Managing Change Is Always A Risk

Patrick Smith (in The Australian April 30, 2011), talking of the gallops, has maintained “racing is losing ground by the meeting” and that “without an independent commission to run the sport and business at either state or national level, racing is shredded by self-interest. Without proper governance it has no chance of holding its ground, never mind expand its audience”.

Patrick can get a bit over the top. Nevertheless he sometimes represents a view that is more widely held than we realise. And while whips and jumps races dominated his thinking, it’s not hard to think of how the industry has handled other challenges.

The rise and rise of NT bookmakers and Betfair would be at the top of that list. At the outset the racing establishment, almost to a man, either ignored or castigated the newcomers. The Australian Racing Board distorted evidence from the UK about Betfair’s role in race-fixing (see, instead, the UK Jockey Club’s reports). Racing NSW boss Peter V’Landys described the bookies as “parasites” (wrongly, as they had always offered to pay field fees). chairman Percy Allen was quick to join in, advising participants to avoid them at all costs. Racing Queensland chief Bob Bentley, too. A tame Task Force of state bureaucrats found that Betfair was a clear and present danger to the industry. Then a poorly-advised Minister tried to ban Betfair but was cut down by the High Court.

Mercifully, despite the ongoing squabble about field fees, attitudes have been changing as the dollars pour in to sponsor greyhound and other races. GRNSW and Betfair are now the best of friends, for example.

Yet, when the historians look back on this era, they will have to ask why did it happen that way? The basic truth is that the industry’s managers resented the arrival of a group which they could not quite control. They first tried to get rid of them using legal devices. When that failed they tried to freeze them out.

But nothing worked for one simple reason: racing’s customers had an entirely different view. They loved the newcomers (or maybe they just hated the oldies) and started giving them business in rapidly increasing numbers. The $10 billion turnover mark is not far away now.

So who is to hold racing’s managers to account? No-one, it seems. They continue to plough on doing whatever deals they dream up – always different from state to state and from year to year – even though they demonstrably have failed in their duty to manage the industry well, or at all. That armed warfare period cost the industry millions in lost income and legal costs. Yet there never was any upside to balance that risky outlay.

An auditor would have to conclude that racing’s governance and management structures were not up to the job. They failed on the “accountability, contestability and transparency” grounds which the Australian Sports Commission lists as basic requirements for sporting organisations.

It may be that these attitudes have seeped down to lower levels. In Adelaide a candidate for the thoroughbred club committee was hounded out for improper practices (why would you want to cheat to get a non-paying job?). An independent consultant recommended that the SA greyhound board take over harness racing because of the latter’s widespread conflict of interest problems. People in Victorian greyhound clubs at Geelong, Bendigo and have demonstrated incompetence or malpractice, according to GRV statements and stewards’ findings.

In Queensland, several clubs have been under “show cause” orders from GRQ/Racing Queensland. Nothing improper is suggested there but it does pose a question about the way the has been managed over time. Today, a multi-code board runs all racing but greyhounds have just a single member on it. Expensive, long term plans for a track development at Logan (SW of Brisbane) have been abandoned and the future of all racing has been “under review” for months. RQ chief Bob Bentley is under fire about the lack of transparency in his dealings with SKY and TVN.

Queensland and NSW greyhound boards are not independent but dominated by club or sector representatives who are automatically conflicted when almost any subject comes up for consideration. In any event, members tend to change with the colour of government.

At the other end of the scale, is run by the state government – by bureaucrats and politicians (still, it seems to be getting by with help from a kindly Treasury).

It all boils down to a system which once worked well enough but is struggling in the modern environment. Patrick Smith might be right. Racing is no longer competitive with other recreational opportunities. That’s why the wagering share of the gambling market has fallen from 50% two decades ago to barely 10% now. Cash flow is maintained only by tacking on more bottom level races and seducing a few more mug gamblers.

Management by committee dominates both raceclubs and state authorities– in varying degrees from one area to another. The attempt to design the horse has ended up with the traditional camel. A bigger worry is that the code’s national body, Ltd, refuses to address commercial or marketing matters, claiming it is there only for regulatory reasons. It has no power of its own anyway and conducts its business in secret.

Despite good efforts in some areas (eg controlling drug use), the key issue remains that the existing racing system has been ignoring its customers, something no commercial company could afford to do.

Organisational reform is the only way out – or up.

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