If the racing industry wants to remain competitive, it must change and become more relevant to a younger customer base.
That's the clear message from New Zealand Racing Board chair Glenda Hughes who says with those changes inevitably come costs.
Hughes said while the year end financials hadn't yet been finalised, the board was being upfront with stakeholders that it would not meet its net profit target and that distribution forecasts would be "steady."
A high New Zealand-Australia currency exchange rate, which has also impacted on SkyCity's results, was partly to blame but higher costs and longer timeframes associated with key projects, such as the mobile app and broadcasting upgrade had also contributed.
"Coming in, I knew the business suffered from historic underinvestment and it was clear to me changes were needed to keep the business competitive," Hughes said.
"Together with the soon-to-be-released new mobile app and an upgrade in core IT services, these investments better position the business to remain relevant to a younger customer base and adapt to a rapid shift to digital channels.
"These projects are not yet delivering the full benefits planned and this has flowed through our forecasts."
But Hughes said good results had started already from these projects such as live race streaming and the transition to SKY which had paved the way for the recently revamped TAB Trackside 1 and Trackside 2 television channels.
Hughes said despite the necessary industry investment for the future, the board would be very focussed on bringing down other costs.
"I see this as a major issue and it's the point that is raised with me more than any other.
"I'll be pushing hard to see focus brought to reducing costs even though it may take some time for them to unwind."
Hughes said this year's Statement of Intent was an honest reflection of where NZRB stood at the moment and the board was taking a more realistic approach.
"It is not where I'd like us to be but our aim is to get the distribution back up to the codes.
"Last year we delivered a record distribution and next year we'll be reviewing the forecasts to ensure we are delivering the best possible distribution."
Hughes said it was nothing unusual to review and update its three year forecasts.
"We do this every year to ensure we accurately reflect the state of the business and our operating environment. A draft has gone to the racing industry for consultation and we will take their feedback into account.
"We will be refining the strategy accordingly. We'll be in a better position to provide an update at our agm later this year."
Hughes said while higher than expected costs had impacted on distribution forecasts for the new season that did not mean the strategic goals unveiled in 2013 may not eventually be achievable.
Meanwhile, Hughes welcomed news that both the Government and Labour had committed to tackling the issue of betting leakage, which was now a major threat to the industry.
It is estimated New Zealanders bet $300 million a year with overseas agencies that isn't subject to levies or taxes, costing the Government $30m in revenue and the codes $35m in profit distribution.
Racing Minister Nathan Guy said betting was now a priority, and his team would work closely with the industry to find practical solutions to the problem after the election.
Racing spokesperson Ross Robertson said Labour would pass legislation to stop offshore betting websites from avoiding tax here.
Courtesy of Barry Lichter and the Sunday Star Times