Pankhurst Decision

Harness Racing Faces Cash Crisis
27/08/2003 09:15 AM - Tim Donoghue - The Independent

The cash-strapped board of Harness Racing New Zealand Incorporated (HRNZ) - the organisation responsible for overseeing the $250 million a year punted at trotting meetings throughout New Zealand - is holding an emergency meeting in Christchurch today to consider its future role in racing and bloodstock industry administration.

The urgent meeting was called to consider the ramifications of a High Court judicial review decision delivered on 11 August by Justice Graeme Pankhurst in the High Court at Christchurch.

Justice Pankhurst ruled that HRNZ acted illegally when it amended its rules on 30 July 2001 to impose a compulsory $30-a year-levy on this country's 5,000 owners and breeders.

The HRNZ rule change in July 2001 meant any owner who did not pay the accreditation fee could not enter a horse for race meetings.

Similarly, under the same rule change, horses could not be registered with
HRNZ unless breeders were first accredited.

The High Court decision is seen as a major blow to the "old boys network" running HRNZ - an organisation with a long history of fund-raising problems.

Christchurch breeder-owner and businessman Kypros Kotzikas - who wants to put harness racing on a more professional basis - and the NZ Standardbred Breeders Association's Canterbury branch successfully took the case to the High Court.

As one observer put it: "They stood up to the powers that be in the harness racing industry and rolled them."

HRNZ chief executive Edward Rennell said one item on the agenda for today's meeting would be the possibility of an appeal to the Court of Appeal.

However he was not in a position to make any further comments on the
High Court decision issue until after the board meeting today.

Racing industry insiders say the impoverished HRNZ is unlikely to appeal to the Court of Appeal as Justice Pankhurst had already indicated costs would be awarded against it in the High Court case.

HRNZ had plainly already suffered a significant financial setback and insiders say they would be on a hiding to nothing by appealing the decision and doubling their financial exposure.

The $150,000 collected annually from the levy is being used to prop up the financially troubled parent body of all harness racing clubs in New Zealand - HRNZ.

Justice Pankhurst ruled the levy breached the provisions of the Racing
Act 1971 and the Racing Act 2003 which came into effect on 1 August, 2003.

Under the 2003 Act, Harness Racing New Zealand became known as Harness Racing
New Zealand Incorporated.

"Put simply, securing an adequate membership and funding for the two associations was not an aspect of the control of harness racing," Justice Pankhurst said.

The decision leaves HRNZ vulnerable financially. Perhaps the most significant item on the agenda for today's meeting is whether accreditation fees already paid by owners and breeders will be refunded in whole or in part.

It is understood most of the money collected from the levy during the past two years has already been spent.

Then there is the issue of accountability in the wake of the High Court decision facing chief executive Rennell and board members - chairman Jim Wakefield (the NZ Trotting Owners representative) and Peter Smith (the NZ Standardbred Breeders representative).

Kotzikas told The Independent as a significant stakeholder in the racing industry, he and others like him felt they had no say in how the industry was run.

They wanted to discuss how the relative value of stake money had been dramatically eroded over the years.

"There has been a dramatic decline in the real value of prize money. Because of this it is hardly surprising people involved in the racing industry are struggling to cover their costs," Kotzikas said.

The current HRNZ financial structure meant owners were, in effect, funding their own stake money.

He pointed to the export levy imposed by HRNZ. Whenever he sent a horse overseas he was forced to pay HRNZ a $550 export levy fee - an amount (based on his own business experience as a significant exporter of fish) he described as usury.

He wants HRNZ to prepare a proper business plan and focus solely on its on-course duties.

"HRNZ has a legitimate interest in ensuring the fair conduct of racing on-course and for ensuring lawful gambling on-course. It has no legitimate interest in the business affairs of owners and breeders off-course," Kotzikas said.

He said the trotting industry establishment might view him and his supporters as just another group of hotheads tilting at windmills within the industry. "But the challenge has just begun for us and we're not going to go away," Kotzikas said.

He and his group wanted to work with the industry in an effort to help
it through its current problems.

The fundamental problem he had with the industry was the people who had been charged with managing on-course activities did not - in the main - have the requisite skills to save the industry from the calamity awaiting it.

"This crisis will only be solved with commercial skills and the combined efforts of motivated business people. In turn, a movement to save the industry can only arise from off-course groups who are going to lose
their livelihoods if they don't move," Kotzikas said.

Kotzikas, the owner of Christchurch-based United Fisheries, and his wife Mary own approximately 200 horses in New Zealand, Australia and the United States for racing and breeding purposes.

They operate an extensive Christchurch track and stables complex from their Lavros Lodge property in Yaldhurst where they have 165 horses in an integrated breeding, training and racing programme.