Racing awaits its makeover
- Created on Saturday, 07 November 2009 01:00
Racing shows many of the signs of an industry that's in big trouble. PHILP MATTHEWS investigates the truth behind the glamour and crowds of Cup and Show Week.
It was a speech that felt more like a kick in the teeth. It was August, the annual conference of New Zealand's harness racing clubs. The assembled delegates were hearing from the new Minister for Racing, Northland MP John Carter.
The minister got up and painted a picture of an industry in crisis. Not just harness racing, but thoroughbreds and greyhounds as well. There are "serious and significant challenges". Betting revenues are down. There is less money around for big projects. There is no scope for increased support from the Government.
Carter went on in doom and gloom mode. The industry needs "a coherent vision". The industry "is at a crossroads". The Government "does not want to see the industry fail". The industry needs to wean itself off gaming machine funds. In short, "it is time the industry woke up".
"There were certainly some messages that the new racing minister was keen to get across," says Shane Gloury, chief executive of the New Zealand Metropolitan Trotting Club, which runs harness racing at Addingotn.
Nice understatement. But Carter's speech was just one in a series of dire warnings.
In 2008, an efficiency and effectiveness audit into the New Zealand Racing Board, which was set up in 2003 to co-ordinate the three racing codes and run the TAB, concluded that both the board and the wider industry needed to "get better, faster".
Once outcome has been the hiring of Englishman Andrew Brown on a reported $900,000 salary as the board's new chief executive. He's been asked to cut costs by $10 million a year; reducing commissions paid to TAB outlet operators has been one unpopular way of doing that.
In March, the board's result for the first six months of the 2008/9 season showed that earnings were down 10.9 per cent, or $8.2m, on the same period the previous year. It was also noted that the previous year's high result had actually been propped up by Australian punters betting here when equine influenza hit across the Tasman.
At the local level, Addington has been forced to cut stakes for the current season. Last year, during Cup and Show Week, the NZ Trotting Cup was raced for $1.2m. This year, the stake is $1m. The prize money for almost every other race in the Addington season has also been cut.
Gloury says that Addington was hit by a double whammy. Off-course turnover was down 11 per cent over the 2008/9 season and then the racing board cut its payout to harness racing clubs by 18 per cent. Everyone hurts: as stakes reduce, the cost borne by trainers and owners increase, Gloury says.
All this came after a reasonably good three or four years for the industry which is why the likes of Brown, Gloury and Tim Mills, the chief executive of the Canterbury Jockey Club at Riccarton, are eager to have the current slump seen as just a short-term recessionary effect. Brown doesn't even accept the word "slump".
But the bigger picture is no more encouraging. It's obvious that horse racing used to be much more central to New Zealand life than it is now. In 1986, betting on horses made up 85 per cent of all New Zealand gambling. By 2006, it accounted for just 12 per cent. Lotto happened, then gaming machines and casinos. Over the same period, the total gambling spend grew from under 1 per cent of household disposable income to around 2.5 per cent, levelling off when pubs went smoke-free in 2005.
So an industry is crisis? "It's certainly challenged, no question about that," Carter says. As noted, he is less inclined than the previous minister for racing, Winston Peters, to inject public cash into it. Peters famously gave the industry a $32m tax break and granted $9m over three years towards increased stakes.
Yes, some of what Peters did was helpful, Carter agrees, but not all of it. "The $9m that he gave for stake money is actually going to become an embarrassment to the clubs because they are meant to replace that after three years and they won't be able to. It's caused a lot of anxiety within the industry.
Carter says the racing board will have to determine whether the stakes stay at Peters-assisted levels. Brown responds that is up to the Government whether they are renewed. And if the Government says no? Then, "the issues is whether that level of funding is an appropriate level to be continuing", Brown says.
Meaning that the Peters scheme set the stakes unrealistically high? "It's not possible for me to comment on that."
What else can the Government do to help? In the briefing paper that came with the position of racing minister, Carter was told to expect the racing board to ask for two areas in particular to be tidied up.
First, some way of dealing with offshore betting agencies that run books on New Zealand events but don't pay licence fees. Second, expanding the TAB's remit to allow betting on television shows such as Dancing with the stars. There is an international precedent for going beyond sport: in Australia, Centre bet ran a book on the last New Zealand general election; in Britain, literary prizes are hot tickets. Brown says that these are among the things he is talking to government about.
This month, Carter is expecting to see the vision statement he asked for at the harness racing conference. The briefing paper did warn him that it would be "controversial" to let the TAB offer "non-traditional bet types" and he doesn't sound hugely open to the idea: "The Government is not inclined to broaden out any opportunities in that regard."
There is one last area of tension. Carter devoted a good amount of his August speech to telling the racing industry to stop relying on gaming machine grants. He noted that since 2005, grants to racing have gone up from $11m annually to over $20m. And much of this, he said, went straight into stake money. In short, not a good look.
Yes, Brown has got the message about gaming machine funds. The Problem Gambling Foundation and others have made noises about cash going from pokies in poor neighbourhoods into the pockets of well-off owners. But the legislation clearly says that racing clubs "have every right" to claim such funds, Brown says. End of story.
If the Government doesn't want to see this industry fail but won't support it financially, then what? The minister is in the position of largely offering advice.
"The industry has to reinvent itself," he says. "You've got to remember this is an entertainment industry. They call it the sport of kings, but it isn't that at all - it's about people participation. And it's in competition with a lot of alternative entertainment that wasn't there 20 years ago and certainly wasn't there 40 years ago."
In his view, racing has an image problem. "The problem is that is you're not involved in the racing industry, it's seen by the public generally as a bunch of fats cats gambling," Carter says.
Not everyone disagrees. "I understand where the minister's coming from," Gloury says. He thinks it's because the media tends to focus on the big paydays and doesn't show how many ordinary people are employed downstream. A 2004 study showed that the racing industry contributes $424m directly to New Zealand's gross domestic product, or 0.37 per cent of GDP. It generates more than $1.48 billion indirectly, or 0.13 per cent of GDP. It employs more than 9000 people fulltime and more than 40,000 are involved in some capacity. Export sales of horses can earn more than $130m per year.
Riccarton chief executive Tim Mills: "If it has an image problem it's probably that younger people think that granddad's sport or dad's hobby."
What does the racing board's Andrew Brown make of that fat cats comment? As a relative newcomer to New Zealand, he can only speak about the international perception of our industry. And? "From the international image point of view, I would say it's not a valid comment." Yes, Brown can see the need to broaden the appeal but the picture of Kiwi racing that pops into his mind are spring and summer meetings treated as festive occasions. Events much like Cup and Show Week, as it happens.
He also thinks, as many do, that racing needs to find a way of making itself exciting and accessible. What can racing do? Racing is harder to reinvent, Mills believes. But packing six or seven races into a twilight meeting is one idea that Riccarton has explored. Kick off at 4pm and be done by 7pm.
For Gloury, a bigger matter since he arrived from Australia at the start of the year was sorting out the food and drink at Addington. He used to get no end of complaints. Now he says it's a reasonable place to dine and - hopefully - have a flutter. He had two cup days at Addington as a visitor from Victoria. This is his first as boss. It's "the biggest and best harness racing meeting in the southern hemisphere".
Last year, a crowd of 25,000 were at Addington on Cup Day. Around 17,000 went to Riccarton for the New Zealand Cup.
But these figures were dwarfed by the 120,000 who went to the Royal New Zealand Show and despite the promotional imagery; the racing side contributes much less than the agricultural side. Horses are glamour, but sheep and cattle do the business: an economic impact study in 2006 showed that from a total spend of $27.2m, the show brought it $16.6m against Addington's $6.9m and Riccarton's $3.7m.
But how do you get those crowds to come every week? Even Flemington, in Melbourne, faces the challenge of making a big day last all year, Gloury says.
"We'd be naive if we thought we could get them to come to every meeting," Mills says. "Some race days we accept are there for the industry churn, to allow horses to compete and progress through the ranks."
While Brown and Gloury are newcomers to the New Zealand industry, Mills is local. He has been chief executive at Riccarton for 13 years. The biggest changes in that time? The push towards off-course participation. In other words, television, radio and the internet. Brown's background in British racing television and his recent announcement of a new TAB channel to be on air in December would suggest that this is still a top priority. No doom and gloom merchant himself, Mills stresses that racing has moved far beyond being an on-course participation in sport. There are plenty following from pubs, living rooms and from in front of their computers. Those empty grandstands? They do tell a gloomy story but not the full story: "It doesn't necessarily mean that everything's falling to bits".
(Source: Weekend Press, Saturday 7th November 2009, Page 1)