‘Making racing great again’
Winston Peters has borrowed a Donald Trump slogan to inspire the struggling racing industry as he declared ‘‘we are going to make racing great again’’.
The Minister for Racing has urged the industry to stop squabbling and work together as he pledged a much-needed $72.5 million emergency support package for an industry that was facing ‘‘an unprecedented threat’’ to its survival.
Such is the desperate state of the industry, Peters revealed RITA (Racing Industry Transition Agency) – which has been widely tipped as being on the brink of insolvency for some time – would have defaulted on financial commitments by Friday this week.
RITA, a reconstitution of the New Zealand Racing Board, pays out to the three racing codes to fund stakes and racing clubs from TAB profits.
If the Government let RITA fall over, the $1.6 billion racing industry would effectively go with it.
‘‘RITA’s lenders also advised that they could no longer extend credit. It means RITA has faced the risk of defaulting on a supplier line of commitments by this Friday,’’ Peters said at his prebudget announcement yesterday.
He claimed RITA was on the brink of a financial crisis due to a perfect storm of the Covid-19 pandemic coming on top of the industry already struggling financially.
‘‘It’s well documented that the racing industry has experienced several years of financial underperformance,’’ Peters said.
‘‘There’s been a dramatic plunge in revenue as costs have remained fixed and the bills have been backing up,’’ Peters said.
But industry insiders argue much of the financial crisis was already in existence long before Covid-19 due to inflated costs at head office and gross mismanagement for more than a decade.
Of the $72.5m, $50m will provide direct relief for RITA – $26m of which will be directed to supplier commitments, $20m (from the Provincial Growth Fund) will go towards two new synthetic tracks which will be constructed at Awapuni in the Manawatu and Riccarton Park in Christchurch and $2.5m will be set aside for the Department of Internal Affairs to fast track work on the online gambling revenue, and address loss of revenue impacts on community and sports groups. Not included in the $20m is the construction of a synthetic track in Cambridge that is already under way after receiving $6.5m from the Provincial Growth Fund.
RITA will pump its remaining $24m into allowing all three racing codes to maintain a baseline functionality and to resume racing activities which will add confidence towards stakes level for the new racing season that begins on August 1.
However, it has been suggested in multiple media reports that RITA has debts of $45m and if accurate, still places the over-arching racing body in a precarious financial position.
RITA has been approached for clarification of those figures.
Peters acknowledged the hard work was just beginning for an industry that has been ‘‘at genuine risk of insolvency’’ but said: ‘‘In the long term, if we get all the steps correct, there’s no reason why racing in this country can not be a world-class industry, stronger than ever.
‘‘We are going to make racing great again.’’
Treasury engaged Price Waterhouse Coopers (PWC) to provide a financial assessment of RITA, which revealed: ‘‘RITA has very weak equity positions to contend with’’.
The analysis suggested the immediate Government grant was the most effective means to prevent default.
It also advised close consideration should be given to recapitalising RITA and Peters said work would proceed on that over the next three months.
Government plans were for the industry to rebuild where it could provide value to the New Zealand economy but that would need serious reform from the industry itself, Peters said.
He claimed synthetic tracks would save the industry ‘‘many millions of dollars’’ by preventing cancellations of race meetings.
In 2018 alone, 32 race meetings were either part of fully cancelled due to extreme weather or unsafe surfaces.
‘‘Synthetic tracks offer consistency and reliability. We not only want to save the industry we want to have viable assets for the future.’’
With fewer race meetings likely to be scheduled in the coming seasons and the looming arrival of the three synthetic tracks, the future of many smaller provincial tracks will once again be under threat.
The Government has also fasttracked a programme of work to identify how to regulate the overseas and online betting sector.
‘‘If there’s going to be gambling by New Zealanders then it’s our country that will benefit, not another,’’ Peters said.
Many major punters in New Zealand favour overseas bookmakers over the TAB.
Peters said that would allow for gambling harm minimisation to be better addressed and ‘‘make sure our communities benefit’’.