STC ACCEPTS MERGER FOR $24M.

The apparent agreement between the AJC and STC to merge is a significant step in the history of Sydney Racing. More interesting than the sweetener offered by the Government is the lack of objection from these two eternally conservative boards. Presumably minister Kevin Greene gave the two Sydney clubs two choices, agree and portray the deal as a unanimous decision or the Government will use their legislative powers to implement the merger which was never in the best interests of the STC. The future sale of Canterbury was denied but when the merger dust settles it will be an inevitable financial necessity.

 

The Racing NSW announcement sounds very staged managed with the usual Peter V’Landys flavour. V'landys said it was ''probably the greatest announcement we have had in racing for the last 20 or 30 years''. The racing NSW CEO appears, however, to have lost the respect of many in his staff and other industry participants for his despotic narrow management style.

 

The Keneally Government announced up to $174million in funding to secure the future of thoroughbred racing in NSW – and protect jobs in the sector. The record funding would enable major upgrades to Rosehill and Randwick Racecourses – following the merger of the Australian Jockey Club and Sydney Turf Club. Mr Greene revealed the NSW Government has given in-principle support to the merger of Sydney’s metropolitan clubs and the drafting of necessary legislation.

 

"The NSW Government will also establish a Thoroughbred Racing Development Fund which will allow the racing industry to secure a $150m loan. This loan will fund the redevelopment of Royal Randwick Racecourse, delivering two new long-overdue grandstands.

 

Ron Finemore, Chairman of AJC, said: “Sydney Racing has been looking for positive news and the Keneally Government has today delivered it by the truckload. The AJC Board unanimously endorses the NSW Government proposal as the right way to secure the future and grow one of our state’s largest industries.”

 

The Sydney Turf Club gets the worse of the deal. Of $174m the STC get only $24m as they have managed their business wisely in the last generation with Jim Fleming investing in facilities as the AJC overpaid on prizemoney. They stand to lose Canterbury for the newly-merged club  Chairman, Bill Picken, said: “The funding will allow construction of world class facilities at Sydney’s two icon racecourses and will offer race fans from all over Sydney, from interstate and from overseas, the opportunity to enjoy premier racing from the two great CBD’s of Sydney in Parramatta and Sydney city.”

 

Looks like game-set-and-match for the rationalists.

Another curious item of logic in this solution was the method of funding at a time when racing’s market appeal has been eroded despite a glut of Australian racing. New gambling terminals will be introduced into pubs, clubs and TABs in NSW to fund the $150 million refurbishment of Randwick Racecourse. Revenue from virtual racing will be used to repay a loan to cover the cost of the refurbishment.

 

This sounds as though Racing NSW are admitting that they have managed their business badly. With over 100 NSW racecourses delivering mediocre product and television beaming racing 24/7 from all over the world, surely racing administrators are missing the point.

 

Since the latest forecast for the 2011 levy –yield came in at £70m, that was the amount the board set aside for all heads of expenditure, including prize-money contributions. The reduced figure compares with this year's forecast spend of £94.5m, which itself has been slashed by a total of £7.7m, when it became obvious that bookmakers' gross profits on horseracing were continuing to slide.

 

Betfair, which celebrated its tenth birthday this year, has appointed Goldman Sachs and Morgan Stanley to advise on going public. Its forecast of a stock-market listing valuing the company at about £1.5 billion would send Betfair straight into the FTSE 250. Floating the company would provide capital for Betfair’s expansion programme in Australia and the US, and provide a return on investment for major shareholders such as founders Ed Wray and Andrew Black, and the Japanese bank Softbank, as well as employees.