Are You Being Served?

The GRNSW pleas to the parliamentary inquiry are probably logical enough, considering the state of its finances today (see a summary of proceedings so far by Clarinda Campbell on 27 November). Future viability of many tracks is in doubt, according to CEO Brent Hogan, because of the bleed of cash to the other two racing codes under the terms of the 1998 commission sharing agreement.

It all casts black marks on the earlier administration’s decision to sign a fixed 99 year agreement on the split. It beggars belief that any commercial operation would make such a commitment, knowing that the future century could see world wars, famine, pestilence, sea level changes and – most important of all – growth throughout the Australian community. Yet it was done, and even today one person intimately involved in the decision has told me it seemed a good idea at the time.

But are greyhound administrations generally capable of good decision-making anyway? And do they learn?

Since that era, NSW has strongly opposed the arrival of Betfair and NT bookies, notably in a speech by the then-chairman, Professor Percy Allen, who implored participants to avoid the newcomers at all costs. (At least four other states did likewise – WA, SA, Queensland and, for a while, Tasmania). That attitude was magically reversed a few years later and all now live happily together. Which is just as well as NSW gets to keep all that commission, unlike the stuff coming in through the TAB. But what an emotional and slapdash way it was to handle a fresh challenge. Allen was a public servant and part-time academic, not a businessman.

NSW has also spent millions over the last decade on developing tracks at Wentworth Park, Newcastle, Gosford, Bathurst, Richmond, Dapto and, more recently, Goulbourn and Maitland. All of that was poorly researched, resulting in old faults re-appearing or new ones created. The entire Dapto track, for example, needed a move of some metres to the north to get it away from track infrastructure, thereby allowing a more sensible start for 520m races (box 1 is now hard up against the line of the running rail), as well as an uninterrupted view for SKY watchers. At the re-built Goulbourn track, flat turns affect the running while inside dogs in 457m races must first turn right then left to avoid going straight into the rail

Earlier this year, GRNSW announced a plan to move the Border Park track at Tweed Heads to Queensland jurisdiction. This revolutionary prospect was accompanied by not a shred of justification but got applause from Racing Queensland, which immediately made a slot available in its TAB calendar. Yet how could it happen? The process would involve huge changes to laws and contractual obligations in both states, to say nothing about the constitutionality of effectively altering state borders. And this came from an administration that has previously cut back the Border Park dates – amazingly, at a time when the nearby Gold Coast track had just closed down. Perhaps it hoped that two wrongs would make a right.

But it all begs the question of why GRNSW decided to forge ahead over the last few years by adding more races and upgrading clubs to TAB status in the face of declining fortunes. Any greyhound expansion could only contribute more to the other two codes (as it did during the equine influenza epidemic), and dilute average revenue per race. And why has it failed to cut costs by combining adjacent clubs? That did happen with Orange and Bathurst, but that was largely due to local initiatives rather than those of GRNSW. Other opportunities to repeat the exercise have been ignored. Cowra/Young, Gunnedah/Tamworth and Casino/Lismore are classic opportunities, for example. Financially, the high prize money for premium races, such as the Golden Easter Egg, must also come into play. If the state is in strife, why is the budget not attacked?

Queensland itself has been dithering for years about the replacements options for the flood-prone Albion Park site and the Gold Coast track, which was lost to the neighbouring hospital. Several have been put up but both the industry and two different governments have been unable to settle on a desirable location, never mind where the money is coming from. But it is doing that in an environment where the state is continually running short of dogs and also running at a loss. None of that is new, it’s been trending that way for years yet remedial action is absent. On top of it all are a series of ongoing arguments and judicial inquiries about the use of funds by Racing Queensland.

Tasmania is also losing money, frequently generating questions in its parliament, none of which seem to address the oddity that local racing is run by what is effectively a government department. It was not doing too well beforehand, but the sale of its tote to TattsBet has sharply reduced turnover and made things worse. That drop would have been an obvious outcome to anyone versed in the habits of punters, so the bleed over to Melbourne and Tabcorp’s bigger pools should have been readily forecast.

WA is not without its challenges, notably that it cannot fund the second half of its enforced move to a new site to replace Cannington and is waiting for government to bail it out.

SA is managing reasonably, but turnover is rising mostly on the back of added races, not internal growth (a fact that the last annual report failed to identify). However, it has been able to negotiate its way towards better splits of TAB commissions. Even so, it has two strategic risks: it is part of a declining TattsBet portfolio and the state is massively dependent on the supply of racing stock by the Wheeler organisation.

Better deals are also the key in Victoria where, relatively, it is awash with money. Frequent government handouts – for track development and breeding incentives, for example – and much improved commission splits have paved with way for regular prize money increases, including the almost obscene $350,000 for the Melbourne Cup winner. Even then, one of those handouts – an increased subsidy for local breeding activity – was not accompanied by any economic justification and is highly unlikely to achieve what the Minister claimed it would do. Suppose breeding were to increase by, say, 10%, would that result in higher employment in the industry? Hands up all the breeders who will be putting on more staff in that event.

Even were the increase justified, the basic theme of providing subsidies for local breeding is a fraud in its own way. There is no evidence that they produce any real benefit to the industry, especially as every state does it. They are no more than handouts to an already profitable sector of the industry. If anything, they might do the opposite if they encourage owners to send bitches to a less than ideal sire.

All told, the common threads amongst all states are a reliance on governments to bail them out when things get tough, a thinning out of both the number and quality of dogs, and a drop in average turnover per race. That includes the flourishing state of Victoria. All this prompts, or coincides with, the obvious outcome of a drop in serious punters numbers and a rise in the proportion of business coming from mug gamblers, both of which pose strategic risks.

But looking at the even wider picture, where is greyhound racing headed and what are we doing about it? Despite the presence of so-called Strategic Plans there are little vision, long term planning, or meaningful objectives, hence administrations are getting into strife they might have avoided. The customary short term outlook of politicians does not help, of course, but it remains a prime responsibility of managements to build and maintain profitable businesses anyway.

The short answers to the problem are that (a) the industry is run by administrators and not managers, (b) the profit motive is absent, and (c) also absent is any system to call management to account. Short of a march down main street to parliament there is no real method of getting the effectiveness of state boards checked out (the current NSW inquiry is unlikely to achieve a lot, mostly because the government is not running it). Racing Ministers take little notice of complaints or refer anything back to the racing board to comment on. Very circular!

Yet the evidence is everywhere that normal commercial decision-making processes are bypassed. At best, the focus is on breaking even during the current year, not on achieving development and a “profitable” outcome in the long term.

The blame for that position is due squarely, not so much to the individuals, but to the system under which they operate. That system is broken, if it ever were valid. A structure which assigns all responsibility to a committee is always destined to be inefficient and unresponsive, irrespective of how much or how little authority is vested in the CEO. If the CEO is strong it means the board will be weak. If the board is strong, it means the CEO will show less initiative, which is a big problem for a sport/business which is desperately trying to catch up with the outside world (or should be).

Historically, the big cry was “get more dog men on the board”. That has already proved a disaster, although Queensland has not read the message yet. Perhaps what we need in the exact opposite. Objective outsiders might then call for a re-examination of the way we are doing business.