MEDIA RELEASE
WEDNESDAY, 29 JULY 2009

JOINT STATEMENT FROM SYDNEY TURF CLUB AND
AUSTRALIAN JOCKEY CLUB

The Australian Jockey Club and Sydney Turf Club presented the findings of the L.E.K. Consulting Report that they jointly commissioned to Racing and Gaming Minister, the Hon. Kevin Greene and Racing NSW today.

While the report finds limited economic benefits directly related to a merger, both Clubs agree that a merger could be advantageous to the future of racing in New South Wales if part of a broader agenda of reform involving Racing NSW and the NSW Government.

The Clubs acknowledge change is necessary to achieve progress and to enhance the structure and strategy of the industry and believe the Minister, through the commissioning of the original merger report by Ernst & Young, has initiated an opportunity to plan for the next generation of racing for which he should be congratulated.

The Clubs advised Minister Greene they desired a strong and robust racing industry founded on a new era of cooperation between Government, Racing NSW, the Race Clubs and other stakeholders.

After considering the Ernst & Young findings, the Clubs jointly commissioned a study by L.E.K. Consulting to look at the sustainable economic benefits that were presented.

L.E.K. concluded the economic benefits unique to a merger at year five to be $3.3m. This compares with previous Victorian and Queensland merger studies where the economic benefits in both cases were reported to be $2m or less. In contrast Ernst & Young estimated benefits unique to a merger to be $14m (like-for-like with L.E.K.). L.E.K. concluded $10.7m (of the $14m in cost and revenue synergies) were not achievable.

The L.E.K. report identifies a range of key factors that must be addressed in considering a potential merger, the Clubs said.

The Clubs have committed to work to address the broader issues that need to be resolved to secure the future of racing in NSW.

The Clubs proposed to the Minister that he appoint a “Merger Benefits Team” to facilitate this project and report back later this year with ongoing monthly reports to the Minister.
 
The team comprising the Chairs and CEOs from Racing NSW, AJC, STC and a NSW Government representative, should consider among other things, the following:

• Progressive future governance options.
• Property strategies for long-term revenue growth and sustainability.
• Government support required for capital raising.
• The disparity between NSW and Victoria in the area of wagering taxation and funding.
• Long-term entertainment precinct consents for the Clubs to leverage property, diversify revenue streams and maximise events for NSW.
• Working with RacingNSW to address race dates and programming three years in advance.
• Safeguards on the unique identities and brands of the two race clubs.

The Clubs believe that the interests of their members and the broader racing community are best served with a merger only on satisfactory resolution of these key issues by the proposed Merger Benefits Team.

AJC Chairman, Ron Finemore, AO, said his Club was well advanced in addressing their own deficiencies by cutting costs and becoming more efficient.

“This is a fantastic opportunity. I am excited and proud that our board and executive have unanimously supported this direction and it is a great outcome for not only our members but everyone in the industry and for the future of racing,” Mr Finemore said.

“A merger is just one of the many issues that should be considered and it should be looked at as one part of a whole solution to the issues facing racing and a long-term strategy for the future.”

STC Chairman, Bill Picken said the industry needs Government support and reforms and the Clubs want to work cooperatively with the Government, Racing NSW and stakeholders to develop a broader industry plan so there is growth in racing in Sydney and NSW.

“This as a great chance for the NSW racing industry to devise strategies and reforms that a merger alone would not solve,” Mr Picken said.

“The STC Board and Senior Management support this opportunity and whilst the immediate financial gain is not compelling, the long-term strategic advantage is evident should this be part of a new consolidated direction for racing in this state”.

Ends
 

To view the L.E.K report please click here