News

Clubs still on course for merger but insist government must smooth the way

30th Jul 2009

Sydney Morning Herald - Andrew Stevenson - Thursday, 30 July 2009

SYDNEY’S two race clubs are seeking a substantial annual cash injection from the NSW Government, plus freedom to redevelop their racetracks as 24-hour entertainment, hospitality and gaming centres in return for agreeing to merge.

Leading figures from the STC and AJC met NSW Racing and Gaming Minister Kevin Greene yesterday to argue their case, which is supported by a second consultant’s report into the economic benefits of a merger.

Greene commissioned Ernst & Young in March to assess a possible merger but the race clubs were unhappy with the analysis and disputed the accuracy of the potential benefit of $21 million a year cited in the final report. LEK Consulting was then commissioned to re-evaluate the original report and the benefits identified.

The LEK report slashes the potential annual savings of merging to only $3.3m – a sum which the AJC board said would make it ‘‘unable to recommend a viable merger case to its members’’.

However, the clubs would be swayed to merge if the merger was part of a broader reform agenda involving Racing NSW and the NSW Government.

Specifically, the clubs are seeking a level playing field with the Victorian industry, where prizemoney is subsidised by the Victorian Government transferring poker machine revenue of more than $60m a year.

STC chief executive Michael Kenny warned the situation was dire unless the financial arrangements between the industry and the NSW Government changed. ‘‘Clearly our biggest competitor is Victoria and if we don’t get some financial assistance going forward there’s going to have to be some changes in the industry which will put us in a worse position than we currently are,’’ he said.

The clubs’ proposal of a ‘‘merger benefits team’’ – comprising the chairmen and chief executives of the STC, AJC and Racing NSW – was accepted by Greene, who said he was pleased the clubs were taking ‘‘this merger process forward’’. The team will report to Greene each month.

AJC chairman Ron Finemore believes members will support a merger if it is part of a broader strategy to revitalise the industry that ‘‘provides benefits for them and the industry as a whole’’. The clubs are also seeking government backing for loans to redevelop their sites.

The LEK report parked the sale of Canterbury racecourse – proposed by Ernst & Young – into the area of further study of track capacity in the Sydney region.

Kenny sees the reinvigoration of the racetracks as vital, pointing out Rosehill races only 28 times a year. ‘‘They [the racecourses] have got to be used 24 hours a day, seven days a week and that means changes in zoning, the ability for clubs to run different businesses,’’ he said.

Kenny envisages poker machines, hotels, business parks – ‘‘anything that brings people into the precinct and generates income from the people who are on the precinct’’.

‘‘Once you have that all of a sudden you open cafes and bars and clubs and a whole range of things that bring the 60 hectares at Rosehill and the 30 hectares at Canterbury back into the community rather than being wholly and solely used for racing and events,’’ he said.