by Brian de Lore
Published 2nd May 2020
Last week we highlighted protest letters and OIA (Official Information Act) requests to the Minister of Racing and RITA (Racing Industry Transition Authority) from the Trainers’ Association, the Owners’ Federation and the Next Generation of NZ Thoroughbred Racing.
The letter not mentioned but also written around the same time on April 22nd, was sent to Minister Peters on behalf of the New Zealand Thoroughbred Breeders’ Association (NZTBA) and signed by its CEO Justine Sclater. The letter was not a long one but very much to the point and hopefully will have struck a raw nerve with the Minister.
It expressed concern about future funding from RITA, how little information was coming back to the codes and how this uncertainty would prevent owners from bringing their horses back into work for a resumption of racing. It also dragged up the Winston Peters quote from the launch of the Messara Report in referring to the administration as a ‘dead horse’ – a euphemism that no one in this game will let the Minister forget.
The livelihood and businesses of our 1400 members and their employees is at stake here and RITA have given us nothing to reassure us that we will in fact have an industry post-COVID-19 – NZTBA
The Breeders’ letter also said: “The livelihood and businesses of our 1400 members and their employees is at stake here and RITA have given us nothing to reassure us that we will in fact have an industry post-COVID-19. Owners will not return their horses to work in local stables without some indication of what they are racing for, and many will in fact send their horses off-shore.
“Our association had grave concerns around the solvency of RITA prior to COVID-19 but were optimistic that your new Racing Act would solve that problem. We appreciate that the Minister has other portfolios to maintain, but we know how much you have invested in the Racing Industry in New Zealand recognising the old Racing Board was a “dead horse”, and presenting us with the Messara Review as a way forward.
“We find this situation with RITA unacceptable,” the letter continued, “and seek your help in making RITA accountable to our industry stakeholders. This is a view shared by our fellow stakeholders the New Zealand Trainers Association and the New Zealand Thoroughbred Racehorse Owners Federation.”
If we were to summarise what the Breeders’ letter says and add the thrust of the intent of the other three letters from last week, the strong message to the Minister is simply, “we have all had enough – fix the problem or the racing and breeding industry in New Zealand will be annihilated under your watch.”
Above, I tongue-in-cheek made the suggestion the letter might strike a raw nerve with the Minister. The question is, are there any raw nerves to strike? – it’s very doubtful! Wiley old politicians have their raw nerves removed very early in their careers and forever-after, it’s water off a duck’s back. With all due respect to serious nature and good intentions of the Breeders’ letter and the three aforementioned letters from the other groups, history would suggest they are likely to receive scant consideration upon reaching their final destination.
…in the one to two decades of the stealthful hijacking of the racing industry by Government appointees or their ex-civil servants/managers…
History, indeed, tells us that in the one to two decades of the stealthful hijacking of the racing industry by Government appointees or their ex-civil servants/managers ( the ones who required shifting sideways because once you’re a civil servant you don’t get sacked) the codes and racing’s sector groups have had virtually no say in the selection of the NZRB board (now RITA) and the senior executives of RITA.
And while on the subject of civil servants getting the sideways shift, readers will be delighted to learn that our esteemed former NZRB CEO John Allen has been appointed chief executive of WellingtonNZ. The Wellington Mayor said, “He’s a big-picture, creative thinker which are exactly the skills Wellington needs at this time.” Another councillor said, “John’s track record speaks for itself,” which is a sentiment upon which most people would agree.”
I digress, however. But still in Wellington, the Government should be continually reminded that racing is an industry that employs something like 15,000 people full time, another 13,000 part-time, and between all employees and volunteers, the number involved is more than 57,000. That was according to the last Racing Size and Scope Report that was released exactly two years ago (May 2018).
When you add up what Treasury rakes in from racing’s betting levy, PAYE on employees, and GST, the figure amounts between $80 and $100 million annually. As a consequence, shouldn’t Government have treated us better? Minister Peters did racing the favour of clawing back a third of the betting levy in this financial year ($4 million), and eventually (three years), we get it all back. But, two questions arise on the betting levy rebate.
The first is this: When you owe the bank $45 million, it’s hard to make a case to say racing’s participants should be giving the Minister a round of applause, especially considering the debt has doubled under his Ministerially appointed RITA and his watch as Minister. A third of the betting levy is only a drop in the ocean of debt.
…why would the Minister not go back to Treasury and make a COVID-19 hardship argument for racing to get the full $13 million this financial year…
Secondly, why would the Minister not go back to Treasury and make a COVID-19 hardship argument for racing to get the full $13 million this financial year instead of waiting for the incremental claw-back over three years? Wouldn’t that be a better option than the Minister promoting to Treasury that racing be granted an Air NZ-like bail-out loan that would forever see racing under Government control?
The $15,000 a race with stakes money back to 14th place announced this week by NZTR is for a limited number of race meetings in July only and offers no guarantees for the stakes level to be set for the new Zealand season from August 1st. It won’t continue at that level but is an incentive to get owners to put their horses back into work. But remember, RITA is insolvent, and with a miserable end of July result looming, racing for half that amount is a possibility for August.
Ideally, RITA could be replaced by a racing commissioner who would restructure the TAB and immediately commence an outsourcing/partnering agreement funded by the recently announced by Grant Robertson interest-free loan facility for two years.
The 2019 Budget granted racing a $3.5 million for efficiencies, which apparently was available for leadership redundancies but isn’t yet utilised and will be available only until June. Is it held over by RITA to affect layoffs at the TAB which by all accounts became known to employees at a meeting on April 20th? Why RITA didn’t see the necessity for such an action last July or didn’t immediately use the COVID-10 crises when they applied for the Wages subsidy six weeks ago is a mystery – delaying the inevitable.
Politicians are renowned for not keeping promises, but how could the industry have been so blatantly deceived?
With an ever-increasing regularity, The Optimist has since the last election tried to be a constant prodder to the conscience of our Racing Minister Winston Peters – to no avail. Politicians are renowned for not keeping promises, but how could the industry have been so blatantly deceived? Racing fell into the trap of voting for NZ-First after they released a racing manifesto full of the reform the industry so badly needed.
Implementation of the racing policy hasn’t occurred. Subsequent promises made through documents such as the Messara Report, the Minister’s speech at the Messara Report Launch at Claudelands, the Terms of Reference for MAC, the MAC Interim Report, The MAC Final Report and the Ministerial Letter of Expectation, so far has not been acted upon.
Take a helicopter view of all that carry-on leads you to the only possible conclusion– the slow and methodical and stealthful hijacking of the racing industry from its true and rightful owners – the codes, clubs and racing participants – is no less a crime than the Great Train Robbery or the French Bank Vault Tunnellers.
Today, racing codes and stakeholders appointed by racing people have had zero say, and in 175-years of racing in New Zealand, the industry is in its worse financial state and affectively bankrupt both morally and financially.
…raising of the flag of revolutionary reform…
The small window of opportunity in this cascading graph of racing’s decline was the release of the Messara Report almost two years ago. We all thought, for a second or two, the Minister’s excitement on the day of its release was a raising of the flag of revolutionary reform and everything from that point forward would be a positive for our ailing industry.
The appointed RITA failed to carry out the Minister’s Terms of Reference, and why has the Minister has not held RITA to account as provided in the conditions of his Letter of Expectation? The course upon which this ship was plotted has neither changed nor has it given racing’s stakeholders cause to believe that what should be a simple fix based upon sound business principles is ever going to happen.
If you doubt that claim above, here are some quotes from the Minister speech at Claudelands on 30th August 2018:
“As Racing Minister, I commissioned this report because for far too long this once great industry has been sitting on its hands.”
“It is being killed by inertia.
“Mr John Messara’s report confirms our worse fears.
“Not only is the industry in a state of serious malaise but it has reached, in his view, a tipping point.
“That means we are staring at a downward spiral from which we may never recover.
“The vital signs of our industry are dreadful.
“In other words, it is an industry in a self-perpetuating decline which is nothing short of terminal.”
“By comparison to New South Wales the returns to New Zealand owners are low:
2016/17 Return to NZ owners 22.9%
2017/18 Return to NSW owners 48/1%
“In reality the numbers are against us. Add it all up and the NSW owner’s returns are double that of a NZ owner.
“Messara was given, in effect, a blank sheet with this review.
“He has been allowed to develop his own thinking on what the New Zealand racing industry needs.
“He has had the chance to talk to a lot of people about what this industry needs.
“This is what an independent review does. It wasn’t an exercise of ghost writing for a Ministerial office wish list.
“What you have in the following recommendations is a clear view on what needs to be done.
“In summary the recommendations:
- Current governance structure needs to change
- Outsourcing TAB commercial activities to an international operator to help increase prizemoney
- Amend the distribution formula to the codes on a more equitable basis
- Repeal the betting levy paid by NZRB to the Government
- Construct three synthetic all-weather tracks
- Increase thoroughbred prizemoney, potentially doubling to about $100 million per year
- Reduce the number of thoroughbred race tracks
“This choice is yours. This choice is whether, as an industry, you accept that you are at a crossroads.
“Do you accept the status quo which evidentially offers a continual, gradual decline? Or do you accept a need to adopt change, and are willing to approach that change in a constructive way?
“The government’s next steps: When receiving the report, one of my staff members advised me the racing industry was going to “freak out” from this report.
“The reason being is that the Messara report pulls no punches and offers a very prescriptive plan on governance, licensing, and particularly on consolidating race tracks.
“It is a matter of public record that many aspects raised in this report are matters which, as Racing Minister, I’ve expressed concerns about before. In particular, governance structure and incentivising ownership investment.
“If you think I’m a harbinger of doom of gloom, read the Racing Board’s annual report out this year.
“Here’s a fact. Some of your code distributions and activities are being funded from cash reserves and borrowing.
“Does that sound promising? Or is that ominous? But to be honest you all know that alarm bells have been ringing for industry for years now.
“Here is a fact. This year a three-year revolving debt facility was established to supplement the NZRB balance sheet.
“And total equity is budgeted to decline by $15.6 million this year.
“Some will argue that the Racing Board is turning the industry around.
“But my bet is, like me, this hall is packed with people seriously concerned with the status quo.
“Mr Messara has today offered a blueprint, especially on race-course consolidation. 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.
“Change is challenging and difficult, but real reform is also the pathway to the restoration of this once great industry.
“These are John Messara’s 17 recommendations. The main ones of which we’ve covered in tonight’s presentation.
“Ladies and gentlemen, as John Messara said in his introductory video, we have a chance to turn racing’s ominous present and future around.
“We all know that so much of the legislation governing your industry was written not for the industry’s benefit, but for the convenience of politicians and bureaucrats. And all of us are to blame for allowing that to happen.
“Tonight we have set before your industry a liferaft of reforms. It is over to all of you now – sink or survive and flourish.
“It is to be hoped that the industry seizes this chance as comprehensively as possible.It’s a now or never moment.
“In the words of the genius of human motivation Shakespeare – “there comes a tide in the affairs of men which is taken at the flood, leads on to fortune”.
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