Racing NSW responds to Show Cause notice

Image courtesy of the Australian Turf Club

Late on Monday night, Racing NSW Chair Dr Saranne Cooke sent an email to participants explaining their decision around the Show Cause notice issued to the Australian Turf Club (ATC).

The email outlines a period of financial decline over the past 10 years, which aligns with the period overseen by recently departed CEO Matt Galanos in his roles as CEO and CFO.

“Racing NSW wanted to take the opportunity to reassure all participants that this action was being taken to protect the interests of the entire NSW Thoroughbred Racing Industry. Racing NSW will work through this process with the ATC, in the best interest of all our 50,000 participants to ensure their jobs and livelihoods,” said the email issued to NSW racing participants at 7pm on Monday evening.

TTR reached out the ATC Chair Tim Hale for comment on Monday evening and he was unable to be contacted. On Friday, Hale said, “The ATC will cooperate with this process and work with Racing NSW to maintain the club’s ongoing financial position and sustainability.”

Reasons for the Show Cause notice

Racing NSW’s email stated that they intervened due to the following three reasons:

“ATC is heavily subsidised by the NSW Thoroughbred Racing Industry and it depends almost entirely on Racing NSW for both operating and capital funding.

“Cash reserves have been shrinking raising concerns around ongoing solvency.

“Recent developments have raised alarms regarding Governance practices.”

ATC subsidies as outlined by Racing NSW

Racing NSW has claimed the following financial statements;

“A frequent claim is that ATC should simply receive all wagering revenue generated by betting from all wagering operators on all its races. Based on this claim, the ATC would receive $80.1 million. The actual money it receives from Racing NSW from wagering highlights why this argument is absurd given that in 2025, the ATC actually received $233.1 million in total funding from wagering revenues (TAB distribution + Racing NSW contributions). "That’s $153 million more than the ATC generated itself."

This $233.1 million comes from a Racing NSW contribution of $164.7 million and wagering income of $68.4 million.

Another says, “TAB Distribution – ATC’s share of the TAB distribution. 2015: $80.7 million. 2025: $68.6 million. Decline of $12.1 million despite overall industry growth. This means TAB income has been shrinking as a proportion of ATC’s funding. Racing NSW has however provided a $12 million top up of the TAB distribution included in below additional funding (of $164.7 million).”

The email doesn’t outline where this additional funding is sourced from by Racing NSW.

TTR sent an email to Dr Cooke on Monday requesting clarification on the revenue source for the additional $153 million provided by Racing NSW to the ATC which is "more than the ATC generated itself."

Prizemoney increases

The majority of this Racing NSW contribution has been spent on increased prizemoney, which the email says has gone up from $89.3 million in 2015 to $216.9 million in 2025. “… more than doubled, with the increase funded entirely by Racing NSW. This increase was critical for keeping Sydney racing competitive and providing the ATC with additional opportunities to drive commercial revenues.”

This represents an increase in prizemoney expenditure of $127.6 million. With Racing NSW providing the ATC an additional $164 million above wagering income, that leaves $36.4 million for the ATC to allocate elsewhere.

As Racing NSW clarified in its email: "On top of all the additional funding provided by Racing NSW for prizemoney increases, the ATC also receives $38 million per annum to use towards funding its operations. This funding has increased by 35% since 2015.

The Racing NSW correspondence also highlighted concerns around the ATC's cost base, particularly staff expenditures. “Staff Costs. 2015: $36.6 million. 2025: $60.2 million. Up by 65%, far above inflation. Meanwhile, ATC’s own non-wagering revenues only rose by $2.6 million in 10 years. Meanwhile ATC's own non-wagering revenues only rose $2.6 million in 10 years."

Additional income from broadcasting

Racing NSW state that they have grown the income received by the ATC from broadcasting rights. “Revenues negotiated by Racing NSW in new agreements with TAB, Sky Channel, and Channel 7. 2015: $14.4 million. 2025: $40.9 million. Growth in these additional revenues due to Racing NSW negotiating new agreements.”

This is contradicted slightly later in the email with this statement; “It also received an additional $42 million per annum from agreements negotiated by Racing NSW with TAB, Sky Channel, and Channel 7.”

ATC debt position

In Friday's article, TTR reported that according to the Sydney Morning Herald, the ATC owes Racing NSW $145 million in the form of an interest-free loan that only needs to be repaid if the club sells a major asset, and a further $30 million is owed to Commonwealth Bank, with a due date for payment of October 2026.

This larger debt was not mentioned in the Racing NSW email. The email stated, “Loans and Debt. ATC has $35 million in debt facilities (bank loan + overdraft). ATC could not meet a $5 million repayment to its bank so Racing NSW had to pay it on behalf of the ATC and further had to be guarantor on the ATC’s $35 million debt facilities.

“Racing NSW had highlighted to the ATC that its cost structure was unsustainable and required to put in place a much more cost effective executive management structure. Racing NSW paid $1.5 million to the ATC so they could pay the redundancies on the executive staff that were made redundant. Unfortunately, these admin costs continue to rise.”

The Racing NSW email also stated the following regarding the ATC’s cash reserves and financial position. “Cash Reserves. 2015: $50.1 million. 2025: $21 million. Decline of nearly 60% in cash reserves.

“Assets vs Liabilities. 2015: Net current assets of +$31.5 million. 2025: Net current assets of -$8.7 million (excluding $30 million loan). Deterioration of $40.2 million.”

Additional concerns by Racing NSW

Racing NSW also made a point of comparing ATC's trajectory with that of the state's country and provincial clubs over the same 10-year period. It outlined that the metropolitan club has gone backwards which regional counterparts have strengthened.

According to Racing NSW, the ATC's trading performance declined 16%, net assets fell 128%, and cash holdings fell 59%. In contract, country and provincial clubs reported increases of 41%, 96%, and 87% across the same categories.

Financial pressures were not the only issue cited. Racing NSW flagged governance failures at the ATC, including three board resignations in recent months, two of which reportedly cited governance concerns directly. The regulator also stated it has evidence of breaches of the club’s Code of Conduct by board members, issues it says have not been adequately addressed.

Financial pressures were not the only issue cited. Racing NSW flagged governance failues at the ATC, including three board resignations in recent months, two of which reportedly cited governance concerns directly. The regulator also stated it has evidence of breaches of the club's Code of Conduct by board members, issues it says have not been adequately addressed.

The ATC has two weeks to respond to the Show Cause notice.