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New Funding Model for Thoroughbred Racing

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Media release from NZTR I have my thoughts on it, interested in yours.

New Zealand Thoroughbred Racing (NZTR) today unveiled significant changes to the way it will fund thoroughbred racing next season, starting on 1 August 2010.

The new funding model simplifies the previous separate funding streams, reducing these from 14 to 6. This represents a fundamental shift away from funding clubs using off-course wagering turnover and a range of other payments, to one that simply provides racing clubs with all prizemoney

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It certainly puts some incentives in the right place for those clubs that are innovative about on-course attendance and turnover. There are no good options given the declines in the punting pool and pokie machine funding and the free-riding theft by the online players (I refuse to open an account with them on principle even though it costs me money). At least helping those clubs who can help themselves is a step in the right direction. I'm not thrilled about having to pay for r80 class fees but it's hardly a game-changer. Likewise lower maiden stakes. What would be a game changer is lowering stakes at the listed level plus - the one good one I'm lucky enough to have would be straight on a plane if they were lowered any further.

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It certainly puts some incentives in the right place for those clubs that are innovative about on-course attendance and turnover. There are no good options given the declines in the punting pool and pokie machine funding and the free-riding theft by the online players (I refuse to open an account with them on principle even though it costs me money). At least helping those clubs who can help themselves is a step in the right direction. I'm not thrilled about having to pay for r80 class fees but it's hardly a game-changer. Likewise lower maiden stakes. What would be a game changer is lowering stakes at the listed level plus - the one good one I'm lucky enough to have would be straight on a plane if they were lowered any further.

Increase you have said it all for me. Cheers NM

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Increase you have said it all for me. Cheers NM

It's a bit hard to work this out without seeing the exact implications in terms of figures.

However, the positives would seem to be that upper level stakes will hold; the 2% extra for oncourse may give clubs room to provide incentives to get big punters back on course and be more competitive with off shore options; more efficient clubs will benefit from the flat payout towards costs possibly.

My concern is sustainability. The above occurs at the expense of R80 and below races, the money spinners turnover wise. I'd like to see the business case that suggests that this won't drop participation and turnover at that level thereby worsening gross turnover and the overall outlook in the intermediate term.

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Leggy If you are subscribed to NZTR News they come out with last years annualised figures each month.

The salient figures are the T/O per runner running at +1.3% for a while now. Not bad

The other figure number of runners has been running at -3.6% for a while but this month went to -3.8% Product loss!

The current funding model allows for a more market approach. The stakes level set are a minimum and there is nothing to stop clubs from upping those. If they do they will get product at the expense of a club that doesnt.

Thus there is more onus on the clubs to run their venture well. At the same time they need to enhance the Owner experience and view owners as a resource rather than an expense.

Best wishes to Awapuni on their Owners Day meeting today

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Leggy If you are subscribed to NZTR News they come out with last years annualised figures each month.

The salient figures are the T/O per runner running at +1.3% for a while now. Not bad

The other figure number of runners has been running at -3.6% for a while but this month went to -3.8% Product loss!

The current funding model allows for a more market approach. The stakes level set are a minimum and there is nothing to stop clubs from upping those. If they do they will get product at the expense of a club that doesnt.

Thus there is more onus on the clubs to run their venture well. At the same time they need to enhance the Owner experience and view owners as a resource rather than an expense.

Best wishes to Awapuni on their Owners Day meeting today

Nerula

Yes, that's what I'm worried about because the turnover per runner differential between high and low stake races appears to be increasing,though regular breakdown of those numbers is a bit hard to come up with. I can see there is definitely a potential benefit for proactive clubs here, but if taking a bigger chunk from the racing that has the high turnover per runner and giving it to the racing with poor and decreasing turnover per runner results in further loss of product numbers then we have a calamity approaching. That's my big worry.

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Nerula - all of what you say makes sense. The positive thing about the new model is that it will reward both smaller clubs who have volunteers and a much lower cost base, while also rewarding larger clubs who have other sources of income. It will be a case of sink or swim - far fairer than issuing a central decree about which clubs/tracks should close (although I suspect the end result may be pretty similar). I agree with what you say about treatment of the owners - Trentham do a great job there, inviting everyone back after the race to have a drink and watch the replay a few times. At Te Rapa and Ellerslie you're left to it. I always find I'm too wound up before a race to really talk to anyone but it's great to congratulate and commiserate afterwards. Aside from the offshore free-riders, the other obvious area of upside is to have one exotic bet type per week where the pool can grow to an enormous scale. Pick 6 never really gets big enough to draw in people who typically only bet once a year on the Melbourne Cup but an occasional $2-3m pot accompanied by lots of Friday advertising surely would. The tiny chance to change your life is why Lotto is so successful. Racing simply doesn't offer that. This has been very successful in France, whose racing model we should copy/paste. The move to have First 4 on an ever increasing number of races is idiotic. It simply lessens the trifecta pool and doesn't pay a big enough divvy to draw in new punters.

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The move to have First 4 on an ever increasing number of races is idiotic. It simply lessens the trifecta pool and doesn't pay a big enough divvy to draw in new punters.

I agree, increase...

I rarely bother with either Trifectas or First Fours ... because I like throwing in a few roughies into my combinations.

In the old days that would mean that once in a while my bet would actually take out the entire pool on a First-Second-Any basis.

Hell, one Auckland Cup Carnival (the Boxing Day/New Year ones: not the March abortion they lob at you now) I actually picked up the entire pool in an on-course double simply by being the only person to have included the (admittedly-very-long-priced) Leg One winner...

Percentage betting and falling-into-line with Australia now means that those days are long gone and you now get divvies like:

Win $40

Place $8

Place $4

Place $10

Quinella $200

Trifecta $350 ($10,000 carried forward)

First Four $500 ($5,000 carried forward)

Not for me...

And when this latest 'novel' bet fails - as it will - what will be next? First Five?

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The move to have First 4 on an ever increasing number of races is idiotic. It simply lessens the trifecta pool and doesn't pay a big enough divvy to draw in new punters.

Totally agree-Why can the TAB not see this?

The end result will be decreased turnover as punters are turned off both types of betting as they will not risk a big outlay on a small pool.

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Leggy Taking money from the high income producers and giving it to the low is a socialist model which wont advance the game.

But 5k stakes provide an imperative that the horse needs to progress to Saturday racing stakes and win something at that or it will be culled pretty smartly.

There is another negative in that the later maturing types will be not be carried and we degrade our product with speedy squibs rather than gutsy durable middle distance and staying horses.

5k stakes will definitely cause loss of product and attrition of clubs that cant ante up. I predict a reduction in the number of races as a further outcome.

Increase talks about a new exotic betting product and that may be a salvation of stakes. Unless the TAB can get really creative with a new product/s its hard to see a rise in wagering with the "same old"

I am waiting for the naysayers and manic depressives to climb into NZTR over this new plan. What does it signify that they havent so far?

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Totally agree-Why can the TAB not see this?

The end result will be decreased turnover as punters are turned off both types of betting as they will not risk a big outlay on a small pool.

i have and never will bet on a first 4.

Need a large million plus return that can be followed over a day or weeks if not struck.

Suspense and excitement needs to be generated not something like a first 4 that involves an unlimited amount of luck and is over in a blink.Leave that to the greyhounds suits there format of racing.

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is the statement reduce the minimum to increase the top (stakes)

Cant these fools understand without a base there wont be a top.

How are you supposed to attract new clients when you win a mid week maiden and the buzz of actually winning fades and the winning owners realise no winning purse is coming their way as the paltry stake is sucked up by the ever escalating costs of racing a horse in NZ.

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is the statement reduce the minimum to increase the top (stakes)

Cant these fools understand without a base there wont be a top.

How are you supposed to attract new clients when you win a mid week maiden and the buzz of actually winning fades and the winning owners realise no winning purse is coming their way as the paltry stake is sucked up by the ever escalating costs of racing a horse in NZ.

Agree completely.

Neil's earlier comment about a 'socialist model' has validity, but the balance of the higher-staked races has been alluded to here before.

It makes little difference either to the owners, or to the quality of the field, if a stake is, say, 250k or 200k. The same horses will be mustered regardless.

If one is lucky enough to have a horse competing at that level, it is still bloody nice to get a slice of it. There is then the option to pursue better prizes in Aus. or Singapore if desired.

Dropping the base, however, will simply mean fewer can afford to develop said quality horse.

Good point also, Neil, about the selection of the speedy 'squib' as opposed to the slower-developing staying horse that we were, once, renowned for.

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There's no point in having $1m+ stakes for the very top races - our small betting population simply can't contribute the extra turnover to make them pay their way. When overseas horses are attracted, I suspect a lot of the extra turnover goes to the offshore free-riders who can always offer better odds because they don't have to pay the industry a bean. In fact, if you look at overseas horses that do come here, just as many are attracted by the chance to get potentially easier black-type than the prize money itself. Look at the NZ Thoroughbred Breeders Stakes. Rather than blow prize-money on egotistical $1m races, I think it's really important not to let G1 $ slip below the $200k minimum and G2 below the $85-$100k area. Otherwise, more and more of the best horses will leave these shores and we will lose more and more of these races as they can't justify their ratings. How does a $500k Kelt or Auckland Cup differ from one that's $1-2m as an event? However, if we start dropping the "lesser" G1 races down to $100-150k, they won't stay G1 races for very long.

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Le Filou (great sire) what they mean is the minimum for top end stakes eg Group 1-2-3 remains unchanged. So the Kelt that was will be the minimum + whatever premium added by whatever means.

Freda, You know I have a good share of a top horse. I also have a share of a three win R74 horse. Next year he will cost $262.50 to run in a 15k R80 race. I think he had 11 or 12 starts this season.

Having said that no way would I be keen at revisiting the 5k maiden scene again. Acutely aware of how tough this is on owners and you industry service people.

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Leggy If you are subscribed to NZTR News they come out with last years annualised figures each month.

The salient figures are the T/O per runner running at +1.3% for a while now. Not bad

The other figure number of runners has been running at -3.6% for a while but this month went to -3.8% Product loss!

The current funding model allows for a more market approach. The stakes level set are a minimum and there is nothing to stop clubs from upping those. If they do they will get product at the expense of a club that doesnt.

Thus there is more onus on the clubs to run their venture well. At the same time they need to enhance the Owner experience and view owners as a resource rather than an expense.

Best wishes to Awapuni on their Owners Day meeting today

That would be great if NZTR had not emptyed our coffers and given to you very needy corperate lovers in the Big succecful City clubs with no debt .:tcheek:

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That would be great if NZTR had not emptyed our coffers and given to you very needy corperate lovers in the Big succecful City clubs with no debt .:tcheek:

Hey Geoffrey back up there. I am not a so called corporate lover. I have paddled my own canoe for ever. I am really happy to live and race in the metro areas because thats where the better money is. But I am an honorary member of a non metro club because thats where the heart is.

Incidentally the country boys have run there affairs more conservatively and successfully than their city slicker counterparts imo.

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Wasting energy arguing about how to divide a slowly diminishing cake between city and country clubs isn't going to solve anything. The cake simply has to be grown. In terms of getting the incentives for clubs in the right place, next season's funding policy makes sense but I doubt it's not going to make a huge difference in itself. Making offshore free-riders pay for NZ product would be one key step forward and the other thing to think about is that the TAB does have one huge competitive advantage - nationwide retail reach. The problem is it lacks the right product to reach out and make use of this competitive advantage. A hard to win exotic bet that can jackpot to multi-million $$ would draw in all those occasional punters that the industry has lost under the onslaught of Lotto, pokies, scratchies and casinos. A third area to think about is there seems a surprisingly low turnout of Asian punters at Ellerslie relative to what you see at the casino. I know the ARC had a hugely successful Chinese day several years ago but there's no evidence of an ongoing attempt to appeal to this key group.

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It's a bit hard to work this out without seeing the exact implications in terms of figures.

However, the positives would seem to be that upper level stakes will hold]

I agree your view re sustainability is the more realistic one.

Experience has taught me that for any organisation or group to make progress it has to build and strive to maintain a strong base. Politics is a good example. Any party that loses its essential base is soon consigned to history. In NZ, Social Credit, Values, and NZ First come to mind.

With racing, the broader and stronger the base, the higher the top it can support. Because racing is very much pyramid shaped.

One can't build a pyramid from the top down - it can only be done by starting at the bottom with a solid platform of satisfied participants and building upwards.

Thoroughbred racing had a strong base, until the major and controversial funding changes of 1 August 1997.

Since that date, however, the base clubs and their thousands of raceday owners have been the victim of an unscrupulous system which deliberately siphons off a substantial and vitally important part of the profits their racemeetings have generated through off-course betting.

The amounts siphoned off have increased over the years and are currently well in excess of $3 millions per year. This $3m+ is on top of the $4.6 millions already contributed by all clubs to subsidise Group and Listed Race prizemoney.

From official figures for 2007/08 it can be calculated that Avondale JC had the biggest amount siphoned away out of its earnings, namely $344,503 over the season. And Avondale has now had to state publicly that it can no longer continue to operate under that burden. Other clubs are at or approaching the same point, bringing the risk of a major breakdown in the code's affairs.

Whether the people responsible at NZTR Inc can be persuaded to stop their discriminatory and cheating practices, and go back to treating all their member clubs and stakeholders FAIRLY, remains to be seen.

On a per-raceday basis the hardest hit clubs in the North Island were Waipukurau JC at $64,286 underpaid (or $6,000 and a bit per race), South Waikato RC at $51,437, and Stratford RC at $49,969 or almost $5,000 per race.

In the SI the most badly affected were Waikouaiti RC at $48,500, Reefton JC at $34,899, and Banks Peninsula RC at $33,955.

The siphoning off process happens because the chairman and enough of his colleagues who control the NZTR Board decided a few years ago to pay 'industry' days - such as the 6 examples quoted above - only a certain set amount of funding from the off-course betting profits. NZTR made a fuss of guaranteeing payment of that set amount in the event that the club might have an exceptionally low off-course turnover for any reason.

WHAT THEY DIDN't EXPLAIN TO THE AFFECTED CLUBS was that the sum 'guaranteed', and indeed paid, was, with almost no exceptions, FAR below the sum the clubs were actually generating through their off-course betting. For 2007/08 the amount paid to a club under the guarantee system was fully covered if the club generated only some $700,000 of off-course turnover.

In the 6 examples above, the average off-course betting generated was $1,161,000 for the three NI clubs, and $1,066,000 for the three SI clubs.

This means all the available profits on an average $461,000 of betting at the NI clubs were siphoned away. The available profit rate for 2007/08, after first providing for some $4.61 millions of Group and Listed subsidies, was very close to 12.3%.

And 12.3% on $461,000 average for each of the three NI clubs amounts to some $56,000 per raceday, which lines up closely with the figures of $64,286, $51,437, and $49,669 referred to above.

This iniquitous system looks very much like theft or stealing. I think most racehorse owners, most racing clubs, and most racing stakeholders generally would dislike and resent being a victim of theft.

If the processes used by the Board of NZTR in the way described are indeed theft or stealing, then that would put the overpaid clubs and their raceday owners into the position of being receivers of stolen property.

NZTR's announcement of 18 June regarding funding for 2010-2011 seems to contain little or nothing to suggest it will cease the existing unjust, discriminatory and dishonest practices - and might even worsen them.

The New Zealand Racing Board has ample powers, and indeed a duty, under the Racing Act to force the NZTR Board to resume dealing fairly with each and every one of its member clubs.

The Minister for Racing also has ample powers to do likewise.

As a final resort so does the Court. The Court of Appeal heard a case a couple of years ago involving an Incorporated Society, just like NZTR Incorporated, and reminded the litigants that the Officers of Incorporated Societies have a duty at law to treat all their Society's members FAIRLY.

If the people in charge at NZTR Inc continue to thumb their noses at the Court of Appeal they may well be required to face the consequences.

PS. If a fair and equitable funding model resulted in some horses being sent overseas to race, so be it.

That would merely add a few to the hundreds already sold to overseas owners from yearling sales or after winning a race or races here.

Racing horses is a sport, a hobby, an interest, and most activities of this nature DO COST MONEY.

Any owner who would get the pip if cut off from the receipt of ill-gotten gains shows a lack of sportsmanship, a lack of character, and little loyalty to New Zealand Racing.

PPS. There is now some good debate on Racecafe about some of these crucially important matters, and I for one sincerely hope it will continue and develop.

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