Cover image courtesy of Sportpix
Racing NSW's June 2024 report shows the organisation holds nearly $600 million in assets. At first glance, this appears to reflect prudent management. Yet, in an industry that relies on a delicate ecosystem of regulators, clubs, participants, punters, and communities, the question is not the size of the balance sheet, but how these resources are deployed.
Are they genuinely strengthening the system, or accumulating centrally while operational entities, including the Australian Turf Club (ATC), which contributes close to half of industry revenue, operate under increasing financial constraints?
Racing is inherently interdependent. Clubs operate venues, manage race days, and engage local communities; trainers, jockeys, and owners supply the competitive product; punters provide wagering revenue; and communities sustain the sport culturally and economically. When financial resources are concentrated centrally, the network risks stagnation. Idle capital represents opportunity cost: reduced prize money, deferred infrastructure maintenance, constrained regional support, and fewer initiatives to attract participants. Over time, these limitations can erode vitality even if the regulator's balance sheet appears strong.
Historically, periods of centralised accumulation within Racing NSW have coincided with club-level strain. Metropolitan and regional tracks alike have been compelled to reduce discretionary spending while reserves grew. While the accumulation of reserves may be intended as prudence, the optics and systemic effects matter: governance is measured by both resource allocation and the perception of fairness.
Trust between regulator and clubs is essential. Without it, collaboration and innovation decline.
Economically, the distinction between stored and productive capital is critical. Reserves provide stability, but only when reinvested in growth do they generate systemic value. Clubs require liquidity to maintain prize money competitiveness, infrastructure, and community engagement. Failure to deploy capital effectively risks declining participation, aging facilities, and diminished public interest.
This is a classic case of opportunity cost: financial prudence at the centre does not replace operational vitality at the periphery.
International benchmarking reinforces these lessons. Hong Kong's Jockey Club combines substantial reserves with consistent reinvestment in prize money, infrastructure, and community programs. Japan maintains strong central reserves but ensures they flow predictably to clubs, supporting both metropolitan and regional racing.
Britain's experience demonstrates the consequences of underinvestment: tracks struggle, participation declines, and audience engagement diminishes. These examples underscore that reserves are valuable only when deployed systemically.
Centralisation can yield efficiency but also creates dependency and weakens agency. Effective governance should combine prudent reserves with mechanisms that empower clubs and participants, ensuring capital translates into operational and strategic vitality. Constructive reforms are both feasible and legally safe:
1. Reserve and Reinvestment Policy: Define operational, strategic, and contingency tranches; set a floor for annual reinvestment in clubs, prize money, and infrastructure.
2. Ring-Fenced Development Funds: Allocate funds specifically to metropolitan and regional clubs, with clear legal or contractual safeguards.
3. Transparent Reporting: Publish quarterly dashboards detailing reserves, reinvestment flows, and basic KPls.
4. Independent Oversight: Engage external auditors and a stakeholder advisory panel to validate fund allocation.
5. Incentive Alignment: Matched grants and performance-linked funding encourage clubs to invest locally while receiving predictable support.
6. Formal MoUs: Clarify roles, responsibilities, and dispute-resolution mechanisms to avoid unilateral interventions that risk eroding trust.
Outcomes must be measurable. KPls could include reinvestment rate, club liquidity, prize money growth, infrastructure expenditure, participation metrics, and transparency scores. Independent verification ensures accountability and converts perceptions of centralisation into demonstrable stewardship.
Scenario analysis illustrates the stakes:
Status quo: reserves grow, clubs remain constrained; participation and engagement decline.
Moderate reform: partial reinvestment, ring-fenced funds, and matched grants; club stability improves, public trust is partially restored.
Transformative stewardship: formal independent oversight, full KPI integration, transparent reinvestment; system-wide resilience, participation growth, and community engagement are strengthened.
The cultural dimension cannot be ignored. Racing contributes not only to the economy but also to social cohesion, regional identity, and community engagement. If operational entities are weakened while central reserves accumulate, the social license of the sport -public trust and participation -is threatened.
Governance is measured not by the size of the balance sheet but by the vibrancy of the system it supports. Financial strength should empower, not constrain; reserves should enable growth, not mask fragility. The choice for Racing NSW is clear: act as a steward, distributing resources to sustain and grow the industry, or risk centralised strength at the expense of the very ecosystem it exists to serve.
The long-term health, cultural relevance, and sustainability of Australian racing depend on that decision.
Yours faithfully,
Mr Antony Knowler
