Keeping sight of hope while we wait

As the weeks and months pass since the release of the Messara Report the more I feel as though we, as an industry, are living our own version of Waiting for Godot.

Samuel Beckett’s best-known work, described by Irish wits as a play where nothing happens twice, is essentially about hope.  However, unlike Vladimir and Estragon, the racing industry has already been delivered hope – in the form of the report, which has been dangled in front of us.

Unfortunately, that tantalising vision appears to have been swept away again and locked away to await the results of deliberations around submissions.  Various permutations of legislation also appear to be on the cards, relating to the creation of RITA, racefields and changes to the Racing Act.  Although, given the fact that parliament sits for a further six days this year, it would seem we will have a long wait over the summer.

A scan of the happenings in parliament this week offered just one glimpse of anything with a racing connection and that was the reappearance of a petition which was presented to the Primary Production select committee calling for greyhound racing to be banned.  No doubt the Racing Board and its highly paid government liaison squad will be all over that.

Back to our code though and the desperate hopelessness which swamps us as we, like Vladimir and Estragon, find ways to fill the time while we wait.

The past week saw the release of the NZTR annual report in ample time to give interested parties plenty of time to read and digest prior to the AGM on Monday, 10 December.  Note to NZRB, perhaps you might look at a similar approach in the future? At this stage, with their AGM scheduled for improbably named “The Zone” in Petone’s Head Office next Friday, there is no sign of the NZRB Annual Report online.

So, to the NZTR document and, as one would expect Chairman Alan Jackson spends a considerable amount of his report focusing on the Messara report and the potential positive outcomes for the industry.

On the topic of changes to legislation, Jackson states that NZTR would hope these could be finalised “sooner rather than later but we are also cognisant of the need to get it right. It is important that the legislation is fit for purpose, as the proposals have the potential to unlock returns that are simply not feasible under the current structure.”

I’ve read a lot of these Annual Reports over the years and developed a healthy cynicism, however I found myself silently applauding the introduction to this year’s NZTR report.

Under the heading: who we are, it states:

“New Zealand Thoroughbred Racing is tasked with administering the domestic thoroughbred racing code but that illustrates what we do, rather than who we are. Technically we are racing administrators but in reality, we are racing enthusiasts.”

That enthusiasm for the industry and its health is demonstrated when the chairman talks about the distribution received from NZRB ($79.7m, an increase of 6.7% “mainly attributable to the advance funding of $24m to the three codes, announced in 2016-17. In 2017-18, NZTR received $6.5m of the advance funding, which was redistributed to the industry in prize money”).

Now read the following and ask what state the industry might be in had the NZ Racing Board exercised similar discipline and restricted their operating costs.

“Of the total revenue received by NZTR, 91 per cent was returned to the industry, with nine per cent being the cost of running NZTR, inclusive of licensing, stud book, handicapping, racing bureau and registrations. A restructure of the senior management team helped reduce staff costs and the overall operating expenditure, before infrastructure spend, was down 2.3 per cent on last year. This was a good result, bearing in mind that the expenditure included a one-off website refresh.”

If you want to consider the rough figures around that related back to the NZRB, when one takes the total revenue (as per the 2017 Annual report, given the 2018 Annual report has yet to see the light of day) of $348m and the total operating costs of $204m the picture is dire.  How is it that the Board, or anyone associated with that bloated organisation, considers it right that around 60 per cent of our revenue is eaten up by operating costs?

As a wise fisherman was reaffirming to me at Karaka during the Ready to Run sales, a reduction of costs in that area would see a totally different picture being painted.

Anyway, I didn’t want to get into yet another diatribe about the excesses of the NZRB – can you blame me though? They as good as load the gun before stepping in front of the sights!

Back to the NZTR Annual report and chairman Alan Jackson’s thoughts on the future of galloping venues.  His considered take on this should soothe some of those who have become over-excited after reading (only that section of) the Messara report, but then some are beyond seeing reason.

The report states:

“Venue reviews will play a big role in determining the future shape of the New Zealand industry and NZTR needs to have the authority to determine that some tracks should be closed. The principle that the wider racing industry should benefit from venue sales is a sound one but vesting all race club property and assets to the code regulatory bodies will meet some justified resistance. NZTR takes the view that in general clubs are the appropriate stewards of their land while racing continues at that venue and that universal land transfer is a blunt instrument, which does not recognise that some venues are important community assets.”

“However, NZTR believes that we need to be able to ensure that when use of venues ceases, any proceeds from a sale of that venue may be applied in the wider interests of thoroughbred racing, following consultation with affected parties, including community groups. We also agree that the current structures relating to asset allocation in the thoroughbred sector do not recognise the historical investment that the industry, as a whole, has made in individual venues.”

Of course, there are also some dire figures included in the report which reflect our dwindling horse numbers, an impact of a foal crop which has been on a downward spiral.  Overall, though this is a relentlessly positive document which gives hope that there might be a future.

In the meantime, we wait.

 

Advertisements

Clumsy PR campaign tries to paint a positive picture

All too often with these blog posts I have one idea in mind – occasionally positive – then something happens which leads me down a totally different path.

Once again, that happened this week thanks to an interestingly timed press release from the NZRB wanting to paint a pretty picture of a bright future where they will remain relevant.  Add to that a club whose track is on the Messara report’s closure list and toss it out there to a gullible waiting media and you have said track being used to further NZRB’s PR narrative.

We are now a full two months down the track since the Messara report was released.  We have seen it discussed and dissected, often by those who have not read the document in its entirety, and submissions have been made.

If you are feeling somewhat depressed about the whole process and what the future might hold then read Brian de Lore’s piece in The Informant this week.  A fabulous representative group of the younger generation, who rely on racing for their livelihoods, have shared their thoughts around the industry future.  I was particularly taken with their use of the Malcolm X quote that the future belongs to those who plan for it.

They are certainly right when they go on to say that our industry has “languished at the hands of those too short-sighted or ill-equipped to make the tough decisions and necessary changes.”

As if their words had conjured him up like the infamous Dr Faust, that same evening the man who sold the thoroughbred code down the river by signing off on Section 16 of the 2003 Racing Act was front and centre on TVNZ news.

Interestingly, the person who was largely responsible for several industry bodies casting a vote of no confidence in his organisation around that action, has now taken on the mantle of protector of country racing.  Go figure?

The subject of the TVNZ story was the Gore racecourse and its survival.

Forget the future of the entire industry.  Forget the other 90% of the Messara report.  Let’s just focus on the fact that the good people of Gore want to keep their track.

Of course, it is impossible trying to get the New Zealand general media to get their heads around what has been going on in racing for the past 15 years.  As far as they are concerned racing occurs during a small window which begins around Cox Plate time and rolls through the spring carnival, summer Cups and Festival, incorporates the Karaka sales and Karaka Million (thus perpetuating the myth we are all rolling in it) and winds up some time around mid-March.

They must find it bizarre when they are confronted with a mid-week meeting in the boondocks.  The interview subjects for their story were quite telling as they included the failed and tainted administrator and a “trainer” who, according to the NZTR website, does not have a current licence.

While the great unwashed might have ended up having some sympathy for the club president trying to save her venue, there was probably a sense of healthy cynicism when it came to local politician Hamish Walker and his petition.  Those of us with long memories can remember going down this route before.

The clumsy link between a poor, put-upon, provincial track facing oblivion and “shock horror” the NZRB issuing a press release which proclaimed “distributions to the three racing codes reaching a record $148.2million” smacked of desperation from an organisation which itself is facing oblivion.

Until such time as the Annual Report, signed off by actual accountants – hopefully not the same ones who signed off on the error-ridden Statement of Intent – is sighted I am not buying their numbers.

According to the press release the Annual Report will be released on Friday 7 December at the NZRB AGM at their head office in Petone.

If that is the case, and one can rely on so little of the information coming out of the NZRB Head Office being based on fact, then there will be little or no time for perusal of the figures prior to the meeting.  Given the fantasy figures used in the Statement of Intent I am sure that once us poor plebs can view the Annual Report online it will be very well studied.

In the meantime, expect the continuing party line from NZRB that all is well with them financially and the Messara report is a giant conspiracy designed to crush racing in the heartland of New Zealand.  There should be a prize for the first general media journalist to notice that the NZRB emperor’s new clothes are indeed non-existent and to start looking at the parts of the Messara report which don’t relate to proposed track closures!

While we wait for that modern miracle to occur, I hope everyone enjoy the purist’s race day on Saturday – what’s not to love about a race day where every race is a group race and no less than four group ones!

 

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

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.

Operating costs a mystery to NZRB

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.