Racing and banking consumer expert Peter Mair had a tilt at the TAB board last week and polled an impressive 28 per cent of the primary vote but still found the process left a lot to be desired.
The management of the racing industry is presently in the self-serving hands of ‘the interests of racing’ and the washed-hands of State governments that agreed to automatically divert community money to racing without requiring commercial accountability. TAB has the power to bring commonsense to bear on racing industry policy — and once its customers stop buying ‘dud’ product it will have the incentive.
In respect of my candidacy for the Board of TAB:
* having been denied low-cost access to a list of shareholders, I was unable to communicate effectively with the shareholders prior to the meeting — a considerable disadvantage when the incumbent directors are collectively plying the shareholders with glowing reports of their success;
* early in the proceedings a spokesman for the Australian Shareholders Association volunteered the view that the Association was ‘very happy with TAB Limited and supported the re-election of incumbent directors’ (for one of whom he later seconded the motion of election). I considered this to be a most inappropriate ‘licking’ intervention from an organisation not widely regarded as doing its job properly; and
* though grateful for the opportunity to speak to the meeting for a few minutes, the mechanics of doing this were complicated by having to speak from the floor while juggling a hand-held microphone and talk notes, rather than more comfortably from the directors’ podium and lectern.
In short, I was given no assistance to put my point of view to the shareholders ahead of the meeting and, at the meeting, given the choice of assisting my point of view to be put before the shareholders or not, the Chairman chose ‘or-not’.
What did not happen
Some other relevant considerations:
* the (NSW) TAB meeting was held in the middle of the Melbourne Cup week of the Victorian spring racing carnival, a circumstance that ensures the absence from Sydney of every senior racing journalist — this TAB meeting should be re-scheduled later in November to allow the reasonable prospect of press coverage by senior industry journalists in Sydney;
* some 300 shareholders attended and, unlike shareholders in Coca Cola, it seemed that this group did not drink ‘TAB’ products regularly — the shareholders asked no questions of any substance (perhaps TAB customers no longer believe TAB shares are a good ‘punt’ and no longer hold live tickets);
* no incumbent director standing for re-election chose to address the meeting — while for some the less said the better, this outcome is perhaps indicative of a range of things including attitudes to shareholders that some might regard as dismissive;
* my expectation that the attending shareholders would be basically familiar with the business of racing entertainment was misplaced and they are unlikely to have understood my remarks about TAB involvement in the business of racing entertainment. Nor, frankly, did it seem that the directors were regular punters or, more importantly, ever-listeners to cram-radio 2KY; and
* on my assessment, the comments on ‘performance and prospects’ that were made by the Chairman and Chief Executive warranted questioning, now that all the easy cost-slashing rabbits have been pulled from the hat — presumably the substantial shareholders in TAB have separate channels for obtaining answers to their questions about the company’s performance and prospects and did not need to attend this meeting. Perhaps no one asks questions.
In the wash up, most would reasonably have reservations about the effectiveness of these processes for the election of directors or a meeting of shareholders being usefully informative. Not to single out TAB, but what happened at the meeting was not illustrative of a particularly useful process for anyone, bar the incumbent management seeking to dispense with a legal formality with a minimum of fuss.
Feedback after the meeting — refining the issues
Mingling later with the shareholders and directors was useful.
Shareholders made pleasant remarks about my presentation to them. The disappointment was that this interest did not follow through to requests for copies of my papers discussing issues affecting the racing industry, TAB and the TAB share price. The potentially most powerful alliance of interests for achieving higher profits for TAB shareholders — TAB shareholders and TAB customers — is perhaps not attainable, and that’s a worry.
Of more concern to me however was the continuing wide differences on key issues between myself and the racing industry, including the TAB Board and management.
* For one example, there is a predictably intractable belief among ‘the interests of racing’ that the racing industry alone has an entitlement to lavish automatic public funding (a fixed share of TAB betting turnover) that is distributed by these ‘self-interests of racing’ among themselves on criteria devoid of commercial discipline. Nationally, this automatic ‘entitlement’ to public funds runs to some $600 million annually — it could be better spent. Even though the ‘entitlement’ is enshrined in legislation it is, to my mind, illustrative of a deplorable failure of public policy processes governing the spending of public funds. Though government could sensibly choose to sponsor racing events in exchange for a ‘commercial return’ to the taxpayers, that is totally different to surrendering to ‘the interests of racing’ an automatic, unaccountable entitlement to taxpayer funds that is basically wasted.
* For another example, the management of TAB predictably defends their commitment to taking bets on the maximum number of races they can and broadcasting (and telecasting) the races on which they take bets. To the TAB mind, there is no such thing as too much racing, an over supply of low-grade product. The only apparent lamentations are about the difficulty of cramming more product into a given time slot, and the racing industry being unco-operative in scheduling events in presently under-used morning and night time slots. It was said that every event generates turnover. Along the way the concept of quality in racing entertainment was discarded. Putting aside the 10 or so days each year that high grade racing is telecast free to air, what remains on the racing broadcast media for the remaining 355 days, is a parody of proper racing entertainment.
The idea that criticism might reasonably be made of the interaction of racing and TAB was rejected — it was said (not credibly) that surveys of customers showed they were getting what they wanted (including the broadcast of NZ racing on Saturday mornings). In the course of my presentation to shareholders, I noted that TAB’s ownership of the racing media — SKY, 2KY ‘racing radio’, and (by contract) of the ‘Daily Telegraph’ — meant that the racing industry had lost the benefit of a free press. In short, TAB customers were unlikely to see or hear discussion in the media critical of the way their racing entertainment is conducted and presented to them. I was assured that, on the contrary, all journalists working for TAB affiliated media were unrestrained as to the views they might express about any aspect of the racing industry. I will let that remark hang in the air.
The challenge now is to sharpen appreciation of the key issues and explain how separate ‘mistakes’ interact to develop the shambles that is currently the Australian racing industry.
Of course, it would help if TAB customers were buying less of a product that, allegedly, has deteriorated in quality and increased in price. On the contrary, however, it was reported that TAB turnover has held up, increasing broadly in line with the growth in the economic well being of the TAB customer base.
How do I explain that — not very well, for the moment.
A part of the explanation is that TAB has performed with excellence in the development of betting products — especially ‘flexi-bet’ and ‘pick-four’ — that encourage customers to bet more and bet more with TAB in NSW.
This race is a long one. The story will unfold.
Those counting on TAB customers having an inelastic demand for betting entertainment (ie: ‘addicted’) may be disappointed. They would do well to remember that the traditional ‘Irish Catholic’ customer base no longer attends church as regularly as it once did — most only go now for the Group 1 events, and services are now only reliably available on the Sabbath.
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