Craig Kerry
Racing NSW’s original plan to install an administrator and advisory board to turn around the fortunes of the embattled Australian Turf Club was put into place on Wednesday after more than six months of legal battles.
The Peter V’landys-led Racing NSW announced administrator Morgan Kelly, of Ernst & Young, would take over, following the racing regulator’s victory in the NSW Court of Appeal on June 19.
Kelly was already overseeing the club’s hospitality operations as part of a peace deal three months ago to resume additional funding from Racing NSW to the ATC, which operates Sydney’s four metropolitan thoroughbred racetracks.
The ATC had won a Supreme Court battle in March to stop Racing NSW’s attempt in December to appoint an administrator over concerns about the club’s financial position and corporate governance. The concerns included the club’s inability to repay a $30 million bank loan due in October. The ruling threatened Racing NSW’s power to appoint an administrator at clubs statewide before the win on appeal last month. The ruling, though, did not give Racing NSW the authority to sack the board, although the directors will be left with only residual powers.
Racing NSW first took action against the ATC in September when issuing a show-cause notice following the sacking of chief executive Matt Galanos and resignation of two directors.
As well as expanding the role and powers of Kelly, Wednesday’s announcement included the establishment of an advisory committee “to assist and support the administrator in carrying out his role”.
The committee will consist of member-elected ATC directors Tim Hale (club chairman), Caroline Searcy and Bernie Brookes, and Racing NSW board members Michael Crismale and Simon Tuxen. ATC directors Annette English and David McGrath were not included. The advisory panel, aimed at giving member and industry representatives involvement in the decision-making process, was part of Racing NSW’s original plan in December. The administrator and committee could be in place for a year.
The ATC board, which has resisted calls to resign, was given a stay until July 13 to appeal the decision last month before Racing NSW could act.
“The administrator will undertake a comprehensive review of the ATC’s operations, financial position and governance arrangements,” a Racing NSW statement read on Wednesday.
“This review will identify opportunities to improve efficiency, strengthen performance and implement best practice governance and operational standards.
“The Advisory Committee has been established to provide management, continuity and industry experience. The inclusion of three current member-elected directors ensures that the perspectives of the Club’s membership will continue to be represented as decisions are made regarding the future direction of the ATC.”
Racing NSW also announced the continuation of funding to the asset-rich, cash-strapped ATC, including guarantee of the regulator’s $145 million loan to the club, which is payable only when it sells an asset. The support will include funding for “urgent maintenance and capital projects” at the club, including repair of escalators at Royal Randwick which have not worked for more than five years. Those works alone are expected to cost several million dollars.
The appeal victory included the ATC being ordered to pay Racing NSW’s legal fees. That will be enforced, despite the additional funding announced on Wednesday.
The regulator said the appointment of an administrator and the committee will not affect the club’s operations under chief executive Steve McMahon.
