ATC says Rosehill vote costs major contributor to $2.6m loss as key RNSW meeting looms

Chairman Tim Hale says costs of about $2 million from the failed Rosehill sale bid have inflated the Australian Turf Club’s 2024-25 operating loss of $2.59 million, posted a week out from a key meeting with regulator Racing NSW.

The ATC has responded to a show-cause notice from Racing NSW that claims an administrator should replace the board due to long-running concerns about the club’s solvency and governance.

Key figures on each side are to meet on Thursday when the ATC presents its case, after a month of correspondence. Although a resolution will not be immediate, a decision is expected before Christmas.

The show-cause notice was issued in September after ATC chief Matt Galanos was sacked and directors Ben Bayot and Natalie Hewson resigned.

In its annual report released this week, the club, which operates Sydney’s four thoroughbred racetracks, and owns all except Randwick, posted record revenue of $374 million for 2024-25, up from $372 million the previous year. However, expenses also increased from $372 million to $377 million and the operating loss from $2.42 million to $2.59 million.

Those losses, though, were improvements on 2021-22 ($7 million) and 2022-23 ($9.9 million), and Hale assured members the ATC “is trading soundly and remains financially viable”.

He wrote that “two significant one-off items”, including the proposal voted down by members in May to sell Rosehill to the NSW government for $5 billion, had affected results.

“Last year’s result included a $1.9 million accounting benefit from the write back of a provision for [Randwick’s] QEII grandstand cladding works,” Hale wrote.

“This year’s result was impacted by approximately $2 million in costs related to the proposed sale of Rosehill Gardens, which had to be explored fully to determine the merits of a potentially huge revenue uplift versus the risks.

“After adjusting for these non-recurring items, the underlying operating result is marginally stronger than the previous year. This reinforces that the club’s core businesses are performing well.”

Hale said cash flow had improved significantly, up $8.6 million to $22.9 million, net assets were $300 million and “debt has been managed prudently”.

In the annual report, Hale said potential gains from the club’s land at Canterbury Park and Rosehill remained central to future proofing the organisation. While the $5 billion offer for Rosehill is no longer on the table, there remains hope of selling parts of that property. The King Street site at Canterbury was reclassified as held for sale in mid-2017, but remains the subject of a legal dispute with developers.

A key factor in the ATC’s battle for survival is its ability to repay a $30 million loan from the Commonwealth Bank by October next year. It also owes Racing NSW $145 million in the form of an interest-free loan. In the annual report, auditor KPMG noted that the bank debt and other factors represent “a material uncertainty that casts significant doubt as to whether the company will continue as a going concern”.

Hale told members the club could “meet its obligations as they fall due”.

He also addressed concerns that current liabilities exceed current assets by $8.7 million, writing that the largest component of liabilities was “revenue in advance” of $27 million.

“This represents money already received for future media rights, sponsorship, memberships and hospitality,” he wrote. “Far from being a sign of financial stress, this position reflects strong forward demand for what we offer.

“Financially, our underlying performance has improved. Our preferred measure of core profitability, EBITDA [earnings before interest, tax, depreciation and amortisation], was $14.5 million, demonstrating that day-to-day racing and hospitality operations remain resilient and well-managed.”