The latest financial results for the Victoria Racing Club, host of the Melbourne Cup and manager of Flemington, do not paint a pretty picture.
As reported in The Age, an operating loss of $24 million for the 2023-24 financial year followed a $15 million loss the year before, and $30 million in losses the two years before that.
Melbourne Cup winner Knight’s Choice soaks up the adulation at Flemington.Credit: Joe Armao
But the purpose of this piece is not to bag the VRC. It manages the best track and racing carnival in Australia and one of the top couple in the world. Punters love Flemington because the best horse normally wins. The new Club Stand, which drives much of the VRC’s $14 million annual depreciation expense, is perhaps the best place to watch sport in Australia.
Instead, the purpose is to suggest a better model for Victorian racing. Which is simply for the three Melbourne racing clubs to merge. That is, invite members of the VRC, Melbourne Racing Club and Moonee Valley to create a mega-club that they all can be part of.
Think about it. It costs members $1749 to join all three clubs individually; they need to fill out three forms and pay three times to do it. Imagine if you, as a racing fan, could fill out one form, pay one membership fee and attend every major track, every week.
Then imagine if, as a racehorse owner, you had a consistent, premium experience at every racecourse, whether Caulfield, Flemington or Moonee Valley.
Harry Coffey rides Duke De Sessa to victory in the Caulfield Cup. Credit: Getty Images
And imagine if, as a racing sponsor, you could purchase signage, pourage and hospitality for every single Saturday of the year. Wouldn’t that be better for racing? Of course it would.
It would also make the clubs, including the VRC, better businesses. No longer would there be three separate office buildings, chief executives, finance departments, membership departments, commercial sales functions, track and facilities management teams and spring carnival marketing campaigns (actually four, as Racing Victoria often funds an all-of-carnival campaign as well because clubs only market events at their own tracks).
No longer would there be three separate master plans worth hundreds of millions of dollars. Operating expenditure would be reduced, and capital expenditure optimised across a network of tracks.
On the revenue side, sponsors would be able to secure exposure on national television every Saturday of the year rather than piecemeal coverage across a subset of weekends only. Pourage, catering and ticketing rights could be consolidated and auctioned to the highest bidder. Or split, as now, if that was more lucrative.
Crowds attend Cox Plate race day at Moonee Valley Racing Club.Credit: Eddie Jim
This mega-club, in partnership with Racing Victoria, could optimise the Melbourne racing schedule without having to worry about stealing or losing prime dates. For example, it could make full use of October and November – the golden window for racing – and finish on the last Saturday of November with a big new race or a marquee group 1 such as the Cox Plate.
It has been obvious to the racing industry for decades that Melbourne’s clubs should come together. It has already happened in Brisbane, Sydney and even on the south side of Melbourne with the recent merger of Pakenham and Cranbourne. It should happen in the rest of Melbourne as well.
Why hasn’t it happened? It boils down to identity, money and politics.
The identity view is that racing clubs are important in their own right, not just as event and venue managers. But fans connect with racing, whether it is at Flemington, Moonee Valley or Caulfield. More choice at lower cost is better for members.
The money view is that the precarious balance sheet of the VRC is a barrier for the more securely financed MRC and MVRC to join them. But any debt concerns can be overcome via a one-off capital injection by Racing Victoria as a merger incentive. The VRC’s financial position will also improve significantly this year with its new sponsorship deal.
The real barrier to club consolidation is club leaders. Committees don’t like to vote themselves out of office, and prefer to focus on projects at their own club rather than looking at the bigger picture. The fastest horse in racing has always been Self Interest.
Failing a three-club mega-merger, an obvious first step would be for Melbourne and Moonee Valley racing clubs to combine. Each has a strong balance sheet underwritten by substantial freehold land holdings and each runs gaming venues to support their racing operations.
Each is also engaged in substantial property development, with obvious potential synergies in financing, construction and transition management. For example, Caulfield hosting MVRC staff and racing during Moonee Valley’s two-year closure period. And, when Moonee Valley reopens, MRC having more flexibility in relation to the use or development of Sandown.
A challenging economic environment, especially in wagering, a new chair and a vacant chief executive role at MRC, and a very capable Moonee Valley chairman who does mergers and acquisitions for a living, make now a good time to do a deal. VRC likes to run its own race – its independent TV deals make that clear – but can join the party later.
If all that is too hard, the clubs could agree to merge in a few years’ time, say by 2030. That way, there is plenty of time to plan and complete current capital projects, such as the work at Caulfield and Moonee Valley redevelopment. Committees can shrink by attrition. No one needs to give up their spot, while still acting in the best interests of members, fans and the industry – which after all, is racing leaders’ paramount duty.
Andrew Jones is principal of management consultancy at The Killer Group. He is a former chief executive of Racing Victoria and Cricket NSW, and has advised on the business of cricket, rugby league, netball, racing and golf.
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