Oireachtas Joint and Select Committees
Thursday, 4 May 2017
Public Accounts Committee
Bord na gCon: Financial Statements 2015
9:00 am
Alan Kelly (Tipperary, Labour)
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Please note that there will be two parts to today's meeting. The second session will deal with the 2015 appropriation accounts, specifically the internal audit of financial procedures in the Garda College as per Vote 20 - Garda Síochána. This session, however, will deal with Bord na gCon's financial statements for 2015. For clarification, Bord na gCon is accountable to the Committee of Public Accounts for its finances but not for its regulatory functions, which are within the remit of the agriculture committee. We are here to examine the financial accounts.
From Bord na gCon, we are joined by Mr. Phil Meaney, chairman, Dr. Seán Brady, interim chief executive officer, Mr. Michael Murnane, chief financial officer, and Mr. Colin Walsh, director of commercial operations. They and their colleagues are welcome.
I remind members, witnesses and those in the Public Gallery that all mobile phones must be switched off. I advise the witnesses that, by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. If they are directed by it to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.
Members are reminded of the provisions of Standing Order 186 that the committee shall also refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government or the merits of the objectives of such policy. Members are also reminded of the long-standing ruling of the Chair to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.
I call on the Comptroller and Auditor General to make his opening statement.
Mr. Seamus McCarthy:
As members know, Bord na gCon was established to provide a statutory basis for the control, regulation and development of the greyhound industry. It operates racing activities through 11 subsidiary companies and licenses greyhound racing at other privately owned tracks. With effect from 2015, it has also operated catering and beverage services at its tracks. Those services were previously outsourced. At a previous meeting, the Chairman asked for a diagram explaining the group. It is on screen now. I have tried to indicate what comprises the group and the extent of my audit, which includes the head organisation and a company called Abargrove, which provides the catering services and operates the Newbridge track. The ten other subsidiary companies operate greyhound tracks that are run by Bord na gCon. A number of other tracks are privately owned but have received grant assistance from Bord na gCon.
Overall, the Bord na gCon group achieved a surplus for 2015 of €438,000. Its accumulated revenue reserves amounted to just €46,000 as at the end of that year. Bord na gCon received State funding of €13.6 million in 2015, which was sourced from the Horse and Greyhound Racing Fund. The 2015 surplus from racing activities was €617,000. This included a net profit of €1.9 million from tote betting on turnover of €19.6 million. Excluding betting, track activities resulted in a net loss of €1.3 million in the year. Bord na gCon paid out €6.5 million in prize money in 2015, towards which dog owners and sponsors contributed €1.9 million. General administration costs in the year amounted to €9.2 million.
The audit report on the 2015 financial statements drew attention to note No. 24, which disclosed the basis on which the board was satisfied that it was able to prepare the accounts on a going concern basis. Some members will recall that I reported on the acquisition of land and the development of a racetrack and new corporate headquarters at Greenpark in Limerick, which was completed in 2010. Since then, Bord na gCon has been carrying a high level of borrowing related to that development, as shown in the diagram that is now on screen. The lighter coloured bar is the borrowing level. In the same period, there has been a significant erosion of the group's operating surplus. Hence, the need for the note on the going concern basis.
Alan Kelly (Tipperary, Labour)
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I thank the Comptroller and Auditor General. I call on Mr. Meaney to make his comments.
Mr. Phil Meaney:
Good morning. The Irish Greyhound Board, IGB, is reporting an operating profit before interest, depreciation and taxation of €2.3 million for the 12 months to 31 December 2015. The comparable figure in 2014 was €700,000. The IGB also reduced its long-standing debt by €1.35 million in 2015 and has since reduced it by a further €700,000.
The generation of surplus allowed the board to increase race grants by 20% since the start of 2016. Average attendance per meeting in 2015 was up 4% on the prior period, average gate income increased by 3% and average tote spend per customer was up 2% on the previous year. The 2015 accounts show improvements under some metrics, but these do not disguise the difficulties the greyhound industry faces. That said, the industry in Ireland is worth defending. The economist, Jim Power, estimated the direct and indirect employment in the industry at approximately 10,000 staff in 2011. The IGB employs almost 800 full-time and part-time staff. The industry supplies the raw materials in the form of greyhounds to greyhound racing internationally. A total of 83% of greyhounds racing in the UK in 2016 were bred in Ireland.
The IGB's difficulties are not unique. The industry globally is facing many challenges, notably as a result of the migration of wagering from track to technology platforms which has impacted on live attendances at race meetings. With the closure of Wimbledon stadium recently, London, for example, now has no greyhound track, from a high of 33. In the United States, there are only ten tracks operating full time. In Australia, the industry is under huge pressure and, therefore, the notion that Ireland would somehow be unaffected by the reasons which have contributed to the nationwide decline is a nonsense. Ireland, per capita, still has the highest number of stadia in the world, which is a reflection of the strength of the industry. The number of stadia in the Republic, IGB and private, is 16. There are 24 stadia run by the Greyhound Board of Great Britain, GBGB, in the entire UK. The IGB's remit is to manage the industry against the background of current market realities and, critically, to deal with a crippling, systemic overhang of debt. That debt stood at €20.3 million at the end of 2016, compared with a turnover of €31 million, excluding Exchequer funding. It may also be of interest that the current board has reduced the debt by €2 million and is the first board to pay down debt.
All these difficulties to which I have referred were known to lndecon consultants when they were commissioned by the then Minister in 2014 to carry out what is regarded as the most comprehensive review of the industry ever undertaken. It is important to state that everyone in the industry - ourselves and critics of the board included - were extremely pleased that such a review would be undertaken. The difference between us at this point is that the board has accepted the Indecon conclusions and recommendations, which were also accepted by then Minister, and has sought to implement them. It is important to state also that lndecon also felt strongly that if the appropriate actions were taken, as laid out in its review, then the industry had a viable future. One of the key recommendations was that an asset disposal programme would be adopted to include the sale of Harold's Cross, which was then, and still is, the asset most likely to yield significant value. Notwithstanding the lndecon report and the support of Government for the recommendation, the decision to close Harold's Cross was something the board of the IGB agonised long and hard about. Harold's Cross was an iconic stadium of great importance to our Dublin colleagues who have a huge emotional attachment to it. We acknowledge that the closure is a blow to the greyhound fraternity in Dublin.
I assure the committee that we will bend over backwards to ensure that Harold's Cross racing finds a welcoming, respectful home in Shelbourne Park stadium. The decision to sell Harold's Cross is not solely predicated on its potential value to the IGB or its contribution to the resolution of the debt issue but is also based on the fact that it is two miles from Shelbourne Park, which is twice its size and operates for a limited period every week, as indeed does Harold's Cross. It does not make commercial sense. The effective closure of the IGB's national arena for the past ten weeks by those opposed to the closure of Harold's Cross Stadium is clearly not sustainable. In addition to the loss of €300,000 that has been incurred by the IGB, the disruption of racing has cost owners and trainers €250,000 in prize money. The IGB cannot haemorrhage money in this way and unless there is a resolution, and I have to make this clear, the end game is the cessation of all racing nationally. The easy option for the board is to kick the issue of debt further down the road and to pretend that it does not exist or that it can be magicked away. We were appointed to do a job and we will face up to our responsibilities, even if our decision to do so is unpopular. It is important also to understand that the debt issue is not some abstract problem or an accountancy issue. It is an issue that grievously inhibits the capacity of the board to invest in the industry, protect its national footprint, encourage new ownership and breeding, address issues around the industry demographic, reach out to the leisure market and exploit the opportunities of online wagering.
We want a vibrant and rejuvenated greyhound industry with the highest standards in animal welfare and integrity, that is celebrated as uniquely Irish, embraced by all, thereby securing its place as a major national sport, and has a place for all participants, including breeders, owners, professional trainers and those involved full-time and part-time. We want an industry that delivers a world-class racing product in a rejuvenated stadium network delivering that best visitor experience for leisure customers and racing fans while distributing racing across all technology platforms. We want to make Shelbourne Park a state-of-the-art stadium to rival others in the capital, such as the Aviva Stadium and Croke Park, and to allow it to operate as many nights as possible and attract new corporate and leisure audiences as well as having premium facilities for our owners, trainers and greyhounds. There is also a requirement to upgrade other stadia if we are serious about expecting those other than the diehard greyhound racing constituency to attend our events. We need to invest further in information technology to ensure we continue to exploit the opportunities the migration to online wagering and the constantly evolving technology
platforms in all their forms present.
Prize money needs to be increased, as does ownership, especially through syndication. On welfare, we need to build on what we have been doing in recent years and ensure full traceability for dogs. By any objective yardstick, the IGB has made huge strides in the area of regulation and integrity in recent years and we wish to keep that momentum going. We want to develop a clear pathway into the industry for those who wish to participate, with a range of support options, including training and professional development. All these areas require capital for investment. We do not have access to it and are trading at the maximum of our banking limits. We can have access to capital by sticking with the decision to close Harold's Cross and to realise the value of the asset, pay down debt and reinvest in the industry.
As an organisation, are we doing as well as we possibly can? No. There are still operational and structural weaknesses we need to sort out, but we have made progress, and I am happy that we have considerable skills represented at board and executive level across finance and business, veterinary, regulation and law to ensure we continue the progress that has been made and perform better in future. The members of this delegation are more conscious than anyone of the backdrop to this appearance before the committee. There is no doubt we are at a critical stage in the life of the greyhound industry. Our ambition is to deliver a commercial, well-regulated greyhound racing and breeding industry, enabling the delivery of a customer-centred, highly exciting and value-led entertainment experience. That requires difficult decisions to be made now.
Alan Kelly (Tipperary, Labour)
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I will call our lead speaker for this session, which is Deputy Peter Burke. He will be followed by Deputy Bobby Aylward. As is custom, the lead speaker will have at least 20 minutes and the second speaker will have 15 minutes to question the witnesses while all other members will have ten minutes. This will ensure everybody will have an opportunity to contribute and ask questions in order that we can have the best meeting possible. We will go around on this issue as many times as we have to in order that we can get the answers we feel are necessary.
Peter Burke (Longford-Westmeath, Fine Gael)
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I welcome the witnesses from Bord na gCon, including the acting chief executive officer. I thank Mr. Meaney for his opening statement. With regard to the management of the greyhound industry, it is clear the sector is at a crossroads.
In the context of the current board, the committee must assess the results presented in the 2015 annual report and how the board has driven matters in respect those results. My concern is that the board's judgment has been called into question on a number of occasions in recent years. First, on a question I posed to Department of Agriculture, Food and the Marine officials, the 2015 accounts did not appear on the IGB website until February 2017, which, I suggest, is not in the interests of transparency and fairness. Second, with regard to the reduction in prize money, while it is said the IGB has a cash surplus, at what cost is this to the industry in terms of shrinkage? We are talking about reduced prize money and increased tote retention, which essentially means less value for the punter attending the track. While this may be a short-term gain for the IGB, it will have significant consequences in the future.
On Enterprise Targeting Solutions, it was openly admitted by the board at a previous meeting of the Committee of Public Accounts that it had not done its homework in checking out the company before the sponsorship contract was signed. Legal fees rose substantially in 2015 to €1.443 million, having been €587,000 in 2014, and there have been a number of high-profile incidents surrounding that. It is very important that greyhound racing is marketed correctly. We have seen the issues surrounding the logistics of the closure of Harold's Cross and how that was carried out. I am aware that a number of families had aimed to attend on St. Valentine's night and had booked out the restaurant. If we are spending money on marketing, that gives a terrible view of the industry and how we go about our business in terms of the capacity to make decisions.
The first point I want to focus on in the 2015 annual report is wages. Prize money and the overall turnover of the sector are decreasing but the one thing that is definitely not decreasing is wages. I know the catering section was taken over. It is stated on page 39 of the report that €867,791 is the direct and operational cost and that food and beverage staff-related costs were €2.778 million. Is that €2.778 million exclusively in respect of the 57 employees who were taken on?
Dr. Seán Brady:
I will deal with Deputy Burke's comments about lateness. On behalf of the organisation, we apologise to the committee, the Department and the Comptroller and Auditor General for the lateness last year. Processes have been put in place this year by our CFO, Mr. Michael Murnane, and additional resources have been put into that area. By now, broadly speaking, all the field work on the audit for 2016 is-----
Alan Kelly (Tipperary, Labour)
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What caused the delay?
Alan Kelly (Tipperary, Labour)
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Yes, but why were they late? Dr. Brady may finish his point.
Dr. Seán Brady:
Mr. Murnane has put in processes and additional resources in the finance area so that, by 1 May, we had a goal that all the field work would be done on the audit. There are one or two big issues still to be resolved but our hope and expectation is that the 2016 audit will be completed much earlier this year.
Peter Burke (Longford-Westmeath, Fine Gael)
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It was disappointing for an organisation that was getting €261,000 per week in taxpayers' money, although I know some of the contributions come from industry. To focus on page 39 of the annual report, is the €2.778 million in respect of the 57 staff who were taken on?
Peter Burke (Longford-Westmeath, Fine Gael)
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Let me rephrase the question. Is that figure in respect of the 57 full-time equivalents?
Peter Burke (Longford-Westmeath, Fine Gael)
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That would be a full-time equivalent cost of approximately €48,000.
Peter Burke (Longford-Westmeath, Fine Gael)
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My big concern is in regard to the number of casual staff within the industry. To take the proposals in the departmental circular, whereby one has to disclose all salaries in excess of €60,000, a concern for me is that, in 2015, 11 board members of Bord na gCon received not far off €1.2 million. That is 11 members of staff. Is that sustainable in an industry which, from the figures, seems to be almost collapsing? Has it increased?
Dr. Seán Brady:
On the remuneration, it is a complex industry and we need talented people to work in it. The remuneration committee of the board decides the salaries of people but, based on my knowledge of working in other industries, I would not see this number of people as unusual in light of the amount of business transacted by the organisation. We have fantastic staff in the business who work very hard but, in a business of this nature, we need good leadership. I think the success of the business is built around having good management.
Peter Burke (Longford-Westmeath, Fine Gael)
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Irrespective of that, I think it very concerning that almost 10% of the Bord na gCon wage bill is potentially going to 11 people. I want to know if that increased in 2016 or 2017.
Peter Burke (Longford-Westmeath, Fine Gael)
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The number of meetings and the amount of prize money are decreasing. We are selling our assets, as has been highlighted in the past 48 hours. To be fair, the defined benefit current service costs at note 8 in the annual report can be taken out because those are not full-time equivalents who are carrying out their duties at present. However, in 2015, €10.3 million was paid for 240 full-time equivalents. Given that many of these are casual staff, such as those on the gate, and not in highly-skilled jobs, why is the wage cost so high? I have to make a judgment on the 2014 report as to whether the board members are managing this industry correctly. I would like that explained better.
Mr. Michael Murnane:
The only thing I can offer Deputy Burke by way of explanation is that it is a very labour-intensive industry and labour continues to be one of the largest costs. To offer some comparison, EHS, the food service, brought 283 jobs to the IGB. Excluding those jobs, we can compare like for like. At the end of 2015 and into 2016 we had, on average, 476 posts in the IGB between full-time and part-time posts. That has fallen from 607 posts in 2008. It is a wide industry that covers 16 different tracks - it used to be 17 - and there is a huge geographic spread. There are many jobs that can only be supplied by a certain person at a particular point in time.
The Deputy must keep in mind that we operate racing in Lifford, Cork and Waterford.
Peter Burke (Longford-Westmeath, Fine Gael)
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Has there been any decrease in wage costs from this implementation?
Peter Burke (Longford-Westmeath, Fine Gael)
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By any metric, the wages being paid do not look sustainable.
Peter Burke (Longford-Westmeath, Fine Gael)
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Is Mr. Murnane happy with the 11 board members getting €1.2 million?
Peter Burke (Longford-Westmeath, Fine Gael)
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I am very concerned. If other areas are falling, we cannot make an industry sustainable if we are not leading by example. That is an important element, but it does not seem to be the case in this context. Why did the legal costs almost double?
Peter Burke (Longford-Westmeath, Fine Gael)
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There have been a number of media reports documenting how the board exercises its judgment in taking cases to court. Its record has been called into question. Would Mr. Murnane like to comment?
Peter Burke (Longford-Westmeath, Fine Gael)
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Ignore that one. What about other cases?
Peter Burke (Longford-Westmeath, Fine Gael)
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I am concerned by that and am not fully convinced. Regarding the Indecon report's recommendations on strengthening the board of directors and management, does the board now include someone who is experienced in marketing?
Peter Burke (Longford-Westmeath, Fine Gael)
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Is that why the IGB closed Harold's Cross on St. Valentine's night?
Peter Burke (Longford-Westmeath, Fine Gael)
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The Indecon report was clear, in that a large part of the board had to be concerned with marketing. The 2016 Indecon report recommended increasing the size of the board if someone with that skill set needed to be included. Why is there no one who is dedicated to marketing?
Peter Burke (Longford-Westmeath, Fine Gael)
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Unfortunately, time is not on our side. The pace seems slow. Has the board appointed a risk officer yet?
Peter Burke (Longford-Westmeath, Fine Gael)
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Is the recommendation that non-executive board members should no longer serve on subsidiary boards being implemented?
Mr. Phil Meaney:
May I return to the Deputy's previous point? We cannot be held responsible for the primary legislation. We have co-operated with the Department in every way in that regard and are more than happy to see the board's members increase from seven to nine. It is not that we are in any way obstructing the process. I would like that to be noted.
Peter Burke (Longford-Westmeath, Fine Gael)
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My concern is that the report, which is a cornerstone of the industry, made recommendations, so I would have expected marketing to be a cornerstone in the future strategy for greyhound racing, but it looks like that situation has not been resolved.
Peter Burke (Longford-Westmeath, Fine Gael)
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This is recommendation No. 1.
Mr. Michael Murnane:
There are four outstanding in total. The first is on additional board appointments, the second is on independent appointments to the control committee and the control appeals committee, the third is on Bord na gCon and the Irish Coursing Club independently serving exclusion orders - the latter is awaiting primary legislation - and the fourth is on additional prize money to be provided when debts are reduced and surpluses are generated.
Peter Burke (Longford-Westmeath, Fine Gael)
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Is the board working to a plan? It is trying to implement Indecon's recommendations. A farmer who gets into trouble might sell pieces of land to try to keep the holding going. The IGB is selling one of its income-generating assets, but the process is not transparent because no one in the public or among elected representatives knows what is happening. Has the IGB a plan in place to make the industry sustainable?
Peter Burke (Longford-Westmeath, Fine Gael)
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Does the board not have one in place yet?
Mr. Phil Meaney:
No. We just started working on it. Dr. Brady is our interim CEO, but we have advertised to fill that position. By the end of the year, we will have a strategy plan completed. We had a definite plan, but we also had a number of serious issues that existed when I joined. We recognised them. Implementing the plan was difficult because of the debt overhang, but we are now in a position to move forward.
Peter Burke (Longford-Westmeath, Fine Gael)
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The graph does not lie. I do not doubt what Mr. Meaney is saying about the debt and I appreciate that aspect, but I must judge the board and how it has dealt with that situation. I must examine its judgment on some of the key issues I have mentioned. I am concerned about them.
Regarding the commercial arrangement with the tracks in Youghal, Tralee and Mullingar, is it a five-year contract?
Peter Burke (Longford-Westmeath, Fine Gael)
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How much is it expected to generate?
Peter Burke (Longford-Westmeath, Fine Gael)
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Each or altogether?
Peter Burke (Longford-Westmeath, Fine Gael)
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Will that be distributed between them equally?
Peter Burke (Longford-Westmeath, Fine Gael)
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I wondered why the IGB could not answer that when asked via parliamentary question.
Peter Burke (Longford-Westmeath, Fine Gael)
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The days of a semi-State body that is getting significant funding from the State entering into non-disclosure agreements are coming to a close. I do not have time to go through everything, but the Harold's Cross situation and how the board was dealt with and procedures were carried out left much to be desired.
Mr. Michael Murnane:
The Deputy must appreciate that we are working in a commercial environment. We understand the requirement for us to be open and transparent and we endeavour to be so as much as possible, but we are working with an independent company that sets requirements about what it is willing to disclose. Since March, we have entered into an extra arrangement with that company that will generate a further €500,000. That will be a fee per race based on what the company is being paid in the UK. There are fewer restrictions on disclosures in such arrangements, but for the initial arrangement, we had to discuss the matter with our customers and ensure they were satisfied.
Peter Burke (Longford-Westmeath, Fine Gael)
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Even if it is not done via parliamentary question, it is important the board communicates with an elected representative who asks questions.
The board may have concerns about commercial sensitivities. However, I take the view that given the amount of funding and the exposure in terms of debt, these things should be upfront.
Reference was made to the plan for assets disposal. I understand four assets were referenced in the Indecon report: the site at Meelick; the head office in Henry Street, Limerick; Cork; and Harold's Cross. Of those four, how many have now been sold?
Peter Burke (Longford-Westmeath, Fine Gael)
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Why?
Peter Burke (Longford-Westmeath, Fine Gael)
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Would it be as difficult as Harold's Cross?
Peter Burke (Longford-Westmeath, Fine Gael)
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How much did that site cost?
Peter Burke (Longford-Westmeath, Fine Gael)
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Under whose stewardship was that purchased?
Peter Burke (Longford-Westmeath, Fine Gael)
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Have we any idea what it is worth now?
Peter Burke (Longford-Westmeath, Fine Gael)
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What was the zoning when it was purchased? It is beside the Shannon. Is that correct?
Peter Burke (Longford-Westmeath, Fine Gael)
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Has someone taken responsibility for that?
Peter Burke (Longford-Westmeath, Fine Gael)
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Have any members of that board continued on the board since that purchase was made?
Peter Burke (Longford-Westmeath, Fine Gael)
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What is the position regarding the asset in Cork?
Peter Burke (Longford-Westmeath, Fine Gael)
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What is the value on that? Is there an estimate?
Peter Burke (Longford-Westmeath, Fine Gael)
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How much did the board get for the site in Limerick? The board paid down debt in 2015 with it. Is that correct?
Catherine Connolly (Galway West, Independent)
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How much?
Peter Burke (Longford-Westmeath, Fine Gael)
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It turns up again, with all the wages and so on. We see issues with Meelick. Obviously, Bord na gCon is prioritising Harold's Cross because it is seen as a cash generator. Do we know how much of the debt of Bord na gCon that could potentially alleviate?
Peter Burke (Longford-Westmeath, Fine Gael)
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We are not allowed to know that either. Is that the case?
Dr. Seán Brady:
At this point in the transaction relating to Harold's Cross, arrangements have been entered into with the Department of Education and Skills. The question was answered last night in the Dáil by the Minister. Appropriate disclosures will be made when the process is further along the road.
Peter Burke (Longford-Westmeath, Fine Gael)
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We are talking about discharging one of the income generators, but it is rather difficult for us to judge the extent of the contribution it will make to the sustainability of the industry or whether it will be significant.
Peter Burke (Longford-Westmeath, Fine Gael)
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I understand that is the final step. Has the board adhered to best practice and robust procedures in the context of an asset of a semi-State body that is being put up for sale?
Peter Burke (Longford-Westmeath, Fine Gael)
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We cannot get a proportion or estimate of what debt it may relieve. Is that the case? I presume Bord na gCon has been in negotiation with the bank on the matter. Is that the case?
Mr. Pat Creed:
I will take that question. I am keen to go back and cover several points. I will cover that particular point at the end, if that is okay. I am a new board member. This board has been in operation for 16 months. In the past 16 months we have had to resolve the three high court cases. They have been resolved. We have resolved the defined benefit scheme. We reduced the balance sheet liability by €5 million in 2016. We have introduced several statutory instruments relating to regulation of drugs and remedies. We have purchased a new laboratory machine in Limerick. Considerable work has been done in the 16 months, despite what others might say. The bank debt is the big thing we need to resolve. The bank debt will be resolved in the coming months. It will reduce the debt substantially. I do not want to go any further than that.
It is important to say that the State got into trouble. The first thing the State had to do was to sort out its finances. One cannot build a house on a poor surface. Many businesses throughout the country go into trouble. Had they not attained financial stability, they would not be trading today. The IGB is no different. It has an overhanging debt that it cannot repay. It is generating circa €3 million per annum on the basis of earnings before interest, taxes, depreciation and amortisation. We cannot build a future business if we do not have a stable business to build from. At the end of this process, it will be a stable business. It will be able to reinvest in some of the capital issues necessary. We will be able to refurbish our national stadium in Shelbourne Park. More important, we will be able to give money back to breeders, owners and trainers. That is not a bad achievement for 16 months given the legacy debt that we inherited in December 2015.
Alan Kelly (Tipperary, Labour)
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For the information of committee members who cannot see the name plate, that was Mr. Pat Creed.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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What is his role on the board?
Alan Kelly (Tipperary, Labour)
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What is Mr. Creed's official title on the board? He is a board member. Is that correct?
Peter Burke (Longford-Westmeath, Fine Gael)
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When we compare it to the country, the critical difference is that the country put in place several incentives in key areas to try to kick-start the economy. I do not see the board putting any incentives into ground racing. I see the board cutting prize money. I see the board taking a larger share of the tote retention. In other words, what I see happening is that the board is saying that it is returning a profit, but it is at a massive cost to the industry. That is where I have a major concern. Is the board going in too deep here?
Peter Burke (Longford-Westmeath, Fine Gael)
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It is stated on page 19 that total prize money and incentives come to €6.67 million but the figure was €7.5 million in 2014.
Peter Burke (Longford-Westmeath, Fine Gael)
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Yes.
Peter Burke (Longford-Westmeath, Fine Gael)
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Bord na gCon is cutting the prize money that it is putting into the industry.
Peter Burke (Longford-Westmeath, Fine Gael)
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Can Mr. Murnane explain why this figure has been reduced?
Mr. Michael Murnane:
That was a carryover. The prize money was increased in 2013 by 20%. In 2014 the results did not show any commercial increase in spite of the increase in prize money. It was obvious during 2014 that Bord na gCon would face a substantial loss. The board took the reluctant decision mid-year to reduce prize money. In addition, one of the recommendations from Indecon was to recalibrate the number of races and reduce the number of loss-making race nights. That was completed in 2015. Since we had fewer race meetings and fewer races, there was a reduction in prize money. The business stabilised in 2015. The board was in a position to offer a 25% increase in ordinary race nights. These are graded races and there is a wider spread.
Peter Burke (Longford-Westmeath, Fine Gael)
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Is Bord na gCon cutting race numbers?
Peter Burke (Longford-Westmeath, Fine Gael)
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Earlier, I referred to a figure of €6.6 million that was down from €7.543 million. What is that reflective of? I am missing the point.
Peter Burke (Longford-Westmeath, Fine Gael)
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What was the contribution from Bord na gCon in 2014?
Peter Burke (Longford-Westmeath, Fine Gael)
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What was the reason for that figure going down?
Peter Burke (Longford-Westmeath, Fine Gael)
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The number of race meetings was reduced. Is that correct?
Peter Burke (Longford-Westmeath, Fine Gael)
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Either it is decreasing or increasing. I am getting confused.
Peter Burke (Longford-Westmeath, Fine Gael)
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How far advanced are we in having figures for 2016?
Peter Burke (Longford-Westmeath, Fine Gael)
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We will not have to wait another couple of years for that?
Alan Kelly (Tipperary, Labour)
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I am sure that Deputy Burke has lots more questions. He will be able to come in a second time.
Peter Burke (Longford-Westmeath, Fine Gael)
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Yes, on pension issues.
Alan Kelly (Tipperary, Labour)
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Before Deputy Aylward comes in, I neglected to welcome Mr. Brendan Gleeson who represents the Department of Agriculture, Food and the Marine in this area and has been before us previously, and also senior inspector, Mr. Gerry Greally, also from the Department. Questions may be directed to the two representatives from the Department also. I have a number of clarification points following on from Deputy Burke's question but I will let Deputy Aylward come in first.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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I welcome the board. This is the first time since becoming a member of the Committee of Public Accounts that I have been contacted by so many people with disquiet over the management of the Irish Greyhound Board. In recent days, I have taken more phone calls, from my own constituency and beyond, from ordinary people within the industry - breeders, owners and trainers - to convey how disappointed and worried they are about the situation they find themselves in and the future of greyhound breeding and racing in the country.
What is the make-up of the board? Who appoints it and what way are they appointed? Can we get an explanation of its structure?
Mr. Phil Meaney:
At the moment, there are six board members and a chairman. I was appointed by the Minister of the day, through an interview process, as was another board member. The other five board members have been appointed through the Public Appointments Service, PAS. They were either appointed or reappointed in December 2016.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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My understanding of the Public Appointments Service is that it gets so many names and then it makes a recommendation to the Minister who then appoints from the recommendations. Is that correct?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Are they experienced people with knowledge of greyhound breeding and racing? Has that been looked at? Would Mr. Meaney say that the board comprises experienced people with the capability to run the greyhound business and who have the professionalism to run it?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Are we talking about the business of running the greyhound industry or the survival of the greyhound business?
Alan Kelly (Tipperary, Labour)
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How long is Mr. Creed on the board?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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What is the term of service?
Alan Kelly (Tipperary, Labour)
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For clarity, Mr. Creed would not have been on the board for most of 2015. He joined in the last month of the year. Is that correct?
Alan Kelly (Tipperary, Labour)
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He has nothing to do with these figures and these accounts, as in he was not on the board then.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Mr. Meaney was making the point ----
Alan Kelly (Tipperary, Labour)
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He was not on the board.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Was anyone appointed for a period more than two terms, in breach of guidelines, that is, more than the two three-year periods, which would be six years?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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I thought that Mr. Meaney said a moment ago that it was.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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In that case, are there members there longer than six years continuously?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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How many?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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That is not normal practice for someone to stay that length of time, is it?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Does Mr. Meaney think that it is good practice? I mean no disrespect to the person involved because I do not know who it is.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Are they political appointments?
Alan Kelly (Tipperary, Labour)
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For clarity, how long is that board member serving?
Alan Kelly (Tipperary, Labour)
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How many years?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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I wanted to clarify that. Modern day boards do not allow people to stay for that length of time and they move on to allow fresh blood and fresh people. Again, I mean no disrespect to the person involved.
Who appoints the executive?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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So the CEO is appointed by the board and CEO appoints the rest down the line through the normal process of interviews, experience and so on.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Why are the 2015 accounts only coming before the Comptroller and Auditor General now, a year and five months behind? Why are they not up to date and why did it take that length of time? Will 2016 not become available for another two years again?
Mr. Phil Meaney:
I will hand over to Mr Murnane for the 2015 accounts. On the 2016 accounts, to try to have more transparency, we issued interim accounts on the last day of March with an interim statement. Effectively, our accounts for 2016 have been public since the end of March 2017. Mr. Murnane has indicated that he hopes the audit will be complete by the end of June for 2016. I do not see any delay about the 2016 accounts.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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It was raised here with the Comptroller and Auditor General and he said he was waiting on Bord na gCon to present them and it looked as though Bord na gCon had been pushed to present them rather than presenting them voluntarily. I am only asking these questions.
Dr. Seán Brady:
In 2016, Mr. Murnane received additional financial resources and put a new process in the business. It is expected that that process will lead to accounts. All the field work that has been completed on 1 May and the expectation is that the accounts will be delivered to the Comptroller and Auditor General by the end of June. There are some issues still to be resolved. I would not want to make that an absolute hard date but good progress is being made with the 2016 accounts.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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I want to ask about the disquiet and the complaints I have heard from ordinary dog breeders and so on. Will the witnesses comment on why they might be so angry and why there is so much disquiet? Will the witnesses, as a board or executive, give a reason that feeling exists and why there is so much noise and disquiet about what is happening and unhappiness about the direction in which the greyhound board is going and the future of the greyhound industry? Can we have an account on that generally before moving on?
Mr. Phil Meaney:
I accept that there is negative comment. In my opening statement, I highlighted that as a board, we have had to make tough decisions. People find it very hard to accept tough decisions. It is often hard to make tough decisions but we had a job to do. When I came on board we had a €2.5 million IOU there from 2005 that had to be paid to Dundalk Stadium, which is a private stadium.
We had to pay that in 2012. It was a legally binding agreement. We had to put a small investment in Clonmel and the Youghal track. Three High Court cases that were there before my time had to be dealt with. We had a serious deficit in our defined benefit pension scheme, as had everybody who had a defined benefit pension scheme. They were the kind of issues that had to be dealt with. We did not have the kind of money we wanted to invest in marketing, IT and prize money. That plus the tough decision to sell Harold's Cross brought the board adverse publicity. I would love to be starting off as chairman of the board now compared with when I started off six years ago. It is a clean business now. It will effectively have no debts and will be in a very good position going forward. It has taken a lot of hard decisions to get there.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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The industry seems to have suffered. The ordinary breeder seems to have suffered while this was happening. Many people have left and are leaving the greyhound industry. If we do not put money back into it and revitalise it, we will not have an industry.
Mr. Phil Meaney:
It is our intention to reinvest in the industry earlier rather than later. The first thing we would like to do in conjunction with the executive is give out prize money and give our stadia, which have been starved of investment over the past five or six years, a bit of a face lift. We need to invest in IT, marketing and promotion. We believe we will build the business back up again quite quickly.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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I wish to discuss Harold's Cross, about which there is a big debate at the moment. As we were coming in today, we saw a group protesting outside. A presentation was arranged by the Chairman a couple of weeks ago in the Dáil which was attended by many of us. It was said at that meeting that there was no problem. People who were at the meeting said that if they were in control, they would handle it a certain way and keep Harold's Cross going. Is Bord na gCon happy with the sale of Harold's Cross? I presume the deal is done. I know Deputy Burke asked about that. The deal is done so Bord na gCon has made a deal with the Department of Education and Skills on the sale of Harold's Cross. It cannot disclose how much money is involved. Will it reduce Bord na gCon's debt? If so, will it reduce by a lot or a percentage? Will Bord na gCon be viable after this?
Dr. Seán Brady:
We have accepted an offer from the Department of Education and Skills through the Circular 17/2016 route. Having received that, there are a number of steps to take to bring the matter to a conclusion. Over the coming two months, we hope that we will get there and be able to bring that to finality.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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In hindsight, is Dr. Brady happy that Bord na gCon invested so much in Limerick and had to sacrifice Harold's Cross to pay for it? Harold's Cross was Bord na gCon's third biggest income generator. According to figures I have, it was a profitable stadium that was making money. It is like selling the silver to pay for gold.
Dr. Seán Brady:
When I joined the organisation, we looked at what kind of commercial state the organisation was in. My role as defined by the board was to act in the best long-term interests of the industry. Debt was a massive burden. It was like a dark shadow over the organisation. I know Deputy Burke spoke about farmers selling bits of land. I come from the country and am familiar with that but the reality was that apart from Shelbourne Park, the only asset that Bord na gCon could turn into significant money to alleviate its banking problem was the sale of Harold's Cross.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Was Harold's Cross sacrificed?
Dr. Seán Brady:
One could use those words but the organisation does not have a viable future until the debt burden is removed. It has to operate with financial stability because if it does not have that, it will have no future. As the chairman outlined in his earlier statement, there are many people who are very dependent on this industry for a livelihood and entertainment. A total of 800 people work in this business.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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In hindsight, do the witnesses think Bord na gCon handled this sale, if one calls it that, well? I am told that the board of Harold's Cross was not even notified. I was told that a week before, some of the witnesses met the director of the stadium and guaranteed that Bord na gCon would keep it open for another 12 months. The following Monday, there were padlocks on the gates and a lot of stuff was removed that Monday morning so that it could not be viable or workable. Is that the way to treat people or a board? Is it right to do so without consultation? It seems to be a dictatorship rather than consultation.
Mr. Pat Creed:
I will return to the sale of Harold's Cross. The sale is the future for the greyhound industry because it means that this legacy debt, which has killed the industry, will be resolved once and for all. The second thing I would say is that from a commercial point of view, I know of no business that has two properties a couple of miles apart - Shelbourne Park and Harold's Cross - that are closed four or five nights a week. They are two premises that are closed four or five nights a week when they are right beside each other. If this was a commercial organisation, they would be merged and that is what the plan for Dublin is. I will let Dr. Brady take the question about Harold's Cross.
Alan Kelly (Tipperary, Labour)
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A phone is switched on. Is it off? We needed that break.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Time for reflection.
Dr. Seán Brady:
There is no need for reflection on Harold's Cross in my world. As Deputy Aylward outlined, we met the Dublin Greyhound Owners and Breeders Association in Naas. We laid out the picture to the association with absolute clarity that Harold's Cross would be sold and that the sale was needed to solve the debt problem. That was made very clear to the people at the meeting on that day.
Subsequently, having discussed it with the chairman, an offer was made to allow racing to continue at Harold's Cross until the end of the year. The Dublin Greyhound Owners and Breeders Association wanted that commitment in writing and would not take my word for it. We said that because of the bank, we could not issue a letter to anyone about the future. We communicated to the association that this was the case. The board met. There was the threat of a picket at Shelbourne Park the next Saturday night. The board discussed the matter and we then made a final offer to the Dublin Greyhound Owners and Breeders Association that if it would accept our word, we would guarantee it racing to the end of the year. The association did not accept our offer. It was made clear to the association that non-acceptance of this offer and continuing picketing of Shelbourne Park would lead to the closure of Harold's Cross. Looking back on it, there were things Bord na gCon could have done better but-----
Alan Kelly (Tipperary, Labour)
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Yes, but I am entitled to ask for clarification. I am the Chair. What could Bord na gCon have done better?
Alan Kelly (Tipperary, Labour)
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No problem, please do.
David Cullinane (Waterford, Sinn Fein)
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With respect, the witnesses are here to answer questions.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Could Dr. Brady answer my question first?
David Cullinane (Waterford, Sinn Fein)
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With respect, it is common practice that members, particularly the Chair, can interject and seek clarification. The Chair deserves respect. If a question is put, it should be answered.
Alan Kelly (Tipperary, Labour)
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Dr. Brady should answer Deputy Aylward's question. He can come to mine at the end. We might go back to Deputy Aylward. I was only looking for clarity.
Dr. Seán Brady:
We had planned an awards night bringing together all of the people involved in the industry. We were informed that this event would be picketed. The event was cancelled. Racing at Shelbourne Park did not stop that night.
When that information was presented to the board, a decision was made by the board to cease racing in Harold's Cross. The executive did risk analysis on this and, as part of it, we were advised by the property people that vacant possession was very important in realising value. There have been protests in other areas in this country so, based on a risk analysis, we decided to close Harold's Cross immediately. We did that job immediately after the board decision. The board made its decision at 9.45 and we proceeded to do it then.
I and the IGB regret absolutely the inconvenience to many genuine greyhound people in Dublin. As the chairman said earlier, we will bend over backwards. We accept that people who were part of the infrastructure of Harold's Cross were discommoded and we are sorry about that.
Alan Kelly (Tipperary, Labour)
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Dr. Brady said he may have done things differently. What would he have done differently?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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The least Dr. Brady could say is that the IGB was disrespectful to the board of Harold's Cross.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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From what I hear, they were told and the padlocks were put on gates to the stadium. Material was removed so that racing could not continue. The board had been there for years and was running the third biggest track in the country and all of a sudden it was gone. In any event, we have gone through it and I wish to move on.
Given the protests that are taking place at Shelbourne Park, what are the IGB's plans to alleviate the situation and to try to bring everyone on board? I believe the losses are approximately €100,000 a week and that has serious consequences for the board for next year's estimates. What are the IGB's plans to sort out the entire problem?
Dr. Seán Brady:
The gravity of the situation is very apparent to the IGB. There was a call by the former Taoiseach, Brian Cowen, and Ivan Yates to enter mediation between the two parties with the assistance of Kieran Mulvey. Two meetings were held with Mr. Mulvey but he was not able to broker a solution. Informal contacts have been going on ever since and also with Mr. Mulvey. I spoke to Mr. Mulvey on Monday to see if he would get involved in the process again. We need a solution and we will do anything we can to find one.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Damage is being done to the industry while this is going on, financially, in terms of breeding and every other way across the board. We depend on the English market a lot and there is much disquiet while the situation is ongoing. It must be brought to a conclusion sooner rather than later or permanent damage will be done.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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We will move on to other mundane matters. I understand that the IGB funding allocation increased significantly, by approximately €2.75 million, from 2014 to 2015. However, the allocation of prize money to greyhound owners was reduced by €800,000. It seems that total prize money paid in 2015 was €6.67 million, which is down almost 50% on what was paid in 2007. That is a 50% reduction in the funding that was keeping the greyhound industry going. It is prize money which allowed people to remain viable. Could the IGB explain the steady reduction in prize money paid to owners, particularly from the period between 2014 and 2015? Has the money paid to owners increased in 2016, which I mentioned already? Is it expected that the prize money allocation will increase this year and in the future? Prize money is the bread for the industry and the ordinary Joe Soap on the ground.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Does Mr. Murnane accept there is a 50% reduction based on the figures I outlined from 2007 to 2015? That is a massive amount.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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The IGB was hitting the people that depended on it - the meat and bone of the industry - by reducing the prize money by 50%. Should the IGB not have looked elsewhere to cut costs without affecting the prize money? I was in contact with people who depend on the prize money. One breeder who is a genuine man and who has been involved in the industry all his life has approximately 15 bitches and runs a few dogs. He was getting a few bob and was able to survive but in five or six years, that changed and he is now hardly able to keep going. I am only talking about one individual.
Mr. Michael Murnane:
I understand what the Deputy is saying. I am a country boy myself so I know exactly where he is coming from but one can only pay out what one makes. In the timeframe in question, the horse and greyhound fund was reduced to €4.4 million. In 2014 the horse and greyhound fund stood at €10.8 million. In 2007 it was close to €14.5 million. The number of races has fallen as well. There was a cumulative fall of 7,700 races and nearly 5,000 of those date to the years 2009 to 2011. I mentioned previously that Indecon recommended that we should reduce race meetings where nights were loss making.
Another contributor to prize money is sponsorship and that has fallen by €1.3 million in that timeframe. A total of €1.2 million of the drop was between 2008 and 2010. We have been there and we do not want to go back to those times. Another part of it is that €4.2 million of operating surpluses of the IGB had to be retained to pay bank interest of €3.5 million and €750,000 in bank repayments. That is a massive figure. A total of €4.2 million had to be set aside to pay interest on a loan.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Mr. Murnane agrees with what I am saying, namely, that the money that was given as prize money went into servicing the debt. That is where the money went instead of going to the owners.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Deputy Burke mentioned the cost of legal fees and I cannot avoid bringing it up as well. There was an increase of 250%. That was massive money at a time when the IGB was under pressure financially. An increase of 250% sounds incredible.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Why were the legal cases taken? Was it due to bad management?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Will the legal fees be that high going forward?
Mr. Michael Murnane:
No. As I said to Deputy Burke, the legal fees are not a recurring expense. My experience in recent years is that there was a problem and we resolved it. We are trying to ensure it will not recur again. We are a self-regulatory body so there will always be an undercurrent of legal fees in respect of the IGB but not of the value that was there in 2015 when there was a total of €1.4 million in legal and professional fees. That is just not sustainable.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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I want to move on as my time is getting short.
Alan Kelly (Tipperary, Labour)
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Deputy Aylward should ask his last two questions and he can come back in later.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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I have a lot more than two questions but I know I will not reach them all.
Alan Kelly (Tipperary, Labour)
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We will be going around to members a second time.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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I will ask one or two more questions if that is okay. The Joint Committee on Agriculture, Food and the Marine previously recommended that IGB should provide a detailed update on its progress towards achieving the financial targets which underpin the strategic business plan for 2003 to 2017, which is a 14-year period.
Based on the recent policy changes following a recommendation by the Indecon review, has the IGB submitted an update to the agriculture committee on progress towards achieving these financial targets?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Has the board gone to the agriculture committee with that plan?
Mr. Michael Murnane:
I am not aware of a report that has gone to them. We do regularly update our financials and where we are in respect of the plan and where we are with Indecon. We do submit that information to the Department. We send monthly and quarterly accounts to the Department and we offer the Department updates in respect of how we are getting on with Indecon. As regards whether that report went back to the agriculture committee, I just simply do not know.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Should the witnesses not know that as an executive?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Should someone here not be able to answer that question? It is a matter of a business plan.
Alan Kelly (Tipperary, Labour)
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Is there anybody here who can answer that question? In our time on this committee, nobody has ever come in and been unable to answer a question like that.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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It sounds very negative if nobody is able to answer or even attempt to answer.
Alan Kelly (Tipperary, Labour)
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Can you answer the specific question?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Which Bord na gCon told the agriculture committee it would produce.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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That does not sound much like a business plan. That is just getting out of the immediate debt problem.
Alan Kelly (Tipperary, Labour)
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Just for clarity, the Deputy has asked a very specific question based on the statement to the agriculture committee. Can we have a clear answer? Either there is a plan and it is published or there is not, or else nobody knows about it.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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If they cannot tell me now, can the witnesses inform us in writing?
Alan Kelly (Tipperary, Labour)
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This is incredible. What do you mean you do not know? It is either a "Yes" or a "No".
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Bord na gCon is subject to the agriculture committee and to the Department of agriculture. It is the Department that gives it the money and the board must come back to the Department when it requests something. Bord na gCon gave a commitment according to what I have in front of me. I just want to know if it went back to the committee with that plan, or if there is any such thing as a business plan as has been said here. I took this at face value. I took this down yesterday evening and researched it.
Alan Kelly (Tipperary, Labour)
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Deputy Creed - sorry, Mr. Creed, I am giving you an elevation because of where you are sitting - with all due respect, there is a specific question pertaining to a commitment given at the agriculture committee, to which the representatives here do not know the answer.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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I find it unbelievable that they do not even realise - they went in front of the agriculture committee and gave a commitment and now they do not even know about it. That is what I have here and I took it all from the agriculture committee. Anyway, we will move on.
Alan Kelly (Tipperary, Labour)
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Mr. Gleeson may want to save his fellow witnesses.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Mr. Gleeson might be able to put some meat on the bone here.
David Cullinane (Waterford, Sinn Fein)
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Before Mr. Gleeson comes in, from what I have heard so far I find it incredible that there is so much confusion between answers given by witnesses from the same organisation. That sets off alarm bells for me but I will get a chance to come in.
Alan Kelly (Tipperary, Labour)
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You can come in in a minute, Deputy. I share your concern.
Mr. Brendan Gleeson:
I am not sure I can add clarity but I will try. There is a business plan from 2012 to 2017. The landscape has changed utterly since then. We did receive alternative figures in 2015, a kind of update in light of proposals to sell Harold's Cross. As a condition of the provision of funding this year, we have asked for a comprehensive business plan to be prepared in 2017. The original one was to expire anyway in 2017. The reality is that between 2014 and now, there has been a roadmap outlined for the development of the sector and its preservation, to be frank, and that has been the Indecon report. The board has an action plan for the implementation of Indecon. In terms of what the agriculture committee asked for, I am not sure what Deputy Aylward is reading from but the convention is that a committee would request somebody to come in and present to it on business proposals.
Alan Kelly (Tipperary, Labour)
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It is not that long ago, though.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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The Department of agriculture is the paymaster which gives out the money. Is Mr. Gleeson happy with the Irish Greyhound Board's performance and the way it is running its business? Is he happy to sign off on giving them money every year, and is he happy with this business plan? Is he happy with the way the procedures are going or has he question marks over the €14.5 million that is being spent and that he is responsible for giving to Bord na gCon? I think we asked Mr. Gleeson this ourselves when he was in front of us. I do not think I was satisfied with the answer he gave either. I am talking about oversight now.
Alan Kelly (Tipperary, Labour)
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He asked a very specific question. Are you happy, as the officer in the Department - I know the Secretary General is the Accounting Officer - are you happy to sign off on the funding that taxpayers give to this organisation, given the evidence today and what you have already stated? Last time you were in here you said in evidence that you meet them once a year.
Mr. Brendan Gleeson:
That is me personally, Deputy. There is a lot of interaction. There is a division that deals with this and there is a lot of interaction with Bord na gCon on a weekly basis. There are two formal governance meetings every year. There is a significant degree of interaction between the Department and the board. I said this the last time I was here and it remains the case. I am not happy with the financial performance of the sector but there is a role----
Alan Kelly (Tipperary, Labour)
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Are you happy with the financial performance of Bord na gCon? Answer the question please.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Was the Department not in charge of the old board as well? If it was a bad board-----
Mr. Brendan Gleeson:
If the Deputy wants to go back to Limerick and that, some of the early decisions in Limerick were made as early as 2005. It was a different board and a different Department. That is just factually correct. There is no doubt that some of those decisions laid the seeds for great financial difficulties which were exacerbated by a recession from 2008 on. An investment was made at the wrong time - I suppose that is the reality of what happened.
The board has inherited a difficult situation and is trying to navigate its way through it. I do not believe there are any easy solutions here. They are doing a very difficult job in difficult circumstances.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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There is a lot of taxpayers' money involved and we are here to make sure it is being spent properly and everything is accountable and above board. That is our job here and all we are trying to do is clarify that money is being spent right and going in the right direction. As part of the oversight, the Department should be making sure of that.
Mr. Brendan Gleeson:
Part of the difficulty, and a factor in the perfectly legitimate issues that are being raised here, is that when one does not have money, one has to make difficult decisions. The fact is that there is a very significant debt which is costing a lot to service. As far as I am aware, between €2 million and €3 million was involved in covering the interest and bank debt over the last two years. That is money that could otherwise have gone into prize money, breeders' incentives, investments in stadia. This thing is a bit of a self-fulfilling prophesy.
I cannot say I am happy with the situation but I am quite sure that the board and the interim chief executive would say exactly the same thing.
Alan Kelly (Tipperary, Labour)
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I wish to raise a matter for clarification and then I will let Deputy Aylward conclude. Mr. Gleeson said that there are historical issues here, a previous board, a change of Departments and so on. Obviously, the issue of the decision to build the site in Limerick is a critical component of this and we all understand that. That is probably one thing we all agree on, but there are many more bigger issues than that as well. Perhaps Mr. Greally will answer the following question. There was a request from the Department of Agriculture, Food and the Marine to the Department of Public Expenditure and Reform to extend the contract of the previous chief executive, who was the decision-maker regarding the building of the Limerick site. If there were concerns about this, why did the Department of Agriculture, Food and the Marine write to the Department of Public Expenditure and Reform requesting an extension of the contract of the CEO who made the decision to build the Limerick site in the first place?
Alan Kelly (Tipperary, Labour)
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I think Mr. Greally might want to answer it as well.
Alan Kelly (Tipperary, Labour)
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Yes, but the CEO is obviously party to the decision.
Alan Kelly (Tipperary, Labour)
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I refer to the CEO at the time when the industry was collapsing.
Mr. Brendan Gleeson:
I accept that, and that is having come through a very difficult time and a difficult recession. However, at the time, a case was made by the board for the extension of the contract of the CEO based on the submission of a business plan and on the need for continuity. I believe that this individual had particular expertise in some of the proposals for the IT element of online services and commingling. That was the basis of the submission made and it was on that basis that we agreed to an extension. Ultimately, the CEO did not accept the post and was not appointed.
Alan Kelly (Tipperary, Labour)
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Yes, but it does sound strange, given the evidence given today by Mr. Gleeson regarding the fact that there are board legacy issues, which is not something I respect, and that it is a matter of a previous board, that it was the same Department that asked for the contract of the CEO of that previous board to be extended based on the CEO's performance.
Alan Kelly (Tipperary, Labour)
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It is consistent with the evidence given previously by the Department of Agriculture, Food and the Marine and given today by the Department regarding a hands-off approach. It is also a policy volte-face. Regarding the review that was conducted in 2010 of the national State assets and liabilities, did the Department not say that a disposal of assets regarding Bord na gCon would have a very negative impact on the industry? The Department of Agriculture, Food and the Marine in 2010 felt any asset sale would be negative for the industry but presumably now supports it.
Alan Kelly (Tipperary, Labour)
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I am not asking-----
Alan Kelly (Tipperary, Labour)
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The same CEO is in place.
Mr. Brendan Gleeson:
We had an objective person look at this situation and there is no ideology at play here. Nobody wants to dispose of assets if it is avoidable, but we asked for an independent company to take an objective look at the sector because we knew there were financial problems. They took a view and made a series of recommendations about improving the financial situation and governance and regulation, and that report was broadly accepted by Ministers at the time it was produced, in 2014.
Alan Kelly (Tipperary, Labour)
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I will let Deputy Aylward contribute presently. I will quote from the Department:
€90m has been invested in bringing stadia up to a high standard; it is highly unlikely this investment would be recovered on the open market.
Despite this, we have had a decision in the past 48 hours.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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I have one last question, for now anyway. I refer to the Indecon report again. The Oireachtas Committee on Agriculture, Food and the Marine recommended that the Irish Greyhound Board facilitate meetings with industrial representatives of stakeholders such as the Irish Greyhound Owners and Breeders Federation. That is one of the complaints I have heard recently. The board and executive are completely ignoring the stakeholders. I have been told they will not meet them, converse with them or tell them what is going on. Here is a recommendation from the Indecon report and from the Committee on Agriculture, Food and the Marine that the board discuss with them the future of the plan that is put forward. Despite this, since January last year, when this recommendation came from the Committee on Agriculture, Food and the Marine, the board has never met them and has completely ignored them. That is what I am being told and I want clarification on that.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Someone must be telling me something different then.
Mr. Phil Meaney:
In December 2015, we set up a forum. By way of a small bit of background, the industry is very splintered. A number of the greyhound owners and breeders associations, GOBAs, around the country are not affiliated to the national GOBA. There are several other bodies: to a name a few, Greyhound Racing Integrity Ireland, GRII, the Phoenix Group and others. It had become impossible to meet everybody. I go to the races three or four nights a week and I am available to talk to anyone.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Will Mr. Meaney say whether the board has met any of the groups over the past 12 months? Will he give me an example?
Mr. Phil Meaney:
Will the Deputy allow me to finish, please? As a board, in agreement with the executive, we decided to set up a forum where we would invite two members from each of the different groups to come to Limerick and we would meet them. Whatever we had to divvy out, we would give them the background and be very open and very transparent. We had one such forum in December and either two or three last year. I discussed this with the Minister of State who has responsibility for the greyhound industry. He thought it was an excellent idea-----
Alan Kelly (Tipperary, Labour)
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I ask Mr. Meaney to name him for clarity and in order that everyone knows who he is talking about.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Deputy Doyle, is it?
Alan Kelly (Tipperary, Labour)
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Is it the Minister of State, Deputy Doyle?
Mr. Phil Meaney:
Yes. The board discussed it with him. He was very supportive of that idea to the extent that he came along one night and made himself available for four hours to meet the different components of the industry. When I got involved in this industry, the one thing I wanted to do, with the board and the executives, was unite the industry. It has been an impossible task. The idea was that by putting this in place, we would get in all the different colours and all the people with different ideas, but it does not seem to have worked.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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How often does the forum meet? Of all the different groups, how many turned up?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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Did any good come out of it? Was the Indecon report discussed? Were the points of view of the representatives who were there taken on board?
Mr. Phil Meaney:
Yes, and I felt that the forum had the capacity to be a success, but the problem was, and the problem remains, that different groups have different agendas. Sometimes they are completely opposed to one another. The biggest individual problem was that we could not get the industry going in the one direction.
Alan Kelly (Tipperary, Labour)
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Deputy Aylward will be able to contribute further. I assure him we will go around this circle a number of times. Just before Deputy Cullinane asks his question, I want to note a few matters on which we will need clarity because we have not yet had clarity. Any time a Deputy asks a question that is not answered, we will note it. The witnesses can answer further in their contributions in a while.
Regarding legal costs, has the board changed legal suppliers in the recent past? Are there any outstanding legal cases? Deputy Burke asked a question about the pension fund. By how much is it underfunded? I understand €800,000 was given towards it. Was that all fully put in recently? Has there been a full section 50 consultation with the staff and, if so, was it done in the appropriate way? We spoke earlier about staffing. Were there any staff appointments recently at any level and, if so, were they advertised in open competition? Is there an organisational review ongoing at the moment? There was no chief financial officer in Bord na gCon for a number of years. The witnesses might outline why this was the case and the consequences of same. I call Deputy Cullinane.
Catherine Murphy (Kildare North, Social Democrats)
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Is there a rota?
Alan Kelly (Tipperary, Labour)
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Yes, we have a full rota of speakers. Members will speak in the following order: Deputy Cullinane, Deputy MacSharry, Deputy Catherine Murphy, Deputy Cassells and Deputy Connolly. If there are no other speakers, I will then contribute.
David Cullinane (Waterford, Sinn Fein)
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As there is a large team from Bord na gCon present, only some of whom were introduced, I would like to know to whom I am speaking. Will Mr. Meaney introduce everyone who is attending on behalf of his organisation?
David Cullinane (Waterford, Sinn Fein)
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How many members of the board are here?
David Cullinane (Waterford, Sinn Fein)
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Is that four of six board members in addition to the chairman?
David Cullinane (Waterford, Sinn Fein)
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I have no agenda. The job of members is to evaluate materials we are given in preparation for meetings of the committee. We examine annual accounts - we will examine the opening statements made by the Comptroller and Auditor General and Mr. Meaney - and then do research on the organisations involved and the issues raised at our meetings. That is the basis upon which questions are asked. I hope Mr. Meaney, his colleagues and members understand that. I will first make an observation rather than ask a question. I found the performance so far to be shambolic and disjointed. The level of planning for this meeting leaves a lot to be desired on the part of members of the board, which raises concerns for me. I am giving my opinion, which the witnesses do not have to accept.
I will move on to questions. In all the material I have read, I have noted mismanagement, poor decision making, bad judgment and incompetence for which nobody has been held to account. Mr. Gleeson, one of the board members and some of the other witnesses responded to questions by making statements to the effect that they could not be held to account, the landscape was changing or something happened before their time. We heard excuse after excuse, with nobody taking responsibility for anything as far as I can see. Somebody else, the people who came before, were blamed.
My first question is directed at Mr. Meaney, although I will also put questions to other witnesses. I am frustrated by the presentations given and the complete lack of acceptance of any wrongdoing, mismanagement or poor decision making. I believe it was Dr. Brady who referred to good leadership and management, a statement I will return to in a few minutes. Can Mr. Meaney tell me that there was no evidence of mismanagement, poor decision making, bad judgment or incompetence by the board or the previous board of the organisation?
David Cullinane (Waterford, Sinn Fein)
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Mr. Meaney is the chairman of the organisation. Somebody has to comment on the performance of the organisation. If Mr. Meaney is not prepared to do so, I will address Dr. Brady. It is not good enough for someone to state before the Committee of Public Accounts that he cannot give an opinion on what happened before his time. Mr. Meaney can give an opinion.
David Cullinane (Waterford, Sinn Fein)
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I am asking Mr. Meaney's opinion.
David Cullinane (Waterford, Sinn Fein)
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I was not there either and I have an opinion. I am asking for Mr. Meaney's opinion, as the current chair of the board.
Alan Kelly (Tipperary, Labour)
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For clarity, on what date did Mr. Meaney join the board?
Alan Kelly (Tipperary, Labour)
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Mr. Meaney had no part in contracts or anything else related to Limerick greyhound stadium.
Alan Kelly (Tipperary, Labour)
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There was no signing off of any work or anything else.
David Cullinane (Waterford, Sinn Fein)
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I remind the witnesses that many of them spent a long time commenting on the actions of the previous board when giving answers. They cannot have it both ways. I am asking Mr. Meaney for his opinion, after which I want to hear Dr. Brady's opinion, on the current and previous boards. In Mr. Meaney's view, were there instances of mismanagement, poor decision making, bad judgment and incompetence either by the current or previous board? I ask Mr. Meaney to answer that question directly before I come to Dr. Brady.
Mr. Phil Meaney:
I would probably not say here that we are a perfect board. As I said in our opening remarks, the man that never made a mistake never made anything. As far as I am concerned, we have managed the business to the best of our ability. We have put in a huge effort. I told the committee the problems that were there when we came in. We cannot magic them away. The problems were there and we had to deal with them. We had to deal with an outstanding IOU of €2.5 million to-----
David Cullinane (Waterford, Sinn Fein)
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With respect to Mr. Meaney, that is not the question I asked. We know there were problems. As he well knows, problems do not self-generate but are created by people and organisations. Were the problems Mr. Meaney stated he inherited a product of mismanagement, poor decision making, bad judgment or incompetence?
Mr. Phil Meaney:
That is a difficult question. There was a combination of issues. Probably the biggest single issue was that decisions were made when the economy was at its highest. The economy collapsed and certainly, with the benefit of hindsight, one would question some of the decisions. I cannot specifically say to the Deputy that any of the decisions that we have made - while I have the utmost of sympathy for Harold's Cross and the Dublin greyhound owners and breeders, my belief it that it is the correct decision but only history will write whether it was the right decision or the wrong decision.
David Cullinane (Waterford, Sinn Fein)
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I ask Dr. Brady to answer the question and give his opinion. These issues are not funny; they are serious. I am looking for respect from the witnesses. I want them to respect the committee and the work we are doing.
Alan Kelly (Tipperary, Labour)
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Will Dr. Brady answer the question, please?
David Cullinane (Waterford, Sinn Fein)
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What is Dr. Brady's function in Bord na gCon?
David Cullinane (Waterford, Sinn Fein)
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I know Dr. Brady is the CEO. What is his function as CEO?
David Cullinane (Waterford, Sinn Fein)
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It is to manage and lead the staff in the organisation. When I ask Dr. Brady for his opinion on mismanagement, he states he cannot answer the question. He can answer the question because if he is the manager, he can tell me whether, in his opinion, there were issues of mismanagement, poor decision making, bad judgment and incompetence. If he is not in a position to answer that question, quite simply, he should not be the CEO of the organisation, interim or otherwise. I ask him again to answer the question that was put. Is he the Accounting Officer?
Alan Kelly (Tipperary, Labour)
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Dr. Brady, for clarity, you can answer the question the Deputy asked but you do not have to make reference to the board. You can answer as to whether you agree with the sentiments, as expressed, regarding mismanagement and so forth in relation in how the organisation, as opposed to the board, was or is performing.
Dr. Seán Brady:
I thank the Chairman for that clarity. I have worked in a number of businesses in my career, most of which had good and bad patches. I would not describe the Irish Greyhound Board as a perfect organisation. There is room for improvement but I see in the organisation very committed, hardworking staff who are very committed to their jobs. They work very hard and deliver a product to the people who come into the-----
Alan Kelly (Tipperary, Labour)
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I ask Dr. Brady to answer the question, please.
David Cullinane (Waterford, Sinn Fein)
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In Dr. Brady's role as CEO has he seen examples of mismanagement, poor decision making, bad judgment or incompetence, either by the current or previous board or the organisation?
Alan Kelly (Tipperary, Labour)
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We will confine the question to the organisation.
Dr. Brady should answer the question as specified.
David Cullinane (Waterford, Sinn Fein)
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I am talking about the full organisation.
Alan Kelly (Tipperary, Labour)
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The executive.
Dr. Seán Brady:
As businesses go, the organisation has made some mistakes. The management team has made mistakes and I have made mistakes since I joined the organisation, as I told the Vice Chairman earlier. I would not agree with the use of the term "incompetence". People in the organisation are very committed to doing the best they can.
David Cullinane (Waterford, Sinn Fein)
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My next question is for Mr. Gleeson. The Department has a responsibility in respect of protecting taxpayers' money and ensuring that there is no mismanagement, poor decision-making, bad judgement or incompetence in organisations funded by the taxpayer and for which it is responsible. I will evaluate whether that is the case in a few minutes but I am trying to get into the heads of the people who are present before doing so. What is Mr. Gleeson's opinion?
Mr. Brendan Gleeson:
The events relating to Limerick were the subject of a special report from the Comptroller and Auditor General. I do not think any of those words were used in that report. Clearly, mistakes were made in the context of the construction of Limerick and the Department fully accepted the Comptroller and Auditor General's report. I think that is the most I can say.
David Cullinane (Waterford, Sinn Fein)
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I will get to some of the issues. I will start with the site near Meelick that was dealt with earlier. Did Mr. Murnane answer the questions on that?
David Cullinane (Waterford, Sinn Fein)
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How much was it bought for?
David Cullinane (Waterford, Sinn Fein)
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What was it bought for?
David Cullinane (Waterford, Sinn Fein)
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What is its current status?
David Cullinane (Waterford, Sinn Fein)
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What is it worth?
David Cullinane (Waterford, Sinn Fein)
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How much of a loss is that?
David Cullinane (Waterford, Sinn Fein)
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Almost €1.5 million. Is that good judgment?
David Cullinane (Waterford, Sinn Fein)
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So there was due diligence?
David Cullinane (Waterford, Sinn Fein)
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Who signed off on the site being bought?
David Cullinane (Waterford, Sinn Fein)
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Would the board have signed off on it?
David Cullinane (Waterford, Sinn Fein)
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Is Mr. Murnane telling me that the board signed off on it without full knowledge?
David Cullinane (Waterford, Sinn Fein)
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It is either-----
David Cullinane (Waterford, Sinn Fein)
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I am not asking about the Comptroller and Auditor General.
David Cullinane (Waterford, Sinn Fein)
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I am not asking the Comptroller and Auditor General. I am asking Mr. Murnane. I am looking for a straightforward answer. Either the board had the full information or it did not. It is not a grey area, it is black and white. Did the board have the full information to equip it to make a decision to sign off on €1.5 million?
David Cullinane (Waterford, Sinn Fein)
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So we cannot say whether it was bad judgment but there was certainly incompetence on the part of somebody because the full information was not given to the board. Would Mr. Murnane agree with that?
David Cullinane (Waterford, Sinn Fein)
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I would label that incompetence. I would see €1.4 million as a very significant amount of money so I would see it as incompetence. I will move to the sale of Harold's Cross. Will Mr. Meaney reread the fourth paragraph on page 2 of his opening statement, starting with the decision to sell Harold's Cross?
Mr. Phil Meaney:
I will. It states:
The decision to sell Harold's Cross is not solely predicated on its potential value to the IGB or its contribution to the resolution of the debt issue but is also based on the fact that it is two miles from Shelbourne Park, which is twice its size and operates for a limited period every week, as indeed does Harold's Cross. It does not make commercial sense.
David Cullinane (Waterford, Sinn Fein)
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What does not make commercial sense?
David Cullinane (Waterford, Sinn Fein)
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Did it make commercial sense to sell Harold's Cross?
David Cullinane (Waterford, Sinn Fein)
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Could I get Mr. Meaney to turn to the-----
David Cullinane (Waterford, Sinn Fein)
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Mr. Meaney spoke earlier about tough decisions.
David Cullinane (Waterford, Sinn Fein)
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There is a difference between tough decisions and the right decisions. Our job is to investigate, examine and interrogate decisions that were made. We can then pass judgment on whether they were the right decisions. I am not saying this was the wrong decision but it is my job to examine. That is all we are going to do so we will examine whether it was the right decision or at least we will put questions. If Mr. Meaney has a copy of the 2015 annual report, could he turn to page 45?
David Cullinane (Waterford, Sinn Fein)
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I accept that. Could Mr. Meaney turn to page 45 of the 2015 annual report? Are we on the same page?
David Cullinane (Waterford, Sinn Fein)
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We can see the tote profit and the track profit and loss in each of the different tracks. What is Abargrove Ltd?
David Cullinane (Waterford, Sinn Fein)
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The food and beverage side of it. The profit is €64,000 while the loss is €307,912. Is that correct ? Am I reading it right? Does Mr. Murnane want to take this part?
David Cullinane (Waterford, Sinn Fein)
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So what is the loss?
David Cullinane (Waterford, Sinn Fein)
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But it is a loss?
David Cullinane (Waterford, Sinn Fein)
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Cork Greyhound Race Company limited has a profit of €310,015 and a loss of €221,522 - a profit of approximately €90,000. Is that right?
David Cullinane (Waterford, Sinn Fein)
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Galway Greyhound Stadium limited has a profit of €169,850 and a loss of €233,645 - an overall loss. Is that right?
David Cullinane (Waterford, Sinn Fein)
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The Kingdom Greyhound Racing Company limited has a profit of €130,000 and a loss of €135,000 so, again, there is a loss.
David Cullinane (Waterford, Sinn Fein)
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Shelbourne Greyhound Stadium has a profit of €725,000 and a loss of €174,000 so there is a significant profit there. The final three - Waterford, Youghal and Mullingar - all had losses.
David Cullinane (Waterford, Sinn Fein)
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In the case of Youghal, the loss was very significant.
David Cullinane (Waterford, Sinn Fein)
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Where is Harold's Cross - the Dublin Greyhound and Sports Association - in that? What was its profit?
David Cullinane (Waterford, Sinn Fein)
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And the loss?
David Cullinane (Waterford, Sinn Fein)
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So what was the profit?
David Cullinane (Waterford, Sinn Fein)
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I am looking at a loss relating to food and beverages and losses on the part of Galway Greyhound Stadium limited, the Kingdom Greyhound Racing Company limited, Limerick Greyhound Racing Track limited, Waterford Greyhound Race Company (1953) limited, Youghal Greyhound Race Company limited and Mullingar Greyhound Racing Company limited One of the only profit-making companies is the one that was sold. I go back to the statement that this makes commercial sense. Can Mr. Meaney illuminate that for me?
David Cullinane (Waterford, Sinn Fein)
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Is it making a loss or a profit?
Alan Kelly (Tipperary, Labour)
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Answer the question please.
David Cullinane (Waterford, Sinn Fein)
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I am asking Mr. Meaney whether it was making a loss or profit? Mr. Meaney is talking about two venues. I am looking at the annual report for 2015 in respect of Shelbourne Park and Harold's Cross.
David Cullinane (Waterford, Sinn Fein)
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Yes.
Mr. Phil Meaney:
I am explaining to the Deputy; I am answering the Deputy's question. As for the two tracks, as my colleague, Mr. Pat Creed, explained earlier, if there were shops two miles from each other, it would not make commercial sense to operate the two. The market is not big enough to operate the two tracks on similar nights and we alternate them.
David Cullinane (Waterford, Sinn Fein)
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I accept it is Mr. Meaney's view that this made commercial sense and he is giving his justification. Mr. Meaney's justification is that it does not make commercial sense to have Shelbourne and Harold's Cross operating so close to each other.
David Cullinane (Waterford, Sinn Fein)
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That is irrelevant. Let me put the question, please.
David Cullinane (Waterford, Sinn Fein)
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If I can put the question, please, Mr. Meaney. If he can show a bit of patience please, I will make my point. I put to Mr. Meaney - I am only working off the 2015 accounts - that what I see is a very significant profit for Shelbourne and a very significant profit for Harold's Cross. How can Mr. Meaney reconcile very significant profits being made by the two tracks with his statement that it is impossible or not viable for the two of them to go hand in hand or side by side? Can Mr. Meaney explain that to me?
Alan Kelly (Tipperary, Labour)
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Sorry, Deputy Cullinane asked a specific question.
David Cullinane (Waterford, Sinn Fein)
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Mr. Meaney can take up all the time in the world he wants to answer the question now.
Alan Kelly (Tipperary, Labour)
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Mr. Meaney, you can take time to elaborate but just answer the question by the end of it.
David Cullinane (Waterford, Sinn Fein)
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Does Mr. Meaney understand how the Committee of Public Accounts works? Does he understand what our function is here?
David Cullinane (Waterford, Sinn Fein)
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Can Mr. Meaney give me his understanding of that?
David Cullinane (Waterford, Sinn Fein)
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Mr. Meaney is the chairperson of an organisation that is funded through the taxpayer.
David Cullinane (Waterford, Sinn Fein)
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When Mr. Meaney is asked a question - I do not want to hear from any witness who comes before the Committee of Public Accounts that he or she will be brief because there is no point in being anything else - he is here as the chair of an organisation that is funded by taxpayers' money to answer questions.
David Cullinane (Waterford, Sinn Fein)
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Mr. Meaney can have as much time as he possibly needs. At times there will be a need for us to interject, but Mr. Meaney has as much time as he needs. Mr. Meaney and his colleagues needs to understand they are here to answer questions.
David Cullinane (Waterford, Sinn Fein)
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Obviously, we will not agree on the commercial viability of both Shelbourne and Harold's Cross. I am only putting on the record the figures for both and the profit that both made, and then people can make up their own minds.
What I am interested in then is the decision by the Department of Education and Skills to buy the property in the first place, and also that Dr. Brady, when asked earlier how much the organisation will get, was not in a position to give us the information, and I fear the dreaded words "commercial sensitivity" coming as well. How many purchasers are there in the game here? How many people are involved? Is there more than one bidder here or is it already a done deal between the organisation and the Department of Education and Skills?
Alan Kelly (Tipperary, Labour)
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Is there a phone on? Perhaps Dr. Brady should put the phone with his colleagues behind him in case he cannot turn it off.
Alan Kelly (Tipperary, Labour)
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It has to be off. That is what I requested at the beginning.
Alan Kelly (Tipperary, Labour)
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My phone is off. Everyone's phone should be off. Can we have everyone's phone off, please? Dr. Brady may go ahead.
David Cullinane (Waterford, Sinn Fein)
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Will I repeat the question?
David Cullinane (Waterford, Sinn Fein)
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Why is Dr. Brady not in a position to tell us how much the organisation will be getting from the Department of Education and Skills?
Dr. Seán Brady:
At this point in time, there are a number of steps to go through the process. We have received advice from our property advisers, Savills, that the price that has been offered is an acceptable price but there are a number of steps still to take in the process which will happen over the coming weeks. When those steps are completed, we will be able to make it a matter of public record.
David Cullinane (Waterford, Sinn Fein)
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What has been in the public domain is €15 million.
Alan Kelly (Tipperary, Labour)
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A question please, Deputy. It will come around again.
David Cullinane (Waterford, Sinn Fein)
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Can Dr. Brady verify that, one way or the other?
David Cullinane (Waterford, Sinn Fein)
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Was it sold on the open market?
Dr. Seán Brady:
The process, as I explained to Deputy Burke earlier, is quite simple. On 23 March, the board agreed that the property be put up for sale. I informed the Department who owns us, the Department of Agriculture, Food and the Marine that the board had made this decision. The Department of Agriculture, Food and the Marine drew my attention to Circular 17/2016 and asked me to allow the Department of Education and Skills to look at the site.
David Cullinane (Waterford, Sinn Fein)
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Was there an open market sale? The answer is "No".
David Cullinane (Waterford, Sinn Fein)
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Was there a tendering process? These are straightforward questions and I cannot understand why there is a hesitance in answering them. Either there was a tendering process or there was not. Is it that Dr. Brady does not know or does not want to answer the question? Can Mr. Murnane answer the question?
David Cullinane (Waterford, Sinn Fein)
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If Dr. Brady does, I am waiting.
Alan Kelly (Tipperary, Labour)
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Let the witness answer the question.
Dr. Seán Brady:
We received instructions from the Department of Agriculture, Food and the Marine, based on Circular 17/2016, about the policy for property acquisition and for disposal of surplus property, which was signed on 28 June by the Department of Public Expenditure and Reform. We entered that process. To my knowledge, the Department of Education and Skills looked at the property and the Valuation Office made a value on it. Arising out of that process, on Monday last I received an offer from the Department of Education and Skills for the property. The board of the IGB met and considered the offer, and got advice from Savills, our property advisers, that this offer was acceptable. There are a number of steps to be completed in the process which will be completed over the coming weeks and months.
David Cullinane (Waterford, Sinn Fein)
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There was no tendering process, no open market sale. That is clear. What zoning is on the land?
David Cullinane (Waterford, Sinn Fein)
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Recreational use and open space. Is the Department of Education and Skills opening sports fields-----
David Cullinane (Waterford, Sinn Fein)
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-----or what are the Department's plans for it? Is this being sold with rezoning rights attached or anything like that, as it is the Department of Education and Skills purchasing it?
David Cullinane (Waterford, Sinn Fein)
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Is it possible - perhaps the Department official can answer this - to build schools on that site with the current zoning?
David Cullinane (Waterford, Sinn Fein)
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Why? Is it that Mr. Gleeson does not know if it is the correct zoning or not?
David Cullinane (Waterford, Sinn Fein)
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It would require rezoning. Mr. Gleeson does know then.
Mr. Brendan Gleeson:
I did not say I did not know.
To come back to the question, and only for the purpose of clarification, there is a convention - it is a circular - that if one State organisation wishes to purchase an asset from another State organisation, if the Department of Education and Skills, for example, wants to buy a site from Bord na gCon or any other organisation for the purposes of building schools, there is a process defined by the Department of Public Expenditure and Reform that involves obtaining a valuation from the Valuation Office which is binding on both parties. The reason for that rule, I guess, is that there is a desire to avoid a situation where a public body would have to enter into a bidding war with private developers in the context of providing a public asset. That is the reason the rule is there and the process that the chief executive has described is consistent with that circular and consistent with that rule.
David Cullinane (Waterford, Sinn Fein)
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I find that answer almost unbelievable. It is not about a bidding war.
One puts something on the open market and there are potential bidders and there is what is called competitive tension in order to get the best possible return for an organisation. That is the purpose, it is not to create a bidding war or to encourage one but it is done to get the best possible return. The reason I asked this is because there could be a perception that the Department of education buying this is a sort of state bailout of an organisation that has clearly failed. The Department of education comes in and writes a cheque for €15 million, wipes out a lot of the debt, every one is happy and, as usual, no one is held to account for the failures, mismanagement, poor judgment and everything else. There is no point in asking that of the witnesses because they obviously will not agree, but it is a question that needs to be put. When asking that question, I want to hear from the Secretary General of the Department of education as to why the Department was interested in these lands, who alerted it to it, what are its plans, what is it paying for it and all those issues. I want to hear from the Department too and maybe we can come back to that at another time. Deputy Cullinane can come back to that.
Alan Kelly (Tipperary, Labour)
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No problem. Do the witnesses wish to take a break?
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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We can take a break for five minutes.
Alan Kelly (Tipperary, Labour)
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We will take a break for strictly five minutes. We do not want people coming in the doors all the time.
Alan Kelly (Tipperary, Labour)
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We recommence in public session. I point out that the members in the Gallery are here by special permission and no member in the Gallery should approach a witness in any way. I need to make clear to everybody in the Gallery that they have to conduct themselves in a manner appropriate to the meeting. Please take note of what I have said.
We move on to further questions. I call Deputy Marc MacSharry.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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At the outset, I thank the gentlemen for coming. None of this is personal so no matter how robust it gets, they should not take it personally. We routinely interrupt each other by way of getting to the answers, as Deputy Cullinane said, so they should not take it personally.
Would it be the opinion of the board that, to serve on a board, a level of product knowledge specific to the industry is necessary?
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Would it be the opinion of the board that a level of product knowledge related to the activities of that board is an essential prerequisite of competence to serve?
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Would everybody have that?
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Which individual does not have that product knowledge?
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Everybody else does.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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They are not allowed.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Therefore, everybody used to have them but they do not have them any longer because they are-----
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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That removes the conflict, does it? Was Dr. Gaynor the person Mr. Meaney inadvertently said was responsible for gambling, which he mentioned earlier?
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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I see. Has Dr. Brady had dogs, even in his wife's name or his children's names?
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Does Dr. Brady feel that-----
Alan Kelly (Tipperary, Labour)
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That is very clear.
David Cullinane (Waterford, Sinn Fein)
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It is a great advertisement for the organisation.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Does Dr. Brady feel that, in any way, this impedes his level of understanding of the industry as a whole?
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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I get the point and sorry for interrupting. As I said, it is not personal. In his own determination, what does Dr. Brady bring to the table that the other six do not have and that is a unique requirement regarding the objectives, ambitions and needs of the board and the executive?
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Dr. Brady is CEO and is on the executive.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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It is regarding Dr. Brady, who is interim CEO. Notwithstanding any view of his performance, I am just asking what he feels, having never owned a dog and not being likely to ever own a dog, that he is bringing to the executive table that is of unique benefit. What is the USB for Dr. Seán Brady in terms of being interim CEO of Bord na gCon?
Dr. Seán Brady:
I have wide experience of business. I have worked in a number of companies ranging from the dairy sector through to the malt sector and the sugar sector, and back to the dairy sector again in regard to marketing Ornua, where I was interim CEO. So I bring a breadth of experience.
Also, I come from the country, so I am comfortable having a chat with a dog owner in a golf caddy with two or three dogs in it. I have had many conversations with owners in Limerick Greyhound Stadium. I bring a business perspective to the organisation. There are some advantages, perhaps, in a chief executive not being immersed in the organisation in the sense that I can bring an objective view to things - although I am unsure.
Mr. Pat Creed:
I will answer that. I am a chief executive currently and I would actually disagree with the suggestion. I do not think one needs to have industry knowledge. I think one needs to acquire industry knowledge when one takes over. However, I do not believe one needs industry knowledge to become a chief executive. It might actually be dangerous. There can be groupthink and inside-think. My view is that a person can be the chief executive but would need to learn about the industry on taking up the job. However, I would not agree that a person needs industry knowledge at the point of taking on the job.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Mr. Creed has raised that issue. The Chairman can tell me if this is an unfair question. We can use a different analogy if it is. If I was the chief executive of Bord na gCon and I was applying for the job of chief executive of Bank of Ireland Finance, would I be appropriate for the role?
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Mr. Creed gave a judgment on the appropriateness of a person to serve as chief executive of whatever.
Mr. Pat Creed:
Let us suppose I looked across the organisation I work for. The amount of people who have joined the organisation in the past three years and who have come from diverse organisations far outside of banking is extraordinary. That is mainly down to where the banking world is going in respect of technology and mobile technology and so on. I believe industries will only thrive if they take advantage of new technologies. That will bring diverse candidates to the table.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Again, let us stick to the banking analogy raised by Mr. Creed. Richie Boucher, for example, did not come from the dairy industry. He came from financial services.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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The practice would tend to be that-----
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Mr. Creed's personal opinion is that it does not have to be that way.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Has Dr. Brady acquired it?
Dr. Seán Brady:
I am learning fast. There are many aspects to the business. There is the actual racing that people have every night. I see the processes. There are processes in business that are transferable to all businesses. One challenge we have in the business is getting races run on time and getting due process around that. There is a regulatory aspect. I have experience of regulation in the dairy sector where I worked for several years. I have experience in the malt sector as well. I have experience of marketing through my roles. I have a wide range - perhaps wide is the wrong word-----
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Dr. Brady referred to marketing. The chairman of the board said there was no one with marketing experience at the moment.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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They are simply implementing the decisions of the board.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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What way does it work?
Mr. Phil Meaney:
The executive puts forward plans and proposals to the board. We advise the executive on strategy and the best way forward for the industry.
Mr. Creed is chief executive of Bank of Ireland Finance, as Deputy MacSharry has suggested. However, it is well accepted that he has considerable knowledge and experience in marketing and promotion.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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I was not questioning Mr. Creed's ability to be on the board. I was simply asking whether there was a view that to have adequate competence, a certain level of knowledge was required. Mr. Creed said that he did not believe so. Dr. Brady said that his other expertise was adequate and that he is learning fast. I was simply wondering about that on a personal level.
Earlier, Mr. Creed made a reference in an interjection to support another answer. I am paraphrasing but I gather he said that he knows of no businesses operating within several miles of each other whose premises were empty three or four nights per week. Is that what he said?
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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How does Mr. Creed feel that Naas, the Curragh and Punchestown have managed it?
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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I am not questioning for Deputy Cullinane and it is not a follow-on from his question. I am simply asking because Mr. Creed said he knew of no business in that situation. I probably picked the most similar business in existence and offered it as an example that is 30 miles away. Three very successful racing facilities exist. From Punchestown to Naas is barely three or four miles. With the benefit of the motorway, the run from the Curragh to Naas and Punchestown is probably closer and easier to navigate than the route between Shelbourne Park and Harold's Cross. It is a reasonable, given that 1.1 million people live in the greater Dublin area and far fewer people live in the County Kildare area, to question the business criteria used to justify the statement made by Mr. Creed.
Mr. Pat Creed:
First, the Curragh is separate to Punchestown and Naas. The Curragh only hosts flat racing, so it is a different track. Punchestown and Naas probably have similarities because they run steeplechases. I will reiterate the point I was trying to make. If we did not have the level of debt overhanging, then it might be a separate discussion. The issue is that we have a substantial debt. We have two stadiums. One is closed five nights per week. The other is closed four nights per week. By merging them into one operation in Dublin we are alleviating the debt burden and maximising the cost efficiency by having staff move to one location. The decision is based on the criteria of where we are today as distinct from if it was a debt-free organisation.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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What percentage of the focus of the board and the executive is on debt management, as opposed to business development?
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Does high mean 10% in proportion to other things? Could it be 5% or 75%?
Mr. Pat Creed:
No, it is not. We meet more often than I had presumed we would meet. It is not a question of once a month. It is probably once per week, if not a couple of times per week. Our focus at the beginning was to resolve some of the legacy legal issues. Then, it moved on to solving all the other issues we discussed earlier. We spend a good deal of time talking about regulation. We spend a good deal of time talking about drugs.
Alan Kelly (Tipperary, Labour)
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For clarity, Mr. Creed, are you saying your board meets once or twice per week? Is that correct?
Alan Kelly (Tipperary, Labour)
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I just wanted to know for clarity.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Let us change the focus a little. I put it to the representatives of Bord na gCon that Horse Racing Ireland took a decision to trade out of the difficulties. It did so successfully and now it has surpassed Bord na gCon in terms of Tote returns and profitability and so on. The point made by Mr. Creed in terms of two facilities for the same scenario, I respectfully suggest, has more of a banking and raw commercial focus than a focus on the culture and spirit associated with supporting a sport.
Mr. Creed used the banking analogy, so I will stick with that. Bank branches close. People are replaced by machines and telephones but sport is a little different. It requires facilities. I put it to the delegation that, by closing one of the main or flagship facilities, Bord na gCon is impeding its ability to trade out of the difficulties and grow the industry in terms of the capacity available to it in future.
Mr. Pat Creed:
We have not got the capacity, based on current numbers, to grow our way out of the debt burden just by doing it that way. We need a substantial reduction of the debt. It has not been said already, but it needs to be said: the option was, we would sell it or the bank would sell it. It was better that we sold it.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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What bank was involved?
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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As established earlier, there was an absence of an up-to-date strategy. Is it fair to say that the strategy in place is obsolete because of other matters?
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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The focus now is on debt management, which is reasonable, but in the absence of a growth or trading strategy. Is it reasonable to state that?
Mr. Phil Meaney:
As I am sure the Deputy is well aware, there was originally three horse racing tracks in Dublin, namely, Baldoyle, the Phoenix Park and Leopardstown. Today, there is only one facility. It is a fantastic facility, which I should have mentioned in the context of my remarks about the Aviva Stadium and Croke Park. The IGB and the greyhound industry should aspire to having a facility like Leopardstown. The strategy to which we have been working is due to expire and so we need to put a new strategic plan in place. As pointed out by Mr. Creed, the landscape has changed a great deal in the last 48 hours and, as such, that plan will need to be very different to what was originally proposed.
Dr. Seán Brady:
The Indecon plan, which forms the basis of the current strategic plan, is due to expire at the end of this year. In accordance with normal business practice we will need to commence work on a new five-year plan in the latter half of this year and to also commence work on budgets for the coming year, which are approved by the board. Work is under way within the IGB in terms of short and long-term strategic planning.
Mr. Walsh, our commercial director, might like to comment on marketing issues.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Perhaps Mr. Walsh is the appropriate person to answer the following question. What plans are being put in place to grow the business and to increase prize money, attendances and so on between now and this time next year and what is the target growth percentage, notwithstanding that a new strategic plan will have to be put in place when the current one expires, which I accept is due to circumstances outside of the control of the IGB?
Mr. Colin Walsh:
As mentioned by the CEO, we produce annual marketing plans. By way of information those plans are linked to the trading budgets of individual business units, for which clear objectives and strategies are set. We break down our customer base by customer type, by month and we track very carefully. We have monthly support and activation plans, which include radio advertising, and a full suite of digital activity to support those plans. In terms of strategy, the focus is, as it has been for the past two years, on increasing awareness around attendance, tote and food and beverage revenue across the stadium network. This is driven by direct and targeted sales and marketing activity across individual stadium brands and the Go Greyhound Racing brand. In response to the Deputy's question, the growth target for this year is in the region of 2% across the IGB stadium network.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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The agency cannot be accused of being recklessly ambitious.
Mr. Colin Walsh:
Maybe so, but not when one considers where the industry has come from over the course of the last ten years. For example, between 2008 and 2012 attendance figures dropped by 561,000. The biggest drop in attendance, at 374,000, occurred in 2008-09. There has been a huge resizing of the industry.
Alan Kelly (Tipperary, Labour)
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What was the reason for the drop in attendance, which does not correlate to any other industry?
Alan Kelly (Tipperary, Labour)
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So, too, is horse racing.
Mr. Colin Walsh:
Disposable income plays a huge part in people's involvement, participation and attendance at the dogs for social events. During the course of the last ten years the Irish greyhound industry, the operations of the stadia, the participants in the industry, whether they own, breed, train dogs or attend as fans, were not immune to the crash that occurred in the industry. In terms of the pattern of decline, the largest decline occurred in the period up to 2012-13. In the intervening years, from 2014 to 2016, we have managed to stabilise the attendances and the revenues. Gate income for the first time in 2016 has stabilised and attendances stabilised over the 2014-15 period. In 2015, average gate attendances increased by 4% to 5% on what they were in 2014. We have achieved a marginal growth in 2016 of between 1% and 2% across the network.
From a marketing point of view, from 2014 onwards we have been building and upgrading the digital infrastructure and commercial competence of the organisation. Previously, the tools to deal with a changing consumer base did not exist. This year is the tenth anniversary of the iPhone, such that we have experienced a mobile and smart technology revolution in the past number of years. We have embraced that and built up an infrastructure and digital marketing strategy. As I said, we have upgraded all of the facilities and this is beginning to bear fruit. Our pre-book business has increased by 9% and our online revenue has increased for 23% - for the first time, it has passed €1 million. The organisation has had to adjust.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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I get the picture. There is activity going on but no strategy.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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I was quoting what your chairman said earlier.
Alan Kelly (Tipperary, Labour)
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Can Mr. Walsh share a copy of the strategy with us?
Alan Kelly (Tipperary, Labour)
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To save time, it would be helpful if Mr. Walsh would forward it on to the committee.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Am I correct that the board decision to sell was taken on 23 March?
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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To inform its decision, was a valuation sought from Savills in advance?
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Did it advise the agency to adhere to the circular referred to earlier by Mr. Gleeson?
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Did they give a valuation? I am sorry if I am pushing Mr. Walsh a little but my allocated time is running out.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Funnily enough, I am. Normally, auctioneers advise that they believe it could make between X and Y. If they are required to provide a valuation in writing for, say, a bank, it will be more precise. Was a valuation given to the seven members of the board by Savills to the effect that it believed between A and B could be achieved?
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Can Dr. Brady tell us the valuation?
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Will Dr. Brady be able to give us that information at some point? Will it be publicly available.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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It is in the public interest.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Okay.
This is all the same thread. I am sorry for going on. Dr. Brady mentioned that Savills said there was substantial interest from Northern Ireland and elsewhere. Is that not what he said?
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Does Dr. Brady want to change the record?
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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He wants to change the record of what he said. That is okay.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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We know the Department of Education and Skills down here does not operate in Northern Ireland. That means there was at least a second party interested in the site. As part of my next question, I would like a quick clarification from Mr. Gleeson. There is a departmental circular which governs the disposal of assets to the Department of Education and Skills if it is interested. It is a circular; it is not a statutory instrument. Is that not correct?
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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The clerk or perhaps Mr. Gleeson can correct me if I am wrong. Circulars are routinely followed because they are the practice but sometimes they are not followed. Is that not correct?
Mr. Brendan Gleeson:
In the case of a sale as sensitive as this, it is important that some guideline be followed. The purpose of that circular is to ensure value for the taxpayer. It is a Department of Public Expenditure and Reform circular, not a Department of Agriculture, Food and the Marine circular. One might, for example, have very good value for one public organisation at the expense of another organisation. The purpose of this circular is to agree ground rules for such sales and the ground rule is that the Valuation Office values the property and that is binding on both parties.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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We got a view. I assume that for Dr. Brady, the word "view" means evaluation by the board. At least, I very much hope so in respect of the decision it made on 23 March. I wish to put on the record that Dr. Brady is going to come back to us with clarification as to what that valuation was. We have established from Mr. Gleeson that this was a circular - the practice, therefore, not founded in legislation or law, to determine that it had to be followed in terms of governing a sale to the Department. We have also established that Savills had at least one other interested party, including in Northern Ireland. Am I wrong in anything I have just said?
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Better still. Then there was a closed sale process to the Department of Education and Skills governed by a circular enshrined as the practice, not the law, the legislation or necessarily the advice of Savills itself. I ask Dr. Brady whether that is reasonable.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Go on.
Bobby Aylward (Carlow-Kilkenny, Fianna Fail)
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He is looking for the Vice Chairman's blessing.
Dr. Seán Brady:
On 23 March, the board made a decision to sell the property, following which I advised the Department of Agriculture, Food and the Marine of the decision of the board. The Department of Agriculture, Food and the Marine then asked me not to let the property go on the open market until the regulation I quoted - I have forgotten the name of it-----
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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It is not a regulation; it is a circular.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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It is not a statutory instrument and is not provided for in legislation. That is very important for the public watching this on the Internet. In that request from the Department, which the board clearly accepted, the board removed the "several" others, to quote Dr. Brady, from the party, as it were, or from the process.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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Others can continue with this thread because I have taken some time. My very last question is whether it is possible to successfully manage the team when one has lost the dressing room.
Marc MacSharry (Sligo-Leitrim, Fianna Fail)
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I do not know who the people outside the gates here protesting are then.
Dr. Seán Brady:
As our chairman said earlier, change is very difficult for people. People have had ways of life. I have spoken to some of the people on the pickets. They had a way of life and a way of doing things. I respect their right and their wish to object to what we did and I am sorry for the inconvenience that has been caused to them and the inconvenience and pain the sale has brought to the industry. However, at the same time, the creation of a viable future for the industry means that the board had to take decisions and I believe that things will get better in IGB now. There is an absolute need for financial stability and, equally, a need for everyone in the greyhound industry to come together and pull like dogs for its future success. We need to unite.
Alan Kelly (Tipperary, Labour)
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Before calling Deputy Murphy, I wish to return to Mr. Walsh. In the years that were referenced in his contribution, turnover prize money, track attendance, sponsorship, ownership, breeding and bookmaker and Tote income all collapsed. Attendances fell from 1.28 million to just under 650,000 between 2007 and 2015. However, if one looks at the Tote in 2006 for horse racing versus dog racing, there is not much of a difference but for some reason, in the horse racing industry, which is run very differently to the greyhound industry, the Tote has come through the recession but has not for the greyhound industry, which I think says an awful lot.
Mr. Colin Walsh:
Regarding the business model that operates in IGB stadia or stadiums generally, we operate 52 weeks of the year at night-time throughout the week and on weekends, so it is a different model to that in the horse racing industry. Regarding the comparison, the narrative that has been around is how the IGB Tote has not been operating or functioning to the same level as the HRI Tote and the horse Tote. However, if one is going to adopt that narrative, one should have a direct comparison of like for like. The on-Tote revenues for horse racing and greyhound racing have continued to operate in very challenging betting environments since 2007, with a decline in Tote revenues of 67.9% at domestic horse tracks and 66% at greyhound tracks. Therefore, when one compares on-track Tote performance, there is a very similar level of decline. HRI has managed to offset the on-track decline with an exceptional performance in international markets, which would include the US, South Africa, Canada, France, Germany and Italy. Of those markets, IGB is only allowed to operate in the US. It is precluded legally from trading in terms of Tote, and the US performance in 2016 is up 42%-----
Alan Kelly (Tipperary, Labour)
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I understand what Mr. Walsh is saying. It still does not add up, to be honest. I call Deputy Murphy.
Catherine Murphy (Kildare North, Social Democrats)
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I will try to keep my question short and I would appreciate short responses because, as the witnesses can see, we have very limited time. How much of the €20 million debt relates to Limerick?
Catherine Murphy (Kildare North, Social Democrats)
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How much of it relates to Harold's Cross?
Catherine Murphy (Kildare North, Social Democrats)
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Limerick was a bit of a disaster, to say the least. Did only one person make the decision on Limerick? Was the person in Limerick? The CEO, for example, would have been the key person involved in that and then the board would have taken the lead from that. Was that the case?
Catherine Murphy (Kildare North, Social Democrats)
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Where is that CEO now?
Catherine Murphy (Kildare North, Social Democrats)
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Until when was he in the organisation?
Catherine Murphy (Kildare North, Social Democrats)
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Did that contract expire and was it renewed afterwards?
Catherine Murphy (Kildare North, Social Democrats)
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The board renewed the contract.
Catherine Murphy (Kildare North, Social Democrats)
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Why would Bord na gCon have wanted to extend the contract?
Catherine Murphy (Kildare North, Social Democrats)
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Would he have had any involvement in the Meelick site?
Catherine Murphy (Kildare North, Social Democrats)
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Would Mr. Meaney have supported the extension of his contract?
Catherine Murphy (Kildare North, Social Democrats)
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Going back to the issue of Limerick, specifically page 45 that was referred to earlier, looking at the 2015 accounts, the loss for the Limerick site was not just a capital loss. There was also a very sizeable operational loss. It was the biggest loss of all the facilities. What would it take to make that stadium run at a profit and is it possible?
Catherine Murphy (Kildare North, Social Democrats)
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I want to go back to the €12 million in Limerick. Does this figure include the €1.6 million on the accounts as a loss for the site that is now worth €100,000?
Catherine Murphy (Kildare North, Social Democrats)
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Yes.
Catherine Murphy (Kildare North, Social Democrats)
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So the stadium is one part and the overdraft is another.
Catherine Murphy (Kildare North, Social Democrats)
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One could add €1.6 million to the-----
Catherine Murphy (Kildare North, Social Democrats)
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So it is actually more than that. What would the timeline be for an operational break-even point for the Limerick stadium?
Catherine Murphy (Kildare North, Social Democrats)
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It looks like a very big ask when we consider that the Harold's Cross stadium is already making profit. It looks like a very big ask to turn that around in Limerick.
Alan Kelly (Tipperary, Labour)
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Dr. Brady wishes to comment.
Catherine Murphy (Kildare North, Social Democrats)
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I do not need the history of it. I just want to deal with the accounts. I have very little time. With regard to the board, many people who appear in front of the committee, which is certainly a challenging environment, will see year zero as the previous board. We have been told that this is a new board. How many people on the new board served on previous boards?
Catherine Murphy (Kildare North, Social Democrats)
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Yes.
Catherine Murphy (Kildare North, Social Democrats)
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Had those three people served on just one previous board or on others also?
Catherine Murphy (Kildare North, Social Democrats)
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Is the term for three years?
Catherine Murphy (Kildare North, Social Democrats)
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Am I right in saying that one person has been appointed for the third time?
Catherine Murphy (Kildare North, Social Democrats)
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That goes against the recommendation.
Catherine Murphy (Kildare North, Social Democrats)
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But Bord na gCon is not taking it on good faith.
Catherine Murphy (Kildare North, Social Democrats)
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Mr. Creed made the point that if Bord na gCon did not sell the Harold's Cross stadium, which was not making a loss, then the bank was going to sell it. Did the bank pick this asset out and tell the board that it was to be sold? What are the circumstances of that decision?
Mr. Pat Creed:
The Indecon report recommended the sale of Harold's Cross. It was the bank's understanding that this is what was going to happen. We had a trigger event on 9 December. The €12.5 million was due for repayment. Obviously we were not in a position to make that repayment. On that date our facilities became on demand. Our banking facilities are currently on demand. The bank needed its money back and the asset had to be sold.
Catherine Murphy (Kildare North, Social Democrats)
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I want to go into a few other aspects of the ongoing operation. In the witnesses' opening statements we were told that, "The IGB’s difficulties are not unique. The industry globally is facing many challenges, notably as a result of the migration of wagering from track to technology platforms which has impacted on live attendances at race meetings." This movement would have been known and has been happening for some time. Were these challenges taken into account when Limerick stadium was being considered? Will the representatives indicate what would be a sustainable number of greyhound tracks? We have a very detailed chart in the presentations that compares numbers with the UK in respect of population size. The attendances at greyhound meetings run to in excess of three million annually. There is an income for prize money. What is sustainable?
Catherine Murphy (Kildare North, Social Democrats)
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Mr. Meaney is saying that they are all sustainable. Can I ask-----
Alan Kelly (Tipperary, Labour)
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I am sorry to interrupt the Deputy. She may finish her question but we will have the Dáil vote shortly. I also need to speak to the witnesses.
Catherine Murphy (Kildare North, Social Democrats)
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Operating costs in 2014 show that winnings paid from the tote were around €15 million and a similar amount in 2015. The operating costs, however, went from €8.9 million to €12.3 million. How did that happen? It is a very big jump, about one third of an increase in one year.
Mr. Michael Murnane:
Deputy Murphy is referring to figures from page 25. The main reason for the increase in the operating costs was the inclusion of the payroll costs and the operating costs of the food services business. There are notes to do with those. If the Deputy looks at page 39, those figures are broken down in detail. The tote operating costs are €1.5 million in 2014 and €1.547 in 2015, so they are similar.
Alan Kelly (Tipperary, Labour)
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We will resume with Deputy Murphy. The session must be suspended for voting time in the Dáil Chamber. It will take around 35 or 40 minutes. The committee will have another session with the Garda Commissioner and An Garda Síochána at 2.30 p.m.
I propose that we return to this issue on Thursday, 18 May 2017. Is that agreed? Agreed. When we return on 18 May, the initial speakers will be Deputies Catherine Murphy, Shane Cassells, Catherine Connolly and Alan Kelly.