Racing Victoria has engaged executive search company Heidrick and Struggles to assist in finding a new chief executive.
Aaron Morrison is currently doing the job on an interim basis and has expressed a clear desire to secure the role permanently.
The official search is finally underway after Racing Minister Anthony Carbines settled the board's make-up in late June after 12 months of uncertainty.
Adverts appeared in newspapers at the weekend, on Page 6 of the Australian Financial Review and Page 9 of The Australian, with a short turnaround for potential applicants thanks to a deadline of July 15 - next Monday.
The new appointment is expected to be made “before the spring carnival”, according to new Racing Victoria chairman Tim Eddy. Details on which executive recruitment company will help RV out is expected “imminently”.
Egon Zehnder was the recruitment company engaged to find the past two Racing Victoria CEOs but RV has opted for international firm Heidrick and Struggles on this occasion.
As a measure of comparison, in the 20 years since Peter V’landys ascended to the role of chief executive of Racing NSW, Racing Victoria has cycled through six different CEOs.
Robert Nason took to the RV CEO role in April 2004, six weeks after V’landys began his tenure at Racing NSW. Since then, RV has had Stephen Allanson, Rob Hines, Bernard Saundry, Giles Thompson and Andrew Jones in the big chair at 400 Epsom Rd.
Assuming the new boss gets his or her feet under the desk before Melbourne bursts into its spring carnival, what are the five most important and immediate challenges for the new appointee?
Repair the stakeholder relationships
It would be easy to characterise TROA chairman Jonathan Munz as the one stakeholder who was wholly dissatisfied with the previous RV executive. But while he was the only one who openly called for Jones to be sacked, there was widespread unhappiness about Jones’ approach from a host of other bodies, including the trainers, the breeders and the clubs.
Morrison has already made this a focus of his interim tenure, extending an olive branch to all and sundry. If he can mend some fences, he will go a long way to convincing the board that he is the man to move forward with. But whoever gets the gig will have to make sure the 11 or so bodies with voting rights are on the same page.
Bren O’Brien
Pick an executive team
When Jones and fellow senior executive Ben Amarfio left within a couple of weeks of one another in April/May, it left a couple of significant holes to fill in the executive team. Morrison, who was COO and CFO, stepped into Jones’ CEO shoes on an interim basis. He has been balancing all three roles.
If Morrison gets the CEO role, then RV will require a new permanent COO in his place. There is no obvious internal candidate. If he doesn’t, then it remains to be seen if he’ll be happy to revert to his old role under a new CEO. The nebulous “customer” role which Amarfio held has not been filled either.
Scrutiny persists regarding Executive GM, Racing, Matt Welsh, who has been the target of critics such as Munz for some time and has been the public face of racing programming changes.
A new CEO will rightly bring a desire to construct their own team and that may mean further change and a longer period of instability.
Turnover troubles and POC Tax
Racing is undergoing a significant turnover decline, around 10 per cent year-on-year, with some sign that decline has softened over recent months. This is off the back of a 4 per cent decline in 2022/23. Aspects such as gratuities and free bets are in even greater free fall, as WSPs change their approaches to customer retention and acquisition.
That presents a clear challenge to Racing Victoria’s bottom line, especially at a time when it is exiting the previous joint venture funding model with Tabcorp and the state government is increasing the rate of the Point Of Consumption tax to 15 per cent.
Under the new regime, where the Victorian racing industry is much more reliant on POCT as a source of revenue – the new split is 50-50 – racing bodies are much more exposed to the ups and downs of turnover. We have already seen several states downward forecast their POCT revenue as a response to the wagering downturn.
Bren O'Brien on the first five things the next CEO of Racing Victoria must do.@SENGiddyUp | @TheStraightX pic.twitter.com/3GllQuGOOB
— SENTrack (@SEN_track) July 9, 2024
Reframing the Tabcorp relationship
The joint venture involving Tabcorp is over, marking a new era in the relationship between Victorian racing and the company which has historically been its most important funding source.
When the new deal was announced in December, it was portrayed as “everyone being a winner”, but will this turn out to be the case?
The new Racing Victoria CEO will need to reframe the relationship with Tabcorp, which will have its own CEO in place by then, Gillon McLachlan, who spurned RV’s entreaty to make him its new chairman.
Bren O’Brien
In a much less rigid relationship, it marks an opportunity for both parties to see significant benefits. Tabcorp has promised innovation, but we will wait and see what that means.
Tabcorp still holds a parimutuel and retail monopoly in the state, a valuable enough prospect for them to fork out $600 million up from and then $20 million a year to secure this until 2044.
Where that $600 million upfront is exactly going still hasn’t been confirmed, but the expectation is that the racing industry will get its cut. A slice of that would be a nice little sign-on bonus for the new CEO to have behind them.
The plight of the clubs
Victoria’s three metropolitan racing clubs are all losing money in the central aspect of their existence, staging race meetings, and are set to undergo substantial change and challenges in the next few years.
All have undertaken, or are undertaking significant construction projects, but all have unique challenges.
Melbourne Racing Club, which reaps most of its revenue through gaming, is caught in a long process of assessing the future of Sandown racecourse as well as the viability of its Caulfield master plan. It is also in the process of finding a new CEO with Josh Blanksby set to depart.
Moonee Valley Racing Club is less than 18 months from the biggest project in its history: the complete rebuilding of the suburban racecourse and reorientation of the track. This project has been a long time coming but will cause considerable disruption, including the relocation of the Cox Plate for at least one year.
The VRC has racked up $45 million in operating losses over the past three completed financial years and was hit particularly by COVID-19 having opened its $130 million Club Stand just before the pandemic hit.
Bren O’Brien
Kylie Rogers assumes the CEO role from Steve Rosich next month, while its six-year broadcast deal with Nine begins with this year’s Melbourne Cup carnival. The decision to sign a deal with a rival to Seven, which broadcasts feature Victorian metropolitan racing for the other 49 weeks a year, put a few noses out of joint at Racing Victoria, including former CEO Jones.
These clubs still wield significant political power within Victorian racing and the relationship between the RV CEO and the leaders of each of that trio is crucial to him or her being able to do their job.
An extra one
We didn’t include prize money in the top five, only because it is contingent on resolving some of the issues already identified first. But at some point, assuming wagering keeps contracting, prize money will have to come under the microscope, or you risk the future sustainability of the industry.
An extra, extra one
If we were to add a seventh priority to this list, it would be broadcast and media. It is 10 years in September since Racing.com launched as a digital platform and nine-and-a-half years since its evolution as a broadcaster. It is probably time for a review.
The integrated media business, now named Racing.com Media Pty Ltd. is an expensive exercise, $65 million for the 2022/23 year alone. RV’s annual report listed $85 million of media revenue, but that includes $42 million of media rights, so it’s hard to ascertain the precise profitability of the operation from the available data.
If there are prize money cuts forthcoming, then participants will want to see that they are getting value from Racing.com
Former Racing Victoria CEOs:
Andrew Jones: July 2022 - May 2024
Giles Thompson: January 2017 - June 2022
Bernard Saundry: Dec 2012 - Dec 2016
Rob Hines: August 2008 - Nov 2012
Stephen Allanson: July 2006 - February 2008
Robert Nason: April 2004 - July 2006
Neville Fielke: January 2002 - November 2003
Brian Beattie: Foundation - December 2021
