politics

Time to put the NZRB out of its misery?

/ Mezzasez

Call me cynical but I’m not buying this sympathy wave the NZ Racing Board is currently riding. With a late run reminiscent of Chautauqua the NZRB is attempting to position itself as a victim.  The outcome is more likely to be akin to last Friday’s Moonee Valley trial rather than the withering last-second winning burst a la any of the grey flash’s TJ Smith successes.

If you watched Weigh In last week, then you will have witnessed the staggering sight of the NZRB CEO John Allen stating that he did not speak to the Minister of Racing.  That was confirmation, if needed, that the NZRB in its current form is broken.

There were a couple of things which immediately sprang to mind when I heard that.  The first was, “well in that case do any of your well-rewarded Government and Industry relationship managers have any contact with the minister’s office”? And, the second was – “Winston can’t be that difficult to contact, Brian de Lore seems to have no problem getting him to provide answers to straight-forward questions.”

Long term readers will remember the Government and Industry relationship tribe which I referred to in a blog post last November (More climb aboard the NZRB gravy train).  From what I have heard over the past week though, they were as blind-sided as Allen when the Minister announced he was pulling the Racefields legislation.

It would seem from this that no one at the NZRB was paying attention when the Messara report was launched and the Racing Minister was answering questions. In addition to communication problems it would appear the CEO and chair are also challenged when it comes to listening and comprehension because, seated front and centre at the launch they managed to miss what everyone else watching heard and saw.

Interestingly, Brian de Lore wrote the following paragraph referencing this in his latest column in The Informant – you won’t have read it though as it was deleted:

That fact has been stated several times here in The Informant.  The Minister stated it himself at the launch of the Messara Report (and debated it with Graeme Rogerson) and he has always said we get only one chance at doing the legislation and everything had to be done at once.  It was no secret.

I went back and watched that segment of the Q&A again where, in response to Graeme Rogerson’s question about Section 16 the Minister had, among other things, this to say:

“I said that the law had been written in 2002 and the last one which is now before parliament which we have suspended bear the hallmarks of writing legislation for politicians and bureaucrats at their convenience and not with the interests of the industry in mind.”

When Rogerson pushed further asking specifically about Racefields legislation Winston Peters claimed the trainer was wanting to head down the motorway in a Lada when he was trying to create a Rolls Royce future for the industry.

“That legislation has got problems with it and we’ve only got a certain gap in the legislative schedule ahead to put the changes in we want,” he stated.

In response to the Minister’s query as to whether he saw the legislation as the “salvation of the industry” Rogerson said, no but it was a help.

The Racing Minister’s pithy reply, “So’s liniment!” left little doubt as to his opinion of the racefields legislation.

Apparently, this exchange went whizzing over the heads of those from NZRB and obviously was also missed by the wonderful leadership team which John Allen would happily have alongside him in any battle.

Their unwavering belief that Racefields was to be their saviour also probably meant they didn’t bother too much with reading the Messara report which also pointed out flaws in the legislation.

This pretty much sums it up:

We are not convinced that the maximum level of penalties prescribed in the Bill is sufficiently high enough to act as a proper deterrent for persons not complying with the legislation. Perhaps further consideration should be given to adding custodial penalties for persons found guilty of breaching the legislation. It is widely thought that the inclusion of custodial penalties in the NSW legislation has been a prime motivator for a high level of compliance. While it would be beneficial for the legislation to be enacted at the earliest opportunity to generate much needed revenue for the racing industry, it would be more appropriate to delay its passage until a final decision is made by the Government on the preferred structure of racing and betting administration in New Zealand. This would avoid the necessity of setting up monitoring and collection systems within the nominated Designated Authority only to have to repeat the exercise if the structure changes.

Based on what we have seen and heard from the NZRB over the past week or so it would seem they are living in an alternate universe.  In that world work goes on shovelling money into a FOB platform which has the whiff of a three-week dead trout about it; jobs of all descriptions are advertised despite the future of the organisation being shaky at best; and there is no connection between the senior leadership team and the Minister.

Shouldn’t we all be more than a little concerned about all of the above?  Even more so when it is being portrayed by the CEO as if they are the ones who are being hard done by.

We are lucky in this country to have relatively easy access to our politicians, we connect to them via social media, can drop them an email, write them a letter and even give them a phone call – which they may, or may not chose to answer!

Brian de Lore told me earlier this week that he had flicked a text to Racing Minister Winston Peters and received a phone call within three minutes.

He relays this in his piece in The Informant where the Minister could not have been clearer when it came to the Racefields legislation.

“I cannot keep on jamming things into the Parliamentary schedule and it made sense to pull that out of the schedule and incorporate whatever good parts there are into a new Bill as fast as I can,” the Minister told de Lore.

Given this and further comments from the Minister in the de Lore piece it was somewhat odd to see an NZRB puff piece also featuring in The Informant where John Allen is apparently “pushing a case for the Racing Board and the TAB in its current form to maintain a position at the top of industry administration and oversight.”

Anyone with a little more self-awareness might have already fallen on their sword.

Instead, we continue to hear the same old rhetoric coming out of Petone where it is everyone else’s fault that they are now presiding over a dead horse.  We are told they are passionate about the industry – as passionate as a six-figure salary can make you, I think – and that they want to see it thrive.   Excuse me if we aren’t swallowing it, after three years we’ve figured out the talk is just talk.

The implementation of recommendation number 4 can’t come soon enough.  Don’t be surprised though if, when the independents charged with conducting a performance and efficiency audit of the NZRB finally break into Fortress Petone, they find nothing but a burnt-out shell.

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

/ Mezzasez

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!

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Racing Minister calls for feedback on Messara report – two weeks after release

/ Mezzasez

Good news for the slow readers out there – Racing Minister Winston Peters has given you an additional five weeks to get your head around the contents of the Messara report.

Yesterday, a full two weeks after the report’s release the Minister announced a public consultation period of five weeks, closing at 5pm on Friday 19 October.  Feedback can be emailed to racingreview@dia.govt.nz

What will be interesting then is just how long the Minister takes to consider the public submissions and what, if any, weight is given to them.  In the meantime, though, time ticks on.

A date which should be marked on the calendar though, is Monday 1 October, the day the Primary Production committee’s report is due.  This is the select committee which has been considering public submissions to the Racing Amendment Bill 2017 following its first reading last August.

This bill was one of the items the Racing Minister specifically requested John Messara to consider when undertaking his review and accordingly a section of Part 1 of the Report is devoted to this.

Number 10 of the 17 recommendations included in the report’s executive summary states:

  • Introduce Race Field and Point of Consumption Tax legislation expeditiously. These two measures will bring New Zealand’s racing industry into line with its Australian counterparts and provide much needed additional revenue

The more detailed recommendations read:

It is recommended that the Racing Amendment Bill be enacted at the earliest opportunity either as a standalone Bill as presently drafted or as a component of wider legislation. The following changes are recommended to the Bill:

  1. The role of Designated Authority in terms of the Betting Information Usage Charges should be allocated to the three Codes of Racing and Sport New Zealand. The role of Designated Authority in respect of the Consumption Charges should be allocated to the Department of Internal Affairs or such other Department as is appropriate.
  2. Authorisation under each scheme should only be issued to persons licensed or authorised to operate as a wagering operator under the legislation of a relevant Country or State, or licensed by an authorised racing body.
  3. For the purposes of the Consumption Charges, the location of a punter should be determined based on the punter’s home address.
  4. The legislation should also provide for the cancellation, revocation or variation of authorisations where the operator fails to pay amounts due to the Designated Authority or fails to comply with the Regulations or any conditions attached to the authorisation.
  5. The legislation should provide for an administrative review of any decision not to approve an application for an authorisation or of any decision to cancel, revoke or vary an authorisation.
  6. Revenue generated from the Betting Information Use Agreements should accrue directly to the three codes of Racing and relevant Sporting Authorities in accordance with the respective shares of that revenue generated by them.
  7. Revenue generated under the Consumption Charges Scheme and collected by the Department of Internal Affairs should be applied firstly to the administration of the scheme, with any balance distributed in accordance with a formula based on the respective shares of the total investments made currently with the NZRB (Wagering NZ) plus harm minimisation initiatives, etc.
  8. Assessment of fees should be based on turnover and the systems should allow bookmakers to claim bet-back credits where they lay off all or part of a bet made with them but only where the bet is laid off with another operator who is liable for the New Zealand charges.
  9. The wagering operator is to provide information to allow the monitoring of matters relating to the integrity of New Zealand Racing and Sporting events.
  10. The Conditions or Regulations making provision for the inspection of betting records held by the operator to also allow an investigation relating to the integrity of New Zealand Racing and Sporting events. Provision should also be made requiring the operator to allow an audit of the operator’s financial records by an independent auditor approved by the Designated Authority with the costs of such audit being borne by the operator.
  11. Provide for revenue generated under existing authorisations entered into by the NZRB to be directed to the relevant Code or Sport New Zealand.
  12. Consideration should be given to adding custodial penalties for persons found guilty of breaching the legislation.

Submissions to select committee were due by 13 December.  However, as the Minister specifically asked for this to be considered in the Review he commissioned John Messara to undertake, these will presumably be included in the report he tables on 1 October.  If not, what was the point?

We have always been led to believe that no one understands parliamentary process better than our current Minister, so no doubt he has a clear plan as to just how these recommendations would be absorbed into the Bill.  There is a clear process outlined here which should be required reading for those wanting to gain some idea of the mountain we have to climb before we have any chance of seeing some form of this Bill become law

An apology – this was not the post I had planned for today.  I had already largely written that by the time the Minister landed the public submission bombshell on us yesterday.  Instead of writing about a five-week delay while every Joe Bloggs and their half-sister made comment on a document which most won’t have read, let alone understood, I wanted to talk about the aspects of the report the general media had largely ignored.

That post is scheduled to publish here on racingthoughts.blog on Sunday.

Also, a quick mention to those kind souls who have got in touch with me via this blog – it is good to know that my rantings are resonating with some of you and I am not shouting into a vacuum.  The feedback is most welcome!

And finally, with a nod to Te Wiki o Te Reo Maori – te panui I te purongo (Read the Report).

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How one club made a bold decision and lived to tell the story (and they put their stakes up!)

/ Mezzasez

 In the wake of the gnashing of teeth and rending of garments from those associated with clubs whose tracks are destined for closure I felt it was an opportune time to provide some perspective.

As I said last week, a reaction of grief is not unexpected.  However, I was left with the strong impression, after reading several online stories that some of those affected were yet to read the Messara report in full.  What was more surprising however, was the fact that clubs claimed this was out of the blue and unexpected. I realise that clubs in this country are run by volunteers but, unless they were totally removed from the realities of the industry, I find it difficult to believe they were oblivious to the fact we were operating on borrowed time (and borrowed money).

I’ve been in their shoes.  Of the three clubs where I served on committees two were small, country clubs.  We worked hard to keep those clubs afloat, working bees were the norm and the financials were never pretty.

With that type of personal investment there also comes a sense of ownership.  But committees, through the ages, have never “owned” their clubs they are merely caretakers for future generations.  As such they have a duty of care.

I am hopeful that those club representatives who reacted in a predictable knee-jerk manner when contacted by media after the release of the Messara report have now had time to read and digest the report.  I am also hopeful that they are now looking at the big picture and seeing a different future for their clubs.

Just a note here too, if you are gobbing off about the report without reading it then please refer to this segment of my earlier blog post Time to embrace the process and be part of racing’s solution – “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?”

If you insist on being one of those people who prefer to live in ignorance or glean your “knowledge” of the detail of the report from the mainstream media, then do the rest of us a favour and do not share your unenlightened opinions with us.  As of Wednesday, when I made my second formal complaint against a mainstream media outlet which persisted in broadcasting and printing mistruths, I decided that I would ignore comment from those who patently have not read the report. Other than to scream at them – you can do that in the Twittersphere by using all capitals – READ THE REPORT! At this stage I have refrained from becoming sweary.

Anyway, for those associated with clubs whose tracks are earmarked for closure who are beginning to see that this might have to be their future I wanted to demonstrate just how it could pan out.

I have often quoted the Feilding Jockey Club as an example of what can happen when a president, supported by his committee and members, makes a very tough, but very brave decision.

To give a little history – Feilding began racing in 1879 and, as stated in Tapestry of Turf it was one of the most prosperous clubs of the time.  In 1905 its two-day Easter meeting recorded turnover of 30,117 pounds.  To put this in perspective the turnover a two-day fixture at Canterbury was 19,784 pounds, while three-days at the Auckland Racing Club saw 27,994 pounds bet.  Things obviously just got better because a meeting at Feilding in 1920 when Gloaming graced the track the on-course crowd of 8368 managed to clock up an incredible 103,000 in turnover.

The club also boasted something which the racing bible claimed was a New Zealand record with Goodbehere family members filling the secretary’s role from 1891 when Edmund Goodbehere took up the position.  Following on from his 33-year reign Edmund’s son Guy served for 30 years before, Edmund’s grandson Brian stepped into the role. His 22-year tenure concluded in 1976, just three years prior to the club’s centenary.

Given its rich – in more ways than one – history Craig McNeill, the club’s president in 1999 did not approach the task lightly when he looked to reshape the club’s future.

Craig recalled the lead up to the decision to sell the Feilding JC property and relocate to Awapuni thus:

“Up until 1998/99 season, the Club was losing money, and basically going backwards and reducing its equity very fast.   A stop had to be put in place for this.

“Within the Committee, various members could recall the closure of Ashhurst Pohangina, Marton and Rangitikei Clubs.   They could see the benefit to those clubs who had gone through the process of centralising racing at one particular venue, namely the Awapuni Racing Centre.

“The decision was made by the then Committee to establish a sub-committee to proceed with the relocating of the Feilding Jockey Club to the Awapuni Racing Centre.

“There was a special meeting called for the purpose of discussing the proposed move. There was a presentation made from various industry personnel, mainly on the pro’s and con’s of staying versus moving.  

“The meeting was then asked to vote on the proposed move and there was a clear majority to proceed with the change of venue to the Awapuni Racing Centre,” he said.

What got the decision across the line, with hardly any opposition, was the fact that the presentation to the meeting clearly showed what would happen if the club stayed.

“What a lot of people do not realise, and the other clubs in the country who are facing closure will come to realise, is that moving made us stronger, not weaker,” Craig said.

“We are focused on the community and sponsors like never before and that sees increased investment and attendance at our meetings.”

The Feilding Jockey Club raced for just over 100 years at their last venue, that land after being sold to the Manawatu District Council in 1999 is now part of Manfeild Park.

The move, which saw the club transfer its racing operations to Awapuni, has been lauded as one of the best decisions made by a New Zealand club in recent decades Craig said.

Back in 1999 the Feilding Jockey club struggled to conduct three low-key midweek race meetings at their course and their feature event – the Feilding Cup – carried a stake of just $8000.

“Today the $50,000 Ricoh Feilding Gold Cup is a Listed open handicap with the club offered $232,500 prizemoney on this day, which is more than they paid out for their three meetings in the 1998-99 season,” Craig McNeill said.

Feilding currently runs three meetings at Awapuni, with the RACE Board allocating them the Manawatu Racing Club’s popular ANZAC Day feature meeting, which has provided the club with a second black type feature day.

“The club is in a very strong financial position and is a major contributor to the RACE concept,” Craig added.

Without making the move he is adamant the club would not have survived and he has no regrets about the decision.

“The club would be long gone,” he said.

To those clubs whose tracks are among the 20 slated to close he offers four bullet points:

  • “Embrace this proposed change”
  • “The Minister has given us a once in a lifetime opportunity – take it.”
  • “Do not be afraid of change.”
  • “Engage now with the venue you are looking to move to and start to agree how you can grow your business.”

“Moving gives the clubs a sustainable future and enables decisions to be focused on the customer and community, not on how to keep a derelict facility going,” he said.

Take it from someone who has been there and, instead of adopting a parochial view which would have heralded the club’s slide into oblivion, took bold action and allowed the club to thrive. History, and future racing generations, will thank you.

 

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