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Bittar flags an industry decline in tough economic times

Paul Bittar

The decrease in wagering and its impact, tough economic times and governance, were among the issues discussed when NZTR CEO Paul Bittar addressed the NZTBA Council and Branch representatives in Auckland last week.

NZTR is forecasting a very difficult two to three years ahead, with short term reductions in returns to owners, a continuing decline in mares served and foal crops and in real terms around a 15 -20% reduction in the size of the thoroughbred industry.

The size and the scope of the industry are under review and it will result in a smaller industry, but as long as it remains vibrant and competitive it can survive. One of the outcomes will be less race days and less races run – in an effort to maintain the basic stakes the industry should only be looking at running around 260-275 race meetings as opposed to the 300 plus currently run now. Ideally we need to be holding two race meetings on a Saturday, some Sundays and a meeting on Wednesday, Thursday and Friday. Naturally this will require a re-adjustment of the co-mingling agreements with Tabcorp and the profit distribution formula from the NZRB.

Bittar reported that betting on the thoroughbred code was down significantly by 8.64% for the year to date. Betting had not improved with the onset of spring racing, and good tracks and was reflective of the economic issues facing the economy.
Although following the international trend fixed odd betting was up 40%.

In a bid to combat the downturn the NZRB were introducing new betting products including the First 4 and the Quadrella.

With this decrease in turnover comes the obvious reduction in funding and the NZRB had projected a decline of around $16.5 million in profit with an impact to the Thoroughbred code of around $8.5 million. This in turn has led NZTR to review all their funding streams, and they will focus on savings on initiatives and subsidies rather than the lower to middle tier stake levels.

One of the first casualties of the decline in betting and in turn funding is the cancellation of the added winning stakes bonuses for selected Fillies and Mares races and Stayers races from 1/02/09. Bittar stated that NZTR's aim in introducing these added stakes, in consultation with stakeholders, was to strengthen the programme by adding specific lead-up races around existing Fillies and Mares black type opportunities and, for Stayers, to promote staying opportunities through the grades, particularly three and four year old staying races.

As with all new initiatives, NZTR has assessed these bonuses to measure their value and does not believe it is seeing an effective return on its investment. The results show that there has been no impact on starter numbers.

Further statistics show that starter numbers across the board are down anyway, and the number of horses in training is also in decline.

The NZTBA's view of the added winning stakes bonus for the selected Fillies and Mares races and for the stayers was not necessarily about producing more starter numbers. According to Michael Martin, it was about supporting the vital components of the breeding industry, and its purpose was to assist Owners and Breeders and give them the confidence to keep racing fillies and mares developing potential staying horses. From a breeding and selling point of view a non-black type mare that has won 3 – 6 races is often not bred from unless she has been able to win a good proportion of her initial breeding cost.

Bittar also said in his address that in line with the policy to review all funding streams the high stakes million dollar races that are a feature this summer will have to be reviewed in the 09-10 season.

As well, NZTR will be reviewing all operative expenditure, one of the biggest of which is travel, however they will resist making any cuts to training and development.

The subject of breeding bonuses was raised also and the Council asked if they were in fact wasting their time preparing proposals for possible bonuses to be put to the Board? Bittar responded that the various bonus ideas had been priced up and put to the board and the only viable bonuses in the current market would be those that were funded by stallion nominations i.e. incentives put up by the stallion owners.

The likely reaction to that from stallion owners could be that they are already funding the stakes through club sponsorship, so perhaps they should withdraw that revenue stream and put it into bonuses.

According to NZTBA President Peter Francis the Council will continue to lobby for some incentives for breeders and he believes they do have some affordable and workable programmes that can be put to the Board.

The subject of governance has been under the spotlight again recently with NZTR authorising a review to be undertaken by Graham Nahkies of Broadworks International. After a series of workshops involving industry sector groups and personnel, the key points of the review were released. They are that the roles are fragmented and confused; the board members are political (not profession or skills based), the Board has a short term, operational focus, the management capabilities need to be improved, the future sustainability is in doubt, improvement is needed in the Clubs and sectors too, and responsibility is not matched by the authority.

Going forward, NZTR is seeking to address the issues of the weaknesses in its current governance and the roles of NZTR and their Board. This Board needs to have succession planning and its needs a strategic plan which focuses on the industry first and its long-term. NZTR needs to ensure that the process of communication between the Board and the industry is improved and transparent. The industry needs to be consulted on the future structure of the NZTR Board and with this in mind NZTR are now inviting submissions on governance from the public. Details of the Review Terms and Reference are available on the NZTR website and submissions close on January 15 2009.

In the meantime the time line has been set for the further steps of the Governance Review. Over the next two months all the models from the various Australian states will be reviewed for comparison. The public submissions will be analysed and presented to the NZTR Board at their meeting on January 23. The final report will go to the Board in March and over the next couple of months the industry will be consulted on the findings and the proposal. A Special General Meeting will be needed to adopt any changes and this will be held in June or July.

Paul Bittar's own views on governance are frequently voiced in his monthly editorial in the NZTR Thoroughbred Monthly and he believes that the issue of governance is not just about NZTR but industry governance. The Board structure does not fit contemporary challenges, and the board skills should reflect the needs of the industry. He advocates that the current model is inefficient and that clubs must not be the only voting member group.

Bittar believes that the code roles and responsibilities are compromised by "conveniently ambiguous legislation" whereby the Racing Board and the NZTR Board are both forced to sit on their hands until it is decided under whose jurisdiction various issues come under, and that NZTR does not have a mandate on the key code issues such as funding, dates and programming.

At the presentation Bittar also touched on the results of Part II of the National Owners Survey, the details of which are covered by the Industry Marketing Co-ordinator Jo Griffin in her column the NZTR Thoroughbred Monthly. He did however present from the survey some interesting statistics on "Dream races" – races which owners' dream of winning. Top of the list of nine races was the New Zealand Derby, while the Karaka Millions rated ninth. The Kelt Capital Stakes came in second followed by the New Zealand Oaks and the Auckland Cup. The surveyors found it interesting to note that most of the dream races were run over middle distances or more and that three of the top four were run over 2400 metres and six of the top nine were over 2000 metres or beyond.

When asked why owners dreamt of winning the races they chose it was found that stakes money was not the most motivating factor it was more to do with tradition and prestige. He then went on to highlight the points of a three-year marketing plan that NZTR had developed for the future attraction and benefit of owners. These include the greater promotion of the sport of thoroughbred racing and the development of new untapped markets for investment in ownership.

To view Paul Bittar's power point presentation click here
- Michelle Saba


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