Why not focus on the benefits promised in the Messara report?

The difference in attitude between New Zealanders and Australians has never been more clearly on view than following the release of the Messara report.

Presented with a blueprint to success and potential doubling of stakesmoney (should the reforms be implemented in toto) New Zealanders immediately latched onto the perceived “negatives.”  In some areas of the media those negatives were figments of active imaginations which hadn’t been able to grasp the detail of the report.  I have laid two formal complaints with one media company which took a deliberately disingenuous approach to its reporting around the report.  Of course, it could have been driven by ignorance, the eventual responses should provide the answer to that and indicate whether I take the complaint to the NZ Media Council.

But back to the report. What is it with this tendency to focus on gloom, this dour, dismal, desolate outlook which is the antithesis of the bright and sunny outlook of our neighbours across the Tasman?  The fact the report was crafted by an Australian was something which grated with some media commentators who demonstrated their lack of knowledge by whinging about this aspect too. Would they have preferred we gave the task to another failed Kiwi administrator, after all, how do they think we got into this mess?

The report has now been widely available for two weeks and there are still many, some employed in the industry, who have not read and absorbed it. Yet they feel free to pontificate on the “negatives” and what needs to change.  The ignorance and arrogance of this stance is appalling.

Some with an agenda not entirely aligned with those who want to see the industry thrive (read the report and it is abundantly clear just who would fall into this category) continue to angst over track closures and the outsourcing of the TAB.

What they are not highlighting are the benefits this report promises.  In his covering letter, John Messara advises the Minister of Racing: “I calculate that the cumulative impact of the reforms recommended in this Review can enable a near doubling of prizemoney in the thoroughbred sector from $59.4 million in 2017-18 to $100 million.  The overall approach to prizemoney has to be aimed at supporting investment and participation in the sport through equitable funding for the lower tiers of racing, while ensuring that aspirations are fuelled by lifting the rewards of the Group and Listed program.”

The examples which follow provide a mouth-watering picture of what our future might look like with $10,000 minimums jumping to $20,000 in a simplified three-tier racing model which would see the top tier racing for $70,000.  What is not to like there?   Likewise, with Listed races doubling to $100,000 and increases at the top end seeing Group One races carrying stakes of $400,000.

To demonstrate just how these increases would benefit the industry there is a graphic which shows how this “Cycle of Revitalisation” would work.  Increased prizemoney leads to increased returns to owners, leads to incentives to invest in horses (buy & breed), leads to increased race fields, leads to increased wagering, leads to increased industry revenues, which takes us back to increased prizemoney and the cycle continues.

These increases in thoroughbred prizemoney are part of the 17th recommendation, which would also see payments extended back to tenth place in all races.

Another recommendation which should have met with a more enthusiastic reception is recommendation #11: Repeal the existing betting levy of approximately $13 million per annum paid by the NZRB, given that the thoroughbred code is a loss maker overall, with the net owners’ losses outweighing the NZRB’s net profit.”

Anyone still clinging to the belief that the NZRB has been doing a good job should read that again, very slowly (you can even move your lips if it helps with the comprehension).

As the report states, prior to distributing its profits to the codes, the NZRB is required to pay GST and betting levies to the government in accordance with legislation. The amount relating to the betting levy is approximately $13.2 million per annum.

The report argues that it would be in the government’s interests to repeal the betting levy provisions as a revitalised industry would “in turn lead to increased employment opportunities and an increase in the industry’s contribution to the New Zealand economy.”

The report continues: “If the government were of a mind to adopt this strategy it would send a clear signal of its support for the racing industry and its recognition of the importance of the industry to the New Zealand economy.”

“Further, if the levy is discontinued we would recommend that the resultant amount not form part of the Board’s overall profit to be distributed in accordance with Section 16 of the Act but that it should be accounted for separately and distributed directly to the racing codes.  In addition, as this action would represent revenue foregone by New Zealand taxpayers, we are of the view that it should be distributed to the codes in accordance with their respective contributions to the New Zealand economy.  Based on the recent Size and Scope Report prepared by IER in February 2018 the revenue forgone by government would be distributed to the codes in the following proportions: Thoroughbred racing 67.2%; Harness racing 27.10%; greyhound racing 5.7%.”

Following the Racing Minister’s instructions to John Messara, the Racing Act 2003 also came under the microscope and the report addresses, among other areas, the aforementioned Section 16.

Some history – Section 16 has given me nightmares from the moment our code was sold-out by those who purported to be acting in our best interests (those who should remain on the scrapheap of failed administrators).  Back in 2002 prior to the Bill going through its second reading it was originally labelled Section 15 and I wrote this piece:

Some 15 years since the adoption of the Racing Act 2003 we now have the opportunity to create a formula which would bring our industry more in line with those in the sporting codes.  Section 57 sees all sports betting, be it local or offshore, taken into account when determining the amounts payable to the respective sports bodies.

The report also details several precedents when it comes to distribution methods which give equal consideration to local and overseas racing.

Recommended under the heading Governance and Structure of Racing and Wagering Finances & Distribution to Codes is the following:

  1. Repeal the government betting levy and distribute proceeds to codes based on their respective contribution to the New Zealand economy.
  2. Amend Section 16 of Act to provide that NZRB (Wagering NZ) profits are distributed to codes on following basis:
  • Provided the NZRB (Wagering NZ) surplus is sufficient, each code to receive the same amount in any year that it received in the previous year (where the surplus is less than the previous year, the codes will receive a proportionate amount based on their previous year’s receipts)
  • Additional amounts are to be calculated as follows:
  • 25% on gross betting revenue on code domestic racing
  • 25% on gross betting revenue on code overseas racing
  • 50% on each code’s contribution to NZ economy
  1. Provide for the new scheme to be fixed for a period of 10 years unless changes are agreed unanimously between the codes and approved by Minister.
  2. Provide for an independent review of the scheme after 10 years.
  3. Continue to fund the racing integrity services from NZRB (Wagering NZ) gaming profits.
  4. All the NZRB (Wagering NZ) to operate on all sporting events (with or without agreement with National Sporting Organisations) and make payments to sports based on minimum payments prescribed under Section 57 of the Act.

There is no doubt the Messara report is a document which provides depth and detail.  It also offers us a roadmap out of the mire in which we find ourselves and the recommendations are dovetailed to ensure success.

Enter into discussions about the recommendations, but let’s make sure those discussions are around the “How” and let’s get this report across the line.

It also might be a good time for some former and current administrators to leave their egos at the door.  Yes, we all know you would’ve come up with a plan just as brilliant given a chance, but the fact is you weren’t, and you didn’t.  Suck it up and quit nit-picking!

In the words of the great Vince Lombardi: “Obstacles are what you see when you take your eyes off the goal.”

If we are to achieve our goal of a vibrant and thriving industry there should be, as Brian de Lore pointed out in The Informant, more than a little urgency around the next steps.

It might be an opportune time to engage with the Minister and express support of the report and its recommendations and stress the need to get the right people in the right positions to drive the Racing Industry Transition Agency (RITA).  That is going to be, as a friend of mine is wont to say, the key to the operation, at least when it comes to stage one.

As mentioned in Friday’s post the above was written prior to the Minister calling for public feedback on the Messara report, what we can expect in the next five weeks is anyone’s guess.  We are certainly living in interesting times!