Board forecast awry, reserves plundered

08:29 PM 17 Aug 2014 NZST
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Chris Bayliss
Chris Bayliss, recently left the board suddenly in mysterious circumstances

Alarm bells have started ringing for racing industry stakeholders after revelations that projected returns from the New Zealand Racing Board are likely to be well down on those forecasted for the next few years.

In an address to the annual meeting of clubs in Christchurch, chairman Gary Allen said Harness Racing New Zealand had just received "an amended statement of corporate intent" from the NZRB which signalled there would be limited growth in funding for the next three years.

And he revealed that HRNZ would have to use $1 million of its $2.5m reserve fund this season to just maintain its present stake levels, which are already so low that trainers are struggling to keep their owners.

Allen said the board was aware of the financial pressures facing the industry and the need to at least maintain returns, but he warned that without extra funding, it would not be sustainable in future seasons.

The announcement came as a shock after the NZRB had signalled in its 2013 annual report that its strategic five-year goal was to increase its surplus from $142m to between $160m and $180m.

Chief executive Chris Bayliss, who recently left the board suddenly in mysterious circumstances, had said the board aimed to grow stakes by 50 per cent in five years, generate 30 per cent more turnover from new markets and products and reduce the cost-to-income ratio to below 30 per cent.

But all that now seems pie-in-the-sky and Allen said the NZRB statement "was not good enough".

"Some increases must be provided in years two and three to at least enable the industry to match CPI and inflationary pressures," Allen said.

Apart from continuing to explore additional revenues it was incumbent on the NZRB, as well as the codes and clubs, to find efficiencies to reduce costs, he said.

Returns to stakeholders had to be increased - "we cannot continue to rely on the goodwill and passion of our industry participants."

Allen said because the funding level this season was only consistent with last season, HRNZ was not in a position to increase the minimum stake level of $5000.

"We have asked clubs to increase stakes where they can, and many have, but it's not easy to direct clubs to take action when they can't afford it.

"Maintaining confidence at the lower levels is crucial to maintaining interest in the industry long-term as the costs for owners are the same whether they have a champion or a battling maiden."

Allen said despite the challenging environment, the industry had recorded some very positive results in the last season.

Feedback he'd received from the last annual conference was that he had been overly positive - "one delegate even went so far as to state I must have been on the ‘wacky backy'.

"But the optimism I conveyed last year was not misplaced.

"We have run more races [up 50 to 2795], used the horse population better [total starts up 1092 to 29,635], grown our total turnover base [up $4.863m] and market share [up from 29.3 per cent to 29.7 per cent] and increased stakes [by 4.57 per cent to $29.8m].

"I believe we can look forward to the future with cautious optimism, however, the challenges facing the industry are considerable.

"They will not be overcome without some pain and decisions in the future that will not please everyone.

"Over the years the industry has become averse to change, however, we must be prepared to better embrace change if we are to go forward. We will need to set aside self interest and make some hard decisions for the long term sustainability of the industry."

Allen said a new structure of premier racing for the new season would see the number of meetings reduced from 17 to 15 but the minimum stakes raised to $20,000.

"These meetings will stand out significantly from other meetings and attract greater attention of the racing public."

Courtesy of Barry Lichter and the Sunday Star Times

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