Messara Submission to Select Committee

[Hesi]

JOHN MESSARA
PRESENTATION TO THE NZ SELECT COMMITTEE ON THE RACING INDUSTRY BILL

THURSDAY 5^TH MARCH 2020

May I thank the Members of the Select Committee for the invitation to appear before you, on this, the last day of submissions.

I am mindful that I am not a stakeholder in the New Zealand Thoroughbred Industry and that submissions are a privilege of industry participants. However, with the Select Committee’s indulgence, I will make some observations and explain the underlying objectives of my 2018 Review of the New Zealand Racing Industry.

Let me firstly confirm that after all of this time, I still stand firmly behind my 2018 Review and all of its recommendations.

NZ Racing was a jurisdiction that was batting “way above its average” for a long-time last century, enjoying great respect from its Australian counterparts and beyond. The renowned expertise of its participants and its famous grazing pastures made the NZ Racing and Breeding Industry an icon of the 20^th-century horseracing world. As a young lad, I clearly remember how my family and racing friends would speak with trepidation, year after year, of NZ invaders, plundering Australia’s major races. The NZ Yearling Sales, in those days held at Trentham, was nothing less than a rite of passage for any aspiring investor in thoroughbreds in our region….. of which I was one. Trentham was a veritable pilgrimage of owners and trainers from around the globe, with Aussie breeders looking on in awe as their NZ competitors dominated the Australasian bloodstock market.

So much so that in 1985 Australian breeders, led by the late Colin Hayes, lobbied the Hawke Government to amend the breeding stock provisions in the Tax Act specifically “to enable Australia to compete with NZ.”  The 1985 Federal Budget did bring in the changes sought, and this heralded the beginning of a long period of sustained reform in the Australian industry, with the obvious benefits being enjoyed today.

Ironically, I was the person who authored that submission to Treasury in 1985, on behalf of the industry.

And yet today, the boot is on the other foot, with NZ breeders and trainers thinking of abandoning the industry here in order to survive and you can imagine the consequences of this on direct and indirect employment. 

The 2018 Review resulted from an approach from Minister Winston Peters, who like the late Bob Hawke, has a real interest in racing. I was commissioned to undertake the Review by the Minister because of the poor state of Thoroughbred Racing in NZ which is the result of a 30-year gradual slide. The Minister made it clear that he wanted a full review, warts and all, of the problems of your industry and the solutions to turn it around. It was also clear to me that the Minister sought recommendations that would make the industry sustainable into the future and independent of government. 

At first blush, it appeared to me that your industry was suffering from a paucity of revenue, shortage of capital and a sub-optimal governance structure, but I also felt that this situation could be righted with a reform program aimed at modernising the industry, introducing new revenue measures and maximising the use of existing assets.

I then sought the assistance of three experienced racing & wagering administrators: John Rouse, a previous CEO of the Australian Jockey Club and currently a Trustee of Randwick Racecourse working on racetrack consolidations; Darrell Loewenthal, a retired senior public servant in NSW, who was responsible for a number of legislative changes and is a consultant to Racing NSW to assist on governance and structure; and Craig Nugent, the recently retired CEO of Tabcorp to assist on wagering. I am very grateful for their input.

We live at a time when the racing and wagering worlds are globalising when horses travel around the world to compete in feature events, and when wagering operators are consolidating to form international corporate wagering giants. It is also a time when Asia is emerging as a big player in our region. These factors represent opportunities for NZ.

Also, racing here, like everywhere else, is facing growing competition from other forms of leisure and gambling, as well as continuous attacks from the animal welfare lobby. These are challenges for NZ and for every other jurisdiction. 

The Review recommendations seek to arm the NZ industry to deal with these factors but this will necessarily mean change, and in some cases that change will be profound. It will be the willingness of stakeholders to focus unselfishly on the wellbeing of NZ Racing as a whole that will determine the success of the reforms.

All the 17 Review Recommendations can be categorised under three major headings:

• Industry Modernisation
• Revenue Enhancement
• Better Utilisation of Industry Assets

I note that some of the revenue recommendations requiring legislation have already been passed and that the Bill now under consideration contains a number of clauses related to other recommendations in the Review. Given that prizemoney is the single most effective lever available to reinvigorate the NZ Thoroughbred Industry, I would encourage the government to expedite arrangements for Racefields Fees and Point of Consumption Tax, and I urge the industry to make a serious commitment to negotiate an advantageous TAB NZ outsourcing deal. These are all new sources of much-needed industry revenue. 

I do not wish to take issue with the current Bill on a clause by clause basis; however, I should advise that this is not a time for compromise on matters that go to the thoroughbred industry’s sustainability and its independence from government. A number of the Review’s modernisation recommendations relate to the devolution of power to the Codes, and I still hold firmly to the belief that this notion is fundamental to the success of the reform package.

I do want to comment on the recommendations made in Part 3 of my Report because I believe that racecourse consolidation is critically important to the reform package. Various independent reports on the NZ Thoroughbred Racing Industry dating back to the Reid Commission on Racing in 1965 and the McCarthy Royal Commission on Racing in 1969 have all recommended the importance of a significant rationalisation of NZ Thoroughbred Racing venues, but little has been done. In relation to this, the work we did as part of the Review in 2018 showed that many clubs, if looked at on a stand-alone basis, would not be able to afford current prizemoney levels without the subsidies provided by NZTR. That said, most venues and tracks are also in a state of disrepair. Against this, we estimated that total capital expenditure required to bring all 48 operating venues up to an acceptable standard in terms of tracks and facilities was $294m, and for the 28 tracks we recommended to be retained plus new synthetic tracks our estimate was $190m. 

I would like to assure the Select Committee that this rationalisation is not proposed as a cosmetic exercise. Better tracks and facilities will better showcase NZ Thoroughbred Racing to domestic and international audiences, provide for more consistent form lines and ultimately give a boost to wagering turnover. Currently, much of NZ Racing on TV and on smart devices looks somewhat shabby by international standards. Thus, a consolidation of tracks, including the sale or closure of surplus tracks and the investment of any proceeds into the remaining tracks, is a priority.

I also note that mention was made in submissions to the Select Committee that a rationalisation of venues had not occurred in my home state of NSW. It is definitely arguable that there should be rationalisation in NSW. However, the extraordinarily strong financial position of racing in NSW has not made that an imperative. This is not the case in New Zealand.

In the light of all this, I commend the submission of NZTR to the Select Committee [and similar submissions from the other Codes], as it summarises the final amendments that need to be made to the Racing Reform Act to reach the goals of the Reform Program I have recommended.

I have two final comments: 

1. The 17 recommendations in the Review were designed to work as a matrix to reverse the fortunes of your industry, and any significant departure from them will affect the ultimate outcome. Simply put, cherry-picking the reform program will compromise the future success and prosperity of the entire industry, and such is the pace of progress & competition in global racing & wagering that New Zealand will be permanently left behind. This is, quite literally, your industry’s last chance to secure a vibrant & successful role in 21^st-century racing. 
2. These recommendations are based not on theory or ideological conviction, but on the real, practical experience of what works, based on my time as Chairman of Racing NSW, and then as Chairman of Racing Australia, leading the Australian thoroughbred industry through a period of deep reform. I know exactly how much effort, passion, and courage is required to enact the recommendations in the Review, but the rewards are immense. Australian racing now has the kind of prizemoney, facilities, events, integrity & leadership that makes people from across Australia & around the world want to be part of it as owners, punters, breeders, trainers & jockeys, and all the many other roles our industry can offer the next generation. 

I have no doubt that the NZ Industry, with its illustrious history, its expertise, its natural assets and its favorable time slot in the Asia Pacific region is well poised to regain its mantle as a leader in the region, if it can be transformed into a viable, independent, modern industry with its racing capable of being marketed competitively outside of NZ.

I believe this process is underway, and a beneficial resolution of this Racing Reform Bill will quickly create an atmosphere of confidence in the industry from within New Zealand and beyond, with all the attached economic, social & community benefits. 

Thank you.

 

 

[mardigras]

"In relation to this, the work we did as part of the Review in 2018 showed that many clubs, if looked at on a stand-alone basis, would not be able to afford current prizemoney levels without the subsidies provided by NZTR"

None of the clubs could afford prizemoney levels without the subsidies provided by NZTR. Does he really think Ellerslie is going to front up with a million for the derby etc?

The only sustainable aspect of the report is the revenue stream that outsourcing TAB operations could deliver. PoC and Racefield fees are just a shift from one place to another - all at a cost to the punter - who else.

[Hesi]

Some of those smaller clubs on their big race days would come close to being profitable.

What those involved with the racing industry in NZ, don't seem to recognise, is that the number one priority must be the outsourcing the TAB,(Messara does allude to this) maybe keep the tote, such that the hugely top heavy costs can be substantially reduced and a substantial increase in money returned to racing.

If this happens, and the industry sees positive signs of more money flowing into it, instead of the pockets of the top heavy NZRB cronies, then they are more likely to pull together in terms of racecourse rationalisation to generate cash to upgrade facilities

[curious]

What a load of crap and I held this bloke in high esteem.

In relation to this, the work we did as part of the Review in 2018 showed that many clubs, if looked at on a stand-alone basis, would not be able to afford current prizemoney levels without the subsidies provided by NZTR

Where the fuck does he think the so called subsidies come from? I don't think or at least am hoping that the subcommittee pollies are not that stupid.

Edited March 9, 2020 by curious

[Freda]

2 hours ago, curious said:

What a load of crap and I held this bloke in high esteem.

In relation to this, the work we did as part of the Review in 2018 showed that many clubs, if looked at on a stand-alone basis, would not be able to afford current prizemoney levels without the subsidies provided by NZTR

Where the fuck does he think the so called subsidies come from? I don't think or at least am hoping that the subcommittee pollies are not that stupid.

He has some very vocal disciples so the likelihood is that ill-informed listeners are going to be influenced strongly.