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John Clydesdale

Where to invest capital?

26 posts in this topic

I will play the devil’s advocate in the challenge of where to put the investment!

My experience in business is that you present your product to the largest possible market. Sell in a manner that invites participation and maximise consumption, then you will be rewarded with the sales will develop and improve the product you offer. The market grows and develops further because it becomes an organic process. More people want the product.

My thoughts are governed by a sport and industry future that is based on maturing new consumers, syndication members, players from off shore, owners now living in NZ from a variety of original homes in the East, but delivering a product to the biggest market available. To me, the lay down misere, to use the betting colloquialism, is to invest the capital for a regular all year round track at Ellerslie.

Why???

The bulk of future owners in the North live there. Whatever their origination, they will live in Auckland! Majority of participants in our industry are using disposable money, not those of yesteryear when the obligatory participation by farmers was a rule of thumb. Today, the younger generation of farmers don’t have a broodmare in the back paddock. The majority of investors today are successful business people, members of syndicates, stud owners, breeders, or those that have the passion that has become an obsession yet to be classified as warranting an ascribed health budget.

We, as an industry have to understand the market of today and the future. The market is fierce for the betting dollar, the centre is Auckland and if the political pundits can get their head around it, that is where the investment should take place. 

Cambridge or Matamata or Hamilton are not the answer. Too far away from the population base. Examples exist everywhere, Fuchu in Tokyo, Chantilly in Paris, Belmont in the US, Randwick in Sydney, Flemington in Melbourne, don’t do a Stiassny and try an reinvent the wheel. The market is the market, the population base. 6.5% of NZ are racing bettors...........what is the betting percentage of Auckland, probably 12-15%.

17% of Auckland are from a betting culture, most successful syndication investments come from those that have some spare cash, the majority of owners will be based in the Auckland wider area, put the capital investment there. Ellerslie is the spot.

The challenge.........sort out the management of the company, then focus on the market. Heard of Fletchers.....try the Racing Board!!!!!!!

 

Just my devilish opinion 

 

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2 hours ago, John Clydesdale said:

I will play the devil’s advocate in the challenge of where to put the investment!

 

I take it this is the breakdown of what your asking?

1 where should the Placement Of All-weather Track be

2 where to invest thereby increasing Syndication of race horse ownership

3 where to invest to increase and attract more punters

 

i think there is a fourth question that needs to be asked

4 How to increase sponsorship of Races

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My concern is Ellerslie can’t get the public on course now . Also as P4P has stated they are in a position to pay for their own all weather track.So great idea  take your ideas to the ARC and see if they will dip into their OWN pocket.

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Guest 2Admin2

I don't believe Ellerslie as it currently stands can topographically accommodate an All Weather Track.  Substantial earth works will be required to give the track a level attitude.  My understanding is that that level attitude is fundamental to providing a consistent surface.  The extent of such work would be cost prohibitive.  Avondale would be easier.

In any event any investment should be made where the horse population is.  On course turnover is inconsequential when compared to off course.

Moth ball Ellerslie to have only the Karaka Millions and its ICONIC days.  That's about all the track can handle.

Anyway if you do the numbers an AWT will be another Winnie folly.

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Devilish or not John you are challenging some perceived truths about an all weather track location.

Before a project like this commences it is critical any conventional wisdom is shaken about to see if it actually stands up to scrutiny.

Giving up on on course attendance (and the flow on benefits it brings in terms of interest in the industry/ownership/punting) seems fraught with danger to me. 

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7 minutes ago, hesi said:

Justy adding in a couple more 

You must have a good product with a competitive advantage.  A Strathayr track, is the same as many around the world, and with so much wagering, internet based, would provide surety and consistency of product.  Next problem, improving the field quality side of providing a good product.

Out of stock situations are a big no no, and meeting abandonments are effectively OOS situations, the customer will just look elsewhere, and if they like what they find, you may just lose them

I notice John Allen rubbing shoulders with the glitterati last night at the Halbergs, second table from the front, sitting next to John Hart's wife

Strathyr tracks are not immune to abandonments.  The recent spate of abandonments haven't affected turnover - race meetings and race numbers are UP on last year subsequently turnover is on par with last year.  NZTR are still well within budget on abandonments and indeed they need them or they will have to go to NZRB cap in hand for more stakes probably from pokies to get through the year.

The biggest issue is indeed Out of Stock situations - not enough horse numbers!  There have been 232 races this season with less than 8 runners - an increase of 52 or nearly 30%.  That has a far bigger impact than the abandonment of a small number of race meetings.

If a new AWT is built at a location that now currently doesn't have race meetings then race meetings and races will have to be transferred from existing clubs - an AWT will swallow up all the race meetings from a very large catchment.  There aren't enough horses lining up to justify additional meetings.  The depth of the problem is evident in the sales numbers which in 2 years are down over 200.  Easy to keep up medians and aggregates when overseas demand is the highest it has ever been and supply is insufficient.

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Check numbers of horses trialing and revert with the year on year data please.

My hunch is that we have enough horses to sustain current racing, but because so many members of the Racing community have been forced into a below the poverty line subsistence existence they now have to trial and sell everything to survive, and I mean everything.

Once they race these horses they’re devalued enormously, unless they win of course, hence we’re seeing more trialing and less racing.

Just a hunch, please prove me wrong.

Meantime the Petone pies and Pinot supplier has thrived.

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7 minutes ago, poundforpound said:

Check numbers of horses trialing and revert with the year on year data please.

My hunch is that we have enough horses to sustain current racing, but because so many members of the Racing community have been forced into a below the poverty line subsistence existence they now have to trial and sell everything to survive, and I mean everything.

Once they race these horses they’re devalued enormously, unless they win of course, hence we’re seeing more trialing and less racing.

Just a hunch, please prove me wrong.

Meantime the Petone pies and Pinot supplier has thrived.

I'll check but those figures are not readily available.  Your hunch may be right however breeding numbers are down as are sale numbers.  My hunch is that the % participation of horses bred that race hasn't changed that much.  Leggy might have information on that.

The other factors you keep alluding to, for example the flawed (corrupt?)  handicapping system are things that can be changed quickly without building big new tracks.  To do the latter without the former can only mean one thing the closing down of other race tracks to fill race meetings at a central location.  In my opinion it would be lunacy to do that without fixing the fundamental issues that are causing the decline in revenue returned to the industry - flawed handicapping, flawed tiered stakes structure, noncompetitive betting product (high takeout rates), high wasteful cost structure (pinot, corporate tables, junkets overseas....).

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13 minutes ago, poundforpound said:

Check numbers of horses trialing and revert with the year on year data please.

My hunch is that we have enough horses to sustain current racing, but because so many members of the Racing community have been forced into a below the poverty line subsistence existence they now have to trial and sell everything to survive, and I mean everything.

Once they race these horses they’re devalued enormously, unless they win of course, hence we’re seeing more trialing and less racing.

Just a hunch, please prove me wrong.

Meantime the Petone pies and Pinot supplier has thrived.

Unfortunately P4P you’re on the money, so to speak. And that conundrum contributes to the situation NZ racing finds itself in.  With many of our good, young stock going overseas, particularly to Asia, the impact of this obsession with trialling/trading now sees us with indifferent fields gracing our tracks every Raceday.  This impacts on punters investing. The pool of racehorses is constantly changing leaving punters, at face value, little incentive to bet. As in a supermarket, you buy what you know...and if you don’t know the horses, you won’t have a bet, at least a significant bet. 

Therefore the industry trialling/trading obsession, (through circumstance or greed) has actually impacted on itself. If Punters  don’t invest how are you going to sustain/fund the industry? Don’t think Jazinda is going to stump up...barefoot kids will get the money before us (& rightly so) because this is a mess of the industry’s own making

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5 minutes ago, Nerula said:

Those rises in the Ellerslie track are caused by live basalt underneath. The only drainage you would get would be lateral. Might be problematic putting an AWT over that.

That's what I thought.  Avondale would be better.

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Be careful what you ask for.  

If we use HKJC Happy Valley course as an example they have 38 scheduled race meetings a year.  That is over 12% of NZ's total race meetings on one track.  NZ had just over 300 race meetings 2016-17 season.

If the stakes pool is limited (which it is) where do the race meetings come from to fully utilise a Strathyr type track?  

For arguments sake lets say that under New Zealand conditions we can sustain 30 meetings a year on the new track - where do the race meetings get transferred from?  Te Rapa has 17 - how many will they give up?  Or will they cash up and move there?  If so they should pay for the track.  Even if they did move there would still have to be 12 or more race meetings transferred from somewhere else.  Which clubs will give up their dates?

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1 hour ago, 2Admin2 said:

Be careful what you ask for.  

If we use HKJC Happy Valley course as an example they have 38 scheduled race meetings a year.  That is over 12% of NZ's total race meetings on one track.  NZ had just over 300 race meetings 2016-17 season.

If the stakes pool is limited (which it is) where do the race meetings come from to fully utilise a Strathyr type track?  

For arguments sake lets say that under New Zealand conditions we can sustain 30 meetings a year on the new track - where do the race meetings get transferred from?  Te Rapa has 17 - how many will they give up?  Or will they cash up and move there?  If so they should pay for the track.  Even if they did move there would still have to be 12 or more race meetings transferred from somewhere else.  Which clubs will give up their dates?

The clubs which are no longer financially viable give up these dates as they close down.  I am sure 5-10 have been earmarked already.  Sounds like a huge benefit of the synthetic track,  the ability to close down these tracks.

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Well I think the all weather should be in Matamata. Reasons

They are the biggest trainig centre in the Waikato but not sure about how many train in Cambridge

They have done a fair bit of ground work about putting in an all weather a few years ago

As far as location for other course if abandoned meeting there is an hour to Rotorua, 45 minutes to Tauranga, 30 minutes to Te Aroha which of all these clubs including Matamata race through the winter anyway. When you think about it it is really the winter months is wherethe majority of cancellations occur. Te Rapa doesnt have alot of winter meetings but their structure of their tack is in good order. Cambridge doesnt race so why go there. There track is a tight turning track anyway. Elleslie is not in the Waikato buy they are closing to spend a reasonable amount to up grade their track in the next few month so then if you turn around and put an all weather in there then money spend on the up grade would have just been wasted. 

Elleslie and Te Rapa have got a bigger pull of people but if you look at their industry days they get very few compaired to some of the other clubs I have mentioned. If you take into account the travel time form the 4 clubs to either Ellseslie or Waikato that just adds a lot extra cost to the owners once again. An hour is nothing compared to say 3hrs from Rotorua to Ellselie. 

I dont think centralisation is the key because in the bigger areas there is alot more on offer so people choose what they want to do. In the smalller areas there isnt so much choice. Ifyou look at Matamata Breeders Day and Te Arohas Breeders day they get a huge amount of people on course. Also look at Taupo at Xmas time once again there was a huge crowd. 

The more accesible without huge travel the all weather is the better for all involved in the industty I reckon anyway

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The AWT would be best built on the new SH1 over the river from Horitui or a bit north of that near the intersection of SH 26. It would need dedicated boxes and accommodation so outside trainers race a winter season like California in the States. The meetings run every 2 weeks. Avondale and Pukepark do the alternates with Ruakaka bookending the season. Leave the jumps at Ellerslie and Te Aroha. That cuts workers fatigue and Owners cost.

 

Something has to go to pay for racings contribution. Te Rapa?

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17 minutes ago, Nerula said:

The AWT would be best built on the new SH1 over the river from Horitui or a bit north of that near the intersection of SH 26. It would need dedicated boxes and accommodation so outside trainers race a winter season like California in the States. The meetings run every 2 weeks. Avondale and Pukepark do the alternates with Ruakaka bookending the season. Leave the jumps at Ellerslie and Te Aroha. That cuts workers fatigue and Owners cost.

 

Something has to go to pay for racings contribution. Te Rapa?

There are many tracks which should go before Te Rapa.  Namely Avondale, Te Aroha, Thames, Te Awamutu, 

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1 hour ago, Gofta said:

There are many tracks which should go before Te Rapa.  Namely Avondale, Te Aroha, Thames, Te Awamutu, 

Avondale is the odd one out there.

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While I agree with the basis of John's thinking I do not think the answer is automatically Ellerslie. As army above says, the bigger the city the more options for leisure activity there is.

I think the answer is to find ways of getting more betting from offshore and keeping the profit from it. I do not understand all the issues around this to give a definite answer on how to do it but that has to be the ultimate goal. NZ's population is far too small to rely it it alone.

I was on a plane recently returning from Asia and got talking to an Aussie guy who lives in Sihanoukville ( southern Cambodia ). He told me that in the last 3-4 years the Chinese have built 57 casinos there and the Cambodian government has just issued 100 more licences. He reckoned they would all be built within 4-5 years giving a total of 157 which is apparently more than in Macau. There are going to have to be hundreds of thousands of Chinese/Asian gamblers visiting to keep that afloat ( assuming it survives). How do you get quite a few of them in front of large TV screens punting on NZ races via a NZ operated betting system ? If it can be done then John's comments about quality product etc. come well and truly into play.

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I presume the casinos are for tourists because Cambodia is a very poor country.

Never been there myself but a friend of mine spent 2 years there teaching and writing a thesis on the country for his Masters.

Gotta say i won't be travelling there anytime soon based on what he said although i believe China is spending plenty on infrastructure.

He of course loved it.

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Definitely for tourists crustyngrizzly. Like you I do not know a lot about Cambodia except that it is still recovering from the Pol Pot regime. The Chinese are pouring money in there. One of the very early projects in their massive Belt and Road project was to put an oil pipeline up through Cambodia to Kuming in southern China. Part of the "payoff" for the casino licenses appears to be a 250 km 6-8 lane highway between Sihanoukville and the capital Phnom Penh.  Apparently Sihanoukville  is a bit like Bali 20 -30 years ago.

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I personally would prefer to see a benefit (growth) to the community of where the All weather track becomes established... this should be the guiding light

If growth of a community can be conveyed and seen(vision) then you will have a driving force that will support the endeavour

support and permissions would inevitably have to be sought by the local authorities... find a Region where a supportive local authority exists and the mission might have a chance of establishing itself

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6 hours ago, army said:

Well I think the all weather should be in Matamata. Reasons

They are the biggest trainig centre in the Waikato but not sure about how many train in Cambridge

They have done a fair bit of ground work about putting in an all weather a few years ago

As far as location for other course if abandoned meeting there is an hour to Rotorua, 45 minutes to Tauranga, 30 minutes to Te Aroha which of all these clubs including Matamata race through the winter anyway. When you think about it it is really the winter months is wherethe majority of cancellations occur. Te Rapa doesnt have alot of winter meetings but their structure of their tack is in good order. Cambridge doesnt race so why go there. There track is a tight turning track anyway. Elleslie is not in the Waikato buy they are closing to spend a reasonable amount to up grade their track in the next few month so then if you turn around and put an all weather in there then money spend on the up grade would have just been wasted. 

Elleslie and Te Rapa have got a bigger pull of people but if you look at their industry days they get very few compaired to some of the other clubs I have mentioned. If you take into account the travel time form the 4 clubs to either Ellseslie or Waikato that just adds a lot extra cost to the owners once again. An hour is nothing compared to say 3hrs from Rotorua to Ellselie. 

I dont think centralisation is the key because in the bigger areas there is alot more on offer so people choose what they want to do. In the smalller areas there isnt so much choice. Ifyou look at Matamata Breeders Day and Te Arohas Breeders day they get a huge amount of people on course. Also look at Taupo at Xmas time once again there was a huge crowd. 

The more accesible without huge travel the all weather is the better for all involved in the industty I reckon anyway

I would think most of the cancellations are in the spring/summer period due to the drizzle on hard surfaces not winter tracks. Many owners prefer the winter surfaces which in general terms are safe but a test of both horse and jockey .

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