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NZTR Northern Forum: dawn of a new age?

"We're not going to invest in 52 venues any longer."

That statement by New Zealand Thoroughbred Racing Chairman Guy Sargent was the most significant of several announcements made at NZTR's Northern Forum, held at Te Rapa on Thursday 2 June.

Guy Sargent, Chairman of New Zealand Thoroughbred Racing
It was a long overdue acceptance of a major recommendation made by the McCarthy Royal Commission on Racing:

For too long the industry has consumed its energies, and its betting public, with too many courses, and in some areas, too many days racing. Courses and dates must be used to best advantage.

The McCarthy Report was published in 1970. Thirty-six years may be an instant in geological time, but for the New Zealand thoroughbred racing industry it has been an agonising age of decline and loss measured by every key indicator: attendances, betting turnover, gaming market share, bloodstock investment, returns to owners, trainers' and jockeys' incomes.

Seeing NZTR finally present evidence of New Zealand racing's failure to provide competitive returns to owners should be cause for celebration, after years of collective leadership denial. However, it's impossible not to have a sense of profound regret for the opportunities and many outstanding people lost to an industry that has taken far, far too long to confront its problems, and embrace new opportunities.

A new age of progress now seems possible, thanks to sustained political lobbying, a new Racing Minister who has delivered equitable taxation on race wagering and realistic depreciation rates for bloodstock, and NZTR's dawning recognition of its responsibility to provide dynamic business leadership for the entire thoroughbred industry.

Reduced taxation of wagering will give an anticipated $32.4 million boost to the New Zealand's Racing Board's 2006-07 income. This will be allocated according to the recommendations of the Racing Board's Jackson Report, published last year:

Wagering – returns to punters - $4.1 million
Infrastructure investment - $8.3 million
Returns to owners - $20 million

Funding of better returns to punters will be left with the Racing Board which operates the TAB. The allocation of the remaining $28.3 million to thoroughbred, harness and greyhound racing will be determined this month, after the three codes have made detailed submissions to the Board. The NZTR board will sign off on its submission on 13 June; the Racing Board meets on 20 June; and a public announcement should be made by 1 July.

Although NZTR's presentation did not state the total amount it is asking for, it did announce an $11.8 million (27%) increase in its own total available funding for next season. In addition NZTR would request direct funding from the Racing Board of $1.685 million to fund the "Free Racing" initiative (refer below). Chief Executive Paul Bittar confirmed that the additional income would not necessarily be allocated to the three codes under the Section 16 formula of the Racing Act.

Highlights of NZTR's funding proposals are:
  • $1.685 million applied to the "Free Racing" initiative, which will eliminate nomination & acceptance fees for standard races. This will save owners an estimated $2.8 million p.a., and a further $300,000 in GST leakage (ie GST paid by the 85% of owners who are not GST-registered and therefore cannot claim it back). Scratching and withdrawal fees will be applied to standard races, to encourage owners and trainers to start horses in races they are entered for. NZTR will request funding for this initiative directly from the Racing Board, not as part of the thoroughbred code's share of distributed income.
  • The minimum prizemoney for Group One races will be $150,000; for Group 2 races, $100,000. Minimum stake levels for Group 3 and Listed Races have yet to be determined. Nomination and acceptance fees will apply to all Group & Listed Races.
  • Higher minimum stakes will apply to all races and meetings, including maiden races, which will increase in base value from $5,000 to $6,000. The maiden subsidy of $100 per unplaced starter (approximately $750 per race) will remain in place for 2006-07. NZTR estimates the benefit of Free Racing at $1000 per race, giving an indicative total return to owners for maiden races of $7750.
One note of caution: the benefit of the Free Racing initiative for owners may be lessened by increases in training fees which have been held at uneconomic levels because of poor prizemoney. The New Zealand Trainers' Association confirms that some trainers have already raised their fees in anticipation of increased stakes.

Other industry priorities identified by NZTR include:

  • Education & training identified as a "core function" of NZTR - Paul Bittar commented, "Where are our jockeys going to come from? Our current system won't deliver them. We must link with the school curriculum and attract them younger than 15 or 16."
  • A strong focus on integrity - Mr Bittar noted the shortage of on-course integrity staff in New Zealand compared with Australia. New Zealand's Rules of Racing also need "a complete overhaul."
  • Infrastructure investment – Gary Foskett has been employed on a 12-month contract as NZTR's track and venue consultant. Mr Bittar said, "We need to review opportunities for all-weather tracks. Thirty per cent of UK flat meetings are now held on all-weather surfaces."
    NZTR's summary of refunds and abandonments for the past 12 months confirmed that thoroughbred racing is the highest cost and highest risk operator of the three codes. Thoroughbred losses on 13 abandoned meetings totalled a startling $21.35 million in turnover, compared with losses suffered by harness racing ($1.5 million) and greyhound racing ($0.85 million).
  • Strategic Venue Plan - this proposal, to identify venues that will be industry-funded, presents obvious difficulties for NZTR, whose board includes seven members elected by club committees. It presents a stern test of NZTR's resolve and of the Racing Board's ability to make decisions in the best interests of the industry, rather than particular clubs, groups or regions.
    Paul Bittar emphasised that non-strategic venues with strong community support can be highly successful. An example is Lockhart in New South Wales, which holds a very popular annual picnic race meeting. Board members Alistair Sutherland added that clubs can thrive without their own venues, citing the South Waikato Racing Club as a great example of that.
  • Better returns to punters - are crucial in the battle to be competitive against unlicensed betting operators, for example, bookmakers in Australia's Northern Territory. Co-mingling of pools offer opportunities to improve better returns, because bigger pools mean better value.
    Paul Bittar said, "I don't believe there's only a limited amount of money available for race wagering. We depend on wagering for our survival. We must increase wagering on racing, and that will increase returns to the industry.
    "Let's look at different models for presenting wagering and the sport, for example by using different television feeds for different customers."
Priorities for NZTR's internal operations include:
  • Better customer service

  • Website re-development and expanded online services

  • Commitment to training and development of staff. Mr Bittar said, "I've been surprised by the lack of investment in people and infrastructure. This has left us at a critical point. We must invest in resources to lift standards."
Towards the end of the Forum, Alistair Sutherland, who will play a crucial role in presenting thoroughbred racing's case for funding at Racing Board level, noted that in his experience fact, rather than emotion, is the best basis for presenting arguments. He's absolutely right.

Yet the facts of New Zealand racing's decline have been obvious for years, and for years nothing effective was done to reverse it.

The thoroughbred industry's current billion-dollar contribution to New Zealand's GDP hasn't been generated by the prospect of excellent incomes, careers, prizemoney or investment returns. It's been driven largely by the love of horses and passion for horse-racing displayed by thousands of New Zealand owners, trainers, breeders, jockeys, clubs and stud & stable workers over the past three decades.

And without the anger and distress which motivated the individuals and sector groups behind last year's Fair Tax campaign, and Winston Peters' enthusiasm and concern for racing, there would be no additional income for the Racing Board to distribute, or for the code boards to spend.

And that's a fact.


Notes:The Northern Forum was led by NZTR Chairman Guy Sargent. NZTR board members in attendance at Te Rapa were: Peter Hutt (NZTBA director), John Rennie (NZ Racehorse Owners' Federation director), Colin Jenkins (Northern region director) and Alistair Sutherland (Northern region director, and thoroughbred code representative on the Racing Board).

NZTR's line-up was completed by Paul Bittar, appointed Chief Executive last November, and Simon Cooper, General Manager – Communications. New Zealand Trainers' Association director Graeme Sanders was unable to attend due to illness.
Mr Bittar presented the main part of the NZTR presentation, working from PowerPoint slides that are now available in PDF format here: www.nzracing.co.nz/images/media/NZTRRegionalForumPresentation2006.pdf

- Susan Archer