp and paper mill, we did all the cable jointing for them. I was there for about three years living in a two-man hut with my uncle, and we worked six days a week with only Sundays off. It was in Tokoroa that I met Alison.”
Colin with one of his favourite horses, Auckland Cup winner, Perhaps. Colin was inducted into the NZ Racing Hall of Fame and was awarded NZ Racing Personality of the Year.
But the lure of the turf beckoned again. He purchased a gelding named Armed trained at Takanini by Morrie Bowden. Eventually, Jillings took over the training himself, prepared Armed from a farm in Tokoroa, and won a couple of races at Matamata, on one occasion ridden by highweight jockey Jim Gibbs, whose only two rides for Jillings both won.
Armed suffered from unsoundness, but Jillings nevertheless saddled him up to win a Grand National Hurdle – testimony to the trainer’s horsemanship even at such a tender age. Meanwhile, he won a couple of races with Swift View, and the urge to go training full-time proved too great to resist.
Jillings left Kinleith and returned to Takanini, starting out with Armed, Goldbearing, and Durain, quickly made an impression and steadily built up a team of horses and a new clientele.
“I went back to Takanini to train in 1953,” he recalled. “My old boss Ivan Tucker then got disqualified for 12 months about 1954, and he appealed and got an extra 12 months, and that’s when I took over his stable. I moved in, paid him rent and I got Bright Gem, Emphatic and Bertha Fox, and I picked up Yemen as a two-year-old, too.”
In 1956 Jillings won the Auckland Cup with Yemen and married his Tokoroa sweetheart, Alison, a marriage of 65 years until Alison’s passing in 2021 at the couple’s townhouse at the Sir Edmund Hillary Retirement Village in Remuera.
On marriage, Jillings would joke: When you marry, you get an asset or a liability; well, I got an asset,” and then after a pause and a grin, he retorted, “marriage is like a three-ringed circus; first you get the engagement ring, then you get the wedding ring, and then you get the suffering.”
Jillo – well-known for his quick wit and memorable quotes
‘Jillo’ as he affectionately became known, all his life had his trademark legendary quick wit and humour, for which he became as famous as for turning out top horses. Always a deep thinker, he had a quote for every occasion, such as, “fools rush in where angels fear to tread,” or “we’ll keep going ahead even if it’s ass-over-head.”
One-time fellow Takanini trainer Frank Ritchie had many days of laughing at the Jillings rhetoric at trackwork and remembers him on one occasion saying: “ya know ol’ son what life’s biggest problem of all is? – the green monster.” He said, “jealousy – never, ever let it get you.
“The other thing he used to say was,” continued Ritchie, “‘never, ever let them know you’re hurting.’ He was talking about a losing bet or losing a horse to another trainer, and he said, ‘even if it’s killing you, never, ever let them know it’s hurting.’”
But while Jillings may have been the ‘poet laureate’ in a different age, he churned out the winners that placed him on a special level in the world of racing. Numerous runs of cheering home Jillings-trained winners far outweighed the occasional bout of ‘hurting’.
If a better trainer than Colin Jillings has lived in the history of New Zealand racing, then it’s an academic argument only – a bit like comparing Frankel with Phar Lap.
Jillings himself modestly put his success down to good fortune but did concede this: “I had a lot of luck as a trainer, but I worked hard at it, and it’s like everything in life – ‘as you sow – so shall you reap.’ I had a good horse every year but never had a big team in work. Today, it’s a numbers game, but I had a personal, hands-on approach.
“Care and attention were the most important factors for me,” came the Jillings answer he shot back to the question of ‘getting the best from your horse.’ None of this ‘she’ll be right’ – it’s got to be right.”
That manner of precision and work ethic saw Jillings train 1,372 career winners, including 703 in partnership with Richard Yuille, from a career that stretched 54 years from 1950 to 2004. Great thoroughbred names such as Stipulate, Yemen, McGinty, Uncle Remus, The Phantom Chance, Brockton, Perhaps, Lawful, Honourbright, Tiger Jones, Old Son, Port Royal, El Tombo, Sharivari, Beauzami, Springtide, Silver Image, Gold Ducal, Marquess, Athenaia, Shamrock Queen and Biltong only to name a few.
Long-time friend and owner Peter Grieve said of Jillings, “I went away with him a lot, and the horses always came first. He had two-year-olds, jumpers, stayers, fillies, Cup horses – everything; he could train them all equally as well.”
“Stipulate was the best horse I ever had – when I think what he went through,” said Jillings when pressed for a favourite. “He was a great horse; really tough – was he good! He won the Auckland and New Zealand Cups, should have won the Wellington Cup – he got beaten narrowly by Great Sensation, and it was my fault.
“I’d eased up on him a bit before the race, but he came out on the last day and beat the best weight-for-age field you’ve ever seen. And he bolted in. He was a stallion but was quiet – he wasn’t one of those that would roar or anything like that – a thorough gentleman, a great horse to train – tough – you could hit him with an axe, and it would bounce off him.”
Auckland Cup winner Perhaps also became a Jillings favourite. He said: “She was beautiful, Perhaps, you could have brought into this lounge – she had such a kind temperament. Sandy (Warren Sandman) who owned her was just the greatest man and owner you could have ever wished to train for.”
He did not suffer fools
Jillings didn’t suffer fools very easily and was notoriously tough on jockeys, but regular rider Bob Vance and the trainer had a long and successful association that survived the odd difference of opinion and developed into a bond of massive mutual respect.
“He just had a great eye for the small detail, said Vance. “You could walk a horse to the track, and if there was a problem, he would spot it from 50 metres away – he would tell you to go back and fix it. For the small detail, he was superb.
“He never had a big team, but his planning was unbelievable. When we went to the Cox Plate with The Phantom Chance, he knew what he was doing every day before he went.
“And he invariably always had the horse 100 percent on race day. He would target a big race and knew he would get the best out of his horse on that day. Everything had to be perfect for him down to the smallest detail – stuff most trainers wouldn’t think about.”
On Vance, Jillings said, “I put him on everything, but when I gave him instructions, he could carry them out to a tee. One day he drew 18 at the barrier in a two-year-old race, and he told all the other jocks behind the barrier, ‘watch out you fellas, I’m going straight to the fence,’ and he said there was only one jockey he was frightened of in that race and that was Chris McNab.
The Colin Jillings trained McGinty defeats Marscay in the 1982 Todman Slipper Trial at Rosehill
“But he got to the fence, and he won the race. He rode Uncle Remus as an apprentice, I might be a bit biased, but by god, he was a good rider – a really top rider.”
Of all the characters associated with Jillings over his long career, none has been more colourful than racecaller and McGinty part-owner, Keith Haub. In Australia in one of McGinty’s pre-race press scrums, Jillings was asked by the local scribes if all was well with McGinty going into the race. Jillings replied, “the horse is well, but it’s the owners that are the problem – one is a millionaire, and the other one thinks he’s a millionaire.”
It was yet another example of the Jillings quick wit and command of language although there was more than just an element of truth in that jibe. Haub and Jillings remained firm friends, and the pair always got together with Peter Grieve for regular catch-ups.
“He’s so clever, Hauby,” said Jillings. “There was no better auctioneer; he could sell property; there was never a better racecaller; he could sing and play the guitar as good as anyone – and he could have done anything in life he wanted to.”
On the other hand, Haub rated Jillings a steadying influence on his life: “Very strong on principles,” said Haub. “He had a huge effect on my career – he kept tabs on me. He’s highly principled, and he always listened carefully to everyone – he was a great student of life and took everything in.”
Some people just might construe that if Jillings was keeping tabs on Haub’s life then he must have suffered numerous distractions – but that’s another story.
And just as Frank Ritchie had earlier related, Haub’s take of Jillings as a deep thinker also brought him to tell Haub, ‘the disease that people have and they don’t know what it is – jealously. They don’t know they’ve got it.’
“Watching races from the stand, he hardly ever used binoculars, and he could analyse a race with the naked eye as good as I did with binoculars and still know everything that happened in it.”
In later years, Jillo’s eyesight failed him with macular degeneration setting in, but his memory and wit always remained sharp, and this legendary Hall of Famer, former Racing Personality of the Year and recipient of the Award for Outstanding Contribution to Racing, will never be forgotten as long as racing exists.
And the good times he had with his very good and close mates will remember fondly how he would often address them affectionately as ‘old son.’
A celebration of the life of Colin Maurice Jillings will take place in the Newmarket Room of the Ellerslie grandstand on 5 January 2023 at 2.00 PM.
A poorly performing TAB NZ last week announced to the three codes that distributions would be reduced for the current season, a move that places the present low levels of New Zealand thoroughbred prizemoney in jeopardy and further undermines the future of racing in New Zealand.
If you thought that the New Zealand racing fraternity’s morale had sunk to record-low levels by the middle of this past year, then think again. This announcement has plummeted the outlook to Mariana Trench depth.
TAB CEO Mike Tod responded promptly to The Optimist’s request for an explanation for the reduction and the current state of TAB’s finances.
Tod said: “TAB NZ will reduce distributions by nine percent in the 2022/23 financial year (year ended 31 July 2023).
$175 million reduces to $160 million
“Total distributions to the thoroughbred, harness and greyhound racing codes are anticipated to fall from $175m in the 2021/22 financial year to around $160m million for this financial year. The $15 million decline will put overall distributions on a similar footing to the 2020/21 financial year.
“The drop in distributions is a reflection of multiple headwinds facing the business, not least the battle TAB NZ is in with offshore operators for New Zealand-based customers.”
Thankfully, NZTR has $24 million of stakeholders’ money on deposit and the current stakes level, as low as it is, will be maintained through to the end of the season. What happens after that is anyone’s guess, but it could be ugly.
Mike Tod does not specify the ‘multiple headwinds’ but those following TAB NZ’s progress from NZRB and RITA days through to TAB NZ which commenced with a new board on August 1st 2020, could have predicted this whirlpool of decline which is another nail in the coffin of domestic racing in New Zealand.
Worldwide wagering has metamorphosed in the past five years with mergers, the opening of the USA market and hundreds of millions of dollars spent annually by a plethora of aggressive corporates attempting to gain a competitive advantage.
Wagering scale was always the problem
Here in good old conservative NZ, we have lived in a wagering bubble, seemingly oblivious to the outside world and pretending we are doing nicely while stuck in reverse gear. Whatever wagering scale our TAB lacked five years ago, the gap has further widened.
Looking from the outside in and identifying our biggest problem four and a half years ago, the Messara Review urged NZ to immediately investigate partnering the TAB and predicted we could double prizemoney by enacting a suite of 17 recommendations. Racing Minister Winston Peters agreed until the Kiwi oligarchs got in his ear and scuttled the notion.
And now, with the highest inflation for over 30 years and a dramatic rise in the cost of living affecting the expendable dollar, the TAB’s profit has shrunk and it’s now a wounded animal cowering in a corner.
CEO Mike Tod inherited the demise
To be fair to CEO Mike Tod, his tenure commenced only in March of this year and his current problems come inherited from previous administrative regimes with the most damage done before his arrival. The turnover in August and September rose through aggressive promotions but profit fell in the same months compared to 2021, and the only figure that matters is the bottom line.
October figures posted on the TAB website this past Thursday came up ugly. The month produced a profit of only $12 million (-13%) compared to the $13.8 for October 2021, despite increased turnover. October was the first full month of the ‘no deductions’ promotion which can only increase turnover, but simultaneously can only lessen the profit line. Substantial losses could occur in some races where multiple late scratchings result from a track downgrade after rain.
The first quarter result for this season shows profit decreased by $2.8 million for the same period in 2021. If you believe the economists who say things will worsen by the middle of next year, that figure could easily blow out to $15 million or more by the end of the fourth quarter.
Tod: Inadequate regulatory settings
On the question of how he intended to tackle these problems, Tod told The Optimist: “Inadequate regulatory settings are seeing increasingly intense competition from much larger unregulated offshore operators, the tightening economic conditions are putting pressure on Kiwis’ discretionary spend, and there continues to be challenges with racing abandonments and small field sizes.”
Does Mike Tod understand that small field sizes are a direct result of inadequate distributions which delivers poor stakes money resulting in reduced ownership? – it’s called a Catch-22
I asked him if he agreed that a reduction of distribution to fund prizemoney levels would speed up the shrinkage of ownership numbers, foal numbers and consequently the number of racehorses in work. And when those groups reduce we will have fewer race meetings with smaller field sizes which result in decreased TAB turnover, thus strengthening the headwinds to which he refers.
He responded: “It is a matter for the Codes to advise on how they will manage the impact of a cut to distributions and any flow-on effects.”
Tod: cost pressures in this environment of global high inflation
Tod continued: “Alongside this, TAB NZ is facing significant cost pressures in this environment of global high inflation, while also needing to deeply invest in its customer experience, brand, infrastructure and gambling harm minimisation to ensure that it can compete against these behemoth offshore operators.
“We estimate that Kiwis are losing up to $150 million annually to those unregulated offshore operators. That is money that could be staying in New Zealand for the betterment of racing, sport and communities with a simple change to the regulatory settings. This is a matter that we are actively engaged with the Government on.”
Tod’s estimate of a $150 million loss annually might be ‘a long stretch of the bow.’ It’s impossible to calculate a figure because it’s private credit card information, and the only guide we have is the figure released by Kiwibank. They said last March they processed $30 million a month to online gambling sites, of which 80 percent is off-shore.
Online betting surged during COVID lockdown
Kiwibank represents only four percent of the banking market, so the total figure might amortise out to around $72 million annually for the entire country. The bulk of this figure is expected to be online casino-type gambling which surged to these levels with the onset of the COVID-19 lockdown.
Few people will know that TAB NZ has $85 million on deposit, and intends building it to $100 million. When I asked Tod why the TAB is compelled to hold a reserve fund, he responded thus: “We need to ensure that we hold appropriate balance sheet strength to ensure the long-term viability of the business.”
He also added: “Under the Racing Industry Act 2020, TAB NZ is required to operate in a financially responsible manner and if it were to maintain distributions at the current level, it would likely breach recommendations made by PWC and Grant Thornton to maintain a strong balance sheet. The advisory firms issued the recommendations at the time the Government provided funding support when the racing industry was brought to a standstill by the initial Covid-19 lockdown.”
I take issue with Tod’s above comment because, while the Act requires the TAB to be responsible about money management, it says nothing about retaining money that rightfully belongs to the entire racing industry. The TAB grew out of the need to financially support the thoroughbred and harness racing clubs, not to collect betting profits to invest and build wealth as a corporate entity might.
Tod: We are required to operate responsibly for a sustainable future
In a letter Tod wrote to the codes last week to announce the distribution reduction, he said: “Under the Racing Industry Act 2020, TAB NZ is required to operate in a financially responsible manner to remain a sustainable business for the long term.
“In 2020, during the first Covid-19 lockdown and in light of the Government’s $72.5m Covid-19 racing support package, the Racing Industry Transition Agency took advice from both PWC and Grant Thornton to ensure that the future TAB NZ business would have independent analysis on what the business’ adequate net asset and minimum capital requirements should be, in order that TAB NZ would be able to meet this statutory obligation.”
The above statement typifies an administrative attitude of governance by people with no stake in the industry they govern. They appear to lack interest in the preservation of the horse industry and are disconnected from the problems facing racing. They have sadly prioritised preserving themselves over the industry.
The letter further stated: “If TAB NZ was to maintain distributions at $175m for FY23, the business would likely breach these balance sheet recommendations and put its ability to withstand any future shock at risk.”
PWC and Grant Thornton don’t understand racing
The problem with the PWC and Grant Thornton recommendations is they make them not giving a toss about the future of the racing industry.
The three big issues coming up for Mike Tod soon concern his support for geo-blocking New Zealand punters, rebranding TAB NZ, and partnering the business with an overseas corporate.
Tod told me six weeks ago he believes the current brand of ‘TAB NZ’ is not trendy and that the younger demographic of New Zealand punters has deserted the TAB for the likes of Bet365. In view of the distribution reduction, I asked him if it would still proceed and how much would it cost.
Tod said: “Work on the future direction of the TAB NZ brand is well advanced and a decision is expected in the first quarter of next year.”
He made no mention of the cost but independent information supplied says it would be in the range of $12 million plus.
On geo-blocking which would require a legislative change to the Gaming Act of 2003, he stated: “We are actively engaged with Government on potential changes and are expecting an update within the next two months.”
TAB partnering crucial for sustainable racing
The third and most important item for Mike Tod comes up next week when he will meet with potential partners with the prospect signing a partnership arrangement for the TAB in 2023. The success of this negotiation should be seen as the only long-term saviour for New Zealand racing.
If they do it right it will greatly enhance their income while substantially reducing costs, provide New Zealand punters with a vastly improved service, and potentially increase stakes money to a sustainable level.
Tod’s letter to the codes last week also said:
“Four international businesses will deliver proposals in person for a partnership with TAB NZ on 12 and 13 December. Our Board will meet before Christmas to decide whether to move into formal negotiations in the New Year with one or more parties.
“I have been deeply heartened by the level of engagement from the Chief Executive Officers and their due diligence teams over the past three months, and I am expecting to see distinctly different proposals from each party.
“If a preferred partner is identified, we are currently targeting the third week of January for a meeting of Chief Executive Officers from the Codes and representatives of the preferred party/parties.”
