Category: Year 2018 Stories

by Brian de Lore
Published 20 December 2019

Racing stakeholders frustrated by the apparent lack of action to get the Messara Report implemented and the industry overhauled can now rest assured that plenty of action has been taking place behind the closed doors of NZ First and the DIA.

Evidence of the work already completed by Wellington bureaucrats surfaced late last week when the newly appointed Ministerial Advisory Committee was named and came together at short notice in the Wellington NZ First office of Minister Winston Peters for a 50-minute briefing which preceded the Committee’s first meeting.

With the exception of the inspired choice by the Minister to name former Southlander Dean McKenzie as Chairperson, the other four members were advised of their call-ups relatively close to the meeting and received their 194-page briefing papers only 24 hours prior.

McKenzie was appointed Chairperson about a month ago but was briefed to keep the appointment to himself while the Minister and his team worked on selecting his fellow committee persons.

In addition to McKenzie, the committee consists of Liz Dawson MNZM, Kristy McDonald QC, Bill Birnie CNZM, and well-known owner-breeder and New Zealand Bloodstock Chairperson Sir Peter Vela.

McKenzie who said he was now working daily on achieving the Committee objectives told The Informant, “This is a team of people who all bring their own set of skills to the table. If we were all the same, that would be a concern. But we are a diverse group, and everyone has a background in racing and that’s an important theme in the group.”

Minister Peters who left soon afterward for the USA and wasn’t available for comment this week clearly showed he was applying a hands-on approach to the industry overhaul when he vocalised the Terms of Reference at the briefing, impressing both McKenzie and Vela.

Most of the racing industry is well familiar with both McKenzie and Sir Peter Vela and should be very supportive of their appointments. Bill Birnie, on the other hand, is a lesser known who was appointed to the board of NZRB around August 2017 and only a year ago was awarded a CNZM for his service to governance, the arts and sport.

Birnie is an investment banker who came through the Fay-Richwhite system and has served on the boards of High-Performance Sport New Zealand, the New Zealand Equestrian Federation and is on numerous arts trusts. Animal welfare activists will be relieved to know that Birnie is currently a trustee of Pet Refuge New Zealand.

The two other members of the committee are both highly credentialed in their fields and do know the racing industry. Liz Dawson MNZM is currently a director of New Zealand Cricket, Hurricanes Ltd, St Kilda Football Club (Melbourne) and is also a board member of the New Zealand Olympic Committee.

She was also formerly on the boards of the NZRB (2013-17), NZ Greyhounds (2005-07) and South Australian Greyhounds (2000-02) amongst many others. Her success in both governance and racing, it has to be said, makes her a valuable member of this committee.

Likewise, Kristy McDonald QC is highly experienced in both matters of law and governance and is currently part of the counsel working on Operation Burnham as well as being Deputy Chairperson of the Electoral Commission, and board member of ACC – with ACC levies for jockeys and trainers set to rise 15 percent in 2019 McDonald may well prove to be an inspired appointment.

The industry knows that racing has been indifferently administered for a long period and the introduction of the ‘gender equality’ policy on the surface of it could be seen as a hindrance to just getting the best people. But as a brains trust these five are right up there, and if gender equality rids racing of its endemic tradition of being nothing more than ‘old boys clubs’ then it will be doing the industry a favour.

Chairperson Dean McKenzie’s appointment, though, is a revelation because he’s highly credentialed with a record of success everywhere he’s been. McKenzie started his career as an accountant in Invercargill before going on to be Racing Manager at the Southland Racing Club.

The 52-year-old McKenzie over the past 25-years has been the Chief Executive at the Wellington Racing Club, Jade Stadium Limited, the New Zealand Metropolitan Trotting Club and for the past two years at Original Foods Baking Company in a departure from racing.

“We need to support the Minister because he’s given this industry an opportunity to change itself,” McKenzie said this week. “Everything is set out in the Terms of Reference, and that’s what we have got to do. We can’t say much more at this stage other than to emphasise that the Terms tell everyone what we are doing.

“We have an interim report to be completed by the end of February, and then in March the government will come back with a decision on the Messara Report recommendations at which time the Minister may fine-tune the process going forward.”

McKenzie did both a BA and BC at Otago University before entering accountancy and afterward went off to the USA to do a Master of Sports Administration at Ohio University. He grew up in a thoroughbred breeding and racing family environment understands the game as well as anyone, and spent six years administering harness racing at Addington. He has succeeded everywhere.

Most of all, McKenzie understands the industry intricately from all angles; in a business sense he is tough and uncompromising, and in many ways is not unlike John Messara who wrote the Report which is now the blueprint upon which this industry, led by McKenzie, will attempt to undergo the biggest metamorphous of change in its history.

“Most people want things to happen quickly, McKenzie continued, “and although we will be going as fast as we can we clearly have to follow a process and that process has been mapped out for us. The timeframe is very tight because Wellington closes down for a considerable period from before Christmas, but we are very confident we will meet the deadline.”

McKenzie has the ability and passion, particularly when fully supported by Sir Peter Vela, to carry the Messara Report right through to a full conclusion. That is not in any way belittling the future input of McDonald, Dawson and Birnie but only to say McKenzie and Vela have a deep passion for the business and have no record of surrendering to a job half done.

No one in New Zealand has more skin in the game than Vela. He owns New Zealand Bloodstock which is the lifeblood of the breeding industry; he owns Pencarrow Stud which is one of the institutional success stories of New Zealand breeding, and the Vela colours of blue and white hoops now grace the racecourses probably more occasions than any other.

But knowing who the ‘famous five’ are now leads to the question of what is expected of them from Minister Winston Peters and what powers do they possess. The short answer is that they possess very little power but are expected to deliver quite a lot.

The committee will be remunerated in the same manner as any board; no one gives this sort of expertise for free – it requires a substantial time input, sharp decision making and drawing on all the experience – the very reason for their appointments in the first place.

Along with the Ministerial press release to announce the arrival of the committee last week was attached the ‘Terms of Reference’ under which the rules are defined. In the first instance, it should be clarified that this committee is not RITA, and it’s RITA that will potentially come into existence on July 1st that will possess all the power.

RITA, meaning Racing Industry Transitional Authority, will only come about once the legislation empowers it, and that will not be before July 1st, 2019. When that occurs the NZRB will most likely change to Wagering NZ, the Ministerial Advisory Committee will have run its course and be defunct, and RITA will have the power to carry every agreed-upon reform forward and through to a finite conclusion.

Just who or what RITA is will be dependent on events between now and the end of June. In the Terms of Reference, the Minister requires “The Committee will provide an interim report to the Minister for Racing by 28 February 2019.” But after that, the Terms also gives the Minister some flexibility to make changes in the wording. The Government is expected to make decisions on the recommendations of the Messara Report in March 2019.

The announcement will identify which of the Report’s recommendations the Government agrees to implement and at this time the Minister of Racing may provide the Committee with further direction about its direction of travel.”

Earlier in the Terms of Reference it says, “The Government is committed to reforming the New Zealand racing industry and seeks the scoping up of a detailed plan to operationalise the Messara Report, the ‘Review of the New Zealand Racing Industry’s’ recommendations once approved by Cabinet, to deliver better governance and economic outcomes for the industry.

“To enable the timely delivery of a racing reform programme, a Ministerial Advisory Committee (the Committee) is being created as a precursor to a Racing Industry Transitional Authority being established in legislation (subject to future Government decisions on the recommendations of the Messara Report).”

The Committee, according to the terms of reference under the heading of ‘Purpose of the Committee’ says, “will be charged foremost with setting a sense of direction for the intended racing reforms with particular focus on prioritising those recommendations that have been identified as the main drivers required for successful industry reform.

“This will provide the basis for a prioritised work plan for the Committee, to be provided to the Minister of Racing early in 2019.  It is also charged with scoping up the operational decision points (whether technical, legal, financial or process orientated) for racing reform, engaging with industry throughout, and offer analysis to the Minister for Racing on opportunities (i.e., the industry’s untapped potential) as well as roadblocks to returning the industry to a well-managed and sustainable economic growth path.”

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by Brian de Lore
Published 6 December 2018

On the backside on of a disappointing Ready To Run Sale at Karaka and an equally disappointing TAB result for November, the racing industry is heading into the New Year with a fair degree of trepidation.

It’s good to be positive and be optimising our hopes for the best result in the coming year but how long has this business been doing that? How long have we been waiting for something positive to happen?

The fiction has been in plentiful supply; the promises have been flowing forever, but the disappointments have continued relentlessly. Isn’t it about time we looked the truth in the face and got rid of all the pretenders or more drastically considered locking the gate and walking away?

The around 20 percent decline in the Ready To Run Sale held on November 22 and 23 was well documented within these pages last week, but the double whammy came with the November TAB betting figures showing betting domestically on thoroughbreds was down six percent compared to the same month in 2017.

Harness was worse at 23.2 percent down while Greyhounds took the biggest hit and were down 33.6%. Betting on Australian thoroughbreds was up at 5.2 percent while Harness was up 14.1 percent in Australia and Greyhounds only marginally better at 0.4 percent. Overall, betting declined in November by six percent.

Looking for reasons for the downward betting trend, one industry observer put it down to increased petrol and food prices and a general tightening of the NZ economy which inhibits the cash flow. Another industry stakeholder dismissed that reasoning in favour of NZ punters becoming disenchanted with the local product which is reflected in both a diminishing annual foal crop, fewer domestic buyers at the recent sale and a succession of cancelled race meetings.

Whatever the reason, the crisis appears to be worsening.  And make no mistake; it is a crisis. Betting is the lifeblood of racing with stake money being dependent on betting revenue not only maintaining its current level but increasing as the NZRB is proposing with the introduction of the Fixed-Odds-Betting platform for which the launch has had four delays.

NZRB CEO John Allen has for a very long time been saying that the FOB will be the savior of the racing industry but racing people generally have very little confidence in the former lawyer, CEO of NZ Post and Head of the Department of Foreign Affairs delivering the silver bullet to save the industry.

Almost two years ago in February of 2017, Allen told an industry discussion meeting at Riccarton that his board would be deciding in April (2017) as to how they implement Paddy Power/Bet Fair and Open Bet with the expectation that implementation would take one year.

That is verified in a recording of that meeting attended by around 30 people which was revisited this week and in which Allen also said, “About saying one year, you’ll say that if I say it’s one year that will be three years and if I say it will cost $25 million it will cost $50 million.

“Two comments about that – the one-year judgement is the judgement of Openbet as to the time it will take; they have done this in multiple jurisdictions around the world and have never exceeded one year, and they are very confident it will be done in the time frame. The reason that matters is because we have committed ourselves to increased distributions to the codes.”

The year in which Allen was speaking was up last April and while this industry remains in a state of ‘serious malaise’ the FOB is yet to arrive after a further eight months have elapsed. Furthermore, the cost has gone from $25 million then to an admitted $40 million but likely to be the $50 million which was the figure that Allen was ridiculing following the delays for which NZRB are paying IT contractors an estimated $3 million per month in over-run time.

Allen also said at that meeting, “We are expecting an additional $45 million of distributable profit in the following year (meaning the current 2018/19 season), and that rests on the FOB platform being in place and operational. And that’s increasing to $60 million the following year (2019/20).

“We are very confident we can do that, and we are confident that that $45 million profit is a real number that can be delivered. We are reliant upon that 1.5 percent of our VIP and Elite customers delivering about 56 percent of our turnover.”

Not only has Allen failed to deliver the FOB on time but his figures are going to be well awry with the TAB’s failure to retain its market share of the VIP and Elite customers.

At a more recent industry discussion meeting at Riccarton, about six months ago, Allen stated, “We could not be clearer about what we are doing – we are investing that money (by admitting the cost had risen to $39 million) and the payback is three years; the benefits are 19 million; and only once have I gone back to the board for the approval of another two million dollars.

“It’s a damn good process; it’s a damn good deal. It’s a sensible business decision and will create real value for the racing industry of New Zealand. It you don’t have a competitive fixed odds betting platform then you drive the customer to the competitors. It’s been well managed. The partners have done a damn good job – they are serious partners with real capability.

“We have a 10-year contract with Openbet so it will be at least 10-years, but the thing about Openbet is that we get access to that technology – they do all the big betting agencies around the world, and those agencies are driving them constantly to be lifting their game.

At that same meeting when with Allen, when this writer suggested he hadn’t been delivering but only spending money he replied, “I agree with that, so the acid test is this next season in which we need to deliver FOB and racefields. The truth is that it’s this next season that is the test.”

We are now well into that season and no further advanced except in debt. It is also worth pointing out that the Openbet work done around the world is mostly for corporates that accept bets globally as opposed to this FOB which aimed solely at the domestic market.

The decline in betting is a considerable worry for racing and potentially could scuttle the ship. The industry has known for years about the excessive running costs of NZRB, and here we are on the verge on another NZRB AGM where the rhetoric will continue about saving $100,000 here and $200,000 somewhere else and how they are doing everything imaginable to get costs down.

The profit and loss statement for this not yet released report says that total expenses have risen from $204.6 million to $213.3 million. Implementation of the Messara Report would rip out a large hunk of that cost through restructuring and outsourcing the wagering services to Tabcorp.

This annual report also says that debt is currently at $10 million which is very interesting considering the SOI released only one day before the end of the season in July showed debt to be $24.1 million – how that discrepancy occurred will be one for the accountants to check.

The report also says that NZRB has capital commitments for next season of $20 million – probably arising from the new TV vans for outdoor broadcasting they have ordered. How’s the cash to pay for that going to be raised?

It also says the borrowings are capped at $25 million so if the $10 million of current debt is genuine then that leaves only $15 million for capital commitments which no doubt is intended to be supplemented by profits from the FOB. Add a further $10 million to keep stakes at the current level which may also be dubiously aligned to increased FOB profits.

The FOB is carrying a huge weight of responsibility because without any income from Racefields it’s the only vehicle that will prevent this industry drifting into a state of insolvency which is a destination it slides closer towards daily. That’s not even considering the FOB cost may now be $50 million and not the $40 million which is the current claim.

Even if the FOB can be launched before the end of the year which must be seriously doubted, the betting trend shown in November’s result will have to do a U-turn to release a flow of money large enough to arrest this downward spiral.

The warning signs have been visible for quite a long time, building all the time and strongly identified through two authoritative reports compiled in the past 18 months. It just so happens it’s an industry that has been sitting and waiting to be rescued rather than getting proactive and saving itself.

Has the NZRB netted debt off against some bank money. Cash on hand before bills have been paid could be a factor.

by Brian de Lore
Published 22 November 2018

The age-old saying that a week is a long time in politics was upstaged by racing which dragged through the week a disappointing two-day Ready To Run Sale at Karaka, saw some unseasonably inclement weather throughout the country and had a week of silence on racing’s political maneuvering.

Racing Minister Winston Peters had a busy schedule this week with some late nights at parliament but found time to speak briefly to The Informant and confirm progress is being made for racing in the halls of power.

“Everything is being put together to ensure it goes to the cabinet committees in the next few weeks and well before parliament rises so structurally everything is in place,”  said the Minister.

“RITA has to be a creature of the legislation. However, its precursor can be as a ministerial advisory group; one will just shade into the other when the legislation is passed. I can virtually see RITA being established in a matter of weeks, but initially, it will not be what its potential shape will be.

“We are going as fast as we possibly can on getting the legislation done. In a matter of weeks, there will be no delay at all in terms of the transformation we are working on.”

The Minister refused to be drawn into the number of people to comprise RITA or who would be involved but when put to him that past industry leaders had lacked industry knowledge he responded thus, “I expect RITA to have a high level of industry competence”, and competence.”

When questioned on the future involvement of John Messara, he replied, “I want to ensure that the integrity of his report is maintained, and the best way to do that is to keep John involved. That’s what I have asked him to do; there is no doubt that there will be a continuation of communication with Messara because I asked him for that.”

And on the Annual Report from NZRB which is yet to be released but which has to be approved by the Minister before its tabling before parliament, he said, “I’m going through the current annual report with a fine tooth comb. I have it in front of me right now.”

Has the industry adapted to parliamentary pace?  We have a Messara Report which was completed four months ago. We have an NZRB board who are well past their use-by date but remain enconsed; we have a Minister who isn’t in a hurry to get rid of the board, and we have the Department of Internal Affairs (DIA) which is still analysing the Messara Report submissions five weeks after the closing date.

We also have a Fixed-Odds-Betting Platform that during the week was further delayed from December 5 until at least December 31 according to an internal NZRB communique – the chances of the New Year’s Eve launch seemingly highly unlikely given it’s the middle of the festive season.

RITA is the brainchild of the NZ First Chief of Staff Jon Johansson who was appointed to the job over a year ago by Minister Peters. Johansson had been a regular political commentator on TV1’s Q & A, and radio, and has written several books.

At Victoria University in Wellington, he was a senior lecturer in comparative politics at the School of History, Philosophy, Political Science & International Relations of Wellington. He specialised in New Zealand and American politics, and political leadership – can you get more academic than that?

The problem for racing with Johansson is that he doesn’t know a thing about racing or running a business, and he now appears to be having a big say on how the Messara Report is handled; hence the mandatory establishment of RITA.

Until legislation is passed which at the very least will be next May, RITA will have no powers to do anything except make recommendations to the Minister’s office (Johansson) about how to implement the Messara Report.

The existence of RITA means that the Minister is keeping on the current NZRB board who will collect their director’s fees, of course, but are now toothless and will have no say in future policy making.

RITA will supposedly involve four to five people including a chairperson who will be au fait with racing. Whoever is appointed needs to know the wagering business backwards as that’s what the NZRB will become with its impending renaming as Wagering NZ, but it appears to be a typical government-paced project that will do everything in its own time rather than cater to the urgent needs of the industry.

According to some sources, RITA will be appointed before the NZRB AGM on December 7 but as already stated, cannot have any power until it comes under the Act which will not be passed until the middle of the year. Consequently, the current racing board remains in place but can’t make a decision.

An offer to replace the board was made but rejected. Right now it’s hard to understand why the incumbents would want to stay other than to collect the director’s fees because they are effectively powerless to act and only preside in title.

Áction is now required from the collective power of the three codes which collectively could wield a big stick if they got together and made a cooperative agreement to take action and force the issues as they have never done before. Will they do it; it doesn’t appear to be in the DNA of any of them but times are desperate, and they cannot afford to be like Nero and play the fiddle while Rome burns.

The codes could decide on a course of action beginning with the engagement of Deloitte, to procure an urgent decision on the viability of everything the NZRB are doing business-wise including an appraisal of the FOB, and the pursuit of the TAB outsourcing. This is now an urgent negotiation, according to Alan Jackson, relative to getting in the Tabcorp queue in front of the RIWA which starts its process early next year.

If the three codes agree on taking this action then the industry can move forward – they cannot afford to wait. The whole process will take a long time and time is of the essence. To make this work someone has to roll their sleeves up and grind it out for two years.

Outsourcing the TAB shouldn’t be contemplated without the involvement of John Messara because he and his ex-Tabcorp cohort Craig Nugent are both highly experienced in such projects and its only the experience and guile of these people who can negotiate the best outsourcing deal.

The Messara Report aims to double prizemoney, and most of the funding to do that will come from the transitioning of the NZRB into Wagering NZ, the racefields legislation and the outsourcing of the TAB. Perhaps that’s where RITA may be of use in pushing those items forward, but Messara has already shown what he can do with racefields.

Racefields didn’t happen in the first instance here because it was poorly written in haste and did not get the required discussion before it was presented in parliament for its first reading in August 2017. It was never going to be adequate for the industry.

In an internal communique, the NZRB has recently admitted that it’s already eight percent behind budget this season, and with a current flat economy we have been witnessing a decline in betting – Cup Week was down 13.4 percent on last year. NZRB has also budgeted for profits it will not get including those from racefields and the FOB platform for which blast-off is into its fifth delay – Houston; we have a problem!

The cost of the FOB is currently admitted to being $40 million, but is likely to far exceed that with overruns. Some of it will have been capitalised in last year’s result although that is presently unknown due to the annual report not being released until December 7.

Not getting the FOB budgeted profit, racefields and the possibility of the FOB not working for some time, or not working at all, could see the industry staring down the barrel of a somewhat tragic result by this season’s end.

If the below budget percentage increased due to this downward trend in betting, and then you take into account racefields, and the strategic initiatives with the potential of the FOB costing another $6 million due to the ongoing delays.  Afterwards, this leaves only four months of the season to achieve the budgeted profit from FOB in the off-peak racing season, so at best you will get 40% of their budgeted profit. Suddenly they have missed the budget by $25 million.

Next week will be another long week in racing as we await the announcement from DIA on the submissions, the possibility of the release of the names to comprise RITA and the impending AGMs of both NZRB and NZTR.  

by Brian de Lore
Published 22 November 2018

Minister of Racing Winston Peters is back from a busy schedule of overseas events, and with the Department of Internal Affairs (DIA) having had more than a month to assess the submissions and gauge the feeling of the industry, an announcement is imminent.

In around a week-and-a-half the three codes will be collectively holding their $40 million breath when the TAB is due to switch-on and launch the Fixed-Odds-Betting (FOB) platform, the December 3 rescheduled launch date being its fourth after delays since July.

Four days later on Friday, December 7, the NZRB will hold its AGM at its Petone Offices and release the annual report as late as the day of the meeting itself. The question is, will any stakeholders without any knowledge of the annual accounts be inspired to travel to Petone, on the start of that weekend date so close to Christmas, to attend that meeting?

Straight after that very same weekend on Monday, December 10, the NZTR will hold its AGM. It would be fair to assume that, in the general business part of this meeting, the discussion might centre around the fallout resulting from the Minister’s review of the Messara Report submissions, the success, failure or otherwise of the FOB platform launch and anything else emanating from the NZRB AGM.

Following the NZTR AGM, nothing significant is likely to happen before Christmas, but from mid-February onwards the formation of RITA is expected to be announced by the DIA. But just who will be involved and exactly what RITA’s role will be and the extent of RITA’s powers in its ‘transitional’ duties is still very much a mystery. 

Are we closing in on some positive announcements? The jigsaw puzzle that is currently the New Zealand racing industry is poised for more pieces to be inserted with some better news forthcoming because most of these coming events in the space of just three weeks will define this industry’s future.

The industry is desperate for a good story. We are more than a year down the track from an election result which the industry helped achieve, and although things have been slowly progressing in what appears to be a positive direction, no one can say for sure how this will pan out.

About the submissions to the Messara Report, it’s feasible to conclude that every submission will be analysed in a very bureaucratic fashion. Then, the Minister will revert to his initial launch speech of August 30 when he said, “Mr. Messara is an expert in this field, and I am not here to strip this report of its value.”

Afterall, this is politics.

The FOB platform is a far more serious issue than the review of the submissions for the sheer reason of the minimum $40 million investment being at stake. One NZRB employee described the FOB platform as a ‘debacle,’ and although this writer is aware of at least three attempts to live-test it, none of them has been successful.

The industry needs this FOB to work as a repeat of the Typhoon platform would be financially disastrous in every meaning of the phrase. The fallout from another failure would inevitably result in mass resignations from the overstaying board and the management that has been driving it. The week of December 3 through to 7 will be interesting.

If it works and increases profitability to the optimistic budget levels NZRB has forecast then this non-carbohydrate eating writer will be forced to consume a large portion humble pie – at this point, I’m not anticipating any carbo-loading penalties will ensue, though.

By next week it will be almost four months since John Messara completed his much-lauded report and handed it to the Minister, and nearly three months since it was launched amid some fanfare at the Claudelands Convention Centre in Hamilton.

Knowing Messara, it is very much in the man’s make-up to work fast and efficiently and go to the next level as soon as he can. That’s why he wrote in his report at the end of the summary, “I suggest that implementation of the reforms begins with the appointment of members to the NZRB, pending the necessary changes in legislation.

“A clear mandate should be given to the board to drive the reforms through the system with a sense of urgency. Further, I would recommend the establishment of a board sub-committee whose only task will be to progress the wagering outsourcing opportunity.”

This was just one of several recommendations contained in his report that could have been acted upon immediately but for which the Minister preferred to slow the process down and keep everything at typical parliamentary process pace. Two others that could have already commenced include the Performance and Efficiency audit of NZRB and the initiation of the review of the RIU and allied integrity bodies. 

The Messara Report is worthy of continual review and re-reading solely because it’s lost impetus due to non-activity since August 30. It is imperative to read it through it several times to comprehend Messara’s assertion that it’s an overall plan, threaded together by a suite of 17 recommendations that work in harmony with one another but would be vastly less effective through cherry-picking.

Highly pertinent conclusions Messara drew and wrote into his report include, “The decline of the New Zealand thoroughbred industry has occurred over a long period, steadily eroding the confidence of participants. That confidence is at a tipping point, causing reduced commitment to investment in racing and breeding and the continuing loss of key participants. In my view, the New Zealand thoroughbred industry is now at risk of suffering irreparable damage.

“In May 2017 Deloitte conducted an ‘Options Analysis’ for NZTR which indicated that an outsourcing agreement would generate significant potential benefits. In my view, these benefits may be sufficient, if added to the positive financial outcomes generated by other recommendations in the Review, to enable New Zealand stake money to be doubled.”

The lessons to be taken from these two statements lies in the phrases ‘tipping point ‘and ‘stake money to be doubled.’ The industry is close to the edge of the cliff, but Messara is also saying that if we took notice of the Deloitte findings and married that analysis into his 17 recommendations, then prizemoney could be doubled.

Why did those who protested loudest about the report not grasp those statements and run with them, rather than adopt that provincial mindset that forever arises when saying, “close whatever venues you like but not ours?”

The industry continues to argue the pros and cons of synthetic tracks and targeted venue closures instead of championing this further excerpt from the report: “The single most effective lever available to reinvigorate the New Zealand thoroughbred industry is prizemoney. It rewards and supports owners, trainers, jockeys, stablehands, and the entire supply chain including vets, farriers, feed merchants, etc.”

Messara has always said, “one man can change the world,” and his strong views on getting the right personnel into the right jobs resonates with this report excerpt: “I am confident that with strong leadership, and the support and commitment of all sectors, organisations, and participants, the industry can be turned around and achieve sustainability with consequential favourable impacts on the New Zealand economy.”

The Minister could do a lot worse right now than to ‘hand the baton’ to Messara and ask him to enact his report which is surely the blueprint of New Zealand’s racing future. If it isn’t, then what is? No other plan exists.

That appointment could kick-start all matters not requiring legislation to commence the restructuring process. No one person could execute the recommendations better than the author himself who alongside Peter V’landys has done it all before when that duo drove Racing NSW to its current level of success.

And on structure, to conclude, Messara’s report didn’t mince his words in saying, “…we do not feel that the current structure of the NZRB is conducive to the efficient regulation of the racing industry or the maximisation of wagering revenue because of conflicting priorities. In addition, the structure does not place a sufficient level of accountability on the NZRB.”

by Brian de Lore
Published 15 November 2018

Once-upon-a-time the thoroughbred industry was administered by people who were Subject Matter Experts (SME), and although it was far from the perfect structure, it was still a long way better than the administrative cataclysm we have today.

Since the Racing Act of 2003 came into being and more lately through three terms of National Party government, this racing industry has suffered a steady decline which, to be fair, has not entirely been the fault of that political reign which mostly had John Key at the helm.

But for a long time now, anyone who follows racing and also has an eye on the political landscape will have concluded that like him or not, Winston Peters has been the one and only political leader who has displayed a willingness to repair this business to at least economic viability.

The question right now is where is this industry currently positioned post-one-year of coalition rule from which Peters has returned for his second stint as Minister. The Messara Report was commissioned and completed in record time, but with almost as much time elapsed since its release, as Messara took to write his 82-page report, we have made little progress.

The lack of action is a worry. The initial impetus that came with a build-up to the launch and the impact of the contents of the report itself is lost. Industry stakeholders are now asking why we are procrastinating?

The Minister asked for submissions, and apparently, more than 1600 had turned up by the cut-off date of 19th October. As reported last week, the Department of Internal Affairs (DIA) asked for a month to evaluate them, but the Minister said he gave them only a week and a half.

The industry now awaits the Minister’s return from Europe and a promised announcement which is likely to be an evaluation of the submissions plus other unknown measures – hopefully, the replacement of outgoing NZRB Chair which the industry would see as a very positive step forward.

When are we going to see this report adopted and changes invoked – not an uncommon question echoing around racing circles?  Deloitte said quite categorically in its report the industry was unsustainable and the urgency with which Messara completed his report gave the stakeholders a mindset that action would be immediate.

Messara himself stated on several occasions we didn’t have the luxury of waiting, around the time his report was presented to the Minister. But the parliamentary process, as Peters has continually reminded us since the report’s launch, cannot be circumvented.

When little over a week ago the Minister spoke to The Informant about the ‘mandatory establishment of RITA,’ it wasn’t immediately evident that he was referring to a bureaucratically appointed committee that wouldn’t be formed overnight.

A transition authority similar to this was last used for the amalgamation of the Fire Department and Search and Rescue. Looking at that model in terms of time constraints, we will be fortunate if RITA is established before March 2019. Further to that, RITA will be appointed by the DIA and by the terms of the protocols now apparently adopted by government bureaucrats, will encompass gender equality.

Racing has struggled administratively; if it hadn’t, we would not be facing the current dilemma. Finding the right people is tough enough without gender prerequisites, but the world is forever changing, and racing is certain to come under the microscope of various pressure groups, particularly on items more pertinent such as animal welfare and integrity.

If the Messara Report is adopted, which it must be for racing’s survival, then governance must come under the microscope from the industry itself. In the first of the 17 Messara Report recommendations, the NZRB will be reduced to a shadow of its former self and become Wagering NZ after outsourcing the TAB has been negotiated and the power it currently holds is devolved to the three codes for self-management.

Therefore the future selection of board members on NZTR takes on a new significance. The so-called Members’ Council came into being in 2011 and this 12-person committee (see the adjacent illustration) is the body that selects the people who become NZTR Board Members.

Going to the NZTR website to find out how the Members’ Council operates and how they are selected is a waste of time. It says virtually nothing, and it appears as though it hasn’t been updated since 2011, listing only the original Council from which only five of the 12 are still current.

When this writer approached the Members’ Council Deputy Chairman Bill Cotton to discover how the Council operated I was told the information was, ‘confidential and highly sensitive,’ and the conversation was quickly ended.

But not be denied and digging around, it wasn’t too difficult to uncover the plot which seemed relatively straightforward and not the sort of information that should be deemed confidential and withheld from industry stakeholders.

Nine of the 12 members are selected by the race clubs, three coming from each of the regions divided as upper North Island, lower North Island and South Island. The three remaining members are single representatives from each of the Breeders,’ the Owners’ and the Trainers’ Association.

In each of the three regions, the clubs have one vote for every race day of each club to find their three representatives, giving the big clubs a decided advantage. Once elected to the Members’ Council for a three-year term, the member is eligible for re-election to a further two three-year terms – a total of nine years. T

That’s far too long to remain on such a committee and all things considered, this is a draconian set-up designed not to find the best 12 committee people but to appease club representation and a provincial mindset that has pervaded our racing for such a long time.

The aim of this Council should solely to be represented by the best 12 in New Zealand and if those 12 happened to all live in Whakatane then, so be it, appoint them. Under this regime that’s not possible but why have as many as 12 – a seemingly high number of which some will be scantly qualified for such an exercise.

The Members’ Council is responsible for assessing all the applicants to find the next NZTR board member. One of the problems with that process is they advertise for the position at the New Zealand Institute of Directors which is a cartel of white-collar unionists who look after each other and who have an appalling record in racing administration.

Racing in New Zealand needs to disenfranchise itself from all the mediocrity of the past and raise the bar on its standards. These are the people that appoint the directors who will be running New Zealand racing in the future.

That’s not to say we don’t have some very good representatives currently on the NZTR board, but if you believe the NZTR board has been an overall success over the past 15 years then it’s time to reevaluate.  

by Brian de Lore
Published 8 November 2018

Racing Minister Winston Peters voiced his displeasure albeit with a little mirth at the vitriol displayed by the political minority in both the racing industry and general media after the tax relief for racing was announced in last week’s budget.

In a call from Tokyo airport to The Informant, last Sunday Peters said:  “The racing industry has to show a bit of patience. They waited nine years and got nothing from the National Party, and I’m trying to put together some changes and that one in the budget is just the start of something for the breeding industry.”

Peters had flown out to Japan on Foreign Affairs business immediately following the budget announcement and was at Tokyo airport getting ready for the return journey when he gratuitously found time to make the call.

Channel Three’s Newshub had earlier described the racing tax relief given by the Minister as a ‘concession for his racing mates’ while a few racing industry people from the right-hand side of the political spectrum took their usual stance in opposition to any announcement from Peters.

“If there are people who are critical of this tax reform – do they prefer nothing? I have to get on with the job, but I’m not here to make friends – only to fix things up,” replied Peters when given details of the dissenters.

It’s a fait accompli that Peters will be criticised whatever changes he makes for the racing, but that’s because he both polarises the political spectrum and in a forum like the Budget of 2018 the racing industry was again fuelled-up with high expectation.

This budget announcement brought shock-horror from those anticipating a free hand-out from government coffers. With that came the barbs flying in all directions but for a battle-hardened politician like Peters, it was like water off a duck’s back.

Peters was in buoyant mood and not really perturbed by the flack: “The next one is about all-weather tracks, but the structure of the racing industry is being investigated and reviewed by John Messara so I have to wait upon that before I can say anymore, and from which the legislation will be derived,” continued Peters.

“That’s the sequence, and I can’t go any faster. I can’t say anything that might pre-empt his report or what the report concludes but what I can say is this tax reform is what was put in place back in 2006 and was accepted for a few years and then when a new Minister of Revenue came along they changed it all.

“So, all I’m doing here is changing it back which I have done, and that’s only the beginning of that structure. On that occasion, it was sabotaged by the National Government, but this time we are going to push the boat out again and make sure no-one sabotages it.

“Whatever John (Messara) might have in his report, the fundamentals of a fair tax policy have to be put in place no matter what, so I can say that now.”

New Zealand Bloodstock Breeders President John Fokerd has been working on this tax issue for some time and a change of attitude towards racing from Inland Revenue.

“All this tax relief was doing was fixing up an inequity between new breeders and established breeders,” Fokerd told The Informant this week. “Nothing has happened around any major tax reform at this stage, but we are hoping it will happen.

Fokerd, who worked to get this reform for more than three years alongside former CEO Michael Martin and with tax accountants such as John Aubrey, Rob Braithwaite, and David Patterson, says the grey areas in racing taxation have to be sorted out, and this is only the start of it.

“This is more of a technical thing because it was tested in court and we haven’t really been able to give advice to potential investors about tax issues since. The breeders have spent years sitting down with IRD trying to go through all the different tax laws around bloodstock to get an agreement.

“This was an issue that stood out that we couldn’t agree on. The IRD wasn’t prepared to go back on something they won in a tax case which became a precedent, and they were sticking with that belief.”

Fokerd further explained: “This tax change is very minor and is only reinstating something we use to have and then lost in that tax case. The tax law was never actually changed; it was just that the IRD took a different interpretation of it.”

He also admits the change will benefit very few people, but the implications of the reform are very important for other reasons” This is to encourage people to come in at the high end of the market and get a deduction straight away.

“To me, the key is to try and keep those horses in New Zealand so potentially we might get one or two future stallions. It’s really opening up an opportunity to a few, new people. It’s not a big number and we are talking only high-quality horses. It’s very expensive to go and buy stallions overseas and if we can encourage the home-grown product and get new people involved that’s a good alternative in my mind.”

One person happy about the change is Te Akau Syndications boss David Ellis who commented: “When the last Labour government was in, Michael Cullen increased depreciation rates to encourage fresh investment in the racing – the work of Minister Peters in 2006.

“That was a big one because we had been losing our gene pool so rapidly – even then. By way of example, of the last 22 black type filly winners, we have had, 19 have been sold to Australia which is heart-breaking for our future breeding.

“What we need is fresh investment and so increasing the depreciation rates is a big help. In 2006 Peters increased the rates to encourage new investment. But once National came back into power, the IRD saw it differently and said the business of a breeding investment doesn’t start until the horse goes to stud.”

Well known industry stalwart John Aubrey who has been looking at accountancy issues in racing and breeding for most of his life had this to say about last week’s budget: “The style of the policy was out of the hands of the industry. It was the Inland’ Revenue’s own approach to it.

“I haven’t had much involvement since last July. We struck the IRD’s stubbornness but in the end, they did relent – they originally thought this change would cost them $50 million a year– I think the ceiling of $4.8 million they have put on it is just ridiculous. Talking to John Fokerd, he’s hoping the opening shots will be a lot more practical.

The opening shots are the wording the IRD has used: Aubrey explained: “The hope is that when it comes through it has a lot more common-sense to it in the wording – and also they need to consult the industry on the practicality of it.”

“The IRD came out with that terminology of standout and quality,” said Fokerd, “whereas we originally said high-priced – we spent a lot of time trying to explain that, but they have a very different view of the industry.”

Fokerd sees this as just a small victory, but he is very optimistic about what lies ahead with further, big changes coming: “The next key support for us will be the Messara Report and what comes out of that and how much the Minister can implement,” he enthused.

“NZ First picked up this one first because they say saw it as unjust. This is only minor compared to the implications of the Messara report and potential for increased prizemoney which will benefit everyone. We now have the platform for change, and that’s what we want.

“The industry can’t keep going the way it is – there has to be change and rationalisation, and the industry has to be a lot more efficient.”

Peters is unapologetic and unchanged about his planning of the order of events: “I’m dealing what I can deal with now, ahead of the Messara report, which will only be a couple of months away and that’s where things currently stand.

“The report will come much more quickly than most reports do, and it will be substantial in my view, and I’m happy to wait for it and be confident that I’m going to get the right answers.

“If people are saying they don’t like what’s happening then my response would be, ‘really, but what did you have before – sitting on the side-lines and whinging is not going to help you, and taking pot shots and not saying it to my face is not a good idea.’ ”

Peters again confirmed the roll-out of legislation for racing can only happen once, which places racefields on hold, and which can only be finalised subject to the contents of the Messara report.

And while overseas on Foreign Affairs matters racing is never far from Peters mind. He recently inspected an artificial track in England and spoke to several experts in that field and when in China next week he will be meeting with people with major racing interests.

“There is a coming market there for us, and while it’s not ready to happen yet I have my team working on it, and we want to be first in the queue and have something to look forward to,” concluded Peters.

by Brian de Lore
Published 8 November 2018

On the eve of departing to attend this year’s Melbourne Cup, Racing Minister Winston Peters was not surprised by the NZRB’s latest pre-AGM statement which paints itself in good light and suggests a rosy result for the financial year ending 31 July.

Under the heading of ‘Record growth in customer numbers underpins New Zealand Racing Board result, Chair Glenda Hughes and CEO John Allen make comments such as, “continues to increase its support to New Zealand racing, financial highlights, a record $148.2 million, an increase of $10.6 million on last year,” and “these results continue our track record of increasing profits.”

But the Minister who isn’t deviating from his previous observation that ‘he’s knows a dead horse when he sees one,’ and was once again happy to speak to The Informant at short notice, responded by saying, “No, I am not surprised by the NZRB statement but has that statement emanated from a final result that has been audited?”

This writer was unable to give the Minister a definitive answer to that question but what could be said was that the auditing was usually the last process to be applied to a set of annual accounts and the NZRB annual accounts were a full month away from the release date.

In addition to the NZRB release, a story also appeared on the TV1 website written by Katie Bradford which was entitled, ‘The Racing Board hopes a large profit will help convince Minister Winston Peters the board is doing its job.’

Peters tempered the authority of the story by saying with a chuckle, “Katie Bradford owns a share a share in a horse, but that was where the extent of her knowledge of the industry started and finished.”

If the auditing of the accounts has been completed and signed off, and in turn signed off by the board, then why would the Annual Report for 2017/18 not be available until the actual day of the AGM which is to be held at the NZRB offices at Petone on December 7^th?

This was revealed in the last line of the statement which can be found on the NZRB website from the menu under ‘News.’ To read of the entire document would suggest to the uninitiated that all is well in ‘the State of Denmark.’

Given that Petone is about as far away in either direction from racing stakeholders as you could get, and the NZRB offices would be seen as a home fixture, and no annual report would be available prior to the meeting, from which questions could be raised, would it be a surprise if no one turned up?

The simple answer is, no. Also, the 7^th of December is also too early in the tomato growing season, of which this writer is an avid grower, to have laid enough ripe tomatoes out in the heat of the summer to have gone rotten; presupposing we will have heat in the summer.

NZRB has again forgotten that the Racing Act of 2003 says they exist to provide benefits to the three codes of racing and not to either alienate themselves from the stakeholders by taking up defensive positions behind the ramparts at Petone.

The decision not to produce an annual report before the meeting, as they also failed to do last year, and TV! Coverage of the Gore races last week and now the Katie Bradford story seriously looks like a campaign to undermine the adoption of the Messara Report.

The statement released by the NZRB raises concerns on several fronts. Firstly, the unexplained difference between the operating profit of $155 million (do we to assume this is an audited figure which isn’t specified) and a reported net profit number of $146 million.

They have also spent a further $9 million of industry money on so-called “strategic initiatives.” Will we have to wait for the AGM to find out what this is all about?

And the $12 million of distributions proudly proclaimed in the announcement has been funded by taking on debt which requires servicing and repayment. Borrowing to operate you’re your day to day business is well-known as a path to failure.

So what can we expect to occur next year? Perhaps, more borrowings to fund the current level of distributions? How is the Board planning on servicing this growing mountain of debt and then repaying it? At this rate, with debt needed to be repaid out of future earnings, we may be faced with potentially lower distributions and thus lower stake levels – surely a recipe for disaster.

Claims of record growth of account customers sounds impressive, but in reality, a number of these customers could be moving their transactions to on-line from other channels and therefore don’t represent new customers. More smoke and mirrors from this Board and senior management that has failed to mention an increase in overall betting revenue.

Signing up families by giving them a free $20 bet when they open an account with $10 is hardly training up punters who will be staying for the long haul.

The statement was conspicuous for its lack of any hype about the upcoming launch of the Fixed-Odds-Betting platform which is set for blast-off on its fourth rescheduled launch date of December 3^rd. Should we be concerned or even surprised if it doesn’t occur?

The whole industry should be crossing its fingers and hoping it’s successful because the last thing we want is a repeat of the Typhoon System which wasn’t strong enough to blow out a candle, was never turned on, and in about 2011 cost the industry an estimated total of $30 million.

And on the NZRB’s statement, Minister Peters added, “If what they are saying in that first statement is they have a profit value measurement on what they are doing that’s misleading that would be a dangerous practice.

“If they were wise they would be telling the Racing Minister what they are talking about, but I’m not waiting for them, I have been focused on getting the legislative agenda, time spaces for representative approval and the mandatory establishment of RITA.”

“There is a way of concertinaing the process, but at present, I can’t say much about that. What I can say is that we are all on target for achieving what can be legitimately done.”

And while the industry participants see progress going at the pace of the retreating Fox Glacier, Peters himself is happy with the speed of production. He said, “The submissions were closed off on the 19^th of October, and we have almost finished evaluating them. The evaluations will tell us what the racing and breeding public of New Zealand are in agreement with and what areas they hold differing views.

“The DIA is evaluating them, and when they asked for a full month to do the job, I said no they could only have a week and a half and I will provide the resources to get the job finished on time.

“Meanwhile, we have to put our minds on our immediate strategy and that is underway as we speak. When we finish that we will get it signed off.”

When suggested to the Minister that we wouldn’t be seeing much action before December he retorted, “We will be a long way on top of it by December 7^th, the date of the NZRB AGM.”

by Brian de Lore
Published 18 October 2018

Limboland is a made-up word which one anxious racehorse owner has used in the past week to describe the current industry predicament of waiting for the next move from Racing Minister Winston Peters.

That owner along with a sizeable proportion of the racing industry is anxious because of the increasing awareness of the financial unsustainability of a deteriorating industry which the Messara Report describes as being in, ‘a state of serious malaise.’

The Minister has since repeated those words. That was early in his speech when launching the Messara Report on August 30th – a speech in which other salient points he raised now seem to have faded from the memory of those stakeholders now making the most noise about what’s happening next.

In that speech, Peters said, “The next step for us is to all fully digest this report. Many of the recommendations have serious merit, but they require careful consideration.

“My intention is to have officials draft a cabinet paper with a set of recommendations for decision – this is appropriate for due-process especially if government and structural proposals are being contemplated.

“In summary, that cabinet decision will determine what revised legislation is required to reset the industry, consider TAB licensing, revenue and tax incentive re-settings and other relevant matters to set future directions.

“It is a matter of public record that many aspects raised in this report are matters which I have expressed concerns about before. In particular government structure and incentivising ownership investment – if you think I am the harbinger of racing doom and gloom, then read the racing board’s annual report out this year.”

Just as the Messara Report requires serious reading and then re-reading, so does the Minister’s speech which, between the two, does provide all the questions, and all the answers. Not everyone will agree with what’s to come, but change is coming.

Peters is not a man who can be rushed, and nor has he ever been. ‘Fools rush in where angels fear to tread’ as the saying goes, but while Peters isn’t the type to claim angel status, he’s also not one for hasty decisions.

When the Minister received the Messara Report in late July, what would he have been expecting?  A 10 or 12-page document with broad recommendations, perhaps?  Instead, he received a comprehensive 85-page report that was not only deliberate in its approach but very authoritative and which required a highly considered response.

He was never going to go off ‘half-cocked,’ and hasn’t. Instead, Peters made a very pointed speech two months later at the launch in which he posed logical questions to the industry participants and gave every opportunity for all stakeholders to make their submissions and have their cases recorded and considered. 

As the closing date of those submissions nears (October 19th), we are drawing closer to an announcement about the Report’s broad industry acceptance, ambivalence or rejection, or part in percentage thereof. No one has been denied the opportunity of having a say or being heard.

But to know what’s most likely to happen, go back to that Peters speech and also re-read the Messara Report in full and you’ll get the idea. Only those double-blinkered with double ear muffs and double Vicks stuffed up their nose will miss the point and not smell the roses.

To illustrate the point, let’s take a look at one of the submissions that have been made public. The NZRB has recently posted its submission on its website – a 39-pager that clearly flies in the face of the Minister’s speech and crucial elements of the Messara Report.

It starts with a Glenda Hughes letter which divides the Report into five issues and firstly states, “The Board does not support the need for a Racing Industry Transitional Agency (RITA). The Board already has an established mandate that can operate as a transition agency up until legislation is enacted that formalises any new arrangements. Several vacancies for Board appointments now exist.

“Furthermore, the Board is leading two existing programmes with all Codes which are progressing venue consolidation and evaluating outsourcing. These programmes would be slowed, and business continuity would be lost by the establishment of a new agency.”

But again looking back on the Minister’s speech, he says “A transitional agency will smooth the operational process, particularly if there are changes in racing’s governance structure and I envisage it playing an important role in changing signals either today or by decisions to be made by cabinet.

“It would also play an instrumental role in racecourse consolidation.  It will be called RITA (Racing Industry Transition Agency) which requires good communication, good coordination and proper consultation with the racing community.”

Get out of here! Good communication, coordination, and consultation – that’s been a rarity in this industry.

The Hughes letter further says, “The Board opposes unilaterally proceeding with outsourcing the TAB before a commercial evaluation of this option is complete which has established it is clearly in the best long-term interests of New Zealand racing. Outsourcing is, in practical effect, a sale. There is no real likelihood of reversing back to a New Zealand owned and run TAB once an outsourcing process has started. There are a number of real risks with this type of structure, and it is crucial that other options (such as corporatisation) are in active consideration, and the status quo is used as a counterfactual.”

But the stakeholders are fully aware that the NZRB board know precious little about wagering and outsourcing. There is no one on that board that has any depth of experience in such matters, and despite past claims, no serious examination of outsourcing has ever been conducted.

An outsourcing deal would take a year to negotiate, and the commercial evaluation occurs during those negotiations – you only do the deal when and if it’s commercially advantageous to New Zealand.

Also, contrary to Hughes’ claim, highly successful Racing NSW CEO Peter V’landys told The Informant in August, “Having people running wagering who don’t fully understand the product is like having a podiatrist do brain surgery – he might know something about it, but he doesn’t to the level that’s required.

“The wagering business is very complicated – it’s not one that you can just go and get a CEO out of the commercial world and succeed. There are so many intricacies to it you need to know including the psychic of the punter – there’s a mountain of things you need to know,” said V’landys.

Hughes further states, “For yet another year under the current management, the Board will deliver on its forecasts. Distributions are up, staff costs are down, and we will exceed our operating profit target for 2018 of $153.9 million.”

Please – we are well over listening to this stuff! The above does not paint a remotely honest picture. The Minister in his speech said, “This year a three-year revolving credit facility was established to complement the NZRB balance sheet. Total equity is budgeted to decline by $15.6 million in just this year alone.”

NZRB were relying on a grab of the racefields income to repay the $24 million it has borrowed between this season and the previous to maintain the minimum stake at $10,000. It was a two-year deal. What happens to stakes money allocation for next season?

This industry has been saying for a long time it wants the truth. With the aid of smoke and mirrors, the annual accounts can say whatever they want, but the reality is NZRB has not delivered, and as a board, they may be heading down the Mainzeal path.

Directors are accountable for their actions. The racing industry shouldn’t put up with a continuation of sub-standard governance, and the entire NZRB board should resign now. It’s not a case of the TAB slogan ‘now you are in the game,’ but instead ‘the ‘game’s up!’

If the NZRB want more clichés then, ‘the writing is on the wall.’ The Minister in his speech made this blatantly obvious with his, “I know a dead horse when I see it,” remark which was aimed directly at NZRB.

He also said, “Racing has for years been right under the political radar screen, and sadly so. Let’s hope that racing reform today and into the future is now above politics and we get on with fixing the industry the way we should have a long time ago. We didn’t commission this report from an expert to strip it from its value.

“If we accept a series of changes they will create a cycle to revitalise this industry. Are you prepared to accept the closure of a local venue if your club remains in existence and there is a better-shared venue just down the road? Would you accept track closures if it means saving your club and creates a better pool of prizemoney to generate further investment in ownership?

“And would you be prepared to accept that the individual codes have greater powers with different distribution models and betting levies. Now, the choice is yours. The status quo has an inevitable outcome – a sad, not happy one – change we know is challenging and difficult, but we all know it’s the pathway of restoration of this great industry.”

The resignation of the entire board would bring a collective stakeholder cheer louder than we heard for the start of The Everest. Let’s keep an ear open for it.

by Brian de Lore
Published 4 October 2018

For too long now the stakeholders of New Zealand racing have benignly accepted whatever’s has been dished up to them by an increasingly intolerable NZRB.

In the 15 years since the Racing Act of 2003 became the enforcing legislation the plight of the racing industry has deteriorated into an all-time low while still-passionate horse people go about their business in lessening numbers with only the name ‘Messara’ repeated in their murmurings of hope.

Every organisation within the thoroughbred code; the NZTR, the Trainers’ Association, the Owners’ Association, and the Breeders’ Association has failed, fallen behind, faltered or whatever you want to call it.

That opinion will grate on some, but no organised group in the thoroughbred code has made any headway at all in that time. Not one body has offered innovation, leadership or enough consternation or noisy protestations even to get a headline.

Has NZTR (Love Racing) performed well over the 15 years since the Act became legislation? In recent times the level of discontent and criticism for it has increased significantly. The feeling amongst stakeholders, rightly or wrongly, is that not enough has been done to curb an increasingly out-of-control NZRB and that communication with the stakeholders and, in particular, the clubs, has been poor.

NZTR will hotly defend itself by saying it is shackled by the Racing Act and has no power or room to move and its communication with the stakeholders has been sufficient. Well, Colin Meads didn’t become a champion All Black by being shy or playing entirely by the rules. The big achievers in this world just make it happen.

In the out-of-date NZTR website under ‘Overview and Structure,’ it says, ‘Represent the interests of thoroughbred code stakeholders, principally the 67 thoroughbred racing clubs operating on 51 galloping tracks.’

It would be much better if the website was up-to-date with the correct number of tracks and clubs and said, “represent the ‘best’ interests” rather than just the interests. But I digress and now, having been successfully removed from every Christmas card list for 2018 and beyond, the focus of this story is about the deception perpetrated on the stakeholders by NZRB.

Sunday’s Weigh In program featured NZRB CEO John Allen who came on for 20 minutes to be questioned by Sheldon Murtha and Michael Guerin about the Messara Report.

During that interview, Guerin asked Allen what the key points were in the Messara report from an NZRB viewpoint to which he replied, “The key points are that we do support racefields and the abolition of the racing duty. We do need investment in racing infrastructure, and so we strongly support the three synthetic tracks that Mr. Messara has advocated.”

Allen then talked about the lack of infrastructure at the clubs, and then added, “Lastly, we do think the option of outsourcing the TAB has to be very carefully thought through. The TAB is a significant asset for our industry.”

How can you have a review of the Messara Report and completely ignore the main thrust of the Report – part one, which calls for the renaming of the NZRB as Wagering NZ and promotes the transfer of all racing functions to the individual codes.

In effect, part one defrocks the NZRB completely and saves in the vicinity of $70 million in running costs when part two is activated with the outsourcing of the TAB. But no mention is made of this which itself flies in the face of the Racing Act of 2003 which under ‘Objectives of the Board’ 8(c) says,’ to maximise its profits for the long-term benefit of New Zealand racing.’

We all know that hasn’t happened and NZRB has been living the high life at the expense of the real people of racing and especially the racehorse owners who pay for everything. Remember that Messara says prizemoney can be doubled if we adopt his report in its entirety.

The reality is that the NZRB has long been a law unto itself and has disregarded parts of the Racing Act (the good parts that offered the stakeholders some protection) and its impropriety has not been acted upon by a benign NZTR.

Take, for instance, the last NZRB board appointment which was nothing less than a shoulder-tap for Bill Birnie from the friendly Chair in Glenda Hughes. The appointment was conducted outside the terms of the Act and while NZTR was fully aware of it they did nothing. What would make the stakeholders of racing angrier – the appointment of Birnie or the roll-over lack of reaction from the codes?

Back to the point, Trackside TV is part of the TAB which is the main arm of NZRB. Guerin works for NZRB and Allen is the CEO. Do I need to say any more? Were rules in place about the questioning?

How badly can the stakeholders in this racing industry be treated? This is not democratic television or neutral reporting we are talking about, it’s something more akin to a repressed society, and it shows a level of contempt from authority to participants not usually associated with this country.

Next, in the interview, Guerin brought up racefields when he said, “The Minister on Friday said the racefields legislation would not be going to parliament. He indicated he wasn’t happy with it; it wasn’t fit for purpose was his words. Is there no communication between the Minister and yourself because he hadn’t told you in advance?

Allen replied: “I don’t know he’d told anyone in advance of that particular decision. Perhaps he couldn’t because of the parliamentary process. I’m not sure, but the reason I was concerned and remained concerned is because we need the money.”

To call this deception is being kind. Anyone that has followed the racefields legislation progress knows that the Minister has been saying since last year the wording of the legislation wasn’t fit for purpose having been written pre-election by national party people who don’t understand racing.

That fact has been stated several times here in The Informant. The Minister stated it himself at the launch of the Messara Report (and debated it with Graeme Rogerson), and he has always said we get only one chance at doing the legislation and everything has to be done at once. It was no secret.

For Allen to claim he knew nothing about it is more than mischief. Guerin then said, “can you not ring Winston Peters and ask these questions – has your relationship not been established; is there a breakdown of communication because you are in charge of NZ Racing and he’s the Minister of racing, but you guys don’t seem to talk very often.”

These were legitimate questions to which Allen answered, “But as you’ve said he’s extraordinarily busy; he has a multitude of portfolios; he’s got to lead his party in a reasonably complex coalition; he’s the Deputy Prime Minister but the answer to your question of do we talk – no we don’t.”

The fact that the CEO of the NZRB and the Minister of Racing don’t talk is an indictment of the appalling lack of intent of NZRB to act in the best interests of the industry stakeholders.

Texting the Minister to get the story straight, he phoned back almost immediately with this response: “I’m at the airport about to fly out so can’t talk for very long, but the essence of it is that I have a timeline for parliamentary legislation that I have to use wisely.

“I cannot keep on jamming things into the parliamentary schedule, and it made sense to pull that out of the schedule and incorporate whatever good parts there are into a new bill as fast as I can.

“That’s it in a nutshell; as a piece of legislation which has dragged on for all this time, it doesn’t fit the comprehensive bill we are trying to fix up in one piece of legislation. As I’ve said previously, the way the legislation was written was not fit for the comprehensive purpose of fixing the racing industry up.”

“So can I confirm,” I asked the Minister, “that we are rewriting that legislation and it must fit into the context of the rewrite of the entire Act.”

“Precisely – I think the misreporting of it is from people that were got to – I’m seriously suspicious but I’m not going to name people until we get further down the track – but they are not going to get away with that.

“They are presiding over a damn mess in an industry they know stuff all about, and I’m not going to have them running around saying what we are going to do. Our industry participants are being led down the garden path.

“If our people are not smart enough to work that out already, what can we do for them?  We have to wait for the submissions date to close on the 19th of October, but in the meantime, I have a team working on the chronological program, and that doesn’t have to wait until the consultations are in.

“To an extent, the consultations will shape it, but we are not waiting around for that because we are working on the program as we speak. The submissions are being analysed as they come in now. We just need to have them all in.

“I also have to work on the resources to do the teamwork to get this thing up and running.  This is all uncharted territory as nothing was budgeted for that.  I know I have to get those resources, get the team ready and get those things done. And have it all in place as fast as I possibly can.”

And when pressed on RITA Peters responded, “I’m not talking publicly on RITA because I don’t want to have people torpedoing me on what’s happening next.”

by Brian de Lore
Published 14 September 2018

Is this a game of chess that’s happening between the Racing Minister Winston Peters, an enthralled but poverty-stricken racing public, the NZRB and a very quiet NZTR which has now come out of the closet and renamed itself, Love Racing NZ?

That’s difficult to answer, but we do know chess is an intellectual game between only two players and there’s at least four in this game; perhaps this is a less complicated version of Snakes and Ladders to include all participants.

The moves in this game are so far thus: Messara delivered his report on 27 July, and the Racing Minister passed on his turn until 29 August.; NZRB moved early to publicly state they were ecstatic about the possible outcome of the Messara Report but then, the inevitable train derailment came at the report’s launch and its esteemed leader remonstrated with the Minister as they departed the Claudeland’s Hall.

This visual clash of the heavyweights came not too long after the Minister had said in answer to a question from trainer Shaun Clotworthy, “I know a dead horse when I see it,” referring to the NZRB. Clotworthy rightly asked when a full review of the NZRB’s performance would take place.

NZTR has remained silent throughout this process but in recent times has been dealing with important aspects of leading the thoroughbred industry forward by rebranding themselves as, wait for it – ‘Love Racing New Zealand.’ Meanwhile, a small percentage of highly volatile, parochial industry participants in the provinces have gone apoplectic about the prospect of their courses being closed.

As if this wasn’t enough to ‘centre-stage’ all of racing’s publicity for the past month;  it’s being upstaged by a self-imploding harness racing industry which on this page will draw no further comment.

Everything considered, where has the thoroughbred racing industry placed itself in its quest for survival? We have politics; we still have a runaway NZRB gravy-train; we have administrative apathy; we have anarchy in the provinces, and we have a Minister of Racing who is displaying urgency about ‘fixing the facing game and fixing it fast which was catch-cry a year ago – pre-election.

It’s fair to say that no one in Australasia would have a better grasp on the state of the New Zealand Racing Industry today than John Messara after completing his impartial and comprehensive Report.

The most important aspect of his four-month-long investigation into New Zealand racing is Messara’s neutrality – something no previous report can claim. Not only neutral but doing the review for no monetary gain while paying his own expenses – New Zealand racing is very much indebted to the man for all his efforts.

It’s now common knowledge following Rodney Schick’s question from the floor that Messara would accept an ongoing role if asked, but Minister Peters wasn’t available for comment this week despite a series of requests. So, racing remains in limbo to a degree while we wait for the formation of RITA (Racing Industry Transition Authority).

RITA will comprise of whom and when will it be announced. Its role will presumably be to transition the process of the old regime into the new which looks to be a very challenging task on the face of it.

So why is the Minister so slow to make his move after Messara had said, following the release of his review, that two of the things that should happen is the urgency of acting upon it and 100 percent adoption? Messara is also adamant that success is reliant upon the personnel employed to carry on and promote the completion of the review – an important message when you consider past failures.

Mixed messages came from Peters in his speech to launch the Messara report. He said: “Mr. Messara has today offered a blueprint, especially on racecourse consolidation, and it’s going to focus the attention of many of you, and the government will take a look at it. We accept the need to make a real effort to restore the industry – we accept this industry is capable of doing twice what it’s doing now in terms of GDP.

“What we cannot tell you today, is how much of the Messara Report will become a reality. That’s not because we shy away from the challenge, it’s because we want to test and consult on these proposals with all of you. And you all have to decide, will it be parochialism and poverty or change which gives racing a real chance to thrive.”

The test and consult part of that statement by Peters at the launch was the most disappointing aspect of all because no government department is capable of testing and consulting on the thoroughbred industry either with or without the thoroughbred industry – that’s just a fact of life. It’s never happened before with any degree of success.

Government departments are just incapable – much in the same way the NZRB is incapable of running racing sustainably. They are no more than squares trying to fit into a round hole.

The administration of racing has come up with, for its own devices over the past 20 years, what can only be described as a ‘fail. ‘ Messara has said his report needs 100 percent adoption to make it work so cherry-picking it, is far from a recommended option. 

Again the racing Minister in his speech said, “The next step for us is to all fully digest this report. Many of the recommendations have serious merit, but they require careful consideration rather than carte-blanche approval rather than the industry’s consent. This is because of several technical considerations requiring further advice. But all of that is capable of being managed.”

The bottom line is that government departments have never had a clue about our industry. NZRB effectively evolved into a government department, and as non-racing administrators, they have proven to be disastrous in everyone’s eyes but their own.

Also, the FOB platform is being built at an outrageous cost ($40 million plus) which could have been curtailed 10 months ago. They didn’t start on it until December, and in reading the Messara report it appears to already be redundant with the plan to outsource the TAB – it may be scrapped just like the Typhoon System; mothballed and written-off.

Although Peters early in his speech referred to the suggested closures of venues several times, the real financial thrust of the Messara Report is not in the closures but in first of the three parts – the structure, finance and legislation which is what will mainly drive the goal to double stakes. That part so far has been least debated or even raised in the 12 or 13 days since its release.

During that time, having canvassed industry participants as to who has read the Report from cover to cover, only three could be found by this writer.  One of three people is Te Akau Racing boss David Ellis.

“The industry has gone crazy talking about track venues that have to close down. It’s going to be 18 months to two years before we get these all-weather tracks up and running. We can’t even agree to where they are going to be at present,” said Ellis

“And we need every grass track until these all-weather tracks are proven and we are happy with them. We are going septic as an industry on something that is two years away. Everybody’s effort is being consumed on that very subject.

“You can’t expect someone who lives in Australia to get every course closure correct. The thrust of what he’s saying is that we need to close 20-odd racecourses. Well, even a blind man knows that we have got to do that.

“But whether it’s Reefton, Greymouth or Kumara, by way of an example, it’s irrelevant. Why would people expect to take their horses five or more hours to the West Coast when there’s no local participation whatsoever.

“There are way bigger issues that need to be actioned urgently than the venue revenue which all the clubs are going to have an opportunity to put in a submission. We need all the grass tracks in the interim to keep racing going and then once the all-weather tracks are in and we can have racing on them through June, July and August and September and have all the trials on them – then the 20 tracks will be surplus to what we need.

“To hear these Presidents of the clubs go on the way they are going on about their own little patch, and not take into account the overall good of the industry, when there’s no local participation in terms of ownership and training, etc., is not going to help the industry progress to where we need to save it.

“Looking at it from Winston’s party viewpoint, he needs to get this up and running in the next six months so that every racing person can say that this NZ First Party has delivered on its promises; has actioned it and we will vote for them at the coming election.”

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.

by Brian de Lore
Published 30 August 2018

The NZRB is due for a Performance and Efficiency Report of the Board which under the terms of the Racing Act of 2003 is required to take place every five years by a person approved by the Minister.

Strangely, the wording in the Act for the appointment of an auditor to do this report does not specify it has to be an independent person but only that it must, ‘not be a member, former member, or employee of the Board.’

Two previous reports have been completed since the Racing Act came into play at the five and ten-year intervals, and now at 15 years a third is due, but the NZRB has neither referenced it nor scheduled its commencement in any press release.

On the NZRB website, only three press releases have been posted since 2015 – that’s an average of one per year. They have a substantial Communications Department at NZRB, so the output is far from prolific. It also can’t be found referenced in the late July release of the Statement of Intent (SOI), or as I prefer to call it, Statement of Discontent (SOD).

The last P&E Report was a calendar year late, coming out in 2014, and was completed by KPMG. That report suggested that the then CEO Chris Bayliss and his team of star-studded executives that were brought over from the BNZ would take the racing world by storm and take profit by 2018 up to $180 million – oops, they must have hit a few speed bumps, that never happened.

Bayliss, who was appointed by current NZTR Chair Alan Jackson, and his cohorts have disappeared long ago with their severance packages, but they must have departed in haste as a strewn mess was left where they once pretended to work. On one occasion during this Bayliss era, an off-site NZRB managers meeting was held at The Chateau at Mt Ruapehu where the weekend bill was reputed to be $100,000.

On another occasion, Bayliss installed – between two sets of swipe card doors on different levels at the Petone TAB headquarters – a couple of extra security measures in the form of two turnstiles through which employees had to pass to gain entry. They cost more than $100,000 to install but had disappeared just a year later – more unreported wastage.

Even the more serious allegations of goings-on and further monetary wastage in a Wellington Hotel suite that was permanently booked by the NZRB but used only on a couple of days a week, but I digress. This story is supposed to be more about the P&E audit of the board and how they will audit the plethora of misadventures that have occurred during the past five years.

But don’t these audits tend to be a bit friendly towards the organisation paying for them, anyway? When, and if it comes out, it is unlikely to make mention of The Chateau at Ruapehu, the Petone turnstiles or the Wellington Hotel because categories in the accounts have been invented to hide or gloss-over these expenses. These are just three of numerous misuses of industry funds.

What’s highlighted here is stuff that’s been swept under the carpet. In Australia, they expose all the misdemeanors publicly, hand out the penalties and move on. But here things are hidden away from view, and the sores stay festering. Well, these festering sores are about to pop.

Have a breeze through the last NZRB Annual Report released for the year 2016-17 – the one that was conveniently released after the AGM. You will not find any mention in that report of the Private Box at Wellington’s Westpac Stadium which costs $80,000 a year and is used possibly twice a year for the Elite Customers and the mates of TAB executives. Not to be found anywhere.

Let’s discern the facts from the fiction, and there’s plenty of the latter to be found in documents like the latest SOI which states: “We’re delivering on our financial targets, making good progress in the delivery of our strategic initiatives and delivering on our commitments to the racing industry.”

Delivering, delivering, delivering – the only delivery to be seen are the trucks arriving to stock up the gravy train – a hypocritic NZRB also continually claim they are controlling costs when clearly, they are not. As an industry, we are over these false statements.

So, what would be the point of the racing industry paying around $200,000 plus for a new P&E Report when the estimated 58,000 racing participants will simply have the wool pulled over their eyes, anyway. In addition, what would be the future use of such a report on the very eve of the release of the Messara Report which is certain to be the catalyst to propel all the remaining current NZRB board members into outer space. No point at all.

Sorry, but we are over the rhetoric, the lies, the false promises, and the incompetence. Here is ‘the end of the section’ – employees of the NZRB who suspect they contribute less to the racing industry than they take home in salary should be updating their CVs for immediate, future use.

The Messara Report is about to hit the streets and one suspects, if adopted, will result in casualties – blood in the streets for the greater good and the long-term sustainability of New Zealand racing. Will Winston adopt it? Yes, he will. Why? Because it’s a very well-compiled professional report and no alternative exists, and the consequences of not adopting it would bring on racing’s Armageddon.

The Messara Report makes the P&E Report irrelevant because, by its own definition, the latter will be a review of people no longer involved. Perhaps a better report would be a full inquiry into the running of the TAB conducted by a more probing organisation than KPMG. Far more serious allegations than those stated above have yet to surface.

But the most serious issue confronting this industry at present is the progress of the Fixed-Odds-Betting (FOB) platform and its costs which appear to be well out of control. Some NZRB employees have lost faith in the project and are ready to talk.

The costs are already over $40 million, and one insider is saying no possibility exists that the platform will be ready for use before Christmas. Management hasn’t moved from the position of the FOB being ready by Melbourne Cup time, but information received on this desk denies that’s possible.

That informer is saying the odds for the FOB platform being ready this year are 30 to one and drifting. And by mid-December, the festive season has arrived, and you wipe out the next couple of months.

A simple calculation based on the 125 IT people involved in working on this project suggests it would be accumulating over-run costs of $3 million to $4 million per month and that’s not taking into account the loss of the budgeted profit from a system not up and running.

Two months ago, NZRB CEO John Allen at a Riccarton ‘racing conversation’ meeting, admitted that costs were already up to $39 million with the FOB being ready for launch by Melbourne Cup time. But conducting the testing of it, according to our IT information, is a six-month process in total and therefore it will not be ready before Christmas.

Remember that 15 years ago we had assets of $106 million which included $70 million in cash – that has been spent, and NZRB debt in a recent statement of financial position was projected to be $24 million in August of this year.

Forecasted debt figures of $24 million after the 2018/19 season are predicated on the NZRB achieving a very questionable $14 million profit from its strategic initiatives. If this didn’t occur which seems very likely, then the debt will balloon out to around $40 million which is the reason we are in a crisis.

The industry doesn’t have the money so is borrowing it. The net profit distributions generated from wagering to all three codes is presently about $100 million.  If the industry got to a debt level of $40 million with a net income of only $100 million, it would be in a potential disaster situation.

What would then happen if the economy faltered and the banks wanted their money back? The racing industry couldn’t manage with a distribution level of just $60 million – it might be ‘all over red rover.’

The doors of racing would have to close, or the government would otherwise need to bail the industry out – that would seem unlikely going on recent history. If you didn’t previously think this industry was in the state of crises then think again?

The voice of John Messara is still resonating quite loudly when he told this writer upon completion of his report, “I knew when I began reviewing the New Zealand racing industry it was in pretty bad shape; what I didn’t know until later was, just how bad it really was.”

by Brian de Lore
Part Two published 23 August 2018

Racing’s revival in New South Wales at the hands of innovative CEO Peter V’landys has always been a movable feast and resting on his laurels isn’t an option while new projects await discovery and development.

“There’s a lot more to come after The Everest; you can’t sit still,” exclaimed V’landys firmly when asked what could possibly top a promotion that big. “You have to keep inventing new things, and you have to look at the generational change.”

By generational change V’landys was specifically referring to his planning of The Everest in which he targeted an age group: “We specially designed The Everest for the under 35s – it wasn’t designed for the traditionalists; it’s very different, and that’s why I put a full-page add in the Melbourne paper on Melbourne Cup Day.

 “The beauty of the race is that under-35-year-olds won’t do what their parents do; they almost resent it. So, if they love the Melbourne Cup, or let’s pick another race – if the parents love the Epsom, then their kids won’t.”

V’landys is not just an administrator in the traditional sense of his accounting background but has developed an entrepreneurial-marketing skill that would do justice to running a company like Saatchi and Saatchi.

“The thing that attracted me to The Everest was the slots and the fact that publicity will come out of people doing the deals behinds the scenes,” he explained. “And people picking horses that everyone’s going to argue about – I got the idea basically from the Miracle Mile in harness racing – I used to create controversy and make the front page of the newspapers which in those days was unheard of for harness racing.”

During the more than one hour with V’landys in Racing NSW offices in the heart of Sydney’s CBD, he gives no impression he’s is a man with an ego. Conversely, he is down to earth, practical and not at all intimidating.

Usually, V’landys [shies away from interviews so to get this one the Messara influence came into play – he agreed only when ‘JM’ put in a good word which was enough to swing it. The end result made the effort worthwhile, and the bonus came in the form of a Directors Lounge ticket invitation to see Winx score her record 26^th consecutive win in the race renamed in her honour.

Messara and V’landys have been a good team and have obvious respect for each other. They have fought and won quite a few battles together over several years, and the people in racing in NSW owe them a huge debt of gratitude.

“He’s a very effective CEO; he has an eye on the bottom line and costs,” began Messara when asked to sum up V’landys in the role he has occupied for 14 years.  He has a good understanding of wagering which is not found in many and over the years working with different boards he’s been able to get outcomes which have placed NSW today in an extraordinarily strong position.

“He’s tough and uncompromising but fair – he’s certainly the best CEO we’ve had in NSW. His only aim in life is a passion for getting the best results for Racing NSW – there’s no ulterior motive, there are no conflicts.

“People thought that he and I would clash when I became Chairman and that it wouldn’t last as a combination but the fact is we got used to each other’s styles, and he recognised that he was always answerable to the board – but that didn’t deter him from his innovation and aggression.

“His heart has always been in the right place, and he’s very effective. We worked out we were both on the same tram – all these things are team efforts at the end of the day, and Peter was head of the executive team while I was head of the board team, and between us all, we have had some very good outcomes. Peter is a very good man and I have a lot of confidence in him.”

The Informant last week chronicled the V’landys background, his success in developing racefields which produced a tremendous boost in income, guiding the industry through the perilous time of equine influenza and then with Messara gaining tax parity with Victoria after hundreds of hours of lobbying the state government.

Next came The Championships: “The Championships was more John’s (Messara) baby than mine, V’landys explained. “John’s vision – he always had The Championships concept in his head, but all I did was just put it together for him.

“The Championships would never have happened without the tax reliefs from the government – that’s what funded it.”

The tax relief that V’landys is referring to is the Consumption Tax of $40 million annually and the $120 million annually that Racing NSW derives from the godsend of the racefields legislation which was passed through parliament 10 years ago but was held up for the following three years as the corporate bookmakers fought it all the way to the High Court.

Thankfully, for racing’s sake, the bookmakers lost. V’landys was always confident about winning that one but some pangs of doubt did haunt the CEO for a brief period when The Everest took a little time to take off.[G5] 

“We took a risk with the Everest and lots of people thought we would fail,” said V’landys, “but we didn’t – we have proved them all wrong. Some things will fail, but you learn from the failures.

“Ironically, when we got it off the ground everyone that I thought would buy a ticket – didn’t, and for the first couple of weeks I was heading back down to the Centrelink Office because I hadn’t sold a slot but once it started everyone rushed into it, and it became oversubscribed – people were phoning daily trying to get a slot.

“Every slot holder had to be in for three years, but already every single slot holder has renewed for four years. It’s only going to get bigger – $14 million next year and $15 million the year after. I think it will be bigger than the Melbourne Cup in five years. I’ve never seen anything take off as this has.”

Entrepreneurial, yes, but V’landys is also a student of human behaviour and has used the social media trends of younger people to try and attract them to racing: “When the parents went on Facebook all the kids left Facebook and went on Snapchat.  There was a study done that when the parents started buying the iPhone, the kids started buying something else. They don’t want to do what their parents do and we specifically designed this race for the under 35s.

“At Randwick at the very first The Everest the bottom bars didn’t take cash – you had to use paywave. The beauty of that is that you don’t have to manage cash which is always good, but it gives you a mountain of information because every detail is on that credit card – you learn everything.

“So, when we looked at the figures 71% of the people attending were under 35 years. And 61% had never been at Randwick before. The marketing worked – be being disruptive, be being different, we had attracted a younger crowd.

“I got an email from a father and son who wanted to get into a horse, continued V’landys.  The father wanted to win the Melbourne Cup, but the son said no, I want to win The Everest. So, you could see the generational change already.

“But the main reason for me is that sprinters are what we are good at so why would we not have a race for something we are good at? Our sprinters are the best in the world.

“People have said to me why hasn’t The Everest got any internationals, but the basic reason is that they are not good enough. The Melbourne Cup is an iconic race for Australia, and the VRC does a great job.  But we now have a big event for the horses we breed best.”

Just minutes after Winx had won her 26^th successive race in the Winx Stakes at Randwick last Saturday, an ecstatic V’landys told me, “You can’t but buy this sort of publicity for racing; having a champion capture the public’s imagination like Winx has and break Black Caviar’s record is priceless advertising for the sport.”

And the V’landys understanding of the value of ‘good press’ was alluded to earlier in the week when he said, “During the first Everest the daily newspaper circulation went up, and they had a lot more hits on the website, and during equine influenza the newspaper sales dropped because people weren’t buying the paper for the form guide.

“It’s very similar situation with The Everest – it’s got to be controversial. Newspapers still have a place in my eyes because they give you the form guide – it’s hard to replicate a form guide on the internet. Newspapers are far from becoming extinct in my eyes.”

One of the things that makes V’landys so successful is his in-depth understanding of the psychology of the punter. He was betting from a very young age himself, he is self-made from a poor background, and he believes the people who make the decisions should look after the small punter.

He explained: “People think all the betting happens on the internet but it doesn’t; it’s the opposite because 60 percent of all wagering here in NSW comes from TAB agencies – everyone concentrates on going digital but where the tote has a monopoly is in the retail network.

“You never ever kick the people in the guts that have been loyal to you over all these years in the guts, said V’landys to being informed the New Zealand TAB had closed down telephone betting and had closed retail outlets. 

“They did something similar here by trying to fix the minimum to a $5 bet, but that’s one of my greatest achievements – you look after the customers that have looked after you for all these years – why alienate those customers who have been loyal for 50 years. I was getting letters from these grandmothers that loved having a 50-cent bet every Saturday – why take that off them. Racing is for everyone – not just a select few.”

V’landys then quickly dismissed my quip that we’d love to have him running our TAB with that attitude, saying, “far too busy here to be thinking about that” but he was more willing to have a long hard think about what it was about him that was the main factor in his success.

“If you think and have an objective and you want to work hard, then you will get there. But if you want to sit back and do the same thing over and over again that has failed then, you will fail again. They have to put the hard work in, and sometimes you have to take risks – if you don’t speculate then you don’t accumulate.

“Where I differ from most people is that I like to work with ‘can-do’ people. I’m not interested in anyone who says I can’t do it – that certainly gets me into enough trouble at times, but throughout my career I’ve met a lot of people who said they could to do things but many others that have said they couldn’t – the glass half empty people.

“If you are negative and find reasons why you can’t do it then you’ll never do it. By having people around you that have a ‘can-do’ attitude you will always have success – don’t surround yourself with people that are negative or are looking for excuses because they will drag you down.”

When told how much New Zealand racing cost to run annually and that the worst kept secret about our TAB was the big rebates they were giving the VIP customers V’Landys responded: “Giving rebates is really bad because it’s a race to the bottom if you do that.

“As an example, if we had a roomful of recreational punters in this room, they as a group would lose 20 percent of their money. So, for every $100 bet, they lose $20. Out of that 20 percent that’s lost everyone gets a little bit of it, the racing industry gets a little bit of it, the government gets a little bit of it, but the professional punters get most of it because they are taking the recreational punters money in rebates.   

“This is what happened in Tasmania – they were giving away so much in rebates they became insolvent. There’s a strong argument that says without professional punters you are better off because you keep more of the losses. Skimming and rebates isn’t a good thing.

“Having people running wagering who don’t fully understand the product is like having a podiatrist do brain surgery – he might know something about it, but he doesn’t to the level that’s required.

“The wagering business – and I have been in it all my life – is a very complicated business and it’s not one that you can just go and get a CEO out of the commercial world and succeed. [

“There are so many intricacies to it you need to know including the psychic of the punter – there’sa mountain of things you need to know.”

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by Brian de Lore
Part One published 16 August 2018

In Australia, the administration of racing and especially New South Wales has never been in better shape thanks to the intellect, planning, and vision of Racing NSW CEO Peter V’landys and his former chairperson John Messara.

Australian racing administration hasn’t ever had a better duo than these two who came from similar backgrounds, were thrust into Australian life in their youth and who both developed a resolve that left success as the only possible outcome in the environment they faced years ago as new Australians.

Messara was born in the Mediterranean Egyptian town of Alexandria, was French-speaking and only 11-year-old when alone he was sent to his uncle and aunt in Sydney to commence the serious part of his education at an English-speaking school.

His Lebanese father and Italian mother followed only three years later, and by that time the young Messara by the very nature of this experience had developed a good degree of independence and self-preservation.

V’landys was born not that far away to north-east in the Greek Island of Kythera. His family were poor but migrated by ship to Australia when V’landys was just three-years-old, in search of a better life.

“I think John Messara had it even tougher than I did,” V’landys told The Informant at his Sydney office this week, “because I know John’s history. He had to leave his parents for three years and come out to Australia very young.

“Whereas, when I came out I was only three years old – we travelled out by ship because my parents couldn’t afford the air flight – we were a pretty poor family; we battled. That’s often a good thing because when you battle in life you make things cost effective and learn to cope.

“John’s a little bit different to me in that his father was interested in horse racing in Egypt and Australia. As a young guy, I would have to get someone older to bet for me. In fifth class my maths teacher taught me how the tote worked, and he was the one that said to me I should be an accountant – my heart and soul had been set on teaching, but he talked out of it.

“We are different to the average Australian,” conceded V’landys at the suggestion something in each of the two’s DNA set them up to succeed in Australia. The parallels continued later in their lives when both became the recipients of ‘Member of the Order of Australia’ for services to racing.

“You have to work a lot harder than other people do to succeed and I did work harder, but I couldn’t have done it without the example of my father because he’d often work from 8.30 in the morning and come home at midnight after a double shift.

“His quality of life wasn’t great because he sacrificed a lot for us. Work ethic is very important, and I always believed you only get success if you work hard.”

V’landys was appointed CEO and a board member of Racing NSW in 2004 and now after 14 years is easily the longest-serving CEO in Australian racing but also the most successful. He was just three years into the job when the equine influenza outbreak in 2007 and that proved to be the ultimate test.

The equine flu outbreak in NSW had the potential to devastate racing beyond repair, but careful management and innovation by V’landys saw 50,000 full and part-time jobs saved, and the earliest possible return to racing after a five-month hiatus.

V’landys explained, “The influenza saga could have wiped out racing in NSW for decades. What people didn’t realise is that we made the decision to incentivise the trainers to keep the horses in work, and the reason we did that is we wanted to have fit horses once we started to race again.

“Otherwise we may have needed a 10 to 12-week lead-time to get horses fit enough. But when they said we could race we virtually raced on the same day because all the horses were in full work.

“We had made it a daily compensation package, and from memory, it was $100/day. That was for all horses in work, and that had an economic multiplier throughout the industry – we made payments to jockeys, stablehands and everyone in the racing work-force while going through the drama. When the green light was shown we raced immediately with full fields.

“The alternative would have been waiting three months before commencing racing. It included 50,000 people; full-time, part-time, casuals – everybody. We were busy going through all the applications, and I didn’t realise there were that many horses in work – some of them must have come out of retirement,” grinned V’landys, “but we didn’t mind that because the money was getting to people that needed it.

“We harassed the hell out of the state government and got money out of them too and learned a lot in that process. At first, the federal government offered us $5 million and I didn’t think that was appropriate, but we ended up getting $235 million. It was fortunate that we had Peter McGauran as Agricultural Minister and he understood racing – I told him to get me a meeting with the prime minister and sure enough one Sunday he rings me and says he’ll give an hour.

“So, we went to see him and that day he signed the cheque for the compensation package. He understood immediately how it would operate and as soon as he was convinced and approved it was all-hands-on-deck to get the money out.”

The compensation V’landys gleaned from a sympathetic government saved the day, but it was his stroke of genius in inventing racefields that turned the financial fortunes of racing around.

“When I started in 2004 I could see the threat of corporate bookmakers, and I wanted to ensure we would stay financially viable,” remembers V’landys. “I went and got a 200-page advice from a leading copyright solicitor here in Sydney who told me we had copyright and bookmakers should be paying us for using our race fields to bet on horses.

“We promoted the introduction of the legislation but were challenged under the constitution by the corporate bookmakers – what people didn’t realise is that they wanted to pay nothing.

“It was a three-year process that went all the way to the High Court of Australia, and we won. That has resulted in racing and sports earning $260 million annually – money we would never have had. They are still battling in the UK to get it through their legislation.”

V’landys travelled to New Zealand five years ago to encourage the then National Party government to pursue its own legislation but racing Minister of the day Nathan Guy didn’t move on it. Now, it has been addressed but will only be passed into law once it can be married into any new legislation specified in the yet to be released Messara Report.

“That is going to have a monumental effect in New Zealand because it will stimulate prizemoney and have a positive outcome on the racing economy, enthused V’landys.

“Racing NSW alone generates $120 million a year out of racefields legislation, and we wouldn’t be in the financial position we are in without it, and either would any other state in Australia – Victoria relies on it more than any other state.

“It was driven by myself and the board and there was a quite a traumatic period there for a while because people thought we would lose. We got scathing criticism because many believed we were done for, but I never ever thought we would lose. But just in case I went and got the address of Centrelink (unemployment office) But we did win, and it’s had enormous ramifications for not only racing but sport.”

Another huge V’landys win relating to taxation came with John Messara as chairman – NSW was being taxed more than any other state in Australia.

“No government have ever reduced that type of taxation, but John and myself lobbied the board, and we got racing an extra $100 million – a lot of lobbying the government,”

“I nearly got kicked out of the Premier’s office, but we stuck to our guns until we got what we thought was right. We weren’t looking for a hand-out but just to be on a level playing field with every other state in Australia.

“A more recent one which also required a lot of lobbying the NSW Government was the Consumption Tax from which we got an extra $40 million a year. So, we are now in a good financial position, and that’s why prizemoney has increased to the levels it has increased. We pay around $260 million in prizemoney which is about $20 million more than Victoria.”

“We have 200 more race meetings than Victoria, but we have never closed down any clubs or racecourses at any time. Closing them down you save peanuts and lose macadamias because if racing is not present in these areas you become irrelevant – people don’t see racing then – I believe you should have a presence in all these places unless it’s not cost-effective.”

Next week: Peter V’landys Part Two talks about the creation of The Championships, The Everest, the future of racing, and offers some advice to the NZ TAB.

by Brian de Lore
Published 27 April 2017

Benjamin Franklin once said nothing is certain in this life except death and taxes, but given events in New Zealand racing over the past couple of weeks, a major overhaul of our industry looms large as an over-the-line certainty.

Arrowfield Stud boss and former Chairman of both Racing NSW and Racing Australia John Messara AM is more than a week into compiling his report and forming recommendations that will be delivered to and then adopted by Minister of Racing Winston Peters.

Peters did due diligence on Messara, and the appointment is unlikely to be followed by debate over the recommendations; Peters knows that Messara has the track record, the experience and know-how to do the job, and to believe the Minister would do anything outside the Messara recommendations would be a naïve thought.

But once the report has been handed to Peters, the involvement of Messara realistically cannot end then. The fix will have to operationalised and who better to do it than Messara himself which is what happened at Racing NSW in collaboration with CEO Peter V’landys. The completion of the report is a job only half done, and its implementation is the second phase.

Messara said recently: “In the end, it’s all about personnel. You can have all the right structures for governance, but you need the right personnel in key places, or it won’t work.” And for that reason, Peters should appoint Messara as the new Chairman of the NZRB, at least for an interim period as the new board is installed and the industry is reshaped.

Let’s be realistic; the current board members should be gone by the back half of July so the Messara blank sheet of paper strategy, which appealed to Peters and had something to do with the Messara appointment, can be carried through to a satisfactory conclusion. The Minister has that power, and it would be delusional to believe otherwise – the way forward has to begin with a completely new team of board members.

Peters wants to leave a legacy for racing and as previously stated; what he is putting in place now will be there to survive succeeding governments and be functional in ten years-time and beyond. Messara is unfamiliar with failure, and between the two it’s hard to believe either will consider the job complete until the agenda is not only finalised but set in concrete.

Already, NZRB board member Alistair Ryan of Sky City Entertainment has resigned. Greg McCarthy has stated he will not be seeking re-election after serving five years and it will be nothing but a major surprise if Chairperson Glenda Hughes doesn’t tender her resignation before July.

The Messara report and its findings will be wasted if the wrong people are seconded onto the board and a new management team is not up to an unprecedented standard for better governance – a state of industry position we have been sadly lacking. We have a history that chronicles numerous failure, and this might be our last chance to get it right.

Messara’s impartiality offers the perfect opportunity to eliminate some of the cronyism in racing that has been prevalent here for years. He is coming in from the outside and therefore will not have preconceived notions or bias about finding the right person/s, and we need a CEO that possesses racing savvy and an uncompromising approach to the task – in the mould of Messara and V’landys themselves.   

What we don’t want to hear anymore is that narrow-minded parochialism about Australians; we just want the best person for the job and if that means the best candidate comes from Timbuktu then so-be-it. Imported CEOs have a poor record, but that’s more a symptom of the selection process rather than the origin of the incumbent.

Years ago when outsourcing the TAB was first mooted, the then Minister Nathan Guy said it would never happen under his watch –  for what reason other than a reluctance to be part of an Australian institution is unknown.

Outsourcing the FOB platform to Tabcorp might be achieved for the $6 million to $7 million per annum that RWWA’s is said to be paying instead of the $30 million plus $17 million a year we are spending. Outsourcing is simply about sharing the Tabcorp technology they already have in place and taking full advantage of the $120 million/year it spends on IT development rather than doing it ourselves.

The NZRB this month relented and with the NZTR has now formed a steering committee to investigate outsourcing – too little too late. It should have happened years ago. The horse has bolted with the gate door wide open.

The business model that the NZRB has been pursuing has been out of date ever since globalisation took hold in the betting world some 10 or 12 years ago. We ultra conservative Kiwis have been too slow to recognise and embrace the global picture just as we were in the early 1990s when some leaders in our breeding industry decried the then new practice of shuttling stallions. We were soon left behind, and our speed out of the barrier has not since improved.

And today, thinking that we could afford to build our own FOB betting platform at massive costs and then compete with the big, powerful global players just to secure the domestic market alone borders on lunacy. That thinking could only be the product of the insular minds of people with no understanding of the meaning of the word scale.

But while it’s not hard to find evidence in the smorgasbord of NZRB faults and excesses that Messara will be currently examining, don’t forget that the erosion of our industry over the past dozen years or so has also taken place under the watch of an apathetic NZTR.

Under the NZTR Statutory Role, Section 23 of the Racing Act 2003, clause four which is headed ‘Participate in the Racing Board’s Governance and Decision Making,’ (b) (1) says ‘consult with the Racing Board about the Board’s business plan’ while (b) (iii) says ‘consult with the Racing Board on the terms of reference for performance and efficiency audits of the Racing Board.’ 

NZTR has simply not been strong enough. Over the said period they have watched passively rather than objected loudly, and allowed themselves to be bullied by the NZRB which has taken full advantage of the wording of the Act. Instead of marshalling the Trainers’ Association, the Breeders’ Association and what’s now left of the Owner’ Association into some type of action, they adopted the ‘look-on’ approach and today we’ve had to hire a trouble-shooter.

Henceforth, how exactly the Messara re-gig of this business is shaped is only conjecture. While his head is buried in annual reports, submissions, etc., he won’t be making statements and will remain silent until the completed report goes to the Minister.

But we do know from previous discussions that Messara believes we are overburdened with one level of administration too many; we are far too expensive to run; management of the finances should revert to the codes and that in the end, it comes back to the quality of personnel. That was an overview from Karaka Sales time but whether or not all these beliefs will still hold true through to the completion of the report is the burning question.

Personnel has been a sticky issue in the past. New Zealanders who could be part of the future of our racing include lawyer Mark Freeman who is Chairman of the Thoroughbred Racing Pattern Committee and the son of one of our most successful administrators in Bill Freeman, and Dean McKenzie who has an impressive record of success wherever he’s worked.

McKenzie is now a wasted talent to racing in the food industry, but previously he was Chief Executive of the NZ Metropolitan Trotting Club for six years, but his background from an early age is in thoroughbreds in Southland where he qualified as an accountant.

McKenzie was Racing Manager of the Southland Racing Club at an early age, moved to Avondale a week before the club went into receivership but nevertheless made a sound contribution. He then did four years as CEO of the Wellington Racing Club, another four years as CEO of Jade Stadium and yet another four years as Executive Director of Esportif International.

McKenzie is already on the Board of NZTR as the most recent appointee, but he is someone racing needs to get back full time. Freeman understands racing and should at least be utilised in a board appointment.

These are two possibilities to enhance the future of New Zealand Racing and shows that New Zealand does have the expertise to make a significant contribution to the industry’s future and get our best people into governance. Others are certain to be on the periphery, and Messara must be made aware of them all.

by Brian de Lore
Published 15 March 2018

“We must use time as a tool, not as a couch,” John F. Kennedy once said during his reign as President of the United States, and it’s that same philosophy our own Racing Minister Winston Peters is using in his approach to changing New Zealand racing.

Peters has been broadly criticised for what some observers say is a relatively quiet start to his time as Minister of Racing. They demand immediate action.

But it’s not the Peters style to return for his second term as the Racing Minister with all guns blazing. This is a much more considered and planned approach by the man who entered parliament in 1979 and has more political savvy and guile than anyone currently in the entire parliamentary system.

Peters is not only a survivor in politics, but at the age of 72, he is the Deputy Prime Minister, the Minister of Foreign Affairs, the head of three other ministries including racing and that makes him the most influential male politician in the country.

And as Minister of Racing Peters will use his political position to leave a legacy for the racing game that only he could leave. He has both the experience of being a previous racing minister and the desire and know-how to turn this game around from the downward spiral direction in which it has been so long travelling.

The racing industry is desperate for better times – that was never more evident than in the past couple of weeks since the release of the Deloitte Report. Although it came out in only an abbreviated form, it provoked some industry turmoil we haven’t seen for many years.

Finally, here was an authoritative document produced by a highly respected international firm of risk advisers that said our NZRB leaders were going down the wrong path and in its view a more sensible option would be outsourcing to save the industry around $280 million over four years.

The Deloitte Report was commissioned by NZTR at a cost of $120,000. NZRB dismissed the report as a desktop exercise that lacked credibility because they weren’t consulted and it contained inaccuracies and assumptions.

The criticism was not so much specific but generally damning without offering detail. It is well known to those connected with the compilation of the Deloitte Report that it resulted largely through highly credentialed Deloitte employees in Australia with substantial racing industry expertise.

The problem with the criticism of the report is that it was levelled by the NZRB’s hierarchy who themselves must come under question for the level of competence they have displayed without due accountability.

NZRB is the same organisation that has been able to increase betting revenue by only 20 percent over the past six years while its running costs have risen by 40 percent.

During the week a usually reserved but frustrated owner-breeder, who shall not be named, expressed this view: “All the independents in the industry plus Deloittes and Investec are saying the NZRB have got it wrong and the industry is relying on two lightweights with no experience in this business.

 “They need to deliver – why should the industry have any confidence in them?; people I know that have phenomenal knowledge of wagering are saying this is the wrong strategy. That’s why I’m scared for our industry. By Christmas, it will be too late.”

The years of mushrooming growth of NZRB with its world-class executive salaries, extravagant spending and arrogant disregard for the wall-paper eating stakeholders at the coal-face of the industry has finally come to the point of cross-swords.

The situation is a reminder of what happened in French history to the sophisticated elites, aristocracy, gentry and business leadership just before the revolution. They expanded and prospered in a time of economic crises, created an artificial sense of well-being, built a wall between themselves and the peasantry, and soon afterwards paid the price.

Perhaps an over-melodramatic analogy but one that some trainers who are struggling to pay the rent on their stables, of which I know one,  or who are losing owners due to lack of available prizemoney, of which I know several, will relate to through familiarity.

But we are fortunate in one way because after suffering from nine years of neglect under a National government and a series of lacklustre ministers for racing, we now have a Minister who has a decent racing policy and is adamant he will carry through with the promises.

If you gave your party vote to NZ First, then give yourself a pat on the back because the analysists are saying the racing vote was instrumental in getting NZ First over the line. If you didn’t, perhaps you thought a change wasn’t necessary.

The industry mostly wanted to change because nothing was working under a continuance of National – after years of collecting GST from an industry that employs 35,000 full and part-time workers and represents one percent of GDP, no thought of giving something back to curb the decline ever entered their heads.

Now, under the Coalition and Peters, having had the racing file on the desk at negotiation time, we have action underway, albeit presently well-hidden from the fraternity it will eventually benefit.

It’s a given that while Peters has remained relatively quiet and is well distracted by a plethora of governmental obligations considered to be more important than racing, a lot of preparatory work is going on in planning a new template for racing.

“The work is currently being done,” Minister Peters told The Informant in an exclusive interview this week. “We are in the middle of budgetary rounds in which the racing portfolio is being discussed, and that’s progressing along well, and clearly we will have a two-staged approach; one for the budget in May and one for later in the year and that’s about all I can say at this time.”

But with some coaxing Peters also relented to say: “My job is to look after the whole industry, and that’s what I’m trying to do. What the circumstances are right now – there’s nothing I can do immediately.

“When I last spoke to you, I talked about what we need to do, and I haven’t changed my mind on that. So the people in the industry with vested interests need to have longevity. I just want to fix things up. Nothing has changed – the plan has been the same all along.”

What Peters did say on that occasion is that if recovery were reliant upon the separation of the codes, then that would happen. He also said that the camel that was the racefields legislation was being turned into a thoroughbred and that he had booked his administrative timetable in advance after consultation with Treasury and the Prime Minister.

Associate Spokesperson for racing Clayton Mitchell shed some light on proceedings when he added: There’s a big piece of work coming, but nothing will be rushed; it’s about getting it right for the long term. 

“It has to be sustainable in the long term so that future governments won’t need to interfere with it because it will look after itself – along the lines of John Messara – starting with a blank piece of paper and doing it right from the start rather than doing bolt-on legislation which is what we’ve been getting in the past.”

The Messara blank sheet of paper was one way of saying the structure is completely wrong, so you dismantle what you have and start again. Messara’s main criticism of New Zealand racing was the extravagant costs of the NZRB, and he talked about trimming off whatever number of employees required to run the industry in its leanest form.

Bearing this in mind, the loss of those employees will ultimately save the 17,000 employees that get up at 4.30am every morning to muck out boxes, feed-up, and condition the horses – the people that are the backbone of the industry.

Like the Deloitte Report, Messara was also a fan of outsourcing to Tabcorp as a sensible means of reducing costs and becoming part of the strongest wagering group with its technology already in place. The Reports talks about saving $70 million a year in costs for the three codes, and if the thoroughbred share were $38.5 million, then there would be enough cash to increase all stakes by 50 percent and still have some left over for racecourse infrastructure and track maintenance. That’s a pleasant thought.

The industry now has to wait for the Peters timetable to come around, but it might unroll as something like this: An announcement for an artificial track or tracks in May, probably funded from the Shane Jones’ billion-dollar slush fund, and a complete NZRB board clean-out by July.

A new board would launch a thorough investigation into NZRB costs, as always promised by Peters, and take the appropriate course of action.  Several executive resignations would follow.

Peters would initiate the process to achieve what he has always said is the most important thing for a healthy and sustainable future for racing – look after the owners and get the money back into stakes. Interesting times are on the horizon.

by Brian de Lore
Published 8 February 2018

Racing Minister Winston Peters’ speech to open the New Zealand Bloodstock Karaka Yearlings Sales for 2018 was exactly that – a speech to open the sales.

An anticipating thoroughbred fraternity was disappointed that the speech did not encapsulate concrete announcements to set the industry off on a new path of prosperity, and for some, it was akin to turning up at Waikouaiti from afar only to be abandoned after race one.

But Minister Peters was unrepentant when he took time out from Waitangi Day celebrations to talk to The Informant and explain why there was nothing substantial to announce and how the parliamentary system determines all order of events.

“Preparing for Karaka I decided not to specify the reforms until it’s very clear to me that they can be done correctly, and done with an enormous amount of speed,” explained Peters.

“It was premature for me to talk about the full facts – there’s an old saying that for any sailing ship that leaves home with no destination port – no wind is the right wind. I won’t get caught in that situation because we need to know the course that’s been plotted and where we will make land.”

At Ellerslie on Karaka Millions Day, one day before the Karaka Sales opening, Peters hinted to The Informant his speech might be subdued when he confided, ‘things may take a little time to roll out.’

“The background to the speech,” Peters further explained,” is beforehand I had put a lot of work into trying to understand why this industry is stalled, and it became more and more apparent, as I went around and talked to people, that we have a major structural problem here which requires full and genuine reform.

“And that is to do with the Racing Act that has been around for a very long time and which is clear to me, doesn’t fit the bill for where we should now be heading.

So just what does ‘genuine reform’ really mean and how will it be executed? Having put the question to Peters he responded thus: “By that I mean with a truly sustainable plan and not a short term fix – we can’t rush in with something that would only be temporary and dangerous for the industry long term – the three industries or codes we are talking about have to be changed to benefit racing overall.

“If the press and your fellow commentators want a short term fix then they have the wrong minister. I want to make sure the fix is sustainable and will get us to the end with the right environment for owners, punters and all others associated with the industry and their codes – long term sustainability which turns around prizemoney.

“If it turns around the quality of people coming into the industry and gives them the confidence to be in it and ensures that the number of impediments like track standards are seriously considered in the critical areas of investment, then it will be worth it.”

With Peters touting his examination of the Racing Act of 2003 it begged the question of what he thought of the Act and how could it be changed?

“I’ve gone back and questioned the Act’s integrity and asked the question – ‘are the codes capable of looking after themselves as three separate units or can we soldier on with the serious material differences between them’? And in the end, I thought the only thing these codes are interested in is themselves and the ability to be masters of their own destiny inside a better framework.

“In short, we are going back to first principles here – the Act can wait until we get it right and that might not be too far away, but I need to talk to the three codes individually.

“The three in one deal is very convenient for parliamentarians, but it’s not convenient for the industry, and so the structure we have to change now has got to be industry prioritised rather than a parliamentary priority.

“I’ve gone back to basic principles and talked to politicians across the political divide because frankly, we want a structural framework to survive this government and go on to long-term success rather than have a big start, a boost and then a stall and all sorts of people grappling with impediments.

“Since I got this job it’s been my priority to find out what’s going on in within the three codes and what I’m staring in the face that’s seriously wrong is the two components of cost and the income – both seriously unsatisfactory.

“It’s premature to give detail now, but we’ve been working on a time-frame and the path we’re taking. I want to ensure all three codes can see the wisdom of that, and that they all understand that’s it’s the health of all three that concerns me, and I want to ensure we maximise in every sense the income that’s capable of being generated which is demonstratively not happening at present.”

Former Racing NSW Chairman John Messara said at last week’s yearling sales it was good for New Zealand to have a racing minister that was au fait with racing, but he also made a comment, which wasn’t published, that he couldn’t understand why our industry was procrastinating about cutting costs because “it was one thing we could do straight away.”

Messara added: “The other thing the deputy Prime Minster addressed on Sunday was a fiscal framework for investing in broodmares and stallions and racehorses etc. That’s a good thing as well.”

“This business in New Zealand has some very good economic benefits employment-wise. It provides a lot of jobs for people. The industry here is as big as the wine industry at one percent of GDP, but I think you could double it. You are preaching to a fairly converted audience.

“There is an accepting public here for racing – it’s a big start. People love their horses, and I think if the costs were trimmed and increased stakes were sustainable, it would allow people to get into racing without sinking as they do at the moment; it would change the game,” Messara concluded.

Repeating Messara’s claim that racing here could be double the one percent GDP, the Minister responded: “I’m saying that we cannot go on with a stalled GDP contribution of about 1.6 billion. It’s been there for years.

“I don’t know what the exact figures previously were, but I do know that that the industry has declined in all sorts of ways, but the GDP remains stagnant – other countries are turning it around, and we are not.

“I think Messara’s view that we could easily be two percent of GDP is a fair projection and that’s got to be a minimalist target for us to set out to achieve, but I do want to take the political environment with me.

“And that’s getting the message across that this business is not a fad; it’s a serious industry that has a social content in this country. The politicians need to know what racing is like at 4 am on a cold winter morning, and how large the number is of involved young people that have a passion for horses, and that this is a career for them and that there’s a tremendous work base out there for which we have to garner far greater support.”

There’s a growing concern in this industry, I put to the Minister, that the thoroughbred industry’s future is reliant upon gaining independence, managing its finances and distancing itself from future government interference as the history of its meddling has only served to retard growth and soak up revenue.

“What I can say is this” responded Peters, “if independence is a critical component of recovery then independent they will be. I inherited the racefields bill which I didn’t think was adequate – it was probably drafted as an oversized committee solution. Instead of getting a thoroughbred we got a camel, and we’ve had to backtrack and sort this thing out.

“My key thing is to have the administrative framework timetable booked in reserve which I have done – I’ve talked to the Minister of Finance, and I’ve talked to the Prime Minister about it in the context of the industry components – it can be changed for the benefit of the Country, the benefit treasury and the benefit of the whole industry.

“What we have been trying to do is modify a model that’s clearly failing, and that won’t work. We need legislation that seeks purpose; that has a number of objectives clearly set out with all three codes, whether they are merged as they are now or whether they be independent in future which is a view I am more sympathetic towards – the bill has all three of them in the outcome.

“Looking at the legislation of 2003, it was a socio-political answer that only satisfied the politicians, but it’s not their interests we should be looking after – it’s the industry.

“It’s not my job to defend Internal Affairs or the Racing Board against the industry; it’s my job to defend the industry against Internal Affairs – and that authority is very clear in my mind.

“I have plenty of confidence in the capacity of the codes to lead themselves, but they need the right environment to succeed. You can cater for vested interests, or you can ensure the whole industry benefits – and that’s what I’m focused on.

“Consider that we’ve had only 102 days of government – we have just started, and the next legislative timetable is about to kick off. I think we have moved as fast as we can.”

by Brian de Lore
Published February 2018

Arrowfield Stud boss and former chairman of Racing NSW John Messara says that if he were in charge of New Zealand Racing, he would start the fix with a blank sheet of paper.

Messara, who was in New Zealand this week to attend the first two days of New Zealand Bloodstock’s Karaka Yearling Sales, took time out to express an overview of the thoroughbred business in New Zealand and offer some advice on how to address some of the issues it faces.

“What I would do if had all the power is take a blank sheet of paper and make a list of the industry’s most crucial needs. I would write this, this, this and this in priority order and then go out and try to emulate it,” began Messara AM who was awarded the honour of a Member of the Order of Australia in 2008.

“Some of the things would be a better revenue deal, a more efficient broadcasting operation, containment of costs and one of the things a lot of jurisdictions have gone to, but one which I’m not in favour of, is this having this regulatory body that presides over the three codes – New South Wales doesn’t have it.”

Messara was questioning the need for the very existence of the body of administration we know as the NZRB. More than that, he suggested the governance structure is one he could never have worked in, and it was ill-conceived all those years ago.

“I’ve found that in industry where there’s a joint board involved in a number of industries there are too many complications.

“These are the sorts of boards that ‘grow like topsy,’ and it becomes a bit of a bureaucracy and you want to avoid that at all costs. Thoroughbred racing can ill-afford to support harness or dog racing.”

And while on the subject of dog racing I am reliably informed that the calculation is done which shows thoroughbred racing supports greyhound racing financially to the tune of $5 million annually because of this clumsy and outdated Racing Act of 2003.

Not something we want to know in the first of two years of borrowing a total of $20 million over two seasons to maintain a minimum stake level of $10,000.

“Each of these codes which has its own culture, its own personnel and its own way of dealing with issues and keeping them separate ends up costing less money rather than costing more money,” continued Messara, “and I think you have to keep them separate because they have their own ambitions and end up not liking each other and don’t then co-operate. So, we have resisted that situation in NSW.

“I understand where these things have been invented from but from a government minister’s point of view they don’t differentiate each of the codes – a lot of ministers aren’t ‘au fait’ with racing, but your racing minister is  – to others it’s just racing.

“When you are dealing with parliamentarians all day as I did you realise they don’t know the detail about any of those things – they know nothing!  If they can bunch them all up and have a standard of integrity – they think they can achieve it all by doing that.

“It seems a neat organisation for them but what it does is cause enormous frictions and constraints – they are three different industries with three different types of people operating them and participating in them, and thoroughbred racing is the biggest by far and is a big generator of GDP.

“You need to simplify things, and the chairman of the industry has to be a strong figure with vision, but in my time as chairman of the industry you had to be strong, but having to preside over those other two codes would have been impossible.

“You can’t be ‘au fait’ with all the peculiarities – the culture is different in everyone. I couldn’t have been confident about the other two codes and would have had to get out because I couldn’t have guaranteed what I was doing in those other codes.

Messara was also Chairman of Racing Australia until he resigned from both positions a little over 12 months ago. He is right up there as one of Australia’s most successful racing administrators.

“In 2011 he agreed to the roles with Racing NSW and Racing Australia to secure the industry’s future by filling in his blank sheet of paper with a specific set of reforms which he had achieved by the end of his tenure.

It wasn’t always a popularity contest, but Messara strength of character went a long way to achieving his goals. We need Messara-type leadership for the New Zealand industry, and a blank sheet of paper would certainly be a good starting point.

“In the end, I think it comes down to leadership and collaboration with the government because we are in an industry that’s governed by acts of parliament,” Messara explained.

“Collaboration and confidence in the government is an important part of what we have done and continue to do in NSW. Having someone with visionary leadership who can execute the plan is the other part.

“The vision comes down to people, and the industry needs someone to take the lead and be a representative to the government to go on and make the changes in government that are necessary which includes containing costs and maximising income on a sustainable basis.”

“It’s no good throwing money at an industry and saying here’s some money to see you through – it has to be maintainable. You can’t establish a stakes money program and then the next season have to bring it down because the money’s not available.”

The irony of Messara’s remark above is that it begs the question of what will happen at the end next season when the $20 million borrowing for stakes has been used up – do we borrow more to maintain the $10,000 minimum if the NZRB strategic initiatives haven’t realised the returns CEO John Allen has forecast?

“Costs are part of what you need to address,” Messara explained, “ but it’s also a revenue thing as well – you have to get that equation right so that the industry can release more money for prizemoney.

“So, the industry gets in all its revenue plus broadcast income plus product fees then it’s got the cost of administration. The decisions you have made on borrowing money to increase prizemoney and building your own FOB platform are precarious ones, but I don’t know all the facts, so I don’t like commenting too much.

“The changes have got to be of a structural nature to put the industry in a sustainable mode – they are some of the things we have done Australia.

“I got a lot of confidence out of the Deputy Prime Minister’s speech when he said he would address the problem of prizemoney on a sustainable, long term basis. I’m sure your guys here can work it out – they only have to look across the ditch.

“The sort of things we have put our mind to include coming to a very workable rapport with Tabcorp – in NSW we get adequate payment for our broadcasting rights and from the corporate bookmakers

“Australia now is supported by a tremendous sustainable base In terms of prizemoney. What we have done is we’ve made racing pay to a certain extent – the best return in the racing industry in the world are those that places that are somewhat closed like Hong Kong and Japan – they are fully integrated and closed, and you have to be licensed to get into them.

“In Australia and New Zealand we have open racing economies – anyone can get started in training, owning or breeding; there are no barriers in getting into ownership, other than economic barriers and so they are far more difficult to control because you have a certain amount of prizemoney which had to be divided into a varying population of participants.

“It’s tough in those jurisdictions – NSW and Victoria have a return to owners which is the best in the world – better than America and Europe and certainly better than here.

“Racing now is not as financially demanding in Australia now as it has been in the past but there’s still room for improvement, but in New Zealand you are a long way behind us because you really haven’t undergone the reform that we have in Australia.

“Structural reforms such revenue generation and also capital expenditure budgets that we’ve had over the last couple of years; all this money that we’ve had set aside to upgrade facilities which were somewhat neglected in our country areas and in our major showplaces like Randwick.

“All that has been done and is continuing to be done so we’ve sort of got our act together in NSW and Victoria but there’s still a battle going in Queensland and West Australia – New Zealand falls into that range. I suspect that here the owners don’t get a return.

“Nothing will happen here in terms of a significant improvement in the breeding sector until you improve the racing sector. It’s totally dependent on the success of racing. The trend of lowering foal crops is a world-wide one. The UK has bottomed and is just beginning to come up, Australia has bottomed-out we think. So even if you get the prizemoney to draw people back in it’s going to take five to seven years to start making a significant difference.

“If you don’t change the racing program, then you will have small field sizes, and that leads to less wagering and therefore less revenue and less money to put out for prizemoney.

“It all comes down to people at the end of the day – personnel is critical. A single person can change the world.”

by Brian de Lore
Published 3 January 2018

There may be a storm brewing on the horizon; the present calm isn’t expected to last the month out as some summer heat produces a zephyr of expectation which could develop into thunder and lightning by Karaka Sales time.

How do we arrive at such a forecast? Read the NZ First Racing Policy and combine it with the associate spokesperson for racing Clayton Mitchell’s election statement that Racing Minister Winston Peters will have some news for the industry by the commencement of the National Yearling Sales series.

Thunder and lightning might be a little melodramatic but the least we can expect is that the wind might get up and disturb the plain sailing of a few administrators and their off-siders. Change is in the air and those changes to be considered were clearly outlined in the Racing Policy devised by Peters and his NZ First Party which subsequently attracted the racing vote and assisted, to some degree, the election outcome.

“We have it very clearly in our minds how we are going to implement things and I think you’re going to see a quick turnaround – before Karaka Sales there is going to be a lift,” said Clayton Mitchell at election time. “We have a great plan with significant changes of a positive nature which will re-invigorate confidence in the industry.”

The 10 bullet point items in the policy included only one which is designated ‘urgent’ and that is ‘urgently review the operations and costs of the New Zealand Racing Board.’ Another near the top of the list is ‘return a greater proportion of industry taxation to the racing codes.’

Winston Peters has been relatively invisible post-election, but rest assured there has been plenty of work going on behind closed doors and this is the proverbial calm before the storm.

An effort by NZ First to push racefields legislation through parliament pre-Christmas on the urgency list failed for technical or priority reasons, but there is every reason to suggest it will be passed into law at the earliest possible time in the New Year.

During a call to NZRB CEO John Allen a couple of weeks ago when I questioned the merit of spending $40,000 on the pop-up function for the Elite Customer Programme at Riccarton on Cup Day, I also asked him if he had met with Peters and what his view was on the NZ First promise to investigate costs at the NZRB.

“No, I personally haven’t had a meeting with Winston yet,” Allen replied.

My argument to Allen that the NZRB had grown too large since the time Peters was previously ensconced as Racing Minister but revenue had increased $50 million over a four-year period, during which time there were no stake increases while NZRB infrastructure had continued to grow and that the whole structure needs looking at, brought this response:

“I’m not defensive about that – if the Minister or whatever want to look at the structures of the NZRB and have ideas on ways that it can be made more efficient, then I think that’s good and from my point of view what we are trying to do is substantially increase the profitability of the Board so that we can enhance stakes and investment in infrastructure and the like.

“So I’m not at all concerned about initiatives to look at the structures of the Board and nor am I concerned about people who have ideas to make this organisation more efficient.”

The problem with the NZRB from this writer’s viewpoint is that after nine years of National Party rule they have evolved into just another government department, complete with the party faithful, which runs with par-for-the-course government department efficiency and speed, or in this case, lack of it.

At the very top of management there is a lack of business experience at the highest corporate level – most come from other government jobs – evidence offered by the recent recruiting of three Government and Industry relations appointments plus a reshuffle with existing staff for the addition of an Operations Specialist and a Strategy Manager for Calendar Optimisation.

Yes, believe it or not, we have a Strategy Manager for Calendar Optimisation. In the press release which announced the appointments there was no racing background cited for any of the new employees.

John Allen defended the appointments by saying: “Our business is a dynamic thing and we are continuing to invest in some areas that have become really important and industry relations is really, really important to me and it’s not an area that the NZRB has done particularly well in over the years – I’m not being critical of others in the past but it’s just an area we have to get on top of.

“We are deliberately investing money in that space and in other areas where things aren’t as good or where technology has evolved or things have changed. We are making changes that will take cost out of the business – it’s a constant dynamic, living organism, this organisation, so we are continuing to work on lowering our costs and I would expect our costs trajectory to continue to decline.”

It is true that when the NZRB Annual Report eventually came out, after the AGM, total expenses were down from $205,187,000 in 2015-16 to $204,681,000 in 2016-17, a total saving of $506,000, or if you prefer to examine it in percentages a saving of 0.25%.

Lower staff costs were achieved in the past financial year with one reason being that 70 phone-bet operators were made redundant and the number of employees on salaries of $100,000 or more reduced from 138 to 134.

The biggest concern for racing is that betting on racing fell by more than $50 million from $1,715,316,000 to $1,665,287. Sports betting and gaming were both up on the previous year and the TAB continues to market sports betting on the premise that new customers to sports betting will eventually convert to racing. And we already know that sports betting returns about one seventh of what every dollar bet on horses returns.

At the NZRB AGM at Karaka in November, the speakers were generous in praise of themselves and quick to blame any industry ills on their incompetent predecessors, for which they actually received a round of applause, mainly from the faithful in the front row. The comparison I always make with RWWA in West Australia was poo-pooed and branded as fake news. But it’s not.

The difficulty for Winston Peters is that an overall saving of one quarter of one per cent for the year is probably not going to cut the mustard if you can read something into his racing policy. It’s a bit like a band aid for a severed head – it’s hardly going to stem the blood loss.

Peters is likely to look long and hard into NZRB costs and it won’t be an overnight job; there will be plenty for him to consider. The other point about the NZ First Racing Policy is the one mentioned earlier about returning a greater portion of the tax savings to the racing codes.

When Peters gained those annual tax concessions for racing all those years ago they were worth $33 million in the first year. Today the same concessions, still in place, bring back at least $65 million annually, but the problem is that most of that money has not come back to the stakeholders; it’s instead been used to expand the size of the NZRB and embark on some of its development such as IT, etc.

Peters has always championed racehorse owners and wants stakes to increase to keep them in the game. Some money has been channelled back into stakes but it’s probably fair to assume the new Racing Minister holds the view not enough has been used for the purpose it was intended. Time will tell on that issue.

If you took the whole of the New Zealand Racing industry; all the clubs and their assets included, and then added every level of administration, and made it into a public company, it would produce an interesting fiscal dilemma. For the level of assets tied up and the return yield those assets provide along with a top heavy administration, the corporate raiding sharks would be circling.

The fictional scene put before a share market man also involved in racing brought the response that the share price would have halved in the past five years. And that share price would now be down to a few cents; it would be ripe for a corporate takeover with a lot of people to be sacked and the dispersal of a fortune in assets. That’s how well this business is going.

The true test of how we are progressing as an industry is, in a thoroughbred context, the number of mares being bred, the number of foals being born and the level of participation by the domestic market at our second tier National Yearling Sale. Statistics will show that in the 2017 breeding season there were less mares mated than in any of the past 40 years and Book Two at Karaka will tell its own story.

The year of 2018 has to be a year of change, because if we get to the end of it and nothing has changed, then nothing will ever change. By this time next year this government will be nearly halfway through its term and the window of opportunity will be slipping away.

It has to happen this year – and it will.