Written by: Dave Briggs
Ontario Racing chair Hugh Mitchell discusses the challenges facing the association.
In mid-August, Ontario Racing (OR) chair Hugh Mitchell addressed a number of issues facing the association group that represents the industry to government — including long-term funding, funding for OR itself, working with government with an election looming in 2018 and why all of this is taking so long.
Where is Ontario Racing today compared to when it was first formed and what might the immediate future hold for it? Can you give me a broad overview?
Ontario Racing officially started in April of 2016. So, we’re about a year-and-a-half old. We evolved from the (Ontario Horse Racing Industry Association) OHRIA model. We have just finalized our governance structure… getting our bylaws established, getting our corporate policies, board policies in place and a governance structure that has evolved from the old OHRIA model. It’s broader and, we believe encourages more industry engagement and involvement. So, I’m pleased with that progress. The other two huge pieces yet to be finalized is working with government and the OLG on a long-term funding model for the industry, as well as working with government and OLG on the model to fund OR on a long-term basis… Although it’s a membership-based industry association, there’s no membership fees paid. So, it has to be funded somehow, some way… It’s my personal hope that we can resolve most of those important funding issues before the end of the year, or sooner. That’s what we’re busy working on now. In addition to that is the whole Horse Improvement Program (HIP). We just recently had a consultant’s report filed with our board, as a draft, on a HIP review process that took a month or so. So, the immediate challenge is finalizing the program for 2018. That’s not likely going to happen until early-to-mid-September, but, you may recall, that we were quite late last year doing this. Our intent is to be much earlier than January or February announcing what the 2018 program is going to be. It’s my challenge to see that the program gets finalized and shared publicly in September… I’ll be honest with you. On a personal note, it’s been heavy lifting… Regretfully, we lost a good executive director in Rob Cook just recently. So, we’re beginning that search process. There’s been some hiccups and certainly the timeline has not moved as quickly as I, personally, would have liked.
On long-term funding, OR did some province-wide consultations beginning in the latter half of 2016. The numbers proposed at that time was annual funding of some $94 million to cover a term as long as 23 years (through 2038). 1. Is that long-term funding model still the one Ontario Racing is working on getting passed? 2. How is finalizing that funding impacted by next year’s provincial election?
“In answer to your first question, there is no new funding model being contemplated. It’s the original funding model that went through the consultation process. There are some minor amendments, but the concepts inside that model remain intact. The same amount of money, same years. Yes, that model is the model that is currently being discussed and hopefully finalized before the end of this year, or earlier. There’s no new pieces — at least as of August 16th I can say there’s no new pieces then what we presented in the consultation process nearly a year ago. The election issue is a real one. That’s why I think it’s critical that we resolve (funding) this fall if at all possible and no later than December 31st, because if there is this spring, early-summer election reality, it will be extremely difficult getting this funding model formalized after January 1st, in my view.”
Is it your sense that the government needs to get re-elected for this funding to happen?
“No, I don’t get that sense. If I did, I would tell you. I don’t get the sense that there’s a delay tactic on the government’s part. When you look at what’s being contemplated in terms of the amount of money and the length of time that it’s committed to, it’s unprecedented that kind of support for an industry like ours. So, this is new ground for government and for our industry. When you look across North America at other jurisdictions, there’s some models that are five or 10 years, but to go out as far as 23 years, it’s way out there. So, it’s pretty significant. That in itself makes it a bit of a challenge. I’m optimistic, I truly am. I can honestly say I’m optimistic that something will be resolved before the end of this year. That’s where our focus at OR is strictly on, getting that funding in place.”
Why has it been so challenging to get the funding issues resolved?
I think the challenge has been getting everybody aligned, which means government, which means government agencies like OLG (Ontario Lottery and Gaming corporation) and AGCO (Alcohol and Gaming Commission of Ontario) and then it means the industry. The industry, as you know, is made up of breeders, horsepeople and racetracks and there’s three breeds. So, when you think of all the pieces to the puzzle, it can be pretty protracted and convoluted in getting alignment and agreement on certain initiatives. So, I think it’s the nature of the industry and it’s new relationship with government and government agencies that has made it (challenging), because it’s the first time through, really. We never had a situation where the OLG provided oversight to the industry before. Previously, we had a commission, the Ontario Racing Commission, and it had direct accountability to government. So, that structure has changed and that’s new for everybody. That, in itself, doesn’t make it negative, it just means we’re learning as we go. But, no matter what the reason, we have to get better at moving the needle quicker, in my view — we being OR. That’s the challenge. That’s where our focus should be.
What can you tell us about why OR executive director Rob Cook left?
“Rob came from the waste management industry, knew it well and spent a fair bit of time there. Racing was new to him. You can appreciate there’s a lot to learn in a short period of time. I thought Rob did an excellent job and I thought he made a huge contribution toward OR. It’s disappointing to lose him, but he’s going back to an industry he knows. He’s going back to an industry where there’s security around the funding. That’s one of our challenges – OR is working on a one-year transfer payment agreement through the AGCO. There remains a question, although I said earlier that I am very optimistic that the long-term funding for the industry will be resolved, it’s still not resolved. So, from a career perspective, it’s a little challenging to hire an E.D. with no guarantees that funding will be in place long-term. So, on an interim basis, Mike Chopowick has stepped in to serve as an interim, acting E.D. while our search starts for a replacement for Rob Cook. How long that takes, I’m not sure. Again, the issue of the long-term funding of OR may be a factor in making it more difficult than we’d like to secure someone. But Mike has stepped in and we’re running a pretty lean operation with one person out of the mix, because we haven’t replaced Rob. We’re going to have to do what many do in the private sector and tough it out and get through it. There’s an old expression: You never say whoa in a muddy spot. From my perspective it’s onward and forward. Again, trying to formalize and finalize the funding for the industry before the end of the year is my daily focus.”
How is OR different than its predecessor the Ontario Horse Racing Industry Association (OHRIA)?
“That’s a very good question. We’ve added some at-large directors. They don’t represent any particular organization. We have, at least it’s designed to be, an independent chair, who doesn’t represent an association or a organization when he or she sits. The two at-large people and the chair are picked by the board. They’re not picked by an industry association. That’s a little different. It’s also an expanded board and its mandate is much fuller than OHRIA. It’s kind of all-encompassing. The current structure is the Racing Alliance reports through to OR, which, in turn, reports to the OLG… That never existed in the OHRIA days. OHRIA was a membership-based organization, so members of the industry had a choice whether they wanted to be a member of OHRIA or not. In this model, OR, by its design is responsible for representing the entire industry — that’s its obligation. So people don’t have to worry about making choices of whether they want in or not. OR’s mandate is to represent them…. OHRIA served its purpose very well, in my view. It had its strengths and weaknesses and, to be honest with you, OR is not perfect, not by any means. We’re evolving and, hopefully maturing and learning from our mistakes. So, I’m optimistic that OR, in time, will have a strong leadership roll with credibility from all stake-holders within the industry and supported by the industry. But we’ve got to put some pucks in the net fairly soon.”
How do you respond when you hear some in the industry are getting impatient?
“I understand that. They have good reason to be impatient. So, I get that. I would never argue with that. Our challenges that I spoke of earlier, they are our challenges. They’re not for the industry to worry about. That’s something OR has to worry about. So, I’m not one to make excuses. Our board are volunteers. I know they’re as frustrated as the rest of the industry is with us not being able to move the needle on some of these very important subjects. So, I don’t think we have any choice but to continue to forge ahead as aggressively as we can.”
How often do you meet?
“Once a month. In the early days we need to be meeting monthly, I think. We have full agendas and there’s good interaction with the OLG.
What is the interaction like between OR and the OLG?
“We don’t always agree. Not only do we not always agree amongst ourselves, but, on occasion, we have disagreements with the OLG and they have disagreements with us. So, we work through those and we start to learn each other’s personalities and we start to understand each other’s perspectives and goals and objectives. Hopefully, we can find and establish good alignment on those goals and objectives, but when you’re dealing with a situation where you’re being funded by government, you lose an element of control. That’s no secret and that’s not profound. That’s just the way it is. You have to learn how to manage that control-managed circumstance. A lot of times it’s a learning curve for some members of government. Our industry is pretty complicated and has a lot of moving parts to it. It’s not an industry that’s easily understood and the longer you work in it, hopefully you’ve learned from that time all the moving parts and the connectivity between breeders and racetracks and horsepeople. Even something as simple to us as the four or five-year cycle of horse breeding, that’s something that people who are not close to our industry, it takes some time for them to understand this lag period on decisions on stallions being stood, mares being bred, yearlings being sold, horses being conditioned and trained as two- and three-year-olds. All that minutiae, and important minutiae and logistics is not easily understood by people that don’t know our business.”
What is your response to those that feel that they are not represented at OR’s table?
“We have a committee structure that has yet to be put in use. That’s our intent which is to try and get further engagement through a committee structure and get the grassroots rising up inside the organization to give us good feedback, advice and council on how to move the industry forward. So, we haven’t been able to capitalize on a strong committee structure that’s constantly feeding the board with the priorities of the industry. We’ll get there. I’m pretty sure we will, but, until we get there, I could easily see how some stakeholders would feel, ‘I’m not engaged. Nobody communicates with me. How is my voice being heard?’… It’s a legitimate issue and it’s something we ought not to ignore and we won’t.”
You also mentioned HIP funding. The way things are going so far, do you expect drastic changes on the thoroughbred side?
“What I can say is HIP is funded, for the most part, from wagering. So, as wagering goes, so does the HIP funding. Just taking that into context, it’s going to be hard to maintain the same funding levels as we’ve seen, with wagering moving around as it has. It’s premature for me to say what the number is, because I don’t actually know for sure. But, we will know and we will share it very shortly with the various HIP committees. I think it’s important that the HIP committees determine how to prioritize the spending in the coming 2018 year. But it’s not going to be more money, for sure, and it’s going to be very difficult to maintain the current funding level to be brutally honest. I think this is what we ought to do going forward is spend more time with the industry showing how HIP calculations are made. It’s a mathematical exercise, for the most part, based on wagering. The feedback I get from breeders — thoroughbred and standardbred — is that (a) They want some say in how the money gets spent — and I think that’s legitimate and (b) They want to know what’s the amount. It may not the number we’d like, but at least we know it and we can work with it because we’re providing input into how it gets spent. I, personally, have always felt the priority for our industry is purse structure. That’s where your ownership base is supported. It’s the engine of the industry — purse structure — no matter what the breed is. As purse structure goes, the industry goes. It fuels investment, a strong purse structure, it fuels quality of racing, which is important in the wagering numbers and, as you well know, our issue is kind of the mechanics of wagering. It’s self-funded, to some degree. It’s all based on wagering and wagering is based on quality of racing and purse structure.”
Some thoroughbred breeders are concerned about the Ontario Sired program. Any thought on OR’s role in the thoroughbred Ontario Sired program?
“I think it’s an OR responsibility. Now, the vast majority thoroughbred wagering comes out of Woodbine. That’s where the vast majority of the race dates are. They will play an integral role and, as you know, they’re the manager of the Alliance. So, Woodbine will have a fair bit to say about how the program looks and what it looks like in 2018, but under the guise of OR… That committee has not, yet, met. So, it would be premature for me to comment on what the program might look like, but I can honestly say that I continue to be very impressed with Woodbine’s commitment to racing — both standardbred and thoroughbred. I know in some small circles people question Woodbine’s motives, but, from my perspective, Woodbine has been extremely important to this industry. Woodbine is key to this industry moving forward and growing and I’ve seen then being nothing but supportive, honestly, and leaders in trying to get this industry through this difficult period we now are in. It’s a watershed period for our industry. Woodbine will play a leading role in getting our industry back on track, which is no surprise, but I honestly sleep at night knowing Woodbine is managing the Alliance. I sleep very well at night, because, in my view, they’ve done an excellent
job – the Alliance and some of the tracks would not be around if it wasn’t for Woodbine.”
You have to deal with distrust of Woodbine in some circles of the industry, but there’s also distrust of OR, the OLG, government. Is that another challenge facing the OR board?
“It is. To some degree I can understand the skepticism around OR, because we’re young, we’ve only been going for a year and a half. We haven’t moved the needle like our board would like us to. I don’t quite understand the skepticism around Woodbine. Maybe it’s because I have a different level of interaction with them, but, believe me, this industry would be in peril if Woodbine wasn’t playing the leading role they are. The issues around OLG, again, are somewhat like OR. They’ve developed this racing division, of which OR reports through to government. It’s new, so anything new creates an element of skepticism, no matter what. I think the industry is taking some time to get its head around the role of OLG in all of this, but, again, my interaction with Stephen Rigby and Cal Bricker at OLG and their management team has been all pretty positive and all pretty supportive. The key is to get our objectives and goals aligned and there’s differences of opinion. It’s usually around the alignment piece, but it’s not major hurdles, I don’t think, at all. I think the OLG wears the decision to cancel the racetrack slots program in the eyes of many. So, naturally, the skeptics and the critics would think they’re an enemy, rather than an ally, which is unfair, because I see them as an ally and nothing but.”
Are we spreading the pie too thin and having too many race dates? Have you discussed that issue at OR?
“We haven’t got that far because the priority was the long-term funding. Once that long-term funding model is set, then the priority will be: ‘How do we sustain this industry on this amount of money over the next number of years’ and for sure, in my view — and this won’t be the first time you and I have talked about this — there needs to be consolidated racing and rationalization of the industry. There’s been a considerable amount of it when you look at the number of race dates today versus 10 years ago, but we have to keep our mind open to rationalizing the industry to make sure that the supply of racing product matches the demand. In my mind, that will constantly evolve. In the private sector, it does. Demand changes and it’s the customer demand that drives your business decisions and that’s one of the challenges of our industry over the last three decades is we’ve been very production driven. We’ve been forced into new models and be demand-driven. As difficult and as painful as that adjustment has been, it’s the right thing for the industry.”