\n\t\t\t\t\tBy Trevor Marshallsea<\/b>\n\t\t\t\t<\/p>\n
Listen<\/p>\n
Prominent industry figures have expressed alarm over Racing NSW\u2019s (RNSW) show-cause notice against the Australian Turf Club (ATC), with some perceiving an attempt to revive the sale of Rosehill, and one fearing a bid by RNSW to seize total control of the sport in the state, in a Hong Kong-style scenario.<\/p>\n
Thoroughbred Breeders NSW president Hamish Esplin said the move illustrated the sport was \u201cat a crucial juncture\u201d some ten years in the making, and which highlighted the need for industry stakeholders to make submissions to the state government\u2019s imminent review into the Thoroughbred Racing Act.<\/p>\n
Four months after ATC members voted out the controversial push to sell Rosehill for an estimated $5 billion for property development, RNSW on Friday issued the notice to the club to show cause why RNSW should not appoint an administrator to conduct the ATC\u2019s affairs.<\/p>\n
Reports in Sydney newspapers said the notice was served owing to concerns over the club\u2019s financial situation, and that the ATC had two weeks to respond.<\/p>\n
The notice was served one day after Ben Bayot and Natalie Hewson resigned from the ATC board on Thursday evening, and four days after the club sacked its chief executive Matt Galanos.<\/p>\n
Bayot and Hewson\u2019s departures leave four directors on the ATC board: Tim Hale SC, the chairman appointed after Peter McGauran\u2019s resignation from that post in July in the wake of the botched initial attempt to sell Rosehill; vice-chair Caroline Searcy, plus directors David McGrath and Annette English. Steve McMahon is interim CEO.<\/p>\n
Racing and breeding figures contacted by ANZ expressed confidence the ATC would successfully show an administrator should not be appointed \u2013 a position barrister Hale, a member of the club\u2019s property and infrastructure committee, appeared to support in a statement on Friday after the show-cause notice was served by Peter V\u2019landys\u2019 RNSW.<\/p>\n
\u201cThe ATC will cooperate with this process and work with Racing NSW to maintain the Club\u2019s ongoing financial position and sustainability,\u201d Hale said.<\/p>\n
\u201cThe process will help our long-term viability, but I\u2019d like to emphasise that the ATC remains asset-rich, resilient, and strong.\u201d<\/p>\n
News of the show-cause notice sent shockwaves through the industry on the weekend, and was a key point of discussions among racegoers at Randwick on Saturday.<\/p>\n
Sydney\u2019s biggest trainer, Chris Waller, responded with an impassioned call for clarity from RNSW.<\/p>\n
\u201cWe are all in the same industry,\u201d he told the Sydney Morning Herald. \u201cThe ATC put on a great show 52 weeks of the year and, yes, they can do some things better, but they need some support.<\/p>\n
\u201cAnd everybody knows that the funding model has changed, and they don\u2019t get as much money, and Racing NSW gets a lot of money now. Everybody knows that, so that needs to be publicly addressed.\u201d<\/p>\n
The timing of the notice raised eyebrows, not only coming a day after two ATC board resignations and five months after the Rosehill sale was rejected by club members, but also on the eve of day one of Randwick\u2019s Everest carnival, and with the NSW parliament\u2019s review of the Thoroughbred Racing Act to begin next month.<\/p>\n
However, that review, prompted by the Rosehill sale attempt, will not investigate funding distribution from RNSW to clubs, or that the regulator operates independent of government \u2013 caveats detailed in the review\u2019s terms of reference.<\/p>\n
But while some industry figures contacted by ANZ suspected political overtones in the show-cause move, some at least felt that on the financial side, the ATC was in a sound enough position to repel any attempt to appoint an administrator.<\/p>\n
The club reportedly has a $30 million debt due for repayment to the Commonwealth Bank by October, 2026.<\/p>\n
It also owes RNSW $145 million \u2013 but that is in the form of a non-interest accruing loan which is only repayable if the club sells a major asset.<\/p>\n
Some industry stakeholders fear that if an administrator is appointed \u2013 which would take away the right for members to make decisions on the club by way of a vote \u2013 it might order the sale of Rosehill. One consequence of that would be forcing the ATC paying RNSW back the $145 million.<\/p>\n
In its 2023-24 annual report, the club listed net assets of $303 million.<\/p>\n
Experienced and respected breeder Brian Nutt, owner of the Hunter Valley\u2019s Attunga Stud and a man well versed in racing operation as a former vice-president of Scone Race Club, said it was \u201cnot a fait accompli\u201d that the ATC would go into administration.<\/p>\n
Saying he was \u201cvery passionate about the industry but very concerned about the direction in which it is heading\u201d, Nutt said it would be unfair to place the ATC into administration when its board had only weeks ago undergone significant change, with Hale and Searcy taking up their positions on July 21.<\/p>\n
\u201cThe ATC has just been issued with the show-cause notice, to which it has to respond,\u201d Nutt told ANZ News. \u201cI have no doubt that those four directors will cooperate with the show cause notice and have a very strong defence.<\/p>\n
\u201cOne has to consider, the ATC is very much asset-rich. I think to place a club into administration when it is asset-rich, and when there is a changing of the guard to one that has very little time to improve what they\u2019ve basically inherited from the last couple of years \u2013 and I refer specifically to the botched sale of Rosehill \u2013 whilst the intervention of the regulator is not unexpected, I\u2019m very confident the show cause notice will be met to the regulator\u2019s satisfaction.<\/p>\n
\u201cThe club can show how asset-rich they are, show part of a strategic plan that would include some partial sale of existing assets.\u201d<\/p>\n
Nutt added: \u201cIt seems to me the crux of the matter is the $30 million loan to the Commonwealth Bank, because the loan of $145 million to the regulator \u2026 the agreement has always been that they are non-interest bearing loans and would only be called in if the ATC sold significant assets.\u201d<\/p>\n
The Attunga owner said while he was \u201cconcerned that this show-cause notice has happened\u201d, he was optimistic the ATC could ward off administration.<\/p>\n
\u201cIt would be very difficult to prove any negligence of governance in this very short period after the departure of McGauran and prior governance, which Bayot and Hewson were part of,\u201d he said.<\/p>\n
Nutt said he suspected a move to revive the sale of Rosehill was involved in the show-cause notice.<\/p>\n
\u201cWhen the Rosehill vote was defeated, I don\u2019t think anyone thought that was going to be the end of the story,\u201d he said.<\/p>\n
\u201cA lot of participants thought there would be some sort of intervention from the regulator. And it\u2019s probably taken a couple of events to give the regulator the so-called justification to intervene.<\/p>\n
\u201cPerhaps the departure of the CEO and subsequent surprise resignations of two directors, in addition to the departure of Peter McGauran, would appear to be \u2013 in inverted commas \u2013 justification for the regulator to intervene, even though the core directors who are left, Hale, Siercy, McGrath and English are more than capable of taking this club forward.\u201d<\/p>\n
Esplin, a lawyer by profession, said if the show-cause notice was a push to refloat the sale of Rosehill, it was doubtful it would succeed.<\/p>\n
\u201cGiven the timing, it\u2019d be hard to say it [the Rosehill sale] isn\u2019t still on the table, but how that works I don\u2019t know,\u201d Esplin told ANZ.<\/p>\n
\u201cBut an administrator is subject to fiduciary duties. They can\u2019t just come in and do whatever they like. They still have to act in the interests of the stakeholders.<\/p>\n
\u201cIn this instance, it would be remarkable for an administrator to come into a registered club, and say, \u2018I get to disregard the views of the stakeholders which were only given in a vote three months prior\u2019.\u201d<\/p>\n
Esplin said \u201cthat wouldn\u2019t stand up to scrutiny\u201d if appeals were lodged with courts or government.<\/p>\n
Of greater concern to Esplin was the show-cause notice handed to the largest club in NSW could be a move towards giving RNSW total control of the sport in the state.<\/p>\n
He said this illustrated that racing in NSW, and its entwined breeding industry, was at a \u201ccrucial juncture\u201d \u2013 highlighting the need of stakeholders to lodge depositions to the parliamentary review of the Thoroughbred Racing Act, which begins taking submissions next month.<\/p>\n
\u201cWhat we are seeing here is a show-cause notice for the only race club in Sydney \u2013 asset-rich but cash poor, it says in the media,\u201d Esplin said.<\/p>\n
\u201cBut what\u2019s the end-game of that show-cause hearing? If the club is placed into administration, what does that mean for the centralisation of power for this sport, except to say it\u2019s going to end up with Racing NSW?<\/p>\n
\u201cAnd this comes at a time when the very Act which empowers Racing NSW is under scrutiny, but not as to whether it should operate independently of the NSW Government.\u201d<\/p>\n
Asked to comment on Esplin\u2019s assertions, V\u2019landys said only that RNSW would issue a statement on the show-cause notice on Monday, adding, \u201cUnfortunately, there is a lot of misinformation\u201d.<\/p>\n
Esplin categorised the show-cause notice as part of a bigger picture of attempts by RNSW to \u201cexert more dominance over the industry\u201d, saying he and others had warned earlier moves were \u201cthe thin edge of the wedge\u201d.<\/p>\n
\u201cIt started with the unilateral extension of [RNSW] directors\u2019 terms, not once, but twice and then a third time,\u201d he said.<\/p>\n
\u201cIt came down to a change in the nature of the way that licensed persons such as trainers and vets could operate in the industry.<\/p>\n
\u201cIt got down to the pulling of bonus structures from breeders, such as when we lost our mares\u2019 bonus.<\/p>\n
\u201cIt then went to an examination of the genesis of the idea of selling Rosehill.<\/p>\n
\u201cThat led to a government inquiry into that issue. That inquiry raised numerous issues not only about the way in which the idea of the sale of Rosehill started, and whether it was really an idea instigated by Racing NSW, to a series of recommendations by that same inquiry, which now includes a full scale examination of the very Act which empowers that regulator.\u201d<\/p>\n
Esplin added: \u201cThis thin edge of the wedge is starting to get thick.<\/p>\n
\u201cAnd the thick part is we will end up with a sport under the sole control of the racing regulator in NSW. That is where this end-game goes, in my view.\u201d<\/p>\n
Esplin added that scenario would lead NSW down a wholly unsuitable path in which it would become a racing jurisdiction like Hong Kong.<\/p>\n
\u201cIt has been said, and I share the view, that there is a very real sense that the sport in NSW is being Hong Kongified, in that you do not have a separation between regulator and the club, and the regulator controls absolutely everything,\u201d he said.<\/p>\n
\u201cIn Hong Kong, the Hong Kong Jockey Club controls everything, including the marketing and the revenue.<\/p>\n
\u201cBut there\u2019s a stark difference between Hong Kong and Australia. We have a breeding industry. We\u2019re an industry that starts organically.<\/p>\n
\u201cIf this sport is headed down a path whereby the racing regulator thinks it can control all the assets of a club, and the biggest club, which it looks like it wants to do \u2026 if the end-game of this whole process is to end up with one regulator who controls all the assets in this state, then we are at a very, very sharp precipice.<\/p>\n
\u201cAnd in my personal opinion, there has not been a good enough performance by that regulator to date to justify that outcome.\u201d<\/p>\n
Esplin stressed that the parliamentary review of the Thoroughbred Racing Act was an opportunity for stakeholders to express their views on how the sport in the state was run.<\/p>\n
He said the Act needed an overhaul partly because having been written in 1996, it did not reflect subsequent innovations affecting industry funding.<\/p>\n
\u201cWhen this Act was written, there was no race fields legislation, no point of consumption tax, no co-mingling of international pools, no internet wagering,\u201d he said.<\/p>\n
\u201cSo I say, in very stark words, that the opportunity for the industry to say how the sport should be governed is right now, in this parliamentary review into the Act.\u201d<\/p>\n
Nutt concurred, noting funding distributor RNSW had become extremely wealthy thanks to innovations in V\u2019landys\u2019 21-year tenure as CEO such as the 2008 race fields legislation, which makes it an offence to publish NSW race fields unless approved by the regulator, and compels those publishing to pay fees.<\/p>\n
\u201cWhilst the regulator will argue the funding model that\u2019s in existence is highly satisfactory, the big difference is that when the original Act was put in place, the regulator didn\u2019t have the function of turning on and turning off the taps,\u201d Nutt said.<\/p>\n
\u201cNow it has all that power since race field legislation. I take my hat off to Mr V\u2019landys for getting that through, but all the money that has been contributed by corporate bookmakers goes straight to Racing NSW, and they can do as they see fit with that money.<\/p>\n
\u201cAnd there\u2019s no coincidence why a lot of race clubs throughout NSW \u2013 not only the ATC \u2013 are struggling, and it\u2019s because of an inadequate funding model where people tend to have to go to Racing NSW cap-in-hand.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"By Trevor Marshallsea Listen Prominent industry figures have expressed alarm over Racing NSW\u2019s (RNSW) show-cause notice against the…\n","protected":false},"author":2,"featured_media":441234,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4107],"tags":[1071,79,16,15],"class_list":{"0":"post-441233","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-racing","8":"tag-racing","9":"tag-sports","10":"tag-uk","11":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115243081026876807","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/441233","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=441233"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/441233\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/441234"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=441233"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=441233"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=441233"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}