Our industry has responded swiftly to the impact of COVID-19 and in particular, the restrictions that have been in place over the past week. I know from speaking with many of you that you’ve had to move quickly to adapt to the situation, by moving animals, cancelling race meetings, changing your operations and so much more. But the overwhelming message I’ve heard is that the measures in place provide us with the best opportunity to return to normal - even if it’s clearly that it will be a ‘new normal’.
Like you, our initial focus was to support a coordinated response across racing to keep people safe and racing running, even if it was behind closed doors. Clearly we now have no NZ racing and limited sport and won’t have for at least a month, so RITA's focus has now moved to maximising the product we have available for punters, reducing costs and preparing our business and our industry for a return to racing.
The RITA Board met yesterday and discussed the performance of the business on the back of COVID-19, the steps being taken to mitigate the impact and consider what the TAB and the industry may look like when racing is back up and running.
Despite a better than expected weekend for the TAB (off the back of some quality racing in Australia), unsurprisingly our turnover remains significantly down on the same period last year. Last week, turnover on racing and sport was down 55% and revenue down 51%, against forecast. The Gross Betting Revenue (GBR) for the week was $3.7m, and while this was better than we had anticipated, had we lost Australian racing we would have been left with about $600k GBR. Clearly we want to see Australian racing continuing for as long as possible, but we are also planning for what many see as the inevitable cancellation of racing across the Tasman.
We’re down about 75% of available product, which obviously impacts the bets we can sell, and when we can’t sell any bets we can’t make any money and in fact with the fixed costs of the business (rent, insurance etc.) continuing, we are losing money. That’s the dilemma we have and that’s why we are focusing so hard on reducing costs; not only for the next 3 months but for the period beyond that - the ‘new normal’. That is where the collective focus of the industry must be to ensure our long term survival and future growth.
I've spoken previously of the steps the TAB has taken to cut costs and we continue to maintain this focus. The Board and executive management team have taken pay cuts and a significant number of the organisation's staff are voluntarily taking leave, while in some cases we've had to ask staff with high leave balances to use them. But all these initiatives will only go part-way to closing the gap that we and all other international bookmakers are facing. The Board is steadfastly focused on ensuring the TAB is set up to weather this storm and come out of it with long-term sustainability in mind and continuing to support the 17,000+ Kiwis who depend on it for a livelihood. We are having active conversations with our banks, the Government and the Codes and are reassured by the support our industry has, and by the progress being made, to keep the wheels of commerce turning.
We know this crisis will have a lasting impact on the TAB and the industry. We know a return to 'business as usual' is simply not possible. We know that NZ and the world will be very different when we get on top of the virus and we have begun planning what this means for the TAB, as we know the codes have too.
As you may know, RITA suspended consultation on the 2020/21 draft racing calendar last week and this week, in conjunction with the Codes, we have started working on developing a revised calendar to take account of the impact of COVID-19. This calendar will have the overriding objectives of minimising costs and maximising revenue, underpinned by a continued focus on animal welfare. We’re at an early stage in finalising a revised calendar and no decisions have yet been made. But we expect the reality is we'll be racing at fewer venues to achieve the desired outcomes. This will require difficult and at times, unpopular decisions, but the alternative is stark.
The industry will be consulted on a draft as soon as it is ready to share, albeit, clearly our timeframe for consultation on any changes will be much shorter than usual.
The Board also wanted to pass on our thoughts and best wishes to all industry participants and staff of the TAB, the Codes, JCA, RIU and racing industry organisations who are facing stress and hardship as a consequence of this crisis. Please continue to keep safe and well during this period. We'll continue to keep you updated on any important developments.