Skin in the game: New Zealand racing’s biggest investors put an innovative reform plan on the table

Cover image courtesy of Peter Rubery (Race Images)

New Zealand racing’s newest reform blueprint has not come from a government department or a room full of career administrators, but directly from a powerful group of successful kiwis whose businesses, bloodstock and balance sheets are tied directly to the industry’s future.

The TAB New Zealand Racing Advisory Committee is chaired by Sir Peter Vela, the owner of New Zealand Bloodstock and Pencarrow Stud. Around him sit Cambridge Stud’s Sir Brendan Lindsay, Waikato Stud principal Mark Chittick, Nearco Stud’s Greg Tomlinson, Breckon Farms’ Ken Breckon, champion trainer Chris Waller and leading standardbred owner Steve Thompson.

The group have spent decades building businesses in New Zealand and will carry the consequences of a shrinking domestic industry. The Committee’s report is, understandably, not short on urgency.

Gallery: TAB New Zealand Racing Advisory Committee members

It warns that thoroughbred and harness racing are carrying a structural deficit of more than NZ$50 million a year; that more than NZ$700 million of capital is trapped across fragmented venue ownership; and that the industry is spending NZ$91 million annually on administration, equivalent to 58% of the stakes and bonuses returned to participants.

The thoroughbred foal crop has fallen 22% in the past decade, while more than 500 thoroughbred breeders have exited the industry since 2015. Forecasts show starter numbers will fall another 18% by 2035.

Harness racing’s position is more confronting again. Its foal crop has fallen 44% over the same period, with starter numbers forecast to decline 32% by 2035.

The report argues that a higher funding stream from TAB NZ has bought racing time, but not fixed the problems underneath it. Without reform, it says reserves will be used to sustain current returns before a decline in distributions becomes unavoidable after the expiry of Entain’s guaranteed funding period in 2027/28.

That is the context for five ambitious recommendations that form a plan to turn the decline around.

The recommendations deal with governance, property, breeding tax, integrity and wagering. More importantly, they attempt to answer the question New Zealand racing has struggled with since the Messara Report in 2018: how do you reform an industry where everyone agrees the system is not working, but no one wants to give up the part they control?

The Messara Report partly unexecuted

The Committee’s report arrives eight years after John Messara delivered his review of the New Zealand racing industry, which set out 17 recommendations across governance, wagering, venues, property, breeding and prizemoney.

Messara was clear that the recommendations were interdependent. In a 2020 submission to Parliament, he said they had been designed to work as a “matrix” to reverse the industry’s fortunes, warning that any significant departure from the program would affect the ultimate outcome. Cherry-picking, he said, would compromise the future success and prosperity of the industry.

Elements of the program were implemented. TAB NZ was restructured, the Racing Integrity Board established and the Racing Industry Act 2020 created a process for surplus racing venues to be transferred from clubs to the relevant code.

The wider reform package, however, was never carried through. Venue rationalisation stalled, club property remained a point of conflict, and racing retained a fragmented governance structure in which codes, clubs and industry bodies continued to operate with separate priorities and overlapping responsibilities.

The Committee says the present model still spreads decision-making between TAB NZ, NZTR, Harness Racing New Zealand, Racing NZ and individual clubs. It says the result is duplicated administration, disconnected property decisions and a system where local interests can block industry-wide action.

It calls this a “veto culture”.

The difference between the Messara Report and this one is that the Advisory Committee no longer appears to believe collaboration can solve the problem on its own; the change needs to come from the structure itself.

Recommendation 1: One accountable body

The first proposal is a single governing body with responsibility for industry strategy, funding, calendar, programming and marketing.

NZTR and HRNZ would retain their code identities, but their present functions would sit within a new, centrally accountable structure. That would include licensing, handicapping, rules, welfare and operational delivery of the calendar.

The Committee says it has identified 122 functions across the racing ecosystem, 92 of which could be consolidated. More than half, it says, could be brought together immediately if a decision was made to unify racing governance and administration.

Its estimated savings are NZ$20 million a year by the end of the Entain funding guarantee. That includes NZ$9 million to NZ$14 million from rationalising the club network, NZ$3.3 million to NZ$5 million from administrative consolidation, and further savings in marketing, governance and shared services.

There is an obvious political hurdle as a single body would require NZTR and HRNZ to give up meaningful authority. It would also require Government involvement, because the Committee wants the new entity ultimately established through statutory change and its directors appointed through Government.

The report’s case is that the current arrangement has no single point of accountability. When the foal crop falls, facilities deteriorate, costs rise or funding stalls, there are many bodies able to explain the problem but there is no body with the authority to fix it.

Recommendation 2: A Racing Property Vehicle

The most original and important idea in the report is also likely to be most challenging to execute.

The Committee aims to establish a Strategic Racing Property Vehicle that would pool racecourses, training centres and other racing assets under professional management.

Individual clubs would receive equity units reflecting the value of the assets they contribute. They would retain a financial stake in the pool and, potentially, their club identity, but they would no longer directly control the underlying land.

The vehicle would make investment decisions across the network. It could direct money to race surfaces, training centres, night-racing facilities and commercial property opportunities based on strategic value rather than the preferences of individual club committees.

The report is explicit that clubs would not be compelled to transfer their property. But participation would come with a very clear incentive: clubs outside the vehicle would not be eligible for industry-funded infrastructure projects or vehicle-backed capital works.

That is a significant departure from the existing approach, where clubs retain their land and the industry attempts to negotiate venue rationalisation club by club.

Major sports routinely centralise commercial rights, broadcast income and player contracts, but it is much less common for independent clubs to transfer real estate into a collective vehicle while retaining an equity interest in the pool.

Major League Soccer offers a partial governance comparison. Its investor-operators own a financial stake in MLS as a whole, not just their individual team, while the league centrally controls key commercial assets and player contracts. Its stadiums, however, remain locally owned or controlled.

New Zealand Rugby has also separated commercial rights into a central entity, NZR Commercial, but again, the grounds are not included.

The closest practical comparison within New Zealand racing is the Auckland Racing Club and Counties Racing Club merger in 2021 to form Auckland Thoroughbred Racing, bringing Ellerslie, Pukekohe Park and their other assets under one entity. That gave the new body the ability to pursue a single property strategy rather than two separate club agendas.

The proposed Racing Property Vehicle goes further than any of those examples. It is a structure designed to give clubs a continuing financial interest while moving control of capital allocation to a central body.

The Committee’s argument is that this is how racing avoids selling assets piecemeal to meet operating costs. Instead, surplus or under-used land could be sold, leased or redeveloped, with the proceeds reinvested into the venues and infrastructure that remain essential to the industry.

It is a creative solution to New Zealand racing’s major infrastructure problem: how to unlock capital without confiscating club land and identity.

Recommendation 3: Tax settings to rebuild the foal crop

The report’s tax package is an exceptionally detailed call for Government support.

It proposes accelerated depreciation for broodmares, immediate write-downs for New Zealand-bred yearlings bought at domestic sales, a standard NZ$2,500 tax value for homebred foals, default pass-through GST treatment for racing and breeding co-ownerships, and an expansion of the Financial Markets Conduct Act exemption for bloodstock syndicates from five investors to 15.

The headline measure is an immediate 100% write-down for qualifying broodmares. It would apply to mares bought for more than NZ$200,000, aged four or older and domiciled in New Zealand for at least nine months of the year.

The Committee also proposes reducing the normal depreciation period for mares from six or seven years to four or five.

There is a clear case study to compare with the US taxation changes. In 2025, the Trump administration’s One Big Beautiful Bill Act permanently restored 100% bonus depreciation for qualifying business property, including most bloodstock placed into service in the United States.

The initiative meant an eligible purchaser could deduct the full cost of qualifying bloodstock in the first year.

It was not the only reason for the strength of the American market, but the timing was hard to ignore. Keeneland’s 2025 September Yearling Sale grossed a world-record US$531.5 million, up almost 24% on the previous year.

New Zealand’s proposal is more targeted than the American model. It does not seek a blanket deduction but focuses on broodmares and New Zealand-bred yearlings, with a proposed clawback if a yearling is resold within 12 months.

The intention is to make capital recovery quicker for breeders and owners, increase reinvestment and create a reason to buy and breed locally.

The standard NZ$2,500 value for homebred foals is another practical proposal. It would replace the present cost basis and defer tax until a genuine return is realised. The Committee notes that Australia uses a $20 nominal value for homebreds, rather than forcing breeders to account for accumulated costs at foaling.

The tax measures are an attempt to align tax treatment with the long lead time of breeding. A mare decision made this season affects the foal crop next year, the yearling market two years later and the racehorse population several years after that.

Recommendation 4: Take integrity out of the industry budget

The Committee recommends that the Racing Integrity Board be funded through the Crown, rather than through the industry it regulates, due to independence.

The present model means the regulator’s funding is negotiated in an industry facing financial pressure. When stakes, facilities and administration are all competing for limited money, integrity spending can become another budget line.

Crown funding, the report says, would remove that conflict and place racing integrity on a footing more consistent with the Sport Integrity Commission.

It would also remove one recurring vulnerability for racing. When welfare or integrity is questioned publicly, the industry should be able to point to a regulator whose funding is not dependent on the people it oversees.

Recommendation 5: Modernise TAB NZ

The final recommendation is to modernise TAB NZ’s legislative settings so it can compete with offshore wagering and diversify its revenue.

The report identifies online casino products, in-race betting and novelty betting as areas where TAB NZ needs more flexibility.

The Committee’s position is that consumers do not stop wagering because a product is unavailable locally. They move to offshore platforms, where New Zealand receives no revenue and has less capacity to impose harm-minimisation controls.

New Zealand racing remains heavily reliant on TAB NZ and the Entain partnership. The Committee is arguing that the industry cannot build a long-term funding model around a wagering product restricted to a market that no longer exists.

Peters urges collaboration

The response to the report has exposed the gap between the Committee’s urgency and the industry’s ability to act.

Racing Minister Winston Peters has said that large-scale legislative reform is not an immediate Government priority with an election approaching. He said to RNZ that the industry should first demonstrate it can act collectively and make progress before seeking further legislative change.

NZTR agrees that collaboration is needed, but its response makes clear it does not believe the process has been collaborative to date.

Board chair Russell Warwick said NZTR had consistently supported a collaborative approach but that “to date, that collaboration has been lacking”. He said the Committee needed to engage in genuine negotiation rather than seek agreement to the proposals in their current form.

NZTR has also committed to maintain funding at current-season levels for the first three months of 2026/27 while longer-term arrangements are worked through.

However, while clubs and participants are offered immediate certainty, it does not resolve the underlying problem.

But the advisory report is more than a warning about decline; it is a serious attempt to deal with the underlying mechanics of the business model, delivered by some of the most successful business brains in New Zealand.

What the committee has produced is the most creative reform package New Zealand racing has seen since Messara, assembled by people with nothing to gain from a consulting fee and a great deal to lose if the industry keeps shrinking.

As the New Zealand Thoroughbred Breeders' Association put it, dismissing the idea that this is a sunset industry, there is "light at the end of the tunnel," and a real chance to use this moment to sustain the sport.

The harder truth is what the report makes explicit: the tunnel has an exit, but it also has a deadline.