Following the tabling of the Harness Racing Victoria (HRV) 2019 Annual Report in state parliament today, HRV Chairman Dale Monteith has issued the below statement:
Annual Report
Today I was pleased to report Harness Racing Victoria (HRV) had achieved a second successive year of profit ($0.4m for 2018-19).
The full details are available in the HRV Annual Report, which was today made public after being presented to Victorian Parliament. (View the HRV Annual Report online)
It should never be forgotten that our industry contributes $0.6 billion annually to Victoria’s economy and sustains 4500 jobs across the state. So many of those jobs are in regional areas where local sport, including harness racing, is a vital part of the community fabric.
It should also not be forgotten that all of us as a team are custodians of this industry. It is incumbent on us all in an ‘industry-first’ approach to pull together and achieve our goal of leaving the sport better for the next generation. We need to always be thinking ‘industry-first’.
Whilst pleasing to report an annual industry profit, it is equally important to acknowledge we still face some challenging times ahead.
Before I outline that in more detail I want to thank all of you, the industry participants, stakeholders and fans, for your resilience in recent times.
CEO David Martin’s decision to resign, the departure of long-time industry doyen Elizabeth Clarke from the HRV Board and the tragic passing of Board member Danny Frawley have prompted a significant recruitment campaign to find replacements.
The HRV Board is working closely with the Minister for Racing and his department on this process as a matter of priority.
Communication
I would also like to take this opportunity to acknowledge that due to the unforeseen circumstances mentioned above I have not been as public in my communication to industry in recent times, for which I apologise. Open and honest communication is a hallmark that has always been at the very front of my mind during my more than 40 years in racing administration. I believe communication fosters cooperation and mutual respect, understanding and of course allows for transparent and productive consultation with stakeholders and kindred bodies. I want to reaffirm HRV’s commitment to ensuring messages from the Board and Executive Management team are visible, allowing all sectors of the industry to be part of the public conversation.
On this important topic, a key strategic focus of HRV in the past 12 months has been on significantly improving consultation with industry kindred bodies. We have committed to more formal consultation with all kindred bodies more regularly.
HRV has held bi-monthly meetings with these groups and in addition the Harness Racing Advisory Council (HRAC) has continued to provide important feedback on racing and other matters to the Board. I assure readers that direct communication has been taking place more regularly than ever before. This has allowed for greater input from kindred bodies on behalf of their constituents on important racing matters and ensured HRV a greater opportunity to provide more regular and direct information to these groups. The best way for concerns to be raised by industry people would be through these groups.
Meeting with the Minister for Racing, the Hon. Martin Pakula
In July I sought a meeting with Minister for Racing Martin Pakula to highlight several challenges facing the industry, which the Board believes will require its continued undivided attention and Government consideration.
I am pleased to report that the meeting was positive in recognising the challenges faced by HRV. The Government over the past three years has provided significant support to HRV through funding for strengthened integrity resources and with additional prizemoney for 2019 and 2020. The Government is committed to continuing to work in partnership with HRV to support the harness racing industry.
At this meeting the Minister requested HRV formalise its submission so further work can commence with the Office of Racing and other government departments including the Department of Treasury and Finance. HRV will play a key role in this work. HRV’s submission was forwarded to the Minister in September. Included among the highlighted challenges were:
- The need for harness racing to remain a viable code across all segments of an industry that delivers a $0.6 billion annual benefit to the state’s economy. Importantly, the Victorian Government is committed to Victoria remaining the pre-eminent racing state in Australia across all three codes.
- The current Joint Venture (JV) agreement with Tabcorp, which commenced in 2012, whilst delivering more to the three codes since the expiration of the first JV, has not delivered as hoped for harness racing. Since 2015 the JV’s rate of return has been in decline. This is best illustrated by the fact that HRV revenue from the JV in 2019 is approximately $9m or 17.3% lower than in 2015. This is due to a number of factors. Firstly, total revenue available for distribution from the JV between the three codes is significantly less than the first three years of the current JV which guaranteed $1b in distributions. Secondly, the three-code agreement, based upon revenue generated by wagering on each of the three codes on Victorian, interstate and international product negatively impacts HRV funding and will continue to do so through to the expiration of the current wagering licence (ends in 2024). This agreement was consummated when fixed odds wagering accounted for very little of total JV turnover. Today it accounts for about 50% of wagering through the JV. If the revenue generated across all three codes was the same we would be well placed, however that is not the case and lower yield (revenue) from fixed odds wagering on harness racing has significantly impacted our market share. Further, more recently there has been a significant increase in the importation of thoroughbred and greyhound racing international product while harness racing international product has been reduced, and there has been a massive increase in the other codes’ international product which they do not produce. This is out of HRV’s control and whilst it might be good for the JV and the other two codes, it is a concern for harness racing nationally given international product accounts for about 10% of total JV turnover.
- The Point of Consumption Tax (PoCT), which was introduced in early 2019, provided for a no worse-off commitment from Government with a review to occur 18 months after its introduction. Following the introduction of the PoCT and Wagering Service Provider (WSP) market consolidation there has been a substantial weakening of harness turnover in the second half of 2018-19. For the last six months of 2018-19, total harness wagering turnover was down by about 5% off the back of a 5% increase prior to the introduction of the new tax. This translated to a $1m shortfall in budgeted wagering revenue from all operators with $500,000 returned to HRV via the PoCT compensation arrangements. We acknowledge the significant consultation that occurred between the racing industry and the Government, which has ensured the lowest PoCT rate in the country at 8% along with significant safeguards upon its introduction that has not been replicated in other states. We look forward to working with the Government to assess the impact of the PoCT and the appropriateness of the compensation arrangements in place.
- In the second half of FY19, all wagering operators – including Tabcorp – have increased their ‘over rounds’ – or the effective price of their offerings to punters. This has affected harness racing wagering more particularly, with wagering operators offering ‘generosity spend’, or promotion spending, on the thoroughbreds with very little, if any generosities going to harness racing.
National Ratings System
The new National Ratings Based Handicapping System went live in July 2019. We are seeing more competitive racing as a result with fewer long odds-on favourites.
The first three months of the new system yielded the following results:
- 19 more races this year than last (976 vs 957, or a 1.9% increase)
- Average field size is 8.47 this year compared to 8.35 last year
- 26 fewer races with seven or fewer starters (249 s 275, or 9.5% decrease)
- 42 fewer races with $1.5 favourite or shorter (233 vs 275, or 15.2% decrease)
National figures mirror our experience in Victoria. We are pleased with the initial results and the HRV racing team will continue to track the figures and adjust race programming to suit the horse population in consultation with stakeholders, including the Victorian Trainers and Drivers Association. It is still early days but we must keep improving returns from the all-important wagering dollar in a competitive environment to ensure better revenue for all stakeholders.
I’m also very proud of the work HRV staff have put in behind the scenes to assist with the roll-out of the new system, from helping to implement the framework to communicating the messaging to industry. I believe HRV led the way nationally in this area.
HRV Board Appointments
I recommended to the Minister for Racing that we seek expressions of interest in relation to filling the vacant HRV Board positions. He agreed and following the closing of applications the Minister’s office has worked on a process to make recommendations to the Minister.
Interviews have taken place and the Minister is determined that the positions be filled as soon as practicable. I took part in the interview process along with fellow HRV Board member Jane Brook along with representatives from the Minister’s department.
CEO Appointment
HRV, with the assistance of the Minister’s department, has advertised the role of CEO.
Applications have now closed with a healthy number of quality individuals having applied with a broad range of skills.
Interviews have commenced and it is hoped the Board will be in a position to advise the Minister of the likely candidate to fill the role shortly. Legislation requires the minister to approve the appointment. The most important decision in a corporate governance sense any Board can make is the appointment of the Chief Executive.
HRV’s General Manager of Finance, Luke Spano, has accepted the role of Interim CEO and will remain in that position until the appointment is made. Luke’s significant experience in wagering and sports administration via previous senior roles with Sportsbet and Cricket Australia has assisted the Board in formulating strategies on wagering and governance in submitting to Government as highlighted previously.
Land development at Melton
I can report that after a number of years of monitoring data from the site owned by HRV at Melton, the environmental audit is now complete.
This audit, which was key milestone in being able to unlock the value in surplus land at Melton, has resulted in a reduction in the buffer zone (500m down to 50m). This means more land is available for development for residential use.
HRV has recently made submissions to Melton City Council on the Urban Design Framework (UDF) and the Council is expected to sign off on the UDF by the end of 2019 (noting that planning permits cannot be applied for before finalisation by council). Consultants are in the final stages of ‘Options Analysis’ on the best use for the land and delivery approach to maximise profitability for the industry.
This land is a vitally important investment for our industry and its management. Its development will benefit all sectors of our sport and is a top priority for HRV.
RISE sale
HRV has successfully facilitated the sale of Racing Information Services Enterprise (RISE). This decision was made to ensure RISE becomes a nationally owned harness racing information technology body for the benefit of the industry. The sale of RISE will enable vital investment in new technology so that RISE – which manages the national website harness.org.au, HarnessWeb and also the national harness racing database – can further enhance its operations and service to the industry. The sale is expected to be completed in November after which HRV will retain a 29% ownership in the company.
Elizabeth Clarke’s departure
Effective July 31, Elizabeth advised the Minister that she wished to resign from her role on the HRV Board to commit to a number of important roles in her local community, which will deliver significant benefits in Country Victoria.
In particular and typically for Elizabeth she wished for as little fanfare as possible regarding her resignation. Until now I have not commented on Elizabeth’s departure to meet her wish, but I feel at this juncture, with an impending appointment to fill her vacancy that I have the opportunity to recognise her remarkable service to not only HRV, but also the wider industry.
Elizabeth has given a lifetime of service to the Victorian harness racing industry and I am convinced that she will continue in various roles in the future.
Her association with harness administration began when she was 17, appointed as a stenographer for stewards on race days in the 1960s.
Her service to the industry, together with her husband Bruce was appropriately acknowledged in 2008 when they were jointly presented with the industry’s most prestigious of honours, the Gordon Rothacker Medal.
During her time on the HRV Board Elizabeth placed a strong focus on a broad spectrum of critical areas, including strong corporate governance principles, financial management and the code’s integrity functions. Her knowledge, acumen, passion for the sport and empathy for the participants makes her hard to replace.
I thought it worthwhile to provide a short snapshot of Elizabeth’s roles in the industry to illustrate her influence and to show that thanks to her efforts, she left the sport in Victoria much better placed to meet the challenges ahead.
- HRV Board member (seven years)
- Member of the HRV Integrity Council (five years)
- Chair of the Harness Racing Advisory Council (five years)
- Member of the Racing and Appeals Disciplinary Board (three years)
- Advisor to Justice Department, previously racing appeals tribunal (13 years)
- Committee member Terang Harness Racing Club (16 years)
It is also important to understand that Elizabeth maintained a high level of involvement in various areas of community service throughout this involvement with harness racing.
Personally, Elizabeth offered her continued advice to me on matters relating to harness racing and integrity in particular. I very much value her friendship.
On behalf of the Board I wish Elizabeth the very best for the future. We will consider, in the near future, appropriately recognising her service in a meaningful way.
Dale G. Monteith
HRV Chairman