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RITA is finally doing what NZRB should have started many years ago


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RITA boss: 30% of TAB staff must go to make leaner, more efficient business

Barry Lichter

By Barry Lichter • 6 May 2020

Racing Industry Transition Agency executive chair Dean McKenzie has confirmed today that 30% of its staff will be made redundant.

Staff were told at a meeting this afternoon that roles across all areas of the organisation would be affected as well as other cost saving measures made to reduce total expenditure.

Consultation with staff will be started this week and details of the changes will be released on Monday, he said. It is believed 160 full time staff and 70 contractors will lose their jobs.

McKenzie said the scale of change was required to ensure the business was sustainable for the future and best placed to meet the needs of New Zealand racing and sport.

“The TAB is a profitable business, however it has taken a major hit from COVID-19 with revenue last month 47 percent below forecast and customer numbers down more than 35 percent.

“Despite far reaching efforts to reduce costs across the TAB, including salary reductions, staff taking leave and reducing all non-essential expenses, it simply was not enough to offset the blow COVID-19 has had, and will have, on our industry.

“The implication of the pandemic extends beyond the immediate impact to the TAB, with racing and sport looking very unpredictable over the next year.

“The reality is the TAB will need to be a leaner, more efficient business with fewer roles, and focused on driving our core wagering and gaming business.

“Our focus now is to discuss this proposal with our people and to listen to their feedback before a final decision is made in late May.”

* The TAB was effectively insolvent even before COVID-19, owing $45 million to the bank after borrowing heavily to finance its fixed odds betting platform.

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Horse racing: TAB in huge job cuts as horse racing bosses mull earlier return to action

7 May, 2020 5:00am
 2 minutes to read
The TAB has been without revenue on horse racing during the lockdown. Photo / Photosport
The TAB has been without revenue on horse racing during the lockdown. Photo / Photosport
NZ Herald
 
By: Michael Guerin
 
 
 
 
 
 
 
 
 
 

Horse racing bosses are eyeing possible earlier returns to the track as the axe falls on nearly a third of New Zealand's TAB employees.

The TAB (temporarily known as the Racing Industry Transition Agency) told its staff yesterday around 30 per cent of its work force will be made redundant in cost cutting after the financial disaster of Covid-19.

Not only did the TAB lose all New Zealand racing for six weeks and faces possibly two months before thoroughbred racing returns, it also lost the betting turnover on almost all sport worldwide. That has brought to a head its financial struggles in recent years.

With returns to the three racing codes diminishing there have been widespread calls for significant reduction of the TAB's costs and yesterday that axe fell.

 

Already many contractors have been laid off but remaining salaried staff have been informed there are 160 more roles to be cut, with voluntary redundancies offered. 
TAB bosses were unable to be contacted for comment last night.

While the TAB is set to reduce costs, the racing industry has restarted, with greyhound racing on Tuesday and harness racing scheduled for May 29. The thoroughbred industry has not given up on potentially resuming racing earlier than their scheduled July 3 date.

New Zealand Thoroughbred Racing chief executive Bernard Saundry told licence holders yesterday they will survey trainers to see how many horses are in work and could be ready for an earlier resumption, possibly in late June.

"We have had almost 300 replies from trainers about horse numbers and when they think they will be ready to race and we are going to survey even more trainers in the next few days," said Saundry.

If smaller meetings with decent numbers could potentially be carded then thoroughbred racing has at least a chance of returning earlier.

Training at New Zealand's largest facility, Cambridge, is going smoothly under the new Covid-19 protocols.


 

"It feels almost like normal, with less horses and everybody is paying strict attention to the new rules," says Cambridge trainer Tony Pike.

"We have jumpouts here on May 23, trials at Te Rapa on June 9 and by then we should know whether we could race earlier."

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It's very poor from RITA. This was apparent well before Covid, and nothing/little was being done.

McKenzie said the scale of change was required to ensure the business was sustainable for the future and best placed to meet the needs of New Zealand racing and sport. 

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What can you say, other than thank God for Covid.

It has caused a lot of damage to Racing but will in the end be the arbiter of change, and in a way that will allow politically acceptable help to be forthcoming

Next steps,

Sort out the outsourcing and fixed odds fiasco.  Keep tote as you have always said Mardi

Put on hold this 'land grab' legislation, until a sustainable model is up and running, and then revisit

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1 minute ago, Hesi said:

What can you say, other than thank God for Covid.

It has caused a lot of damage to Racing but will in the end be the arbiter of change, and in a way that will allow politically acceptable help to be forthcoming

Next steps,

Sort out the outsourcing and fixed odds fiasco.  Keep tote as you have always said Mardi

Put on hold this 'land grab' legislation, until a sustainable model is up and running, and then revisit

What wasn't stated in there - if when sports and racing is fully up and running (and pokies), will they then seek to employ further staff - on the basis that the business is sustainable again (with the extra staff), taking them back to where they were. This adjustment may be purely a Covid adjustment due to the likely effect on things for the next 6 -12 months.

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One would hope that fiscally responsible governance will come into play.  Remember also a succession of NZRB boards allowing all this to keep on happening.  One would also hope that they accept the folly of Fixed Odds and the huge impact this has had on costs for such poor returns......and do something about it

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1 minute ago, Hesi said:

One would hope that fiscally responsible governance will come into play.  Remember also a succession of NZRB boards allowing all this to keep on happening.  One would also hope that they accept the folly of Fixed Odds and the huge impact this has had on costs for such poor returns......and do something about it

Yes one would think that - but it hasn't been evident. And the growth in staff has occurred over time - and they would claim in relation to needing those staff to run the business. So in the future, the 30% of staff now to be gone, may be seen as needed, as that business grows again post Covid.

They are only showing a need to adjust the workforce supposedly in line with the business. In actual fact, they are reducing the workforce by less than the stated revenue decline of the business. That hasn't taken into account the top heavy nature of the business pre Covid.

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It is going to be a tricky political road to travel for them, because they are going to need a bailout, and clearly that bailout will come with some very strict conditions in terms of expected revenue and cost projections.  Winston must be happy, as this Covid situation gets him out of a very tricky situation

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Their first priority must be to find revenue streams that allow decent stakes for current owners to want to stay in the game. If we see wholesale mass reductions (eg Gavelhouse auctions overloaded with young well-bred racehorses being 'fire saled') be very afraid, cos it would start a landslide in perceived value of bloodstock.

RITA has to create incentives for owners, reduce their outgoings in every way they can. Travel subsidies/rebates, noms/acceptances, commercially-sponsored bonuses like the 'Pearl' series, even special one-off races like the Aussies do so well with the Everest, Golden Eagle and Jericho). Doing this will keep the size and quality of fields strong and therefore a good wagering product attractive to Kiwis and international audiences

Edited by Maximus
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There is massive disparity between the level of return/potential return that is required to keep owners interested, and the current revenue generation related to the business.

And one of the main issues has been the desire to create incentives for owners - that result in short term outcomes. They have become obsessed with that side, to the detriment of keeping and developing interest in the industry.

It's a cycle, but at some point the cycle breaks to the point where you have lost both - the interest in the industry, and sufficient incentives to owners. We reached that point around 10 years ago. Largely through the decisions made which didn't think about retaining interest in the industry - and focussed on ideas at the time they thought were going to sustain owner incentives. (Failed ideas as well).

The model is broken - hence why RITA talks about their dependency on sports and pokies.

If they reduce costs and that leaves extra for the industry, it is imperative that does not just go on stakes (again, trying to create incentives for owners). They must invest in trying to keep and grow interest in the industry - or at some point when the gains from reduced expenses has gone or been used up, they will need to find the next 'revenue stream'.

The situation is negative though Hesi. Because the industry has reached the point where it simply doesn't balance.

Edited by mardigras
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1 hour ago, mardigras said:

Yes one would think that - but it hasn't been evident. And the growth in staff has occurred over time - and they would claim in relation to needing those staff to run the business. So in the future, the 30% of staff now to be gone, may be seen as needed, as that business grows again post Covid.

They are only showing a need to adjust the workforce supposedly in line with the business. In actual fact, they are reducing the workforce by less than the stated revenue decline of the business. That hasn't taken into account the top heavy nature of the business pre Covid.

That indeed is a huge worry. I think the fact that they are giving employees an option to choose leave without pay over redundancy attests to that. We are certainly not there yet.

Edited by curious
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5 minutes ago, mardigras said:

There is massive disparity between the level of return/potential return that is required to keep owners interested, and the current revenue generation related to the business.

And one of the main issues has been the desire to create incentives for owners - that result in short term outcomes. They have become obsessed with that side, to the detriment of keeping and developing interest in the industry.

It's a cycle, but at some point the cycle breaks to the point where you have lost both - the interest in the industry, and sufficient incentives to owners. We reached that point around 10 years ago. Largely through the decisions made which didn't think about retaining interest in the industry - and focussed on ideas at the time they thought were going to sustain owner incentives. (Failed ideas as well).

The model is broken - hence why RITA talks about their dependency on sports and pokies.

If they reduce costs and that leaves extra for the industry, it is imperative that does not just go on stakes (again, trying to create incentives for owners). They must invest in trying to keep and grow interest in the industry - or at some point when the gains from reduced expenses has gone or been used up, they will need to find the next 'revenue stream'.

The situation is negative though Hesi. Because the industry has reached the point where it simply doesn't balance.

Yep, has to be a business plan or model for growth, can't just cut costs and expect it all to be okay

Hard to know where this growth can come from though, things are so rundown

You mean like actually promote the industry to pick up the lost generations coming through

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Just now, Hesi said:

Yep, has to be a business plan or model for growth, can't just cut costs and expect it all to be okay

Hard to know where this growth can come from though, things are so rundown

You mean like actually promote the industry to pick up the lost generations coming through

Yep. Try and grow interest in NZ racing from (at a minimum), New Zealanders. 

Promote NZ racing over and above all other racing. Offer price incentive on New Racing to differentiate it from your other 'products'. Change the ways racing is run in NZ (we can't really control the way it's done elsewhere). So things that make racing different, racing priced better, and racing celebrated through our available media etc. Things like that, to attract a wider audience of interest.

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What are we promoting here though, wagering on NZ racing, which the TAB does, or NZ racing, which NZTR should be doing, but can't, because it has no budget to do so, and if it did, there would be a chorus of whinging from shareholders, as to why are they spending money on Marketing when it could be going to stakes.

As I have said before, the number 1 reason why NZ racing has declined in the last 30 years is lack of a cohesive promotion(every year), lack of upgrading it's product

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45 minutes ago, Hesi said:

What are we promoting here though, wagering on NZ racing, which the TAB does, or NZ racing, which NZTR should be doing, but can't, because it has no budget to do so, and if it did, there would be a chorus of whinging from shareholders, as to why are they spending money on Marketing when it could be going to stakes.

As I have said before, the number 1 reason why NZ racing has declined in the last 30 years is lack of a cohesive promotion(every year), lack of upgrading it's product

Not just betting, promoting racing as an interest. And addressing the areas of racing that are not attractive to both interest and betting participation. That includes tracks and integrity - but also the racing model, and what other things would/could attract interest

As for NZTR and marketing, if they have the mandate (which they do), to run the code. They should be doing what is right for that. That is not giving everything possible to stakes if other areas would serve NZ thoroughbred racing better.

The TAB can run their own promotions with the aim of improving things for their operations. Such as what TABCORP will do, whilst Racing.com will have their own branch of marketing/promotion. The same should be being done here with NZTR being the equivalent of Racing.com. If Racing.com want to use a TAB broadcast medium for promotion/marketing, they can pay for it - or they can choose to direct their attention to other mediums.

Edited by mardigras
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Alright then Mardi, you are the brains trust when it comes to wagering.  What is the best way for the TAB to promote itself to increase net betting revenue, by attracting new bettors and getting existing ones to turnover more.  These bonus bets don't seem to be the answer.

The danger of course in promoting wagering, being that you fall foul of the anti- gambling lobby.  NZ Lotteries have done it well, with the life changing approach

Promoting racing(not wagering), you get the advantage of attracting more people to racing, which enhances the horse ownership and involvement in racing, but also the wagering aspect.

I was always bemused by the branding of NZTR, as Love Racing.  What's the point, waste of money, they don't use that branding to promote racing, so bit of an exercise in ego massage maybe

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23 minutes ago, Hesi said:

Alright then Mardi, you are the brains trust when it comes to wagering.  What is the best way for the TAB to promote itself to increase net betting revenue, by attracting new bettors and getting existing ones to turnover more.  These bonus bets don't seem to be the answer.

The danger of course in promoting wagering, being that you fall foul of the anti- gambling lobby.  NZ Lotteries have done it well, with the life changing approach

Promoting racing(not wagering), you get the advantage of attracting more people to racing, which enhances the horse ownership and involvement in racing, but also the wagering aspect.

I was always bemused by the branding of NZTR, as Love Racing.  What's the point, waste of money, they don't use that branding to promote racing, so bit of an exercise in ego massage maybe

Let's not go there. 

I am struggling for ideas due to the degree they have gone past an easily correctable situation. So to be honest, I'm not sure what their options are.

And it's further made difficult since at this stage, we don't have something that is particularly attractive - so making it so will take time. And ideas around what can be some points of difference to make our racing something people might like to watch/attend/participate in - and potentially bet on in the future. You need your creative people for that.

They have invested massively in pushing people away from NZ racing, which has resulted in an increased appetite for off-shore racing. How do you turn that around? Apart from near cold turkey at a lot of pain, I'm not sure what is the best approach. I'd probably look to do that. Reduce the racing schedule of off-shore racing to 20 races per week. The best only. Couple that with some of the other points mentioned to wean the local punter off Australian racing whilst investing in making NZ racing more attractive - and delivering what we have in a way that actually highlights all things about racing as the centrepiece of each on the mediums available.

The way it is now, the Aussies hold all the cards - and they can hold us to whatever they feel like. We're dependent on them, and that dependency has taken away our ability to do the things we need to do for our own racing, in a way that we want to do it.

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53 minutes ago, mardigras said:

Let's share some ideas on what people is the way people think to get NZ racing on a sustainable track.

Good idea

Firstly it might help to quantify sustainable

At the moment(2018/19), we have net betting revenue of 348 mil(tote, FO, pokies and overseas) and costs of 211 mil to give a net profit before distributions of 137 mil, take out another 7 mil for RIU anf 14 mil to sports, therefore if the codes got paid out 151 mil, the budget doesn't balance by 35 mil

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3 minutes ago, Hesi said:

Good idea

Firstly it might help to quantify sustainable

At the moment(2017/18), we have net betting revenue of 348 mil(tote, FO, pokies and overseas) and costs of 211 mil to give a net profit before distributions of 137 mil, take out another 7 mil for RIU anf 14 mil to sports, therefore if the codes got paid out 151 mil, the budget doesn't balance by 35 mil

Don't the sports payments come out pre net profit?

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