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 7th?
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 7th 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 3rd. 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 19th 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 7th, the date of the NZRB AGM.”
