Australian Turf Club directors have vowed to answer a show cause notice which threatens to hand control of Sydney racing into that of an administrator, by defending its financial position and ability to meet its commitments.
The ATC is reportedly burdened with a $30 million loan with the Commonwealth Bank, which falls due in about 12 months’ time, while it also owes the state’s thoroughbred regulator Racing NSW $130 million.
The Racing NSW “loan” would need to be paid back only if the club sold a major asset, such as Rosehill, an option which had been put on the table almost two years ago.
It is understood that ATC chair Tim Hale and his deputy Caroline Searcy fronted Racing NSW officials on Friday morning where they were issued with the show cause notice.
If the board fails to prove it can remain financially viable and service its commitments, Racing NSW could appoint an administrator. It has a fortnight to respond.
The demand came at the end of a week of upheaval for the ATC in which its chief executive Matt Galanos was dismissed and two of its six directors, Ben Bayot and Natalie Hewson, resigned soon after.
Steve McMahon, the ATC’s head of corporate affairs and government relations, has stepped in as the club’s interim CEO.
Hale confirmed Racing NSW had issued a show cause notice as to why it should not appoint an administrator to run the ATC’s affairs.
“The ATC will cooperate with this process and work with Racing NSW to maintain the club’s ongoing financial position and sustainability,” Hale said in a statement released late on Friday.
“The process will help our long-term viability, but I'd like to emphasise that the ATC remains asset-rich, resilient, and strong.
“Be assured the club has a clear direction: that is to strengthen the ATC and invest in the future of Sydney racing across all metropolitan racecourses.
“The priorities are unchanged - members and our racing come first, particularly as we tomorrow officially launch the Sydney Everest Carnival. This Spring Carnival will showcase new enhancements for participants, members and patrons.
“We look forward to building the best possible future for our Club and its racing.”
Bayot, whose resignation on Thursday was quickly followed by that of government-appointed independent director Natalie Hewson, claimed “the board lacks alignment, recently shown poor corporate governance and faces significant financial strain” .
“I don't see a positive future for the club under this board,” Bayot told The Straight on Thursday.
Bayot had the support of former chair Peter McGauran after the latter stood down in July. But he was unable to secure the numbers to assume the leadership of the ATC.
McGauran was a strong advocate for the sale of Rosehill to the state government and he stood beside NSW Premier Chris Minns at a major press conference announcing the $5 billion proposal in early December 2023.
Tim Rowe
A redevelopment of Rosehill was expected to deliver 25,000 new residential dwellings, with McGauran vowing to use the huge sum of money to future-proof the club and racing in urban Sydney.
But the proposal split ATC members, stakeholders and participants of the racing industry.
The potential sale of Rosehill also triggered an Upper House inquiry into the unsolicited sale process in which Racing NSW chief executive Peter V’landys, McMahon and trainers Gai Waterhouse, John O’Shea and Chris Waller were among those called to appear.
The sale was voted down by ATC members in late May, 18 months after it was first raised publicly, with 56 per cent of members voting to retain Rosehill.
McGauran and Hewson were government-appointed independent directors of the ATC while Bayot was member-elected, while Bayot was chair of the ATC’s finance sub-committee which also featured Hewson.
The trio’s departure leaves the ATC with four directors, Hale and Searcy as well as David McGrath and Annette English.
Questions were put to Hewson by The Straight via her public relations adviser on Friday asking about the reasoning for her resignation, the position she held on the sale of Rosehill and whether she was pressured to stand down. She declined to comment.
The timing of Racing NSW’s intervention has raised questions, with the ATC board being forced to answer the show cause notice at the same time as the state government’s critical review of the Thoroughbred Racing Act is about to start.
English, elected earlier this year effectively on a Save Rosehill ticket, was appointed this week to lead the club’s response to the review, which is being overseen by former NSW Health Minister Brad Hazzard.
Tim Rowe
A spokesperson for NSW Racing Minister David Harris confirmed that he had no authority to place the ATC into administration and that a timeline was yet to be established to elect replacements for the vacant independent director positions.
“Any vacancy created by a resignation of a club-elected director is the responsibility of ATC to fill,” a spokesperson for Minister Harris told The Straight.
“The Minister for Gaming and Racing is considering next steps in filling the vacant independent director positions left by Natalie Hewson and former chair Peter McGauran, with more information to be announced in due course.”
In order to select the independent directors, a panel is composed of a person nominated by the chair of Racing NSW, an incumbent independent director already on the ATC board and an elected director nominated by the ATC board.
