Job cuts imminent at TAB as “cash flow challenges” bite with revenue down 40%

An announcement is imminent on significant staff cuts at the TAB.

All staff were told on April 20 that a deeper review of the business was underway and jobs would be lost.

The revelation comes along with confirmation by the Racing Industry Transition Agency that while it has undertaken significant cost cutting to help lessen a dramatic loss of revenue through COVID-19, it had also approached the Government about options for supporting the racing industry.

In replying to questions from New Zealand Trainers’ Association president Tony Pike, RITA executive chair Dean McKenzie said the TAB had cash flow challenges with product availability down 80%, revenue down 40% and customer numbers down about 35%.

“Thankfully, we have managed to weather the first wave of financial pressure but significant work remains to be done.”

The trainers’ association quizzed RITA why redundancies and wage reductions had not been made when many other organisations had done so, its sole response seemingly to announce 3400 leave days would be taken through to the end of 2020. RITA had received Government subsidies of $4,075,087 to pay its 595 staff.

But in his reply McKenzie said the use of non-essential contractors and casuals had stopped and “a deeper review of the business was underway, which the industry would hear about in the near future.”

RITA boss Dean McKenzie … “We have managed to weather the first wave of financial pressure.”McKenzie revealed that because no class four gaming (pokie machines) had been allowed under alert level 4 and 3, the ongoing funding of integrity - Racing Integrity Unit, Judicial Control Authority and the Racing Laboratory - had become an additional expense that must be funded via betting revenue.

$1 million in savings

“In the last few weeks, these organisations have taken steps to reduce their costs and revised budgets have been prepared with significant changes, with forecasted savings of approximately $1 million through the remainder of the 2019-20 season.”

Challenged on what RITA planned to do about a bloated and inefficient organisation like the RIU, McKenzie said it would continue to work with the organisation to become as efficient as possible.

While RITA was yesterday able to confirm funding for the tail of the 2019-20 season, it was very difficult to accurately model how much it will be able to distribute to the industry in the new season, starting August 1.

“But once a calendar has been approved for 2020-21, which we hope will be in place before harness racing resumes at the end of May, we will be in the position to indicate funding levels for next season.”

In response to a question on where RIA stood on finding a joint venture partner to unlock the value left in the business, McKenzie said work had been on hold for the last six weeks while everyone had been dealing with the coronavirus pandemic.

“But as late as mid-March the board advanced discussions to further consider potential partnering opportunities and we continue to work under the direction of the Minister.

“Any progress to actively move this forward is dependent on the progression of the Racing Industry Bill.”

The Bill previously had a proposed enactment date of July 1, 2020, but with Parliament unable to conduct normal business, the Select Committee’s original date for reporting back to the House of April 17 had been extended to June 1.

“But we understand that the passing of this Bill remains a priority for the Government.”

On the subject of ownership of the TAB, McKenzie said he had not seen any formal proposals from the Government to resolve it.

“This was not addressed in the Messara report and RITA has not been asked to consider the issue.

“However, under the existing Racing Act, it is clear that the racing industry is the ultimate recipient of profits of the TAB and this position is unchanged in the Racing Industry Bill.”