Analysis: It’s Ladies’ Day at Pukekohe Park, billed as one of the most anticipated racing events of the local season – all about fashion, fun and a little flutter. But there’s a heavy rain watch for Auckland, and this morning’s thunderheads aren’t the only clouds over the race.
The TAB racing advisory committee has published its much-anticipated (and partially leaked) report, revealing the depth of the $1.72 billion industry’s internecine battles, its existential fiscal crisis, and a plea for Government help.
A “veto culture” has paralysed the industry for 30 years, it says; cooperation between the codes cannot be incentivised, it must be legislated. “The New Zealand racing industry is at the most critical turning point it has faced,” argues chair Sir Peter Vela.
Newsroom foreshadowed this last week, in analysis by Mary Watson-Burton: “Right now, even a casual punter might not bet on the future of New Zealand’s racing industry,” she wrote.
Today’s report finds horse supply in long-term decline: the thoroughbred foal crop has fallen 22 percent over the past decade and the standardbred foal crop 44 percent, with more than 500 thoroughbred breeders lost since 2015.
The report identifies a growing share of funding consumed by duplicated administration across the thoroughbred and harness racing codes. Administration costs drain $91m a year from the industry.
It points out that more than $700m of capital is locked in fragmented venue ownership, with no industry-wide plan to deploy it, while training and racing infrastructure remains under-invested.
And finally, the industry is carrying a structural deficit of more than $50m a year, and on current forecasts the codes will have exhausted their reserves by the end of the 2027/28 season – about the same time that a $150m-a-year funding guarantee from global British betting giant Entain runs out. Yet there’s no single point of accountability for industry-wide outcomes
“The industry has the assets, the people and the standing to build a strong, sustainable future,” Vela argues. “What it has lacked is a structure equal to those strengths – the one it has is working against it.”
He says reform on this scale will only work if the industry, and those 12,500 people who work in it, moves quickly. “What it requires now is for the industry to act while the decision is still its own to make.”
On current trends, the codes’ combined failings will exhaust the codes’ reserves within two seasons and force sharp cuts to the stakes and returns participants rely on. Essentially, even as greyhound racing is being shut down by the Government because of animal welfare concerns, the thoroughbred and harness racing codes are doing their best to bankrupt themselves.
Part of the problem is the codes’ bickering over governance, funding and infrastructure. The Herald reports an upcoming consultancy report could recommend the closure of two of the country’s most iconic racetracks, Trentham (thoroughbred racing) and Alexandra Park (harness racing).
That would spell the end of all racing in Wellington, and of the trots in Auckland. The clubs that oversee Trentham and Alexandra Park have vowed to fight.
Today, the committee’s report recommends drastic action: unifying the two horse-racing codes in one organisation responsible for industry strategy, funding, calendar and marketing. “The code entities will be consumed by the new single governing body entity,” the report recommends.
Clubs’ ownership of racing venues should be transferred to a single strategic property company in exchange for equity in the company – and to top it off, the committee recommends the Government should intervene to aid industry finances.
The advice – from the breeders and owners who comprise the committee – is for tax breaks for breeders and owners. They insist in the report that it’s not really a “tax break” or a “subsidy”, but rather, a “production incentive” to restart the supply chain at the source.
And they recommend the Racing Integrity Board be funded by taxpayers rather than the industry, and that the TAB be modernised to also run online casinos and in-race betting. “It ensures that customers in New Zealand do not need to seek a black market should they want to consume such products,” the report says.
These would require law changes.
Two of the committee members – Sir Peter Vela and Sir Brendan Lindsay – are major NZ First donors. Between them they’ve contributed at least $250,000 to this year’s election campaign. But it doesn’t appear they’ve got everything they want from the Government – at least, not yet.
Vela says “the evidence is clear, the pathway is set out”, but Racing Minister Winston Peters seems unconvinced.
He’s directing the committee, TAB, Thoroughbred Racing and Harness Racing NZ to engage in good faith to develop a cohesive pathway forward – the pathway they insist they’ve already built.
Peters says large-scale legislative reform is not an immediate Government priority. In fact, it would be a last resort. “For reform to succeed, it cannot be driven in isolation. It must be built on collaboration, shared understandings, and a commitment from all parts of the industry to move forward together.”
Already this month, reading the writing on the wall, NZ Thoroughbred Racing and Harness Racing NZ have issued a memorandum of understanding, promising to work collaboratively on industry reform. It’s not so much an agreement, as a promise to seek agreement. It does not commit either code to specific funding reforms, asset transfers or structural changes.
Peters’ support for restructuring, while refusing to legislate this parliamentary term, does open the starting gates for the election race. It means that if the industry is to get the structural reforms it wants, it may well feel motivated to return Peters as minister for another electoral term.
With the big political donations already being proffered by Vela, Lindsay and other breeders, that could make the track to this year’s election as muddy as the one at Pukekohe Park today.
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