Musings...

[Freda]

On the face of things,  Karaka appeared to have a disappointing result.

Predicatable,  I should have thought ;  love him or hate him [ and not getting into a discussion about how/why he operates ] ,  without D.E there would have been blood on the floor.

So, he trumpets that stakes will double next season,  I guess that justifies - to some - why buying a large number of lots is viable.   Got me buggered,  even double the money is just a drop in the bucket to what an owner needs to make the business of racing a horse financially viable.

David ia not the only one from whom I have heard that diatribe,  but - wheres the money coming from?

Closing venues won't realise any dosh,  adding allweather tracks won't either, short term at least.

J.A has burnt  $50 mill on the dog of a platform,  borrowed  $25 mill to sustain stakes this season, and will have to borrow again to sustain next season's levels.

Taxation relief [ I am told]  will realise about  $13 mill - that we think we deserve even more of a handout from the taxpayer I can't get my head around -  but,  anyway,  the Paddy Power/ Open bet costs are in the region of $17 mill per annum.

That makes us, by my  calculations,  $100 mill in the poo,  with turnover plummeting and costs rising.

Anyone for a cheap colt?

 

[mardigras]

Government handouts?  Again.

And from what I hear of the new platform, apart from being a dog, it wouldn't surprise me to find that a number of punters are also bashing them in sports betting - such is the brilliance of their automated fixed odds pricing.

[Chief Stipe]

1 hour ago, mardigras said:

Government handouts?  Again.

And from what I hear of the new platform, apart from being a dog, it wouldn't surprise me to find that a number of punters are also bashing them in sports betting - such is the brilliance of their automated fixed odds pricing.

In that respect I can't see how the new odds setting system reduces cost.  Presumably they were going to lay off bookie staff but Allen has said that they are still setting the odds for local events.  

In the past they just copied overseas odds for non local events to start tye book which I guess didn't take much effort.  Then managed the book based on the local pool.

Now if they are using automated odds all the way through and the algorithm has less weight on the local pool then some serious value bets would arise.  That is I know drawing a long bow on my part.

I note we haven't seen any weekly turnover information for months.  But the gossip is that there has been a big hit.

I'm with Freda I can't see where the increased stakes are coming from and surely this Government is not going to give a handout to "the rich bastards who gamble and race horses"!

I thought the proposed tax breaks were once again for the breeders.

[Freda]

My understanding is that the 'tax relief ' refers to gaming duty - currently at 4.5% [ I think ] from 20% some years ago,  when Winston gave us parity with other forms of gambling.  

That windfall was quickly gone and now they expect to go cap in hand and get even more reduction?

[MaltedMilkshake]

I think this is just a game of smoke & mirrors. As we all say, where is the money coming from. DE is just spinning it...he has to to draw in investors (just let’s call them that for,the time being) to justify his spend. 

Tax relief....let’s analyse that.  Most are registered for GST...so refund that goes back into the pocket (you know what I mean). Write down on breeding stock - very generous allowances by IRD. 

Betting?  There isn’t enough going through the TAB to ensure decent returns to the Industry...because the quality of horses racing is subjective. so what to do? How to fund the prizemoney? 

Simple, if everyhorse is worth (according to the “other” channel) $15k pa to the turnover, then we need to up the horse numbers at TAB meetings - as I have been saying for 5 years.  We as an industry, can’t keep “giving” horses away to Asia at the expense of our own domestic racing.  

A regime, however unpopular it maybe, is to actually bar horses who are destined for Asia, from using industry facilities to prepare them for export. Currently they can remain in NZ GST free for a negotiated time.

A levy of $15k per horse charged to a trainer for each unraced horse on his stable return exported to Asia - in lieu of what it is costing the TAB. 

3) A CGT on each horse exported to Asia. These funds need to go back into industry revenue for prizemoney. 

Currently NZ (as a whole) doesn’t benefit from the export side of our industry. Yes, a few breeders, bloodstock agents, breakers and trainers benefit nicely from trading so much so, their “thinking” has bent the industry to the point where it can’t stand up.

So radical thinking is what is needed to sustain the industry...however painful it is to some. As it’s panning out, you can’t have a flourishing export industry and a strong domestic racing scene...with the current amount of horses being bred. 

This is an issue that only the industry can solve...but I don’t think it has the capacity to do so because of too many vested interests. No one wants to make hard decisions

[Mark D]

If the gaming duty is reduced and the "industry" funnels that directly and totally into increased stakes it will only exacerbate the problem.  Need to make betting on horses attractive to punters to create long term revenue increases.

[Weasel]

I don't see why the Government (ie taxpayers) shouldn't contribute to the growth and development of one of NZ's highest export industries and employers. (It is willingly embraced by state and fed govts in Australia, for example, with massive funding for capital projects.) For about 150 years Governments in NZ have creamed this industry through revenue from every aspect, starting with Govt control of our sole betting agency (TAB), banning bookmakers, and God knows how many other revenue streams ... while local/provincial clubs (many of them Incorporated Societies)  worked their butts off, operating on shoestring budgets to sustain the business of the 'sport of kings'; and are struggling now to keep their licences (having originally built, and then improved tracks, grandstands, public facilities, etc). I can see why they view the proposed Venue Plan as a land grab.

History shows neither National nor Labour-led Governments has the will, enthusiasm, knowledge or respect for Horse Racing to achieve effective, long-term improvements. Winston is now under pressure to deliver in this year's Budget the $$$ he promised pre-election. His problem is, he has to convince Taxinda to spend massive money on something she and her Labourites view as a game for 'rich pricks' and/or corrupt pricks. (Current investigations in harness racing here and the Weir arrest yesterday are not helping!) Notably, she has failed to show at either of the two Karaka Sales (2018 and 2019) ...and I noticed Crusher Collins making sure she got seen alongside David Ellis earlier this week.

It's now up to Winston to deliver on the promise of last year. The answer lies in the Budget. If the money is or  isn't there this year, you will have your answer on the future of racing in NZ. 

[Mark D]

Absolute rubbish Weasel.  You're true to your non de plume

[mardigras]

36 minutes ago, Weasel said:

I don't see why the Government (ie taxpayers) shouldn't contribute to the growth and development of one of NZ's highest export industries and employers. (It is willingly embraced by state and fed govts in Australia, for example, with massive funding for capital projects.) For about 150 years Governments in NZ have creamed this industry through revenue from every aspect, starting with Govt control of our sole betting agency (TAB), banning bookmakers, and God knows how many other revenue streams ...

I probably couldn't disagree more. 

NZ is one of the leading nations that operates their racing by way of betting based funding, in returns to the racing industry relative to that income, from government funds.

We rival HK in that regard if not exceed it 

And we are so far ahead of Australia, they are hardly worth mentioning.

And now the industry wants tax reductions to get more of the government pool of money. Stuff the rest of NZ.

The NZ racing industry has minimal export. Around 20-30 million per year (according to NZRB).

As far as it's level of employment, someone is taking the piss, surely!

[JJ Flash]

6 hours ago, Freda said:

On the face of things,  Karaka appeared to have a disappointing result.

Predicatable,  I should have thought ;  love him or hate him [ and not getting into a discussion about how/why he operates ] ,  without D.E there would have been blood on the floor.

So, he trumpets that stakes will double next season,  I guess that justifies - to some - why buying a large number of lots is viable.   Got me buggered,  even double the money is just a drop in the bucket to what an owner needs to make the business of racing a horse financially viable.

David ia not the only one from whom I have heard that diatribe,  but - wheres the money coming from?

Closing venues won't realise any dosh,  adding allweather tracks won't either, short term at least.

J.A has burnt  $50 mill on the dog of a platform,  borrowed  $25 mill to sustain stakes this season, and will have to borrow again to sustain next season's levels.

Taxation relief [ I am told]  will realise about  $13 mill - that we think we deserve even more of a handout from the taxpayer I can't get my head around -  but,  anyway,  the Paddy Power/ Open bet costs are in the region of $17 mill per annum.

That makes us, by my  calculations,  $100 mill in the poo,  with turnover plummeting and costs rising.

Anyone for a cheap colt?

 

It wasn't a poor sale if you listen to all the NZB and Te Akau blurb. I'm with you Freda, based on numbers it was a poor sale and a serious level below recent overseas sales notably MM.

The numbers say it all , lower median at 100K,poor clearance rate at 77% cf MM 90%.Congrats to new owner of Cambridge who sold 100% and Waikato who blitzed the sale in most categories.

Te Akau was leading buyer for 14th successive year. they are truly great for NZ racing industry and if you doubt that then you are seriously deluded.

Only 2 NZ based stallions in Top 10 by average.

Edited January 30, 2019 by JJ Flash

[Mark D]

OK I'm deluded.  Written the same thing many times but to summarise the only benefit is to NZB, Te Akau and some of the big studs (who don't need it given their huge export business).  To race these high priced horses in NZ means that the top end stakes have to be increased, usually at the expense of lower "graded" races where the run of the mill horses participate which the industry needs for these top horses to participate. It's killing the industry and of course many of its participants.

On the other hand if you believe in the fairytale that stakes are going to double next year then may be it is you who is deluded.

[MaltedMilkshake]

The reason why the sale was down is very simply, quality or lack of...

as I keep harking, you can’t continuously keep selling your good colts to ASIA without it having a negative impact on your Stud Book.  If the page is lacking, the big players won’t play. So many horses bought for Asia just don’t seem to see the light of day.

I hate to see the first foal of a mare go to HKG or elsewhere in Asia...the chances are it won’t race. 

Yes, good to see Godolphin and Shadwell and Jonathon Munz buying, but on the whole, NZ is heavily dependent on Savabeel. So who is the next stallion to stand up?

The  bloodbath over the next few days will be a telling factor about the state of domestic racing. 

[Reefton]

24 minutes ago, MaltedMilkshake said:

The reason why the sale was down is very simply, quality or lack of...

as I keep harking, you can’t continuously keep selling your good colts to ASIA without it having a negative impact on your Stud Book.  If the page is lacking, the big players won’t play. So many horses bought for Asia just don’t seem to see the light of day.

I hate to see the first foal of a mare go to HKG or elsewhere in Asia...the chances are it won’t race. 

Yes, good to see Godolphin and Shadwell and Jonathon Munz buying, but on the whole, NZ is heavily dependent on Savabeel. So who is the next stallion to stand up?

The  bloodbath over the next few days will be a telling factor about the state of domestic racing. 

The quality thing is an inability of NZ studs to compete for the top echelon stallions any more along with the fact that Godolphin and Coolmore have a endless supply of top stallions going into their Aussie operations.

NZ is becoming less and less relevant in terms of international racing and the Studs are pressuring Winston to somehow make them more competitive by attacking NZ racing. 

Pretty sad but I cannot see a positive outcome here - I do agree with Mardigras that there is a limited amount more assistance the government here can give whatever Big Dave says.  Maybe the issue is the TAB and its cost structure but fixing that and stopping the flow of betting funds overseas? 

[JJ Flash]

1 hour ago, Mark D said:

OK I'm deluded.  Written the same thing many times but to summarise the only benefit is to NZB, Te Akau and some of the big studs (who don't need it given their huge export business).  To race these high priced horses in NZ means that the top end stakes have to be increased, usually at the expense of lower "graded" races where the run of the mill horses participate which the industry needs for these top horses to participate. It's killing the industry and of course many of its participants.

On the other hand if you believe in the fairytale that stakes are going to double next year then may be it is you who is deluded.

With the greatest respect Mark , no one makes you  purchase shares in TA horses yet all NZ racegoers and trackside viewers get the benefit of DE taking all the risks to provide a local betting product.Its him who signs for them , him who pays all their staff and him who takes all the risks.

If he does not buy 40 horses then someone else has to or else  studs and NZB are worse off in terms of revenue. Surely that it not good for NZ racing ????

Your argument that stakes at top end needs to be increased to cater for high priced yearlings is not backed up by facts. Most of NZ's bigger races have seen stakes decline over the last decade in both real and nominal terms. example Kelt was worth a million and its now worth a fraction of that. NZ's highest staked WFA sits at a pitiful 400K

Race meetings all over the racing world  offer run of the mill races at lower stakes levels to cater for lesser achievers., its a world wide phenomena.

No where do i even enter or raise the issue of stakes rising in the future, that's a completely separate discussion.

[Freda]

I did notice that there were some lots from tidy-looking international families,  with loads of black type.

But in most cases, no-one was interested.  It may have been that the horses had some physical issues not evident from the TV...but certainly,  for someone just wanting quality in a pedigree,  it was there.

But the only form [ generally ] that was wanted was Aus black type.

[JJ Flash]

2 minutes ago, Freda said:

I did notice that there were some lots from tidy-looking international families,  with loads of black type.

But in most cases, no-one was interested.  It may have been that the horses had some physical issues not evident from the TV...but certainly,  for someone just wanting quality in a pedigree,  it was there.

But the only form [ generally ] that was wanted was Aus black type.

Its historically been that way Freda, many buyers either dont understand the Northern Hemisphere bloodlines or cant positively market them to their clients.

A case in point was a Saddlers Wells filly that was bred to southern Hemisphere time a few years back. At a time when SW's were going gang busters not one bid was offered for the NZ one and it was good in term of confirmation.

[Kopia]

At the risk of being admonished for bringing politics up again...and by the way, we're in the middle of a crisis involving a politician who has made a lot of promises ( peters I'm talking about, not the housing idiot) so politics is intrinsically involved in this discussion especially..

what will be interesting is when Cullen releases his 'report' on capital gains tax..if it goes the way many predict it will involved a tax of up  to 33% on anything sold at a profit-not, they say, your family home but thats still to be determined.  So  the yearlings bought at these sales and sold on at RTR sales or as trial/race winners may attract this cgt ..thats if labour are still in govt after the next election ( 2020-next year ). Something to think about eh?

[JJ Flash]

3 minutes ago, Kopia said:

At the risk of being admonished for bringing politics up again...and by the way, we're in the middle of a crisis involving a politician who has made a lot of promises ( peters I'm talking about, not the housing idiot) so politics is intrinsically involved in this discussion especially..

what will be interesting is when Cullen releases his 'report' on capital gains tax..if it goes the way many predict it will involved a tax of up  to 33% on anything sold at a profit-not, they say, your family home but thats still to be determined.  So  the yearlings bought at these sales and sold on at RTR sales or as trial/race winners may attract this cgt ..thats if labour are still in govt after the next election ( 2020-next year ). Something to think about eh?

Likewise ,if you lose money you must surely be entitled to a refund. Re CGT, the devil as always will be in the detail Kopia

[Mark D]

19 minutes ago, JJ Flash said:

With the greatest respect Mark , no one makes you  purchase shares in TA horses yet all NZ racegoers and trackside viewers get the benefit of DE taking all the risks to provide a local betting product.Its him who signs for them , him who pays all their staff and him who takes all the risks.

If he does not buy 40 horses then someone else has to or else  studs and NZB are worse off in terms of revenue. Surely that it not good for NZ racing ????

Your argument that stakes at top end needs to be increased to cater for high priced yearlings is not backed up by facts. Most of NZ's bigger races have seen stakes decline over the last decade in both real and nominal terms. example Kelt was worth a million and its now worth a fraction of that. NZ's highest staked WFA sits at a pitiful 400K

Race meetings all over the racing world  offer run of the mill races at lower stakes levels to cater for lesser achievers., its a world wide phenomena.

No where do i even enter or raise the issue of stakes rising in the future, that's a completely separate discussion.

I see no benefit in that.  He faces minimal risk buying the horses on favourable terms from NZB and I would say nothing is paid by him until the horses are syndicated and money paid.

As to the stakes I would say it is more important to look at how those races are funded.  In your isolated example of the Kelt that race was funded by nomination fees paid by owners and by NZTR in terms of a stake contribution.  That stake contribution was far in excess of the revenue earned from the commission on betting.  That is the case for all "higher end stakes" races in this country.  In effect the higher end stakes are subsided by the lower end stakes races.  That pitiful $400k would be far lower if it was based on the revenue earned by that race.  Ellis targets these races (Derby etc) and sells his syndicates on this basis (and other spurious claims) and therefore is relying on this subsidy continuing at the detriment of the majority of stakeholders.  Your statement that racing all over the world run these sort of these run of mill races to cater for these lesser achievers makes no sense - of course they do - without these races you don't have the production line for the higher graded races - which was my point.

I won't bother to offer the greatest of respect nonsense - clearly you didn't mean it - and the reverse applies.

[Reefton]

10 minutes ago, JJ Flash said:

Likewise ,if you lose money you must surely be entitled to a refund. Re CGT, the devil as always will be in the detail Kopia

Knowing the way the IRD carry on a refund arising from a capital loss is by no means certain

[MaltedMilkshake]

21 minutes ago, Kopia said:

At the risk of being admonished for bringing politics up again...and by the way, we're in the middle of a crisis involving a politician who has made a lot of promises ( peters I'm talking about, not the housing idiot) so politics is intrinsically involved in this discussion especially..

what will be interesting is when Cullen releases his 'report' on capital gains tax..if it goes the way many predict it will involved a tax of up  to 33% on anything sold at a profit-not, they say, your family home but thats still to be determined.  So  the yearlings bought at these sales and sold on at RTR sales or as trial/race winners may attract this cgt ..thats if labour are still in govt after the next election ( 2020-next year ). Something to think about eh?

Kopia, this is what I’m alluding to....a CGT is long overdue for the thoroughbred industry to try to kerb the export of quality young horses to Asia. 

 

[Kopia]

6 minutes ago, MaltedMilkshake said:

Kopia, this is what I’m alluding to....a CGT is long overdue for the thoroughbred industry to try to kerb the export of quality young horses to Asia. 

 

I cannot agree with you....then do kiwifruit growers get blasted with cgt for exporting to Asia? Do people who farm salmon get blasted with cgt for exporting fish to Japan? Do tuna fishermen get....you get the drift. Horses are just like any other 'product' so if any govt starts taxing export products as ' capital gains' as well as income tax this country is well and truly stuffed...and its heading that way now btw.

[Reefton]

52 minutes ago, Kopia said:

I cannot agree with you....then do kiwifruit growers get blasted with cgt for exporting to Asia? Do people who farm salmon get blasted with cgt for exporting fish to Japan? Do tuna fishermen get....you get the drift. Horses are just like any other 'product' so if any govt starts taxing export products as ' capital gains' as well as income tax this country is well and truly stuffed...and its heading that way now btw.

Ah there is a slight difference there Kopia.  Kiwifruit, Salmon and tuna fishermen are all subject to ordinary income tax on their earnings.  A person with a pattern of trading horses(say a trainer who regularly buys a yearling or two and turns them over or a pin hooker) would also be subject to ordinary income tax as would the studs.

I am not advocating CGT but I suspect if it does arrive then horses sold at a profit will be assessable.  Although race winnings are not assessable(nor are racing expenses deductible) so they may exempt racehorses on the basis that there are a lot more losers than winners when it comes to the nags.  I will virtually guarantee there will be no allowance for a capital loss so don't hold your breath for a refund if your yearling purchase has a case of the slows.  It is possible they may 'ring fence' capital losses to allow them to be offset against future capital gains of a similar type(so your future horse sale profit may be able to be offset against a past loss but a horse loss would not be able to be offset against(say)a property gain).  I am guessing there but certainly it is entirely possible.  

 

[MaltedMilkshake]

Thank you Reefton for the clarification. I must point out that whilst I am a right leaning capitalist, I also believe in sacrifice for a cause.

Kopia, you’ve actually answered one of my questions. I think the general consensus is the industry is not prepared to make difficult decisions to enable domestic racing to survive. The CGT for exported horses should be, in the short term, allocated to prizemoney revenue to help rebuild the industry. It’s needs to be a negotiated with the Government.

As the broodmare population is so small, you can’t have your cake & eat it to...so one has to go...either export or strong domestic racing...but you can’t have both.

 

[Kopia]

4 hours ago, JJ Flash said:

Likewise ,if you lose money you must surely be entitled to a refund. Re CGT, the devil as always will be in the detail Kopia

Can someone explain something to me...lets say you are are one man band in racing, train a few of your own etc...and you get hold of a horse with some potential. You're not gst registered so you can't claim gst on your purchases. You're not a 'trainer' you don't claim expenses or declare a 'profit' because your'e not doing the horses as a 'business'. So you manage to sell the horse that showed potential. You make..say $40k in round figures...over all of your expenses. So why would you be expected to pay anything to the govt? Your endeavour, you took the risk..?