Horse racing shake-up: Selling tracks and outsourcing the TAB

Insight - Forcing racing clubs to close their tracks and outsourcing the TAB could revitalise the horse racing industry, but, as Max Towle discovers, some diehards won't accept change without a fight.

It's past midday at New Plymouth Raceway and there's a steady stream of gamblers collecting betting slips at the TAB's selling windows. Behind the grandstand, which is looking a little empty despite the pleasant weather, a few young children get their faces painted while others play near a basketball hoop.

The day is not a sellout, but the club lounge is full and the punters lounge is pretty chocca with people chewing on pies or grabbing a feed from the portable roasting oven. A large projector screen shows that day's races at Ellerslie, and the bar is stocked full of Speights and Lion Red.

Carey Hobbs leans on a railing and admires the course. "I've been 32 years in the job so I'm a racing tragic. It's great to see a young crowd here and all the ladies dressed up and the young guys watching them in their dressed up clothes."

But even a committed punter like Carey can see that racing is slowly dying in New Zealand.

"Rugby, racing and beer" - a phrase he uses - may have once summed up the passions of a percentage of the population, but that percentage is dwindling.

Racing is still a $1.6-ish billion industry, with about 14,000 full-timers and 10,000 volunteers.

But the prize money going to horse owners is now worth less than a quarter of their costs.

Attendance is dwindling - the number of people going to the track has fallen by more than 20 percent in the past six years - while there are fewer races being run.

The owners are getting older, and the number of foals being produced for sale is falling.

At Awapuni Racing Centre just outside of Palmerston North, chief executive of RACE Incorporated - a group of amalgamated lower North Island clubs - Alasdair Robertson, says it's shocking how few club members there are in provincial New Zealand.

"If you think back to the 1910s to the 1930s, a club in a provincial New Zealand town was the heart and soul of the community, it really was. It would have been the community hall, it would have been everything. But not anymore."

Most importantly, the gamblers - the punters who essentially fund the industry - are spending less on the horses. An increasing number of those who do bet on races are doing so at overseas bookmakers, meaning the local industry is losing out.

"Stake money hasn't anywhere near kept up with inflation ... it's very difficult to get new owners because it's that hard a game," says Carey.

At this point, he trails off, distracted by the first race of the afternoon. Tavi Mac raced by young jockey Hazel Schofer is ahead turning the final corner. Carey yells over the crescendo. "Local's going to win the first, mate, so everyone will be happy!"

Subscribe to Insight for free on Apple Podcasts, Spotify, iHeartRADIO, RadioPublic or wherever you listen to your podcasts

Like Carey, the Minister of Racing, Winston Peters, is another old school racing type who remembers the days when he was a child and would ride a horse to school, and tie it up in the paddock behind the building.

When he took over the portfolio in 2017, he declared he would shake-up the industry to save it from stagnation and a slow death.

But it was never going to be easy.

"There's only one way out here, it's either go with reforms and have a thriving industry, or stagnate and die, the signs of which are all there now," he says.

To review the industry, Peters commissioned Australian racing guru John Messara, who released a report just over a year ago that rocked racing to its core.

The Messara Report said horse racing was at a tipping point, and the country had far too many tracks. He recommended that over the next few years, 28 of the country's 48 thoroughbred tracks should close.

That included the likes of Hawera, Wairoa,Timaru, Winton, Avondale and Stratford.

Messara's thinking was that by closing these mostly country tracks, more money could be poured into the big centres, like the Riccartons and Ellerslies, and even the New Plymouths.

But some small clubs aren't buying it and don't plan to go quietly.

Simon Williamson runs the Kurow Jockey Club. Kurow, and its one annual summer race, is slated to close in the coming years. He says Kurow still gets about 5000 people attending its race, which makes close to $150,000 on-course.

"It just defies logic to me," he says.

"We've proved that 80 or 90 percent of people's first experience of racing is at a country meeting."

He can't fathom why smaller tracks should have to close to make the bigger ones more sustainable, and disagrees with RACE chief executive Alasdair Robertson's depiction of country racing.

"Kurow isn't just a racecourse, it's a community sports hub. The rugby club has its headquarters in the same building, so does the squash club. The school uses it. The pony club uses it. Everyone in the valley uses it. I just don't get the point of closing clubs like ours.

"The 5000 who come to Kurow on December 30 won't necessarily go to Oamaru or Cromwell to the same event."

That's a sentiment former Central Otago mayor and president of the Central Otago Racing Club, Tony Lepper, supports.

He acknowledges his club is making a slight loss, but he says closing tracks like Omakau is going to turn the sport into a "paint-by-numbers" product.

"If you constantly race at Wingatui and Riccarton, you'll get people there on premier days, but on others you won't. It will just be the same horses going around in circles," he says.

Several other country racing people have expressed similar sentiments. Some also had a problem with the way John Messara decided which tracks should close.

"He didn't come at all. He sent a couple of disciples here and they stood up in the grandstand and probably had a look out and saw dollar signs because they thought they could sell us and make the money," says Egmont Racing Club president Karl Stratton.

"They never came to Omakau. They went to Gore for about five minutes and moved on. It's been a paper exercise," says Tony Lepper.
 
John Messara didn't want to comment, but Winston Peters says the good and bad tracks are obvious.

"Look, I know some of these race tracks and some of these administrators, and I can walk onto a race track and tell you what the success story is going to be by some of that very obvious visual evidence of physical performance."

He means crumbling grandstands and overgrown grass, or toilet facilities that aren't up to scratch.

At the beginning of the year, New Zealand Thoroughbred Racing (NZTR) released its Future Venue Plan, which confirmed the tracks that would no longer be given licences for race meetings over the next decade.

Chief executive Bernard Saundry says not everyone can be satisfied.

"If you look at Wairoa, for instance, it costs $39,000 to send the broadcasting equipment up there, plus the club funding of $37,500, plus prize money of $80,000. When that show rolls into town, we expect the club to generate some income."

Wairoa was given a reprieve in April - its licence was renewed. Saundry says others don't take advantage of their raceday opportunities.

The Messara Report also recommended that with track closures, the freehold land also be sold, with the proceeds to be spent on the remaining tracks.

That raised legal questions regarding the forcible sale of freehold land, most of which is in the name of racing clubs.

So to get around this, Messara proposed vesting the ownership of freehold racecourse land and club assets in New Zealand Thoroughbred Racing. The sale of Avondale's land alone, could generate between $100 and $200 million.

Again, there was outrage.

"We are privately owned, freehold land, and they think they're going to pass legislation that will sell us up and the money go to NZTR or the Racing Board? That's theft. That's Robert Mugabe stuff," says Karl Stratton at Egmont.

"If they take our races away from us, we'll keep our land and be a training and trial centre and be the richest little country club and race wherever we want."

"We'll fight it tooth and nail," says Simon Williamson at Kurow, who believes the wholesale closing of tracks could be the death knell of racing.

"It's a bit like walking about Auckland and saying we're going to close every second golf club - compulsory - there'd be a human outcry."

But the Messara Report says the sale of land is critical to bringing the other tracks up to par. It describes the look of New Zealand racing as "shabby."

In June, Winston Peters opened the starting gate on turning those recommendations into legislation.

The first racing bill in June introduced new taxes on offshore bookmakers, and reduced the duties the industry has to pay the government.

A second bill is being finalised and will be introduced to Parliament this year. The industry expects it will provide a blueprint for closures, and potentially how that freehold land can be forcibly sold, which would likely require changes to the Racing Act.

Winston Peters is coy about the bill, but says clubs are still being encouraged to see common sense, hinting that they should volunteer their land.

"Ok, I'm from 'Waikikamukau', for example, and ... I've got a racecourse here that is obsolete. What would I want to do with that? If I was a true racing person, I would want to make a contribution to racing to keep the industry I love alive."

Alasdair Robertson of RACE says people need to think of the greater good.

"We see ourselves as custodians of the asset [Awapuni], we do not see ourselves as owners of it, even though its freehold title is in the name of RACE.

"That's a very different view to other clubs in the country. The nimbyism is very strong in the industry and has to be stopped."

He says investing more in fewer tracks will encourage gamblers to return to the TAB, and others overseas to bet more on New Zealand races.

"I know Australian gamblers and they're just Joe Blows who spend big, but they will not bet on a poor maiden field on a heavy 11 with slippery tracks."

And gambling is vital to the industry.

If there were two key recommendations in John Messara's report, the second, after closures, was his proposal that the commercial activities of the TAB be outsourced.

His argument was that the TAB can't compete with its overseas competitors. He said it needed better technology, both in terms of gambling online, and on-course, and needed to piggyback on a bigger foreign operator with more resources.

There are many in the industry who believe Australian mega-companies like Tabcorp and Sportsbet could be potential bidders for a 20 or 25-year licence, but Winston Peters is again coy.

"I can't give you an answer on that, but our objective is not unsubtle, it is pure, unbridled nationalism and ... we're doing our best to ensure that [what we do] benefits New Zealand."

Bernard Saundry at NZTR says outsourcing is necessary, even if he wouldn't necessarily use that word. He prefers "joint-venturing."

"New Zealand lacks scale, and we need international waging operators with investment and capital to invest into the economy. I'd like nothing more than to see a wagering presence in every pub and club in New Zealand. We've got on-course tote-facilities that are archaic. The model's broken and we need to change."

Alasdair Robertson says the immediate opportunity would be to reduce costs at the TAB's operator, the New Zealand Racing Board, which has been temporarily renamed the Racing Industry Transition Agency (RITA).

"The cost structure is enormous. We're an industry in thoroughbred racing where the total stakes are just over $50 million, yet the operating costs of the racing board are well in excess of that. You try to think of any other business that operates in that upside-down model?

"In 2013 [RITA] had 70 people earning over $100,000 a year, worth about $11.5 million. Five years later, they had 143 people earning almost $21.5 million. This is in an industry where trainers are going broke and the total stakes are $50 million? It doesn't add up."

But again, some in the industry aren't happy.

Ian McKelvie, the National Party's racing spokesperson, says he doesn't think racing should be controlled overseas.

"We're capable of running our own ship and I think we should be very careful ... I think it's very ironic that a minister who has always been completely opposed to foreign banks is in favour of another foreign bank taking over our TAB, so to speak."

The Racing Board, or RITA, wouldn't provide an interview for this story, but directed RNZ to a statement from earlier this month that conceded it fell behind its projected budget and forecast projections for the past year.

RITA says it is investigating outsourcing its commercial activities, while the government works on legislative changes that would allow this.

In the meantime, RITA is also seeking approval for new gambling products and betting options, something that worries the Problem Gambling Foundation's Andree Froude.

"I understand that racing has been around for an awful long time and a lot of people enjoy it," she says.

"But the fact we may be looking to [outsource to] Australia? Australians are the biggest gamblers by head in the world, and they see kids as young as 10 being able to tell you the odds. Is that what we want to see in this country?"

Speaking to the passionate small town punters, to the administrators, to Winston Peters, perhaps the only thing everyone can agree on is that racing is a fractious industry that needs to come together quickly to survive.

And perhaps, as Alasdair Robertson at Awapuni suggests, it's an industry that just needs to start thinking a little differently.

For instance, at Wellington Cup day last year, he says his group RACE established an independent festival zone featuring Sons of Zion, while this year Stan Walker will perform.

"Conservative thinking in racing would say that it's difficult to attract young people because they like noise and music and that scares the horses," he says.

"But we orientate the stage away from the horses. I would guess about 80 percent of the people in that area won't go see a horse, and that's great. I can assure you that there's 100,000 people at Melbourne Cup day, and if 10,000 see a horse that's a miracle."

As for Winston Peters, he appears to be feeling the strain of the portfolio.

"I can say that this industry, which used to be a bit of a vignette for ministers of the past, has been an enormously arduous and difficult project for a whole load of people," he says.

"I'll be enormously relieved when I can spend more time on other portfolios, because I'm spending too much time on this one."

And back at New Plymouth raceway, Carey Hobbs has sympathy for the discontented.

"50 years ago in every little town there was a dairy factory, and there's not anymore. I know it's really hard, but clubs have to get together and realise the status quo isn't going to work. I know it's difficult for someone to lose their identity and the track they race at," he says.

"But we have to do something now, otherwise this industry will retrench badly in the next 10 or 20 years, and there's a lot of people like me who don't want to see that happen."

Follow Insight on Twitter