The Fake News of the NZ First ‘Racing Industry Bill’

At a race day on Friday 6 March the Avondale Treasurer, Tracey Berkahn, caught up with club members attending the races, along with Secretary Bruce Cleland. The Treasurer described to members present what she called the “fake news” about how “industry funding” has supported continued activities by racing clubs, including Avondale JC.

One of the most outrageous elements in the New Zealand First ‘Racing Industry Bill’ is the flawed justification put forward for taking – and retaining in the racing industry – “racing property” and making that value available to the government agencies that want to benefit from racing clubs’ landholdings.

It is widely considered that the key target for expropriation of clubs’ land – using this Bill if enacted – is the Avondale JC venue in inner-city Auckland.

The justification behind this part of New Zealand First’s racing agenda is that industry funding has supported racing clubs operations or capital spending.

The falsity of claims supporting an agenda for confiscation – the fake news – in the modern era regarding Avondale JC (and indeed many other thoroughbred racing clubs in the sight of Rt Hon Winston Peters) is demonstrated by these basic points.

(a) In a free enterprise economy such as New Zealand’s the NZTR funding policy is a mile away from the ethos of businesses – instead of enterprise funding for clubs they are dominated by decisions from centralised governance. Betting levels on Avondale JC’s racing is irrelevant to the club itself and (in effect) the control of thoroughbred racing turnover is with NZTR.

(b) NZTR’s policy that drives racing activity, applying to all racetracks in New Zealand, is a “command model” designed to achieve various outcomes, including that clubs holding weekday events (“industry days”) break-even on those days and generate no income for themselves. For Avondale JC (and many others) commissions for the club from the level of on-course betting are non-existent.

(c) All industry day clubs get the same level of race day funding from NZTR so there can be no argument that some clubs are more of a drain on the industry than others, unless there is additional funding given to struggling clubs that cannot operate within the NZTR rules.

(d) Funding operates in a monopoly environment in which NZTR’s funding of the club is simply part of a “money-go-round”: the bulk of the costs of holding races are passed through the host club by NZTR and industry day clubs have no business interest in betting they generate. It follows that a mechanism for making a profit from racing activities does not exist for Avondale JC.

(e) Avondale JC has not and does not receive racing-related funding additional to the funding policy.

(f) In respect of premier and related meetings – the good quality weekend racing in New Zealand – generally the money made available by NZTR to racing clubs is through commissions on turnover. Clubs running these dates are able to make a profit by getting a percentage, unless infrastructure relating to those clubs events has too high a cost of running.

Avondale JC introduced night racing into New Zealand in 1987, and by its centennial year in 1989 was in financial trouble as a direct result. Ultimately the club’s financial woes were resolved with an industry bailout by an interest-free loan from the New Zealand Racing Board (NZRB). Avondale JC repaid principal at the rate of $150,000 per year and cleared the loan in October 2008. Other clubs got into financial difficulties in the 1990s and a number had industry debt forgiven by the late 1990s – Ellerslie, Riccarton, Alexandra Park and Addington to name some. Much of that funding assistance by racing authorities related to construction of grandstands and so on. Considerable debt was forgiven. Avondale did not receive such luxurious treatment in the aftermath of night racing. There were various reasons given at that time why Avondale did not receive assistance but there is no doubt fair-handed treatment was missing from NZRB’s playbook.

Avondale JC receives no grants, gifts or funding contributions from NZTR outside of the funding policy, other than a minor payment towards a report prepared by Turnberry Consulting Limited in 2015 relating to rejuvenation of the club’s racing infrastructure. [AJC’s submission to the Select Committee flags small safety grants from a Ministerial pool.]

For these reasons Avondale JC suggests Racing Minister Peters is very poorly briefed on how thoroughbred racing currently runs – certainly it has changed since the time when he was last the minister in charge of the racing industry.

The racing industry does not provide financial support to Avondale JC. Indeed, five or so years ago when clubs such as Avondale tried to attract on-course betting at their races (by incentivising big punters) NZTR funding policies changed to squash entrepreneurship.

The underlying basis on which the government promotes its Racing Industry Bill in relation to venues, and the fake news about club assets being industry assets, is utterly flawed.

Avondale JC is allocated only the rats and mice of annual racing fixtures. Despite that under-allocation of licences over the last two decades, Avondale JC is in a position where it can self-fund a redevelopment and rejuvenation. Assuming a fair allocation of race licences, the venue does not require ‘industry-funded’ investment moving forward.

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