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Winston Peters has borrowed a catchphrase from Donald Trump to inspire the racing industry in trouble as he declared, “We are going to make racing great again.”
The Racing Minister has urged the industry to stop fighting and working together as he promised a much-needed $ 72.5 million emergency aid package for an industry facing “an unprecedented threat” to its survival.
Such is the desperate state of the industry, Peters revealed that RITA (Career Industry Transition Agency), which has been widely reported to have been on the brink of insolvency for some time, would have defaulted on its financial commitments on Friday this week. .
RITA, a reconstitution of the New Zealand Racing Board, pays all three racing codes to fund bets and racing clubs with the proceeds from TAB.
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If the government dropped RITA, the $ 1.6 billion racing industry would go with it.
“RITA lenders also reported that they could no longer extend credit. This means that RITA has faced the risk of default on a line of supplier commitments for this Friday,” Peters said in his pre-budget announcement on Tuesday.
He claimed that RITA was on the brink of a financial crisis due to a perfect storm of the Covid-19 pandemic reaching the top of the industry that is already struggling financially.
“It is well documented that the racing industry has experienced several years of poor financial performance,” said Peters.
“There has been a dramatic drop in revenue as costs have remained fixed and bills have fallen,” Peters said.
But industry insiders argue that much of the financial crisis already existed long before Covid-19 due to inflated head office costs and mismanagement for more than a decade.
Of the $ 72.5 million, $ 50 million will provide direct relief to RITA, of which $ 26 million will go to provider commitments. Up to $ 20 million (from the Provincial Growth Fund) will go to two new synthetic tracks to be built at Awapuni in Palmerston North and Riccarton Park in Christchurch, and $ 2.5 million will go to the Department of the Interior to speed up work. on income from online gambling and address loss of income in sports and community groups.
Not included in the $ 20 million is the construction of a synthetic track in Cambridge that is already underway after receiving $ 6.5 million from the Provincial Growth Fund.
RITA will spend the remaining $ 24 million to allow all three race codes to function and resume racing, adding confidence to the betting level for the new racing season beginning August 1.
However, RITA reportedly has debts of $ 45 million that, if accurate, still put the racing body in a precarious financial position.
RITA has been contacted to clarify those figures.
Peters acknowledged that the hard work was just beginning for an industry that has been “truly at risk of insolvency,” but said, “In the long run, if we take all the right steps, there is no reason why careers in this country would not. may be an obstacle. ” world-class industry, stronger than ever.
“We are going to make the races great again.”
The Treasury Department hired Price Waterhouse Coopers (PWC) to provide a financial assessment of RITA, which revealed: “RITA has to deal with very weak capital positions.”
The analysis suggested that immediate government subsidy was the most effective means of preventing default.
He also recommended that RITA be recapitalized and Peters said the work will continue in the next three months.
The government’s plans were for the industry to rebuild where it could provide value to New Zealand’s economy, but that would require serious reform of the industry itself, Peters said.
He said synthetic tracks would save the industry “many millions of dollars” by avoiding cancellations of racing meetings.
In 2018 alone, 32 race meetings were part of a total cancellation 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 the possibility of scheduling fewer race meetings and the imminent arrival of the three synthetic tracks, the future of many smaller provincial tracks will again be threatened.
The Government has also accelerated a work program to identify how to regulate the online and offshore gambling sector.
“If New Zealanders are going to gamble, our country will benefit, not another,” Peters said.
Many top New Zealand punters favor off-shore bookmakers over the TAB.
Peters said that would better address the damage to the game and “ensure that our communities benefit.”
He said more New Zealanders were turning to online gaming from offshore platforms.
“Both trends are very worrying.
“We are in this together. The government is responding, the industry also has to respond.”
Peters said RITA’s management teams have responded by tightening their belts and are managing difficult decisions around staffing levels.
About 30 percent of RITA staff learned of a proposal to lose their jobs on Monday, according to reports, including longtime presenters and presenters and Trackside Radio staff, and the station proposed not to return from his current break due to Covid- 19 closed races and sports.
“Now is the time to try different approaches,” said Peter.
He called on the industry to unite and stop infighting, blaming games and infighting.
Peters said some people unfairly blamed RITA for the problems it inherited, but many in racing circles have been unhappy with the organization and its CEO Dean McKenzie for the lack of transparency and communication in recent months.
“We’ve already had enough older men leaning against the rails scratching their ears and blaming everyone else,” Peters said.
“Fortunately, common sense now prevails and the majority of the industry accepts that calibration is the key to recovery.
“That’s good because, generally speaking, if you’re having financial difficulties, it’s a bad time to be rude to the bank manager,” Peters said.
