The Optimist

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http://www.theoptimist.co.nz/

Manure will hit the fan in two weeks!

by Brian de Lore
Published 13 June 2019

We all should know what happens when manure hits a fan? The euphemistic definition goes something like this: ‘an action takes place bringing about a number of undesirable consequences;’ or if you prefer, ‘you reach the point at which an already unstable situation devolves into utter chaos.’

Another definition says, ‘a riot takes place, and it’s the best way to solve problems.’ The Optimist prefers the latter, but the racing industry has hardly been through times of riot. Quite the opposite, racing has been a benign whinger for many-a-year with little or no organised action other than individual complainants like myself who wield no power but can only provoke thought.

All things considered, we are a manure of an industry. Manure because that’s what horses produce and manure because that’s the level of effort the racing industry has made to get itself organised and demand a better deal for itself – it still hasn’t happened.

In this blog last week I quoted our now Minister Winston Peters from a 35-minute phone chat I had with him in 2017, 22 months ago, when he was on the campaign trail. It was one of our first phone calls, and much of the conversation hasn’t been written – but there comes a time.

That time is now. And while NZRB is endemically ravaged with denialism, the disease seems to have been contained to Petone. The Dept of Agriculture must have got in quick, thinking we had received another Queensland fruit-fly via NZ-Post and erected a ring fence.

When I complained bitterly to Peters that day about the direction NZRB CEO John Allen was taking the racing industry, and questioned why a person of his background was ever appointed to run racing, the NZ-First leader didn’t hold back.

“John Allen came from the Post Office (NZ-Post), and we all know what happened there, and then he went to Foreign Affairs (MFAT),” said Peters, “and 42 diplomats signed a paper against him, and then he ends up heading the racing industry, and I’m sitting there thinking ‘what on earth is wrong with the racing industry.’

“He comes along and treats racing as a motivational exercise and thinks the industry needs some motivation, and the industry doesn’t need that – they need someone who knows what the hell he’s talking about.

“The first thing you need is someone who knows one end of the horse from the other. Employing people on $900,000 a year (probably a reference to what the NZ-Post CEO is paid) is just ridiculous. Racing has suffered from a lack of leadership – at the top. But the CEO is only symptomatic of the problem; start with the people that appointed him – you have to get rid of them.”

Nearly two years later, we still haven’t got rid of those people – they have two weeks left to run – the board of NZRB. The industry is incredulous they have been allowed to survive for so long, but when Peters became Minister 18 months ago he chose to deal with the racing problem in a slower bureaucratic fashion than was recommended in the Messara Report; probably on advice to achieve the best long-term result.

A year ago while Messara was in the middle of compiling his report, and all but one member of the NZRB board was due for replacement in July 2018, it was leaked to The Optimist that CEO Allen successfully negotiated a new three-year extension to his employment contract.

If the board thought they were about to go, and they agreed to keep Allen in racing for a further three years just as they were expecting to depart, would that not be deemed a breach of their fiduciary duty, or more plainly an irresponsible act of governance, not just to an incoming board, but for all stakeholders.

It should be stressed, however, this information comes from a third party and is unlikely to be confirmed by either Allen or NZRB. So it can only be described as a rumour; albeit a strong rumour from a good source – RITA will find out soon enough when the manure hits the fan.

That was a year ago, so if correct, he will still have two years still to run on his contract. At recent Industry Conversation Meetings, Allen has been openly stating he isn’t going anywhere, is looking forward to RITA and will be in the job for some time.

But logic tells you that simply cannot be an option. When RITA steps into the breach on July 1^st how can they keep on a CEO on who has belligerently defied industry opinion, is running a TAB which to all intents and purposes is broke, has built a $50 million FOB (Fixed Odds Betting platform) against all industry advice except his own executive team which has failed in the six months since launch, has failed to deliver on other strategic initiatives, and is unapologetically continuing to lie to the industry.

The TAB is at an all-time low, including the morale of employees. It has been limiting the amount the bigger punters are allowed to win; they are the elite customers who might be good punters and are a chance to win. A source from inside revealed the TAB is desperate – in panic mode after reputedly losing big-time on the Ruiz-Joshua fight. Ruiz was around 8 to one.

The source who is always accurate said the TAB had had a knee-jerk reaction across the whole business without consultation. Even retail outlets are cutting bets and are alienating loyal customers.

Anyone who has run a successful business knows it takes a certain amount of good will towards your customers to retain them. The TAB in New Zealand has displayed no goodwill in a decade or more, perhaps since outsiders took control after the Racing Act of 2003 came into being. The TAB is a disgrace, but it all changes on July 1^st.

Is it any wonder thousands of New Zealanders are now betting directly with corporates in Australia. That’s why the New Zealand industry will benefit so much from the POC (Point of Consumption) levy which will give our industry a big kick-back, and that’s why the legislation (Racing Reform Bill No.1) which is about to get its second reading as I write this, is so important for the future of the industry.

MAC will become RITA on July 1^st, and that Board will be focused on revenue for the industry. The Minister will have done the first half of his job, and the road for maximum funding will open up for collection by RITA while putting the Messara Report into operation in an attempt to save every part of the industry which hasn’t been damaged beyond repair.

RITA Chair Dean McKenzie stopped talking to The Optimist a couple of weeks ago and won’t do so now until July.  Complaints have been to no avail, but McKenzie is shutting up shop on communication because July 1^stwill come around quickly, and a super-plan of engagement will commence.

No alternative exists. The Optimist predicts McKenzie will be appointed Executive Chairman of RITA and take over the day to day running of the TAB, and Allen will be sidelined in the first instance and placed on gardening leave to be available to answer questions about all the chaos he has caused over the past four and a half years. This is the end of the road for Allen – make no mistake.

In two weeks and one day, MAC’s final report will be delivered to the Minister. Peters has repeatedly said he has complete faith in the MAC which becomes RITA with the addition of one more, and possibly a seventh member when the skill-set for that person they are seeking is found.

Swift action will be required by RITA to turn this industry around. July is going to be a very compelling month for participants. We know that MAC has been working plenty of overtime; RITA is unlikely to get any respite.

 

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I'm rather surprised at Winston Peters appointing stalwarts from the Fay Richwhite winebox saga. Both Vela and Birnie are closely linked to Michael Fay. One has to wonder if that grouping could have their own agenda. Certainly with Vela having a monopoly business in the industry it would appear there is an obvious conflict of interest.  The RITA group does seem an odd mixture.

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You can’t simply turn this industry into a profitable entity by firing the administrative team..

It would be a good start to achieving some liability recovery in expenses.