NZ Racing Board

Time to embrace the process and be part of racing’s solution

/ Mezzasez

The date has been named and, next Thursday, our burning questions will be answered.

What will be in the Messara report and when and how will it be actioned?

Already though the naysayers are spreading their poisonous tendrils as they attempt to negate the report before it has seen the light of day.  They are no strangers to the industry, in fact it was possibly their ancestors who took machetes to every earlier report which sought to set the industry back on a profitable course.

All those missed opportunities to drag us back from the abyss – the bottom of which we now find ourselves – were the result of timidity of thought.  That inability to trust the people charged with doing a job and back the minds behind the likes of the McCarthy report has led us to this point in history.

It is one of the saddest differences between Australia and New Zealand.  Whereas the Lucky country is populated by gung-ho, optimistic, take-a-chance gamblers, we have a high proportion of dour, purse-lipped, wowsers who would rain on any parade.

Point out any positives in Australian racing to this lot and they will scowl, shake their heads and spit out some drivel about there just being more money in Australia.  Try and draw their attention to the gross over-spending and inability to rein in operating costs of our own NZ Racing Board and they have no answer.

What I find particularly sad is that some of those who have been sagely shaking their heads and claiming the Messara report will make no difference are supposedly journalists, current and former.  These people make (or made) their living from the industry, yet they are incapable doing their job which includes questioning those in power and taking them to task.  Instead, they accept puff-piece PR from the NZRB and seem to find it normal that we have an organisation whose costs outweigh its returns to the industry.

Of course, the difficulty we now have in New Zealand is the paucity of truly independent racing media.  This breaches many of the fundamental elements of journalism [Bill Kovach & Tom Rosenstiel] – its practitioners must maintain an independence from those they cover; It must serve as an independent monitor of power; Its practitioners must be allowed to exercise their personal conscience.

This lack of independence means those seeking out credible information need to look to the country’s only independent racing publication The Informant and its correspondent Brian de Lore, or the likes of the Otago Daily Times and its racing reporter Jonny Turner.

Racing coverage which seeps into mainstream media is either of the negative “rich racing people get given more money” theme; or, what should be the celebration of a wonder horse with a Kiwi connection, ending up being all about the money she has won.  The latter is due to a total lack of understanding of the industry from the presenters and those who have directed them towards the story.

What to do then when this long-awaited Messara report finally sees the light of day?

Read it through, breathe, read it again.  Sit back, mull it over and ask yourself one question.  Am I going to be part of the solution, or part of the problem?

Make no mistake, this is our last chance to finally get it right.  Tinkering around the edges and throwing a few all-weather tracks into the mix is not going to solve the problems we have.  This is going to take bold moves, some of which we may not immediately like.

You can be part of the problem or you can embrace the process and be part of the solution.

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Operating costs a mystery to NZRB

/ Mezzasez / 2 Comments

A new season and hope abounds.  So what do we know so far?  The Messara report has landed on Winston Peters’s desk and no doubt will be given due attention once he has dealt with small matters such as the ASEAN Foreign Ministers’ meeting in Singapore this week.

We do need to occasionally be reminded that while racing is front and centre of our minds at all times Winston has had other pressing issues to deal with as he was at the helm as acting PM for the past six weeks or so.

Patience dear readers, we will know what the report contains soon enough but what we need to hope is that this one, unlike the myriad prior, is acted upon quickly and completely.

As a media hound who believes the worst of everyone I couldn’t help but be moderately amused that the NZRB, with its usual tone-deaf timing, released its Statement of Intent 2019-2021 this week.

If you were someone relatively new to the industry or even somewhat less jaded than I am then you might find yourself buoyed by the messages contained within.

My BS radar is so finely tuned these days that I can barely read a sentence without querying the thinking behind it.  I suppose it is nice to know that some of those employed at great expense to the rest of us were toiling away to create this work of art and fiction designed with that grand old police motto in mind – “move along people, nothing to see here.”

As regular readers will be aware I have a real problem with two areas of NZRB expenditure which are of course interlinked – operating costs and salaries, not to mention the numbers employed,  Rather than conduct a deep dive into such a shallow pool of information and risk major injury I have instead focused on those areas when perusing this document.  The findings should have anyone with a financial involvement in the industry questioning how we can let these people continue to operate.

Apparently NZRB “remains committed to undertaking a broader review of our operating costs.”  Good on them, at least they are getting the message I thought.  Only to have to apologise to my office mates for an expletive-laden outburst when I read the following statement:

“This was paused following the commencement of the Messara review and other strategic options analysis but will be reconsidered in the 2018/19 season.”

It took me a while to get my head around this one.  So, the industry is undergoing a review which will examine, among other aspects, how to return more money to participants and the outfit in charge of the dollars WAS “undertaking a broader review” of its operating costs but paused it as soon as the Messara report was announced.

Rather than actually continue to look at how they could apply a little slash-and-burn to operating costs which, until last season exceeded the payout to industry, they decided to sit on their hands and wait and see.

I trust they have done something really useful in that time.  I would suggest dusting off their CVs and working on creating some handy LinkedIn contacts might have been a good place to start.

After reading that statement it was difficult to see this as something other than another NZRB puff-piece.

Prior to it landing this week I was intending to revisit a time when NZRB CEO was newly appointed to his position.

In 2015 with the bright enthusiasm of a newbie, John Allen told NBR that the Racing Board needed to lift distribution to the industry by $40-50million “over the next few years.”

“Unless we can do that and get the facilities right, get the returns to owners right, so we can begin to get the investment into the breeding stock again that we need to support the industry over time, the whole industry grinds to a halt,” he said at the time.

“Basically, every dollar we spend is a dollar that doesn’t get distributed to the codes,” he added.

“It’s really important that the codes trust us to be efficient and effective with that money.”

Reading that is was apparent that Allen had been well schooled on what the industry needed. So, a few years down the line and what have we seen?

Back when Allen originally commented the NZRB 2015 Annual report showed operating costs at $139m, with staff costs $62.4m while the distribution to the industry was $134.2m.

The following season operating costs had dipped ever so slightly to $138.7m, staff costs peaked at $66.8m and distribution was $135.3m.

The 2017 annual report listed operating costs as $136.2m (a drop of $2.5m – remember those figures), staff costs at $63.6m and the return to the industry finally bettered operating costs at $137.6m.

Just a couple of notes around the staff expenses for the past two years – in 2016 that number was made up of $60.2m in salaries, $1.8m in termination costs and $4.7m in (covers a multitude of sins) “other staff expenses”.  In 2017 those figures for the same items were $59.2m; $18,000; and $4.4m.  However, included in this was $1.3m of expenses relating to strategic initiatives ie FOB, Racefields Legislation, Customer and channels programme, and Optimising the calendar.

So what of the future according to the overview of the 2019-2021 document?

The prediction is distribution for 2018-19 “budgeted at $151.6m” explained thus: “a $0.8 million increase on last year (2017-18) to offset increased venue services charges to the codes from the vision capture upgrade. This includes the $12 million of additional funding targeted at increasing stakes across the 2017/18 and 2018/19 seasons that has been approved by the Board. A further amount of $2.6 million is being distributed to fund the continuation of the activities and expenses of the Event Marketing and Logistics (EML) business, which was transferred to the equine codes on 1 August 2017.”

So that increase included the $12m that we have borrowed to ensure our stakes aren’t a total embarrassment, yet the work on reducing operating costs was paused.  How are we meant to take these people seriously?

We are now living outside our means with a three year revolving debt facility having been established during the current season.  According to the SOI document this was to allow for “critical investments in growth initiatives.”

No need to panic though as they assure us “as the benefits of the strategic projects are realised, NZRB will take a prudent view to repaying debt while continuing to invest and increase distributions to the industry.”

I don’t recall anything in the NBR  article where Allen mentioned they may have to borrow to get close to the $40-50m he recognised was needed when he took the reins.

And what of the costs, of which, need I remind you, Mr Allen said every dollar they spent was one we didn’t get?

Well apparently in the 2017-18 year they are expecting “underlying operating costs to increase by $2.5m to $136.2m.”  Yes, that is correct – Increase, and what’s more this is in line with their budget.  So much for looking to rein in their operating costs.

The more observant of you might notice that $136.2m is actually the figure given as operating costs in the 2017 Annual report, which had me scrambling to back and double and triple-checking the figures.  I went so far as to seek the independent advice of an accountant (a real one, unlike those obviously used by the NZRB) and he confirmed my suspicions when he walked me through the figures.

If you check out the figures used on page 5 of the SOI under the heading Managing Costs you will find the following: “Excluding investment behind our key strategic initiatives, underlying operating expenses in the 2016/17 year decreased by $5.0 million (3.6%) to $133.7 million compared to the prior year ($138.7 million in 2015/16.”  So the mystery $5m decrease which leaves us with $133.7m is largely fictitious as the actual figure in the 2017 Statement of Profit or Loss is $136.2m.

Perhaps I should’ve been alerted to the fact this was not going to be a document which could be relied upon for its veracity when an email follow-up was sent out one day after the SOI was released into the wild.

It stated: “Unfortunately, there was an error in the summary document of the NZRB Statement of Intent sent to you yesterday. The document should have read ‘ Reported net profit before distributions of $173.5 million is budgeted for 2018/19, $201.2  million in 2019/20 and $219.6 million projected in 2020/21.”

If you fancy torturing yourself then go read the fantasy document yourself.  I’ve read so many of these promise-the-world documents over past decades that I believe none of it any more.  The creative accounting/obvious muck-up just confirms that my skepticism was well placed.

Like so many who have watched our industry driven into the ground by people with no skin in the game I am tired and jaded.

However, I am also damned if I am going to walk away before I see this current mob marched out of their cushy NZRB offices and replaced by people with the dedication to see this industry succeeds. Let’s make sure it happens.

No pressure Winston, but it’s up to you now.

Time to learn from the past and forget the piecemeal approach

/ Mezzasez

When I was a kid, a journey with my grandfather was a travelogue of often defunct racecourses and anecdotes of what had gone on there years earlier.

My favourite tale involved the old Carterton track where he claimed he broke his little toe.

Between the time he quit race riding and established himself as a trainer many of the tracks he used to frequent had gone the way of the Dodo so there were plenty of stories.

So, what has that got to do with anything you ask?  Well, last week the NZ Herald, finally realising the Messara report was an eventuality whether their NZRB-employed “reporter” liked it or not, ran what I refer to as a “non-story”.

With the report yet to be released and so consequently light on any facts the writer went for the divide and rule approach by focusing on the fact Messara had been asked to focus on the thoroughbred code.

The reasoning was twofold he decided – our code had “fallen the furthest behind its Australian equivalent in terms of stake money and infrastructure, particularly New South Wales racing” and this doozy – “it was serious players in the thoroughbred industry, like Sir Patrick Hogan, who were among the most vocal Peters supporters before last year’s election.”  Right….so now we have established the level of media we are dealing with, lets move on to another aspect of the piece which left readers in no doubt as to the writer’s absolute terror that the gravy train may be about to derail.

Lacking an actual story, he decided to attempt to provoke the provinces with the following statement: “Reducing the number of racing venues in New Zealand also looks certain to be recommended but again that will be met with considerable resistance in some regions.”

No prizes for either assumption.  There is no doubt that, for our population, we do have a surfeit of tracks, likewise, if you are going to suggest to a club that they might want to curtail their activities and relocate then you had better be armed with a good argument.

Not every club is double-blessed in the way the Feilding Jockey Club, New Zealand’s best example of a club moving down the road, was – with the advantage of owning land someone else was prepared to pay money for AND being driven by a forward-thinking president and committee who put industry interests first. If you need further convincing just compare their Cup stake these days to the figure they ran for at their old home track.

Considerable resistance is an understatement based on my personal experience too.  I am old enough to remember going racing at the Opaki track just outside of Masterton – in May, it wasn’t pleasant.  At the time, working at BloodHorse magazine I was already aware of the glut of tracks in the country and the fact that some of them were looking pretty shabby and struggling to survive.

In my youth and naivety I suggested to a few of the locals – all heavily involved in the industry – that it wouldn’t be long before we saw racing in the Wairarapa solely at Tauherenikau.  Needless to say the reaction was instant and negative.

The same suggestion, it turned out, was made in the 1946 Finlay Royal Commission, although no one reminded me of that at the time!  Eventually it did happen, albeit about 40 years after Finlay and co’s recommendation.

The Herald picked the right irritant if it wanted to stir up anti feeling prior to the release of the Messara report.  The arguments around which clubs should survive, which should amalgamate or pool their resources and which should just pack up their tents have been hotly contested since Finlay’s Commission mooted the same.  

Anyone remember the Otautau Jockey Club or the Waiapu Racing club or the Tolaga Bay Racing club?  Those three were among six clubs the Commission recommended have their licences withdrawn and relocated to other clubs.  By the time the 1970 McCarthy Commission was back revisiting some of the same ground those three had gone, while many of the others which it was suggested might rethink their futures were still raging into the night (I’m looking at you Masterton)!

So here we are five Commissions of Inquiry down the track – yes, FIVE – 1911 Clifford; 1915 Hunter; 1920 Kent; 1946 Finlay and 1970 McCarthy – obviously we are very slow learners, something Waikato Stud’s Garry Chittick reminds us of regularly.

On top of these Commissions we’ve also had a Ministerial Review, which I vaguely remember in the early 1990s; the PwC industry report of 2002; the Ernst & Young Performance and Efficiency Audit of the NZRIB of 1997 (what I wouldn’t give to see something like that delving into Jackson St these days!); the Racing Industry Working Group report in 2003 and that is probably only scratching the surface.

And where do we find ourselves people?

Being controlled by an obese organisation which is haemorrhaging money via the open oozing wound which is its operating costs.  It suckles 870+ employees, with the knowledgeable and necessary being squeezed out at the expense (and I mean expense) of the six-figure earners who are disconnected and disinterested.

We are racing for stakes which wouldn’t – at the lower level – be out of place in a racebook from thirty years ago, while costs have continued to escalate.  The following from the 1970 McCarthy Commission report would not be too far removed from how NZ trainers are operating today – “training fees charged by the licenced trainers barely covered the costs of feed and labour…trainers relied chiefly on their customary 10 percent share of stakes for their personal income.”  You want to know why so many of our promising young horses are sold off-shore, there’s your answer.

Our infrastructure is struggling to remain fit for purpose thanks to decades of neglect – if it wasn’t for the weight of Health and Safety demands number eight wire would be all that was holding us together in some places.

Make no mistake, this Messara report will paint a clear picture of what needs to be done and don’t be surprised if it sounds vaguely familiar.  After all, we’ve had a swag of Commissions and reports which have recommended the way forward. In each and every case these have been adopted in a piecemeal fashion, with the hard decisions avoided to our detriment.

The 1970 McCarthy report, in its conclusion, was wary of this after stating its recommendations were designed with the object of presenting one comprehensive plan of reform.

It stated: “Piecemeal adoption would lose much of the advantage of a plan aimed at ensuring a viable future for the industry as a whole.  Hopes of this are less likely to be fulfilled if the recommendations are not seen as inter-related.”

The final statements of that Royal Commission are worth repeating in full:

“We cannot leave our task without stressing once more two points which we have made often during this report.  The first, that though racing and trotting are merely different parts of an industry which includes other groups as well and which must therefore have machinery to co-ordinate and direct it, yet we firmly believe that the two codes should be left to decide their own internal structures and run their own affairs as they themselves would wish, without direction from others, save when the economic welfare of the whole industry is involved.  Because of this belief we have refrained from some positive recommendations which we might otherwise have made about matters which we think would be better changed. The second point is, that though we are convinced that the industry will experience increasing difficulties and challenges in the years ahead, its situation is far from desperate; it has much vitality and many forces for good. It must, however, prepare for the future by mobilising and employing them with the greatest efficiency.  Only if it does that, will it live vigorously and prosper.”

We had the chance in 1970 but lacked the cojones to make the changes needed.  Let’s not make the same mistake this time.

 

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Missing the mark with media

/ Mezzasez

If ever you needed an example of how far below the radar New Zealand’s racing industry is travelling, there was a glaring one on Newshub’s AM Show this morning.

While talking politics with, surprise, surprise, political reporter Tova O’Brien, host Duncan Garner queried the connection acting prime minister Winston Peters has with racing.  It would appear that, like the racing minister, the industry itself has little relevance when it comes to this show.

In the past there have been cringeworthy interviews around the NZ Derby meeting – focus being fancy hats and how much the trophies are worth.  Prior to the yearling sales there was a confused introduction of Sir Patrick Hogan with Garner claiming he was about to have “one last crack at the Karaka Million.”

Racing, once part of the nation’s fabric, is de trop and something which retains the stigma of back-alley betting shops and aged beer-swilling smokers, at least with this news outlet.  So much for the marketing and communications efforts of the six-figure salary earners in Petone!

Every step of the way those charged with promoting the industry have missed their mark.  They have failed to mark out a place for an industry which contributes $1.6 billion to the economy.  Their sole focus with media is on top end events.  Hospitality for media types at these events is more about the food and booze in isolated marquees rather than checking out the stars of the show and giving them an authentic experience.

It’s probably not their fault as one would expect few of those who work at the Racing Board have had an authentic racing experience themselves.  They certainly have no grasp of the industry’s rich history.

For example, here we are, coming up to the 40th anniversary of the first day women rode against men in New Zealand (15 July 1978).  Today females make up around half the riding ranks, some are even second-generation jockeys and there are numerous fantastic story opportunities.  If we are relying on anyone from the NZRB to lead the way when it comes to celebrations and some media acknowledgement to mark the occasion then, I imagine, we will be left disappointed!

The incredible story around “letting” women ride against the men has been there since day one and this one could even appeal to Duncan Garner and the AM Show crew – well, maybe not Mark Richardson!

While the industry hierarchy may have had to been bitch-slapped into allowing women to apply for licences once they took that step they ensured there was no discrimination when it came to pay scales.  From day one – 40 years ago – female jockeys have been paid the same amount as their male contemporaries.

Given the cacophony in the general media around gender equality – especially in the area of pay equity – this is one story which the industry should be shouting from the roof-tops.

I imagine there is a reason that the six-figure earners at the NZRB aren’t trumpeting this one (apart from the fact that any reference to pay rates might focus more unwanted attention upon the $60 million in salaries which the organisation siphons out of the industry).  Most likely it is that they probably don’t know (and don’t care) because they are so far removed from the industry they work for they wouldn’t have the first clue what jockeys are paid.

I can’t imagine any of them have ever used any of that six-figure salary to enjoy a share (or two, or three) in a horse and therefore are aware of the actual costs of racing a horse in New Zealand.

It is no wonder then that media outlets like Newshub continue to think of racing as some misty, murky relic of the past – populated by the likes of Winston “and his mates.”

Those who are charged to do as follows – via the Racing Act 8 Objectives of the Boards  The objectives of the Board are – (a) to promote the racing industry – have failed dismally and will not be missed upon their (hopefully imminent) departure!