Industry blueprint unrecognisable in Racing Industry Bill

Towards the end of last year, I was gently scolded by a gentleman who has been a constant presence in the industry for as long as I have been involved.  He wanted to know what had happened to this blog, why I wasn’t writing and whether I had been effectively “gagged.”

To be honest what had really happened was that I had lost motivation, as I could see things beginning to evolve following the release of the Messara report and the passing of the Racing Amendment Act, the industry did appear to be progressing.  While the pace of the progress was not ideal, I was prepared to err on the side of the old Mainland cheese advert, “good things take time.”

Given the time between the release of the Messara Report (30 August 2018 for those who need reminding) and the appearance of the Racing Industry Bill I was expecting a well-crafted document.  Unfortunately, what did finally emerge looked as though it had been put together by a bunch of people with little familiarity with the industry; how it currently works; and what Messara intended.

A mishmash of cut-and-paste from the existing Bill and garbled interpretations of what was a very clearly articulated blueprint of how things should look, there appear to be so many fingerprints on this Bill it would be difficult to pin the crime on one culprit.

That lengthy preamble is what passes as an explanation as to why I have breathed life back into this blog.  I am motivated to ensure that as many people as possible are aware of the yawning difference between what Messara created and what the bureaucrats have delivered.

I keep coming back to the fact that in the Messara Report we had a blueprint.  The Minister then applied due diligence appointing the Ministerial Advisory Committee (MAC) to run a ruler over the Messara Report.  Subsequently we ended up with RITA, the Racing Industry Transition Agency which was intended to maintain BAU as the industry moved from the horrors of the past to a brave new world.

My fellow blogger Brian de Lore provided a handful of the Racing Minister’s better comments from his speech in Hamilton at the launch of the Messara Report and I recommend you read that here.  However, there were a few others which provide a reminder of how the Minister saw the industry at that time.

“If you think I’m a harbinger of doom of gloom, read the Racing Board’s annual report out this year,” he stated.

“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.”

So that is where we were and what John Messara gave us was a map out of the NZRB-created maze into what promised to be a utopia.  Armed with that document one could be forgiven for thinking there was a glimmer of light at the end of the interminable tunnel we have been negotiating. And then the tinkering began and with the release of the Racing Industry Bill it was apparent that the wheels had well and truly fallen off.  Somewhere along the line the Messara Report had been hijacked and it would seem that whoever stuck their oar in was limited in knowledge of the industry, how it functioned and why Messara flagged the changes he did.

A very wise racing administrator, on first viewing of the Racing Industry Bill, told me his one recollection from his school days and his Tech Drawing class was that when one started to remove elements from a blueprint then it impacted on the integrity of the structure.  And that is what the gang of Bill writers, or those who influenced them, achieved.

What we have now bears a resemblance to the Messara report in much the same way that Bold Personality bore a resemblance to Fine Cotton.

Those with a desire to see this industry grow and thrive need to familiarise themselves with the key clauses of the Racing Industry Bill and how they create a very different final outcome to that predicted by Messara.  And please, don’t just read the Explanatory Note at the beginning and think you’ve got it covered.  It paints a picture so different from the Bill that it is clear the writers of each had possibly never been introduced.

Once au fait with the Bill and how it is written compare the significant areas around code functions, governance and appointments to the TAB, not to mention government interference, with the intention of the Messara Review’s recommendations.  A simple submission could be created purely around those issues.

The industry (not to mention others who believe themselves impacted) has until 11 February to make submissions.  It also must mobilise and unite as never before to ensure their local MP (in this election year) is well aware of our views.

 

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!

 

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.

Missing the mark with media

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!