TAB New Zealand update on trading performance - August 2020

[Chief Stipe]

TAB New Zealand update on trading performance - August 2020

29 September 2020

Monthly Trading Performance Update

TAB New Zealand (TAB NZ) today provides a trading update for August, the first month of the 2020/21 financial year. Moving forward, TAB NZ will provide regular updates on wagering performance and key operational highlights.

Wagering Performance Summary
Despite the ongoing impact of COVID-19 on its business and the wider industry, TAB NZ’s key results for the month were ahead of budget and last year.

Starter and field size numbers were particularly good for both equine codes contributing to positive year-on-year domestic racing turnover growth. Encouragingly, total racing turnover continues to be strong, with year-on-year growth (+10.1%) with no significant growth in the volume of racing being broadcast. Analysis of customer behaviour shows that many bet on domestic racing only prior to lockdown have maintained their overseas racing activity while their domestic racing activity has returned back to prior levels.

Sports turnover was strong (+36%), benefiting from the condensed nature of the sports calendar at the moment, with a number of sports seasons overlapping where they traditionally would not, eg. NBA taking place in August. This is helping to drive customer engagement levels. 

Customer numbers responded positively with 94,000 customers for the month, with days active comparable to the peak November period (Melbourne Cup and NZ Cup Week and major World Cups in the past). 

Retail operations and customers have also been shown to be resilient, notwithstanding the recent Greater Auckland Level 3 lockdown. Retail turnover in Auckland returned, almost immediately, to pre-lockdown levels. The Board  recognises the significance of a Level 3 or 4 lockdown on our gaming business is considerable given the absence of being able to provide a  comparable online offering. This presents risk to the funding of racing integrity, racing enhancement and community sport which Class 4 Gaming currently enables. Extra vigilance of gaming performance is therefore required to manage the ongoing risk of COVID-19.

The Board is encouraged by the trading performance for the month however it remains cautious at this early stage of the season on the ability to meet full year projections. This is given the ongoing uncertainty presented by COVID-19 and the potential for further disruption to domestic and international product supply.

August Operational Performance Highlights 

• Net Profit for the month was $12.8m, which was $1.7m above Budget and $1.4m above Last Year. This is made up of; Betting Profit $11.9m (+$2.2m v Budget), Gaming Profit of $1.4m (-$0.5m vs Budget) and Racing Integrity RIU (RIU) of -$0.5m (in-line vs Budget). The result was primarily driven by a strong trading month from turnover due to increased product supply with margin and continued cost management being in-line with Budget.
• Total Gaming Revenue is $0.6m below Budget and $0.7m (-26.3%) below Last Year due to Auckland sites being closed for 19 days during Covid-19 lockdown. All other stores overall were in line with Budget.
• Operating Expenses are $0.2m below Budget and $2.6m (+21.1%) below Last Year. 

August Distributions

• Actual distributions of $11.5m for August were paid to the Racing Codes vs $10.7m budgeted.  This consists of TAB NZ Betting Profit, Betting Duty relief and offshore bookmaker commission fees (Betting Information User Charge (BIUC) in the table below), based on actual turnover.

August Wagering Performance Highlights

• Account bettor customers were slightly up  (+1,200) on July’s numbers, with both racing and sport bettor numbers increasing: Racing customers were up 4% in July and sport customers were in line with July.
• Turnover of $208.2m is $21.8m above Budget and $27.1m (+14.9%) above Last Year impacted by strong performance in International Racing and Sport.
• Domestic racing accounted for $54m in turnover, with overseas racing product made up $82.2m of the month’s total turnover and sport delivering $71.7m in turnover.
• Gross Betting Revenue of $32.1m is $3.1m above Budget and $1.6m above last year due to higher turnover. 

August Events

Top 10 Racing Events by turnover

22-Aug	Randwick	R7	Winx Stakes (G1)	$434K
15-Aug	Riccarton	R8	Winning Edge Presentations 123rd Winter Cup (G3)	$425K
15-Aug	Riccarton	R10	Racecourse Hotel & Motor Lodge Handicap	$388K
8-Aug	Te Rapa	R10	See You @ Valachi Downs Foxbridge Plate Day 1400	$324K
1-Aug	Matamata	R7	Well Done Jamie Richards & Team 100 Winners	$323K
22-Aug	Matamata	R11	Happy 60th Russell Wright Handicap 2000	$287K
1-Aug	Ashburton	R9	Brand & Gunn Want The Return of Trackside Radio	$285K
22-Aug	Matamata	R9	Cunningham Decorating Services Handicap 1200	$281K
1-Aug	Matamata	R5	Price Racing 1400	$268K
1-Aug	Ashburton	R10	Barnswood Farm Stakes Day 18th October	$259K

Top 10 sport events by turnover

9-Aug	Super Rugby	Crusaders v Highlanders	$645K
1-Aug	Super Rugby	Chiefs v Crusaders	$608K
7-Aug	NRL	Manly Sea Eagles v NZ Warriors	$599K
14-Aug	NRL	NZ Warriors v Penrith Panthers	$575K
20-Aug	NRL	Parramatta Eels v Melbourne Storm	$552K
30-Aug	NRL	Canberra Raiders v Canterbury Bulldogs	$542K
27-Aug	NRL	Parramatta Eels v South Sydney Rabbitohs	$519K
8-Aug	Super Rugby	Hurricanes v Chiefs	$519K
13-Aug	NRL	Sydney Roosters v Melbourne Storm	$518K
29-Aug	NRL	NZ Warriors v Newcastle Knights	$518K

[Joe Bloggs]

OMG, many of those figures are better than the hold TABCORP had on same race here in AUS, now thats super impressive, in fact it's absolutely mind bending. At this rate the payment of the FOBP royalty will be peanuts, I'm beside myself with excitement, oh and bewilderment also.......Congrats boys.....and girls.....youse are walking jeanyusis's.......

[Freda]

Good on them, at least, for putting out the report,  far better than the last two mobs.

[Chief Stipe]

Although good to finally see some figures there is a bit of creativity in their presentation.

That aside I'm not sure what value there is on giving top 10 turnover figures especially with FOB on sport.  Revenue Yield is the important metric.

The full yearly report for 2019-2020 for RITA and NZTR must be due now that we have new efficient administration structures.

 

[Huey]

Good to see some figures,  so when does trackside radio return? 

[Chief Stipe]

23 minutes ago, Huey said:

Good to see some figures,  so when does trackside radio return? 

There is some spin in those figures so be wary of tinting the specs the colour rose.  Also they may well argue - "see getting rid of Trackside Radio didn't make a difference!"

But it's a good question.  Some NZRB functions have been devolved to the Codes.  Where does Trackside Radio lie now?  Is it a punting service, a broadcasting service or a marketing service?

Under the new structure and devolution of functions I see the rich getting richer.  The Harness and Greyhound codes are really going to be squeezed especially if they have weak or compliant leadership.  For example what does it have to do with Saundry when it comes to retaining or selling Forbury Park?

[JJ Flash]

2 hours ago, Huey said:

Good to see some figures,  so when does trackside radio return? 

Not any time soon i'd say. Good numbers without it although im sure the same old naysayers and moaners will disagree

 

Greg

Edited September 29, 2020 by JJ Flash

[Chief Stipe]

4 minutes ago, JJ Flash said:

Not any time soon i'd say. Good numbers without it although im sure the same old naysayers and moaners will disagree

 

Greg

Huey said it was good to see some figures.  He didn't say they were GOOD figures.

JJ can you explain for us how they are GOOD figures?

[Chief Stipe]

4 hours ago, Freda said:

Good on them, at least, for putting out the report,  far better than the last two mobs.

That's a bit harsh Freda.  We used to get regular reports on turnover from the NZRB from NZTR.  In far more detail than this report.

We used to get the turnovers weekly by race meeting vs the previous year and performance against KPI's.

[JJ Flash]

11 minutes ago, Chief Stipe said:

JJ can you explain for us how they are GOOD figures?

Only to happy to when you reinstate my PM function. In the interim keep being negative about TAB NZ August update and results. It is after all your modis operandi IMHO

 

Greg

Edited September 29, 2020 by JJ Flash

[Chief Stipe]

1 minute ago, JJ Flash said:

In the interim keep being negative about TAB NZ August update and results. Nothing will ever be good enough for you as witnessed by your constant negativity IMHO

What is really positive about them?  In terms of transparency we have no way of determining how far in the hole we were (no annual report) and no idea on the budget they are supposedly reporting against.

But according to you JJ it is "none of our business" to know those things.

[Freda]

25 minutes ago, Chief Stipe said:

That's a bit harsh Freda.  We used to get regular reports on turnover from the NZRB from NZTR.  In far more detail than this report.

We used to get the turnovers weekly by race meeting vs the previous year and performance against KPI's.

Maybe.  Always stand to be corrected.  But the 'detail' didn't translate into positive action, though, did it?

[Happy Sunrise]

46 minutes ago, JJ Flash said:

im sure the same old naysayers and moaners

Looking forward to Forbury tomorrow?

[Chief Stipe]

4 minutes ago, Freda said:

Maybe.

No maybe's.  Purcell continued the custom of publishing turnover figures and KPI's such as field sizes etc on a weekly basis.

6 minutes ago, Freda said:

But the 'detail' didn't translate into positive action, though, did it?

Do you think that now that we have less transparency we will see MORE positive action?

[Noodlum]

3 minutes ago, Happy Sunrise said:

Looking forward to Forbury tomorrow?

Yeah Flash is a bit selective in his postividdy!

[nomates]

1 hour ago, JJ Flash said:

Not any time soon i'd say. Good numbers without it although im sure the same old naysayers and moaners will disagree

 

Greg

As ever Greg , following the party line .

Maybe , just maybe , the figures could have been much larger with radio coverage .

[Joe Bloggs]

Here's a thought, The Winx Stakes, those figures would be through the co-mingling, wouldn't they? and as 4/5ths of that would be Oz money, or more like 9/10ths, I'm saying creative accounting is on steroids....oops, nothing in racing is on steroids is it?........would it not be the case with the other pools as well?

I looked at the pools on the NSW TAB a few Saturdays ago, 700 bucks in the place pool at Ellerslie, as they jumped, yep, the race fields legislation is going to work wonders.....NOT........

You can fool some of the people some of the time....you know the rest.

[Freda]

1 hour ago, Chief Stipe said:

No maybe's.  Purcell continued the custom of publishing turnover figures and KPI's such as field sizes etc on a weekly basis.

 

I said, I always stand to be corrected.   

So, that means you think we'll see less action?  I can hardly wait...

[Chief Stipe]

17 hours ago, Chief Stipe said:

Starter and field size numbers were particularly good for both equine codes contributing to positive year-on-year domestic racing turnover growth. Encouragingly, total racing turnover continues to be strong, with year-on-year growth (+10.1%) with no significant growth in the volume of racing being broadcast.

Which means bigger fields and more of them.  Less sub-optimal fields for betting i.e. those below 8 in number.  How long will this last?  Hard to say.  In Thoroughbred and Harness racing there was a log-jam of horses ready to go racing.  It would be expected that numbers will fall eventually.

18 hours ago, Chief Stipe said:

Analysis of customer behaviour shows that many bet on domestic racing only prior to lockdown have maintained their overseas racing activity while their domestic racing activity has returned back to prior levels.

What this means....in simpler english..... is that before lockdown some punters only bet on NZ racing but during the lockdown they understandably bet on the International racing that was on offer through the NZ TAB.  Seems after lockdown they have continued betting on overseas races but are spending the same as they did before on NZ races i.e. they are spending more.

18 hours ago, Chief Stipe said:

Sports turnover was strong (+36%), benefiting from the condensed nature of the sports calendar at the moment, with a number of sports seasons overlapping where they traditionally would not, eg. NBA taking place in August. This is helping to drive customer engagement levels. 

 This is good news for Sports organisations but doesn't help racing.

18 hours ago, Chief Stipe said:

Customer numbers responded positively with 94,000 customers for the month, with days active comparable to the peak November period (Melbourne Cup and NZ Cup Week and major World Cups in the past). 

The term "days active" is the key in this statement.  It means the number of days during the month that customers had a punt on.  I'm picking that lockdown restrictions on other entertainment had an impact on this.  Is it sustainable?  Anyone's guess - I imagine though that it is a "soft" improvement and will be difficult to lock in.  Who knows maybe the promotions from the new system are working.

18 hours ago, Chief Stipe said:

The Board  recognises the significance of a Level 3 or 4 lockdown on our gaming business is considerable given the absence of being able to provide a  comparable online offering. This presents risk to the funding of racing integrity, racing enhancement and community sport which Class 4 Gaming currently enables. Extra vigilance of gaming performance is therefore required to manage the ongoing risk of COVID-19.

Basically like most Pokie venues the TAB would have taken a big hit.  I imagine like many pubs they will be reviewing ongoing viability of Pokie venues e.g. can the floor space be better used for more sitting space for eating and drinking. 

18 hours ago, Chief Stipe said:

• Net Profit for the month was $12.8m, which was $1.7m above Budget and $1.4m above Last Year. This is made up of; Betting Profit $11.9m (+$2.2m v Budget), Gaming Profit of $1.4m (-$0.5m vs Budget) and Racing Integrity RIU (RIU) of -$0.5m (in-line vs Budget). The result was primarily driven by a strong trading month from turnover due to increased product supply with margin and continued cost management being in-line with Budget.

Any Net Profit in these difficult economic times is good.  So well done.  However what we do know that based on the last annual report that we saw and the fact that NZRB/RITA was insolvent requiring the Government to bail them out that $12.8m isn't enough.  

18 hours ago, Chief Stipe said:

• Total Gaming Revenue is $0.6m below Budget and $0.7m (-26.3%) below Last Year due to Auckland sites being closed for 19 days during Covid-19 lockdown. All other stores overall were in line with Budget.

This impacts the funding of the RIU.  Can't afford anymore lockdowns.

18 hours ago, Chief Stipe said:

• Operating Expenses are $0.2m below Budget and $2.6m (+21.1%) below Last Year. 

The $2.6m below last year is interesting but we don't know what it composes.  We do know that they would have made operational savings during lockdown and still are with a reduction in customers services in retail and on course.  Hence the difference in actual vs budget is probably due to Covid-19 rather than major structural changes.

18 hours ago, Chief Stipe said:

• Turnover of $208.2m is $21.8m above Budget and $27.1m (+14.9%) above Last Year impacted by strong performance in International Racing and Sport.
• Domestic racing accounted for $54m in turnover, with overseas racing product made up $82.2m of the month’s total turnover and sport delivering $71.7m in turnover.
• Gross Betting Revenue of $32.1m is $3.1m above Budget and $1.6m above last year due to higher turnover.

The increase in turnover is in lower yield products hence the % increase in turnover not equating to a similar increase in revenue (14.9% vs 10.1% Gross).  

The Gross Betting Revenue result suggests that they were budgeting for less than last year!  I guess the pandemic was a silver lining!

As for the Turnover figures by race - note how the races listed coincide with when Australian racing comes on screen?

As for the Sports betting turnover by event - this is interesting but no more than that.  We don't know what the yield was on each of those turnovers and what net profit that occurred is not destined for racing.

Overall Grade - a C-.  Needs to do more given the position that they are starting from i.e. insolvency.

[Huey]

5 hours ago, JJ Flash said:

Not any time soon i'd say. Good numbers without it although im sure the same old naysayers and moaners will disagree

 

Greg

Of course they'll disagree , its needed make no bones about that, ask anyone in the industry if they miss it and feel the same. 

You want to be careful these glorified numbers you're pushing aren't happening just due to the odd nature of the time we are in and that they are in fact improved performance .

There will be a price to pay for having no trackside radio and the impact of that will no doubt be felt in the future if they continue without it.

[JJ Flash]

19 hours ago, nomates said:

As ever Greg , following the party line .

Maybe , just maybe , the figures could have been much larger with radio coverage .

I wondered when you would pop up with your usual shit. I have no axe to grind or anyone or any group to promote so the Party Line is just a fallacy for you and the Chief to blurb out and hoping it will stick

BTW, did you post a "you were correct" re new restructured Management team numbers. I'm pretty sure i was right on at 4. Must have missed that post of yours 😋

 

[JJ Flash]

16 hours ago, Huey said:

You want to be careful these glorified numbers you're pushing aren't happening just due to the odd nature of the time we are in and that they are in fact improved performance .

I'm not pushing anything Huey. the numbers are above budget thusfar and hence payouts to the codes have been increased based on the month of August's increased revenue. If you and others think thats a bad thing you are a lost cause. Mind you , if your in that camp you are not alone, you have about 10 other supporters

 

Greg

[Chief Stipe]

2 hours ago, JJ Flash said:

the numbers are above budget thusfar

We don't know what that budget is.  But what we do know is the increase over budget is "soft" and not reflective of a normal operating environment.  It would also appear that neither the budget nor the increase in budget are sufficient to turn the tide.

If you look at the figures they released you will see that Net Betting Profit EQUALS Code Distributions.  There is no mention of paying down debt or investing in new infrastructure - although the Government insolvency bailout helped balance the books in the short term.

The Net Profit before distributions in 2018-19 was $136m.  If the figure quoted in this release is the derived in the same way then it is $131m or a $5m drop from two seasons ago!!!!!!  JJ Flash even you can't consider that to be GOOD can you?  Hell they'll need to be above budget by 5% to deliver the same as they did two years ago!

ALSO it is important to note that the final distribution to the codes was bolstered by $28m in borrowed money/taken from reserves with the final figure for racing being $151m.  Is this "budgeted" $117m the final distribution?  Or will it be "topped up" somehow to get close to $151m?  If not then the codes will get around $30m less than 2018-19!

If it is topped up where is the money coming from?  Government isn't going to pitch up again and I doubt that another bank will be giving them another $35m overdraft!

See JJ - the release looks like spin to hide a sow's ear!

[Joe Bloggs]

2 hours ago, JJ Flash said:

I'm not pushing anything Huey. the numbers are above budget thusfar and hence payouts to the codes have been increased based on the month of August's increased revenue. If you and others think thats a bad thing you are a lost cause. Mind you , if your in that camp you are not alone, you have about 10 other supporters

 

Greg

Just a couple of questions if I may? Do you believe in custodial sentences for people found guilty of dereliction of fiduciary duty? and or deceptive and dishonourable conduct?.....resulting in bankruptcies, marriage breakups, and in some very sad cases suicide........and should a Royal Commission be called to investigate the 70 million dollar FOBP fiasco and the ongoing royalty/servicing fee of 17 mil per annum........

[curious]

2 hours ago, JJ Flash said:

I'm not pushing anything Huey. the numbers are above budget thusfar and hence payouts to the codes have been increased based on the month of August's increased revenue. If you and others think thats a bad thing you are a lost cause. Mind you , if your in that camp you are not alone, you have about 10 other supporters

 

Greg

What exactly is above budget and above what budget? Net revenue is up I take it but up on what?