The following is the full text of NZTBA President Peter Hutt's address to the Annual General Meeting of New Zealand Thoroughbred Racing, held in Wellington on Monday 15 July. It is notable that Mr Hutt and breeder Gerald Fell of Fairdale Stud were the only dissenting voices at a meeting characterised by unquestioning acceptance of the status quo in New Zealand racing.
Thank you for the opportunity to introduce myself and make some comments on behalf of the Association.
I have been breeding thoroughbreds on a small scale for about 25 years. My best produce was my mare Peat who gave me some wonderful thrills in her nine-win career. I have served on the committees of the Timaru Racing Club (about 20 years) and the Waimate Racing Club (10 years) and was over this time regularly engaged in Judicial Committee work in Canterbury, culminating in being appointed an Appeal Judge under the old system then assisting with the training and evaluation courses in Wellington which preceded the appointment of professional judicial committees by the Judicial Control Authority. I was appointed an Appeal Judge under the JCA as well.
I was on the committee of the Canterbury/Marlborough/Westland branch of our Association then elected as president of the branch. I've been on the Thoroughbred Breeders' Association's national Council for the past 10 years and was first appointed to the Executive of the Council six years ago, so I guess I've "been around the traps" and that I'm fairly much a known quantity at our Board table.
As the new president I will be focussing on ensuring that the working relationship with your Board produces satisfactory outcomes for our Association and the industry stakeholders it represents. I will also seek feedback about how our contribution to your administration can produce changes which will help to improve the health of domestic racing in New Zealand.
Our Association has 2700 members whose involvement in breeding spans the whole range from major commercial studs to people who share the ownership of just one mare. The major factor which they all have in common is that their financial outcomes as breeders are strongly dependent on the state of health of the domestic racing industry. The strength of the local buying bench at our sales is a crucial factor underpinning the market. Although the size of our annual foal crop has steadily declined over recent years, our breeders still produce far greater numbers of horses than domestic racing requires. The problem is that they often cannot be sold to local buyers at a profit. We believe that this relates directly to domestic stakemoney levels.
Although your Chairman in his address to you earlier this morning referred to positive indicators in our industry, describing conversations with trainers with new cars and no mortgages saying that they were doing really well, he obviously did not speak to any breeders because they would have told him just how tough things are for them at present.
We estimate that the investment required by NZ breeders to produce the 5000 starters on NZ racetracks so far this season is about $125 million. Their owners have added another $80 million or so in training fees for this year alone. Many of our members are also substantial race sponsors. A survey of our members showed that over 80% of them were currently racing at least one horse. So our interests and your interests as Club representatives significantly overlap. We're all in the same boat.
I've pointed out that we have a significant stake in the industry and this was recognised in the report by Pricewaterhouse Coopers which was released about 10 days ago. We were identified as "key stakeholders ". I was surprised that the report did not identify the Government as a key stakeholder, considering it receives $57 million a year from betting tax, plus GST and income tax from the industry. It is clear to me that the Government is a key stakeholder and it should be proactive in effecting changes to improve the productivity and profitability of the industry.
We have also been advocating the need for fundamental changes in the administration and structure of the racing industry and this was the major finding of that report.
I was astonished at how effortlessly your Chairman dismissed this report this morning as irrelevant and possibly flawed. He also intimated that the authors of the report might have privately distanced themselves from it. I think this is an unfair comment in respect of the work of two experienced professionals who are employed by an internationally respected accounting firm. This 66-page document cannot simply be brushed aside. It represents the most important comment on the industry in years.
If your Chairman's response to the report is shared by you as Club representatives then the new Minister for Racing is going to have to be strong and energetic to drive change from the top. I consider the present Minister has been outstanding, especially compared to the dismal earlier Racing Ministers. She has made a concerted effort to listen to industry stakeholders and respond to their concerns, culminating in the prompt and decisive commissioning of this report after she might have considered that her main task was over, namely progressing the Racing Bill. I watched the delivery of her address to you yesterday, and your response to it, with amazement. I had to conclude that it resembled nothing else so much as a seance. Here was the Minister seeking to communicate with you and delivering an energetic address out to you all. I thought it combined passion with exasperation in roughly equal amounts. At the end of it she sought messages from you, some signs that she'd been heard. She asked if there were any questions of her. This was two weeks away from a General Election. There was only ONE question from the floor and that related to racing in Ireland! It was then answered by the chairman of the RIB. That scenario must have seriously tested her belief in your existence.
My personal interest in seeking fundamental changes in the present administrative structures has been heightened recently by a couple of incidents relating to funding for NZ Thoroughbred Marketing. This company was established by our Association to promote the New Zealand thoroughbred generically, not just particular sales or studs, so all industry participants could benefit in some way. In 1998 we requested your Board to levy a $10 annual payment from broodmare owners as a contribution to the funds of the new marketing company, largely from our membership. The members had been canvassed in advance and overall the reaction was favourable. The levy was imposed and paid to the company in following years.
We were dismayed to be advised in January this year that your Board had now decided not to collect this levy on our behalf in future. No plausible reasons were given. We had to make strenuous objections before the decision was then reversed.
What these "flip/flop" decisions brought home to me was how little influence, let alone control, our Association actually has relating to matters exclusively within its own interests. Under the present structure we are reliant on our one Board member persuading the other seven, who represent racing clubs and the Trainers' Association, that any particular proposal relating specifically to the interests of breeders is worth their time and attention as part of the business of racing administration which they are elected to focus on. Our Association cannot at present be master of its own destiny in administering the activities of breeders and furthering their specific interests without negotiating support from Board members who may not value the project. We do not believe that the current Board structure in which we have one representative out of eight fairly reflects the breeders' stakeholding in the industry.
A second dissatisfaction relating to administration arose from your Board's decision to take funds collected through an increase in the fee for the export certificate of pedigree. The raising of these funds was requested by our Association for payment to the marketing company and agreed to on that basis. It was not part of your Board's existing income. It was a new levy paid by horse exporters. Your Board recently announced that this new cashflow would in future be used in a way which its existing income is meant to provide for, namely to dramatically increase the stakemoney for four Classic races. This prizemoney will consequently be at such a disproportionately high level that it will surely attract the attention of Australian owners and trainers. I would not for one moment suggest that there is anything bad about Australian horses coming over here to compete in our races. This competition is good for betting interest and raising the profile of our industry. But I do suggest that money which has been specially raised for marketing, particularly the promotion of domestic racehorse ownership, will have been totally wasted if it simply ends up being taken offshore as stakemoney.
The underlying concern I have about this action is that the goodwill with which the requested funds were made available by your Board seems to be a fragile commodity, susceptible to changes of mood and political objectives. This unreliability is unacceptable in the context of a commercial partnership, which was essentially the role of your Board in this instance. The abrupt ending of this funding stream has seriously reduced the viability of the marketing company which your Board had agreed to support. The major investment over several years in the training of young, talented employees and in the strategic industry connections which they have made has now been lost. I note that this morning your Board member, David Ellis, fulsomely praised the work for that company of Mark Player. Now he and the rest of the earlier staff have all left. I have mentioned this to you today because I simply do not know how much of the background to the launching of the marketing company and its reliance on the funding stream agreed to by your Board would be known to you at your local Club administration level. We cannnot leave this issue as it stands at present and I raise it for you to reflect on as people of integrity, commonsense and goodwill.
I have mentioned a couple of areas of difference between our and your elected representatives. I will move on to another issue which we may possibly approach from the same viewpoint. I am concerned that the terms of reference which were established for the Graded Stakes Committee to work within are now too restrictive and prevent it from taking a "holistic" approach to its decision making which would benefit the industry. The committee was isolated from the possibility of lobbying or pressure from any particular Club or its agent/s by being given a "purist" brief which meant that it did not have to take into account any effects of its decisions on any particular Club or region, or on the pattern of racing generally over the season. I think it is time for this to be reconsidered. The members of the committee are dedicated, capable and hardworking but at present their deliberations resemble scientists isolated in a mountaintop laboratory poring over screeds of statistics and reaching conclusions which are
then delivered to the expectant Clubs below, in terms which advise of such things as "third warning being removed" or " this race is now on its second warning". The effect of losing a Listed race within the overall pattern of racing is not allowed to be a consideration under their terms of reference. Consequently we have a total number of races under warning which as an industry we can not afford to lose. I suggest that the work of this committee should be integrated into the Code's overall responsibility for programming and preserving an agreed overall pattern of racing. This would not prevent reviews and changes but it might prevent problems such as one discussed at my Branch's last committee meeting at which we were advised that the Wellington Racing Club has decided to change the date of the Cuddle Stakes, a Listed race for fillies and mares only, to within a week of the Breeders' Stakes at Riccarton, also a Listed race for fillies and mares only. This cannot be good for both races, particularly as
they literally can't afford these clashes. The stakemoney for Listed races should be treated like the scarce commodity it is and not squandered by inadvertent programming glitches. I would like to think that the Graded Stakes Committee should be involved to ensure this doesn't happen.
We have a vast commonality of interest in the future good health of New Zealand racing. It is vital that we can work together for our common objectives. It is also vital to our Association that its legitimate interests as represented at present by a minority membership of your Board are dealt with on a basis of reliable goodwill and good faith so that significant commercial decisions can be made with confidence. I hope that your newly elected Board members will take this message with them and our Association looks forward to working with them and the returning members on the challenges of effecting significant industry changes to the benefit of us all.
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Thank you for the opportunity to introduce myself and make some comments on behalf of the Association.
I have been breeding thoroughbreds on a small scale for about 25 years. My best produce was my mare Peat who gave me some wonderful thrills in her nine-win career. I have served on the committees of the Timaru Racing Club (about 20 years) and the Waimate Racing Club (10 years) and was over this time regularly engaged in Judicial Committee work in Canterbury, culminating in being appointed an Appeal Judge under the old system then assisting with the training and evaluation courses in Wellington which preceded the appointment of professional judicial committees by the Judicial Control Authority. I was appointed an Appeal Judge under the JCA as well.
I was on the committee of the Canterbury/Marlborough/Westland branch of our Association then elected as president of the branch. I've been on the Thoroughbred Breeders' Association's national Council for the past 10 years and was first appointed to the Executive of the Council six years ago, so I guess I've "been around the traps" and that I'm fairly much a known quantity at our Board table.
As the new president I will be focussing on ensuring that the working relationship with your Board produces satisfactory outcomes for our Association and the industry stakeholders it represents. I will also seek feedback about how our contribution to your administration can produce changes which will help to improve the health of domestic racing in New Zealand.
Our Association has 2700 members whose involvement in breeding spans the whole range from major commercial studs to people who share the ownership of just one mare. The major factor which they all have in common is that their financial outcomes as breeders are strongly dependent on the state of health of the domestic racing industry. The strength of the local buying bench at our sales is a crucial factor underpinning the market. Although the size of our annual foal crop has steadily declined over recent years, our breeders still produce far greater numbers of horses than domestic racing requires. The problem is that they often cannot be sold to local buyers at a profit. We believe that this relates directly to domestic stakemoney levels.
Although your Chairman in his address to you earlier this morning referred to positive indicators in our industry, describing conversations with trainers with new cars and no mortgages saying that they were doing really well, he obviously did not speak to any breeders because they would have told him just how tough things are for them at present.
We estimate that the investment required by NZ breeders to produce the 5000 starters on NZ racetracks so far this season is about $125 million. Their owners have added another $80 million or so in training fees for this year alone. Many of our members are also substantial race sponsors. A survey of our members showed that over 80% of them were currently racing at least one horse. So our interests and your interests as Club representatives significantly overlap. We're all in the same boat.
I've pointed out that we have a significant stake in the industry and this was recognised in the report by Pricewaterhouse Coopers which was released about 10 days ago. We were identified as "key stakeholders ". I was surprised that the report did not identify the Government as a key stakeholder, considering it receives $57 million a year from betting tax, plus GST and income tax from the industry. It is clear to me that the Government is a key stakeholder and it should be proactive in effecting changes to improve the productivity and profitability of the industry.
We have also been advocating the need for fundamental changes in the administration and structure of the racing industry and this was the major finding of that report.
I was astonished at how effortlessly your Chairman dismissed this report this morning as irrelevant and possibly flawed. He also intimated that the authors of the report might have privately distanced themselves from it. I think this is an unfair comment in respect of the work of two experienced professionals who are employed by an internationally respected accounting firm. This 66-page document cannot simply be brushed aside. It represents the most important comment on the industry in years.
If your Chairman's response to the report is shared by you as Club representatives then the new Minister for Racing is going to have to be strong and energetic to drive change from the top. I consider the present Minister has been outstanding, especially compared to the dismal earlier Racing Ministers. She has made a concerted effort to listen to industry stakeholders and respond to their concerns, culminating in the prompt and decisive commissioning of this report after she might have considered that her main task was over, namely progressing the Racing Bill. I watched the delivery of her address to you yesterday, and your response to it, with amazement. I had to conclude that it resembled nothing else so much as a seance. Here was the Minister seeking to communicate with you and delivering an energetic address out to you all. I thought it combined passion with exasperation in roughly equal amounts. At the end of it she sought messages from you, some signs that she'd been heard. She asked if there were any questions of her. This was two weeks away from a General Election. There was only ONE question from the floor and that related to racing in Ireland! It was then answered by the chairman of the RIB. That scenario must have seriously tested her belief in your existence.
My personal interest in seeking fundamental changes in the present administrative structures has been heightened recently by a couple of incidents relating to funding for NZ Thoroughbred Marketing. This company was established by our Association to promote the New Zealand thoroughbred generically, not just particular sales or studs, so all industry participants could benefit in some way. In 1998 we requested your Board to levy a $10 annual payment from broodmare owners as a contribution to the funds of the new marketing company, largely from our membership. The members had been canvassed in advance and overall the reaction was favourable. The levy was imposed and paid to the company in following years.
We were dismayed to be advised in January this year that your Board had now decided not to collect this levy on our behalf in future. No plausible reasons were given. We had to make strenuous objections before the decision was then reversed.
What these "flip/flop" decisions brought home to me was how little influence, let alone control, our Association actually has relating to matters exclusively within its own interests. Under the present structure we are reliant on our one Board member persuading the other seven, who represent racing clubs and the Trainers' Association, that any particular proposal relating specifically to the interests of breeders is worth their time and attention as part of the business of racing administration which they are elected to focus on. Our Association cannot at present be master of its own destiny in administering the activities of breeders and furthering their specific interests without negotiating support from Board members who may not value the project. We do not believe that the current Board structure in which we have one representative out of eight fairly reflects the breeders' stakeholding in the industry.
A second dissatisfaction relating to administration arose from your Board's decision to take funds collected through an increase in the fee for the export certificate of pedigree. The raising of these funds was requested by our Association for payment to the marketing company and agreed to on that basis. It was not part of your Board's existing income. It was a new levy paid by horse exporters. Your Board recently announced that this new cashflow would in future be used in a way which its existing income is meant to provide for, namely to dramatically increase the stakemoney for four Classic races. This prizemoney will consequently be at such a disproportionately high level that it will surely attract the attention of Australian owners and trainers. I would not for one moment suggest that there is anything bad about Australian horses coming over here to compete in our races. This competition is good for betting interest and raising the profile of our industry. But I do suggest that money which has been specially raised for marketing, particularly the promotion of domestic racehorse ownership, will have been totally wasted if it simply ends up being taken offshore as stakemoney.
The underlying concern I have about this action is that the goodwill with which the requested funds were made available by your Board seems to be a fragile commodity, susceptible to changes of mood and political objectives. This unreliability is unacceptable in the context of a commercial partnership, which was essentially the role of your Board in this instance. The abrupt ending of this funding stream has seriously reduced the viability of the marketing company which your Board had agreed to support. The major investment over several years in the training of young, talented employees and in the strategic industry connections which they have made has now been lost. I note that this morning your Board member, David Ellis, fulsomely praised the work for that company of Mark Player. Now he and the rest of the earlier staff have all left. I have mentioned this to you today because I simply do not know how much of the background to the launching of the marketing company and its reliance on the funding stream agreed to by your Board would be known to you at your local Club administration level. We cannnot leave this issue as it stands at present and I raise it for you to reflect on as people of integrity, commonsense and goodwill.
I have mentioned a couple of areas of difference between our and your elected representatives. I will move on to another issue which we may possibly approach from the same viewpoint. I am concerned that the terms of reference which were established for the Graded Stakes Committee to work within are now too restrictive and prevent it from taking a "holistic" approach to its decision making which would benefit the industry. The committee was isolated from the possibility of lobbying or pressure from any particular Club or its agent/s by being given a "purist" brief which meant that it did not have to take into account any effects of its decisions on any particular Club or region, or on the pattern of racing generally over the season. I think it is time for this to be reconsidered. The members of the committee are dedicated, capable and hardworking but at present their deliberations resemble scientists isolated in a mountaintop laboratory poring over screeds of statistics and reaching conclusions which are
then delivered to the expectant Clubs below, in terms which advise of such things as "third warning being removed" or " this race is now on its second warning". The effect of losing a Listed race within the overall pattern of racing is not allowed to be a consideration under their terms of reference. Consequently we have a total number of races under warning which as an industry we can not afford to lose. I suggest that the work of this committee should be integrated into the Code's overall responsibility for programming and preserving an agreed overall pattern of racing. This would not prevent reviews and changes but it might prevent problems such as one discussed at my Branch's last committee meeting at which we were advised that the Wellington Racing Club has decided to change the date of the Cuddle Stakes, a Listed race for fillies and mares only, to within a week of the Breeders' Stakes at Riccarton, also a Listed race for fillies and mares only. This cannot be good for both races, particularly as
they literally can't afford these clashes. The stakemoney for Listed races should be treated like the scarce commodity it is and not squandered by inadvertent programming glitches. I would like to think that the Graded Stakes Committee should be involved to ensure this doesn't happen.
We have a vast commonality of interest in the future good health of New Zealand racing. It is vital that we can work together for our common objectives. It is also vital to our Association that its legitimate interests as represented at present by a minority membership of your Board are dealt with on a basis of reliable goodwill and good faith so that significant commercial decisions can be made with confidence. I hope that your newly elected Board members will take this message with them and our Association looks forward to working with them and the returning members on the challenges of effecting significant industry changes to the benefit of us all.
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