Cover image courtesy of Australian Turf Club
In a statement to Australian Turf Club members on Tuesday afternoon, ATC Chairman Tim Hale announced that the Supreme Court of NSW has suspended Racing New South Wales’ appointment of an administrator for the club until Thursday, December 18. This pumps the brakes on the principal racing authority’s announcement on Monday that it would place the club under administration.
Financially strong and operationally stable
In Hale’s statement, he reasserted the ATC Board’s position in that they do not accept that Racing NSW has the legal authority to remove the current directors and appoint an administrator in their place, and that the ATC is “financially strong and operationally stable”. Hale outlined the club’s current assets of $29 million in cash and over $400 million in land and property assets, and asserted that the club has continued to meet its financial obligations.
“Beyond these significant cash holdings and assets, the Club is actively pursuing several commercial contracts and partnership opportunities,” the statement read. ‘These initiatives have been thwarted as a direct result of restrictions imposed by Racing NSW during the show cause process. Notwithstanding, the Board continues to progress commercial efficiencies, new revenue initiatives, and cost reduction measures to further strengthen the ATC’s financial performance.”
In addition, the club has been in refinancing discussions with Commonwealth Bank, with whom they reportedly have a $30 million loan payable by October 2026.
A fresh revelation from the statement was that Racing NSW itself currently owes the club over $1.2 million in outstanding payments, with just shy of $800,000 outstanding for more than 120 days.
Tim Hale | Image courtesy of Australian Turf Club
In addition, the Board sought approval from Racing NSW to elect another member to the Board to fill a vacant director position in the interim, but approval to do so was not granted by the PRA.
TTR have reached out to Racing NSW to find out the reasons behind this and have received no response at the time of writing.
“Throughout the show cause process, the ATC engaged openly, constructively, and in good faith,” the statement from Hale continued.
“We provided detailed written submissions, extensive financial and strategic material, and independent expert advice addressing each issue raised by Racing NSW. The Board unequivocally rejects any suggestion that it has failed to develop or articulate a coherent and credible strategy for the Club’s future.”
In closing, the statement assured ATC members that their membership experience would not change, and that the ATC was committed to upholding and defending the rights and voices of their members.
Given that the majority of the Board strongly opposed the 'no vote' to sell Rosehill Racecourse, the statement provides clear assurance to Members that the Board will uphold and defend that position for as long as they hold their Director roles.
The ATC stated that they will keep members informed as the legal process continues. Due to the nature of proceedings, no one from the Board was available for further comment.
Racing NSW shares letter to ATC Board
Less than 2 hours after Hale’s statement to members, Racing NSW’s Chairman Dr Saranne Cooke issued a Participant’s Bulletin entitled “Update on Australian Turf Club Administration”, the body of which was a copy of a 5000-word letter sent to Hale and the ATC Board on Monday, December 15, outlining the reasons for placing the club under administration.
“The only reason we are putting this letter out is because the ATC has today misrepresented the situation in a notice to its members,” the bulletin’s introduction read, indicating the response was a reactionary move.
“Racing NSW will continue to act in the best interests of the NSW Thoroughbred Racing Industry and we believe that the facts in the attached letter speak for themselves.”
The letter doubles down on Racing NSW’s previous claims that the club is unable to financially plan effectively for its future and that the concerns around corporate governance remain.
Dr Saranne Cooke | Image courtesy of Racing NSW
“Far from demonstrating leadership, the ATC Board’s focus appeared to be limited to short-term, distressed asset disposals, pursued without adequate strategic planning and in circumstances where there is a significant risk that assets will be sold grossly undervalue and thus impair the ATC’s balance sheet,” the letter to Hale said.
“The ATC did not demonstrate, at the appropriate level of detail, how it would increase revenues and decrease costs in the future. Its responses were often superficial and in the nature of motherhood statements.”
The letter asserted that there is a “real and unacceptable risk” that Racing NSW will have to cover the ATC’s outstanding debts. Racing NSW also disputed the advice the Board received from advisory firm KordaMentha, claiming that the firm’s analysis “proceeded on a critical and erroneous assumption, namely, that Racing NSW would extend its guarantee of the ATC’s debt facilities”.
The letter outlined a number of financial shortfalls perceived by Racing NSW, including overexpenditure on IT services and proposed reductions in staff that relied too heavily on staff already scheduled to leave or retire.
It also alleged that the ATC has misrepresented their financial position to members, when Racing NSW has already honoured debts owed by the club, and that the club hadn’t taken up numerous opportunities for extra revenue, with no strong reasoning as to why they hadn’t been pursued.
Rosehill rears its head
A sizable part of the letter called into question the conduct of Hale around the proposed sale of Rosehill Gardens and his communications at the time with the Hon Mark Latham. The letter stated that Hale did not inform the rest of the Board that he was communicating with Latham around the time.
Racing NSW expressed concern for the “changing nature” of Hale’s correspondence with Latham, and that “the conduct of the ATC Board gives rise to serious and systemic corporate governance concerns”.
It has been alleged that Latham shared confidential information regarding his evidence to the Select Committee Inquiry about the sale, and that Hale gave contradictory information in statutory declarations made as part of the ATC’s case against their Show Cause notice. A section of Hale’s statutory declaration was pasted into the bulletin as an image, but isn’t visible in the final email.
Hon Mark Latham | Image courtesy of Sky News Australia
The letter alleged that Hale did not think he needed to make a disclosure to the rest of the Board, and that fellow Director Annette English had advised that, while she didn’t consider it to be best corporate practice, she didn’t believe that Hale had failed in his Chairman duties by not disclosing his conversations.
It is important to note that if Hale were removed as a Director - and with Racing NSW allegedly refusing to allow the ATC Board to appoint a new Member-elected Director - the Board would be reduced to just three Directors, leaving it without a quorum to function and, by default, forcing an administrator to take control. The scenario would create an 'own goal' for Racing NSW's desired result.
While it is afforded the most airtime in the letter addressed to Hale, Racing NSW made it clear that there were numerous contributing factors to the PRA’s view that the ATC Board was dysfunctional and not fit to lead.
“While Racing NSW has formed each of the views identified above, it considers that any one, or combination of more than one, of these conclusions justify the appointment of an administrator,” the letter concluded.
ATC’s administrator elect named
At the close of the letter, it was announced that Morgan Kelly of “Big 4” accounting firm Ernst & Young has been appointed the administrator - although his taking the role has been postponed until at least Thursday, when the Supreme Court of NSW will reconvene on the matter.
A Partner in Ernst & Young’s Sydney Strategy and Transactions Practice, Kelly is described by the firm’s website as a Corporate Turnaround and Restructuring Expert with over 30 years experience in the industry across Australia and Asia. He is also a member of the Institute of Chartered Accountants in Australia and New Zealand (CAANZ), a Registered Liquidator in Australia, and a Licenced Insolvency Practitioner (NZ).
TTR reached out to Kelly for comment on being appointed administrator and he declined to comment at the time of writing. His role hangs in the balance of what outcome happens on Thursday.
