RUNNING. Punters and racing industry benefit from Tabcorp agreement

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1 Inside RUNNING Issue Punters and racing industry benefit from Tabcorp agreement 16, 2007 Nearly three months into the New Zealand Racing Board s agreement with Tabcorp and the benefits of commingling are already paying off for punters and the New Zealand racing industry. The commingling of the Australian SuperTAB and New Zealand totalisator pools has also given punters renewed confidence in placing bets as bigger pools have lowered price volatility and provided better opportunities for punters to follow Kiwi horses, trainers, jockeys and drivers throughout their Australian campaigns. The New Zealand Racing Board s Racing Manager, Michael Dore said it has been hard to measure the full impact of commingling due to a plague of abandonments driven by poor weather conditions in Australia throughout June and July. However, the final two weeks of the 2006/07 racing season were free of abandonments and betting on racing across those two weeks grew by 13 per cent compared to the same time last year. On the whole we have been extremely pleased with the results. Initially, the introduction of commingled pools presented us with a few technical challenges in terms of the way dividends are presented to Trackside viewers. For commingled races the dividends paid to customers in New Zealand are displayed as the win and place dividends on-screen. However, on occasion Trackside presenters have referred to the dividends paid in New South Wales which can be very confusing for customers. Since June, bigger pools have led to increased wagering interest which in turn has enabled the New Zealand Racing Board to import increased international racing product. Wagering essentially pays for the telecast for those who watch the races from an entertainment point of view. Previously the cost of vision and our ability to provide international wagering opportunities prohibited the Board from importing international product. The agreement with Tabcorp has enabled Trackside to simulcast international racing coverage via Sky Channel Australia at no extra cost to punters or the Industry, said Michael. A true measure of the agreements ability to leverage racing and wagering opportunities was seen in the New Zealand Racing Board s coverage of England s Royal Ascot. Trackside s Royal Ascot coverage demonstrated that there is clearly an appetite for quality, world-class racing with more than $310,000 passing through the NZ TAB in tote and fixed odds betting over the five days of the racing carnival....continued on page 2 IN THIS ISSUE: Punters and racing industry benefit from Tabcorp agreement p.2 Quinella delivers increased dividends to customers p.2 TAB retail agency wins design award p.3 Asserting control pays off for ORC at Wingatui p.4 NZRB signs agreement with St John Ambulance p.4 NZRB invests $2.5 million in big screen entertainment p.5 Regional event management workshops a big hit p.6

2 In the past Kiwi punters wanting to place a bet on Royal Ascot would have been forced to bet off shore and wait for the results to be published. We were able to simulcast live Royal Ascot coverage from Sky Channel Australia over the five nights of the racing carnival, Tuesday 19 to Saturday 23 June, from 1.00am each morning. The TAB Sportsdesk stayed open until 5am every morning to take racing tote and fixed odds bets. TAB customers placed their bets via our internet and touch tone betting channels into the commingled pools which provided better opportunities for punters placing large bets as the odds did not reduce dramatically in the last few minutes leading up to the start of the race, added Michael. Opportunities abound in this racing season through the introduction of the new Australasian wagering schedule and provision for increased international racing coverage. This provides increased wagering opportunities for punters and significant financial returns for the New Zealand racing industry. In the new racing season punters will continue to have the opportunity to bet on races from Hong Kong, but now the New Zealand totalisator pool will be commingled with the Australian SuperTAB pool. From 1 August 2007, punters will also receive more money back in the form of increased dividends for win, place and quinella bets on all domestic and imported Australian racing. Punters will receive slightly higher dividends on these three product types for successful runners through tax reductions and the introduction of commingling. Western Australia Australian Capital Territories The expected benefits of commingling have already been prepaid to the New Zealand racing industry with the $12 million funding increase this season. This bold move has enabled the Codes and Clubs to increase their stake money levels and reduce costs for owners. Victoria SuperTAB Partners Tasmania Quinella delivers increased dividends to customers New Zealand TAB punters will receive more money back in the form of increased dividends for quinella bets from 1 August 2007, following a move by the New Zealand Racing Board to lower quinella take out rates by 30% The reduced take out rate brings the quinella into line with win and place products which both operate at the lower level. For example a quinella bet that would have previously paid $79, will now pay $ New Zealand Racing Board General Manager Racing & Wagering, Bill Colgan said New Zealand now deducts the same take out rate as Australia for all three products raising the industry s commitment to the customer through increased dividend payments. The New Zealand Racing Board continues to look for opportunities to increase returns to TAB customers through its commingling arrangements with Tabcorp. Take out rates for win and place products were reduced in November All quinella bets placed with the New Zealand TAB from 1 August 2007 on thoroughbred, harness and greyhound race meetings (including commingled races from Australia) will be covered by the reduced take out rate.

3 TAB retail agency wins design award One of the New Zealand Racing Board s recently upgraded TAB retail agencies has picked up the Group Leisure Award at the 2007 New Zealand Retail Interior Design Awards. In presenting the award the judges said the TAB in Wellington s Brandon Street was a bold and dynamic evolution of an iconic New Zealand institution. Evocative graphics, colour and contemporary internal elements combine with new technology to redefine the customer experience. This is a sharp contrast to the brand s traditional environments and the designers have clearly stuck to their guns in promoting this modern look and feel. The New Zealand Racing Board engaged the creative expertise of Auckland designer Richard Stanton of Ellery Muir Associates to address the aesthetic concerns raised by retail customers through earlier research. The introduction of modern colours and finishes, clearly demarcated sports and race betting areas, flush mounted Sharp LCD monitors, touch screen information stations for sports options and Internet browsing facilities has heightened the entertainment experience for our inner city customers, said Graeme Hansen, Chief Executive Officer, New Zealand Racing Board. The new look showcase store in Wellington s Brandon Street opened in June The New Zealand Racing Board is looking to adopt a similar look and feel across some of its other agencies in the metropolitan centres.

4 Asserting control pays off for ORC at Wingatui Using the services of local volunteers has been a long standing tradition in the New Zealand racing industry and profit share arrangements are commonplace in many race clubs throughout New Zealand. The Otago Racing Club at Wingatui recently reviewed its profit share arrangement for its bar facility and decided it was time to reclaim sole financial control to ensure the long term viability of the Club s bar. Andre Klein, Chief Executive Officer, Gallop South said the Club wanted its bar facilities to more accurately reflect the Club s vision and customer service imperatives. The Club had no say as to how volunteers conducted themselves on duty and had become concerned that quality standards were not being adhered to. Following an extensive review of the bar s profitability, in conjunction with customer feedback, the Club assumed full control of its bar facilities in a bid to increase sales and improve the standard of service it offered to its customers. The Club turned to the Otago student population to resource the bar and set very clear expectations about the image they wanted staff to portray to customers. The Club employed a pool of 15 regular staff that could be called upon to work the bar at each race day. The Club now trains and manages its own staff which means we have greater control. If it s a slow day we can send staff home early, likewise if it s busy we have the ability to call someone in at short notice. We have employed a bar staff supervisor to oversee the management of the bar and we also employ a stock runner and bins man to assist on busier race days, said Andre. Assuming responsibility of our own bar promotional activity has provided us with opportunities to leverage the relationships we have with our suppliers and sponsors. In addition, all staff are fully trained in the appropriate handling of each suppliers products to ensure the customer receives a consistent quality product each time. Since the Otago Racing Club took control of its bar facilities pure bar profits have increased from $3,500 for the year ended 31 July 2004 to $42,500 for the year ended 31 July 2006 and this doesn t include proportioned bar sales from hospitality functions where drinks are provided as part of the sales package. There is huge potential for Clubs throughout New Zealand to take a similar approach. Taking full financial control of our bar operations has enabled us to make considerable cost savings while improving the quality of service we provide to our customers. Our vision for Gallop South is to develop a catering business that services as many race days as possible within the region as well as outside catering functions. This won t happen overnight given the individual financial arrangements of each racing club in the region and the demands of setting up a completely new arm of our business, added Andre. The Otago Racing Club is now in the process of recruiting a full time Hospitality Business Development Manager who will initially be employed to improve the hospitality arm at Wingatui with a view to supporting other clubs in the region to develop their business. For more information about the Otago Racing Club s initiative contact ceo@gallopsouth.co.nz NZRB signs agreement with St John Ambulance The New Zealand Racing Board has signed an agreement with St John Ambulance which will see St John charity donation boxes placed in TAB outlets throughout New Zealand. New Zealand Racing Board Chief Executive Officer, Graeme Hansen, said St John Ambulance officers play a critical role in providing first aid and emergency care to jockeys, drivers and customers at racing events throughout New Zealand. The Board and the racing community is committed to helping St John generate greater public support. St John branded donation boxes will be displayed on the counter of all nominated TAB retail outlets from 1 August.

5 NZRB invests $2.5 million in big screen entertainment A big screen is now expected at all major events, from rock concerts to motor racing, from rugby to golf. Customers across all sports genres and events have become accustomed to the vision and entertainment provided by a big screen and expect to have access to the instant replay. This is particularly pertinent for racing where the arena for live action is spread out over a large area. Big screens bring the race action to the customer and with this in mind, the New Zealand Racing Board is investing up to $2.5 million towards the delivery of big screen entertainment across up to 63 race meetings throughout New Zealand over the next three years. New Zealand Racing Board On-Course Marketing & Events Manager, Janice Hill, said the big screen programme of the past two seasons has been developed and extended to more meetings. This follows customer feedback received throughout the 2006/07 racing season where customers indicated that big screens enhanced their raceday experience. The Board will hire big screens rather that buying them outright as this option provides a more cost-effective solution to service multiple sites and the peak period. The New Zealand Racing Board s preferred supplier MonstaVision has been appointed as the hire screen provider. MonstaVision s nationwide pool of late-model screens provides a significant operational economy of scale. Critical to the success of the big screen is the production value of the presentation that is built around the race vision. The New Zealand Racing Board will continue to fully fund and manage the presentations (technically and production qualities) to ensure the screens deliver a consistent customer experience across the differing types of race meetings. Further down the track there may be increased opportunities for big screens on-course to attract new sponsorship and enhance advertising revenue for clubs, said Janice.

6 Regional event management workshops a big hit In June the New Zealand Racing Board hosted a series of regional industry event management workshops aimed at providing clubs with practical tools to develop successful events around their race meetings. The workshops were driven by customer research conducted at 57 race meetings across New Zealand where customers said they wanted more from their raceday experience. Providing customers with a positive entertainment experience is key to driving growth in on-course attendance and no-one knows this better than IER Australia s Senior Partner Glenn Hardy. Glenn, formally a Marketing Manager and Club Administer for Mooney Valley Racing in Australia, crossed the ditch to share his wealth of experience, knowledge and passion for the racing industry with more than 100 race club administrators throughout the country. Glenn presented six topics relating to event management, including pre-selling and packaging, the importance of branding and quality for the customer. Each topic had a workshop question that clubs had to work together as a team to solve providing opportunities for clubs to discuss their ideas and share common concerns around implementing new strategies. Creating themed racing events was the most popular topic with attendees and Glenn really got the creative juices flowing. Many innovative event ideas developed as a way of casting the net wider and attracting new people to the races, ranging from a Whitebait and Gumboots festival and an Irish themed day, to a Harvest theme celebrating the local area s produce. Pre-selling and packaging was also a popular and thoughtprovoking topic amongst attendees. Glenn presented examples from metropolitan and country race clubs in Australia where marquees and food and beverage packages were pre-sold to customers. Pre-selling and packaging is a proven way of providing customers with a high quality entertainment experience while generating revenue for clubs. One of the great things to come out of the two day workshops was the willingness of clubs to work more closely together. The realisation for many of the attendees that all race clubs face similar problems, coupled with the fact that they are not in competition with each other, provided a great forum for discussion. Issues such as the implementation of a no BYO policy and gate charging, two very traditional aspects of racing, were challenged, paving the way for greater opportunities for clubs to increase revenue which in turn can be invested in improving facilities. There was no doubt about each club s passion for the industry. The clubs came to the conclusion that pooling and sharing resources could potentially lessen the financial barriers to putting on quality events. The 2007/08 racing season is set to be a cracker with clubs looking to put some of the ideas shared into practice, starting with the launch of the New Zealand Racing Board s Christmas Brand in September. Passion > Have strong beliefs in the industry > Be considerate and enthusiastic about your contribution > Have fun in the work place Dynamism > Focus on change and moving forward > Think big, start small and scale fast Inside Running is published by the New Zealand Racing Board. ISSN: Jackson Street, Petone, PO Box 38899, Wellington Mail Centre, New Zealand Phone: (+64 4) Fax: (+64 4) insiderunning@nzracingboard.co.nz