Written by Arthur Mitchell, principal of Yarraman Park Stud
Cover image courtesy of The Image Is Everything
On the cusp of another carnival, one that should be uniting participants and showing off the fruits of everyone's labour, we instead find ourselves in a courtroom.
At 10am on Thursday morning, when trials were still underway at Royal Randwick, the regulator, Racing NSW, faced off against the Australian Turf Club in the Supreme Court.
Whilst country clubs continue to struggle financially and racing infrastructure languishes behind Victoria, hundreds of millions of dollars in reserves appear on the balance sheet of Racing NSW.
As we have read this week, there is a growing disconnect between our industry participants and Racing NSW. Its chief executive last week launched defamation proceedings against a media company that queried, amongst other things, if 21 years in that position may have been too long.
So now we have found ourselves on Phillip Street, to find out if Racing NSW has the power to put the state’s premier race club into administration.
Late last year, at the preliminary hearings, we heard Racing NSW lawyers argue the ATC was on the point of financial collapse and sought to take over from the club’s board immediately.
Racing NSW told the court the ATC was dependent on discretionary ‘top-up’ payments to fund prize money and warned it could withdraw its guarantee on the club’s $30 million Commonwealth Bank loan.
Justice Kunc seemed unconvinced, questioning why Racing NSW, tasked with supporting racing, would take action that could push the state’s premier race club into default?
Justice Francois Kunc | Image courtesy of Legal Services Court
Does that sound like a regulator wanting to better the industry, or squeeze what oxygen is left from it?
Governance concerns were raised about the ATC from the very regulator who copped a bollocking from the NSW Parliament’s powerful Privileges Committee for engaging in conduct that may have had the effect of deterring potential inquiry witnesses from coming forward to give evidence at the inquiry into the proposed sale of Rosehill for fear of reprisals. The committee referred to this as the ‘chilling effect’.
Thankfully, not all voices have been put on ice.
Dr Saranne Cooke, the chair of Racing NSW, and who regularly reaches your inbox, has a doctorate in corporate governance.
But has she acknowledged the criticism from the Privileges Committee and pledged to improve or even look into the matter? Not publicly, the only comment from Racing NSW that I saw was an unnamed spokesperson effectively saying everything was OK because the Committee had not found the organisation guilty of contempt.
Dr Saranne Cooke | Image courtesy of Racing NSW
The Rosehill inquiry revealed further governance failures at Racing NSW, including that non-executive directors were unaware litigation had commenced against its largest commercial partner, Tabcorp, and that the Integrity Assurance Committee had met just once in three years and not investigated a single complaint in that time.
Those on the board would also be aware Racing NSW is failing to meet its obligations under its own Act.
The Act requires a strategic plan every three years. The last full plan was published in 2017, closing in on ten years, and not since 2024 has a draft been seen.
In my opinion, instead of criticising the governance of the ATC, those on the board, along with the Minister for Racing, David Harris, should question why these responsibilities are not being met.
Rather than patting themselves on the back for a substantial balance sheet, having become responsible for collecting the vast majority of wagering revenues, government taxes and grants, take a proper look out the window.
David Harris | Image courtesy of NSW Parliament
These funds have been generated by you, the owner, the punter, the trainer, the breeder, stable staff, clubs and their employees, and they need to be invested back into the industry and its infrastructure to ensure its sustainability.
The current situation is far removed from the vision of respected judge Ian Temby, whose landmark 1995 review established Racing NSW as an independent regulator, separate from commercial influence.
Over time, that separation has eroded, and the regulator has become the industry’s dominant commercial force.
There are, however, reasons for cautious optimism. Justice Kunc may yet find Racing NSW has overreached in its attempt to take control of the ATC, placing limits on its powers.
There is also the ongoing review of the Thoroughbred Racing Act, led by former minister Brad Hazzard, due in April. Unfortunately, the terms of reference prevent Mr Hazzard reviewing racing's funding model and the relationship between the regulator and the government. Despite its narrow scope, the review presents an opportunity to address the growing imbalance between Racing NSW and the clubs and participants.
Brad Hazzard
As a member of the Racing Reform Group, we have made a detailed submission calling for stronger governance, greater accountability, and a clear separation between Racing NSW’s regulatory and commercial functions.
Let us hope that by the end of the Championships, the industry has put this chapter to bed, and at least some of the necessary changes have been made to propel the industry we care so much about, forward
