Racing Uncertainty

IN May 2012, it emerged that the Irish Greyhound Board was facing a serious debt crisis following the botched construction of its new flagship stadium on the outskirts of Limerick.

The company responded with an advert in race cards to reassure punters the Limerick development had been a success and it had “significant capacity to meet all of its financial obligations to the satisfaction of banking partners and the State-run Comptroller and Auditor General’s office.”

It said it was in such rude health it had €2.6m to spend on additional building projects.

Since then, it has faced a series of regulatory scandals and had to deal with a steady decline in interest in the sport which has restricted the opportunities to turn its fortunes around.

It has been in frequent contact with the Department of Agriculture and has had public and private meetings with the relevant ministers.

The IGB has also appeared before the Public Accounts Committee and presented a five-year strategy that claimed it was already on its way to solving its problems.

Now, an independent review prepared for junior minister, Tom Hayes, has said far from a new dawn, the semi-state firm is in a much worse situation than it was in May 2012.

The report, authored by Indecon, has said the industry is declining in almost every sector and its reliance on new business opportunities will not be enough to allow it to survive.

The board has been told because of the decision made in 2009 to proceed with the development of the Limerick track, the company will have sell its assets, including Harold’s Cross, and reduce prize money if it is to survive.

In essence, it said the economy has hit the industry hard, but much of its troubles are its own making.

“Our analysis has indicated that Bord na gCon has faced very difficult, financial challenges in recent years and the sector has also experienced potential regulatory damage due to the outcome of some regulatory cases…

“The financial outcomes are due significantly to the economic crisis and the scale of the decline in income has been dramatic. The financial stresses have also been due to bearing the cost of a major capital development project that was largely funded by bank borrowings and which did not deliver expected outcomes.”

Limerick Track

The report labelled the €23m Limerick track as “the single largest contributing factor to the level of debt.”

The decision to press ahead with the development was made in June 2008. At the same time the company was before the Public Accounts Committee to account for previous failures.

Yet, despite the criticism it faced, the board decided to build the new track on the basis of gentleman’s agreement it shook on with a land development company a year earlier.

At a more recent PAC meeting, the current chairman of the IGB, Phil Meaney, said he had brought in an independent firm to review the project and he was happy with it.

He said he wanted to bust the “myth of Limerick”, and that when it came to criticism of the development, he thought the IGB needed to “kill Limerick once and for all.”

He said he was “satisfied with the facts and figures to do with Limerick.”

However, Indecon said otherwise. It said the IGB made a decision to build a stadium without any proper consideration of the likely costs and benefits.

Instead, the directors viewed a spreadsheet but there was “no documentary evidence presented to the board in June 2008 to underpin the validity of critical assumptions” that had been made.

In the end, the estimates made about the likely financial performance of the track proved “very optimistic.”

Indecon said an updated cost benefit analysis was presented to a “critical board meeting” on April 23, 2009, when the decision to proceed with the construction was made. At this meeting, the early trading figures for the first two months of 2009 were available but this was not considered.

“There is, however, no evidence that the implications of this decline in revenue for the Limerick project viability were discussed or that there was adequate analysis of the underlying assumptions.

“Based on the analysis and documentation available to Indecon, it is hard to conclude anything other than the fact that there was inadequate appraisal of the Limerick capital investment,” it said.

Regulation

The report has highlighted that a large number of positive drug tests were dropped and this is threatening the reputation of the industry.

The consultants said less than 1% of samples were showing up as positive, despite suggestions that doping was more prevalent.

It said the low number of positives was a concern as was the long delay before guilty parties have had their case details published.

Indecon said there was evidence of a large number of tests getting taken at tracks but this level of policing did not correspond with the low number of names that were eventually published.

It said there had been particular issues and the Control Committee had thrown out a number of positive tests because there were doubts about the storage temperature of samples before they reached the laboratory.

At another stage, separate cases were ruled out because of problems with the labels attached to the samples.

“It is clear that having a position whereby protocols being implemented are deemed to be inadequate by the Control Committee is a significant issue and there is a need for absolute clarity between all parties on appropriate protocols and on other aspects of the processes,” it said.

Financial future

In November, Phil Meaney told the Public Accounts Committee that the IGB’s five-year plan was the document on which its survival would be based.

“The minister has noted our five-year strategic plan. In my view, that is a real living and breathing document. We are close to the first year of that plan now. The minister has asked for an annual review of the plan.

“We look to be on target for the first year and we intend to keep in contact at least annually and to keep the minister apprised by presentations and by our accounts and figures and whatever he requires.”

However, the consultants said the first year of the plan had fallen well short, and the IGB’s scope to find further savings was small.

“The first year of the strategic plan ended with a total group surplus of €40,000, compared with a figure of €238,000. The most significant aspect of the 2013 performance was the non-achievement of the target for net turnover from racing facilities and the plan appears to be approximately one year behind targets.

“On the cost side, major reductions have taken place over recent years so reductions will be increasingly difficult to find unless they involve a rebalancing of the number of races and a corresponding reduction in prize money.”

The IGB’s income was not sufficient to keep up its current level of activity and to pay down its debt, it said.

Indecon said it would not be prudent for IGB to rely on new business opportunities, which was the strategy recently presented to the Public Accounts Committee, but instead it had to take urgent action to reduce races at certain stadia and cut prize money.

“This, combined with a programme of asset disposals, will provide the basis for sustainable development of the sector,” the report said.

A full, financial breakdown shows that attendances at tracks has fallen from 1.3m to 687,000, and, although Harold’s Cross was one of the better performing tracks, it should be sold. The board was also told to reduce prize money and cut the number of races at loss-making tracks.

Junior minister Tom Hayes has given the company three months to come up with a plan for how it will change tack and adopt the Indecon report in order to secure its survival.


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