Racing Victoria (RV) has today released its results for the 2017-18 financial year (FY18) which demonstrate the continued strength of the Victorian thoroughbred racing industry.
RV has reported a net surplus of $5.645 million, whilst proactively increasing its expenditure to support members, participants and the sustained growth of the industry.
2017-18 FULL YEAR HIGHLIGHTS
- Strong financial performance positions industry well for the future
- Net surplus of $5.645 million after significant industry investment expenditure
- Increased revenues from wagering and media – up 3.25% year-on-year
- Robust balance sheet with growth in financial assets under investment to $78.750 million, up 27.97%.
- Proactive increases in expenditure to support the industry
- New multi-year metropolitan Club funding agreements
- Special grant paid to Club stakeholders from surplus funds
- Significant prizemoney increases across all levels of racing
- New participant wellbeing initiatives
- Growing customer engagement
- Record wagering underpinned by growing popularity of twilight and night racing
- Nation high attendances with Spring Racing Carnival on the rise
- Media assets working to drive growth in both wagering and engagement levels
- The delivery of world class racing
- An unwavering commitment to integrity and welfare
- Spring Racing Carnival an established international drawcard
- Field sizes increased against national decline
- Securing the best outcomes for industry stakeholders
- Negotiated an acceptable Point of Consumption Tax (POCT) framework with commitments for Victorian thoroughbred racing to be ‘no worse off’
- Worked with Government to develop a new three-code integrity structure
- Foundation laid for Government funding commitments made after year-end for both prizemoney increases and infrastructure upgrades
RV Chief Executive, Giles Thompson, said: “Victorian thoroughbred racing remains in a strong position with growing customer engagement, record returns to participants and the delivery of a sustainable surplus for the sixth consecutive year.
“We delivered a net surplus of $5.645 million for FY18 while facilitating a targeted increase in expenditure, primarily to service new multi-year Club funding agreements and major prizemoney increases which ensure that our Clubs and participants are well rewarded.
“Revenue remains among the highest of any sporting organisation in Australia, with overall revenue growing 3.25% to $424.245 million off the back of record wagering activity and a 4.14% increase in income from our media investments.
“We have maintained a strong balance sheet; one which ensures that we retain sufficient funds to protect the long-term future of the industry, with financial assets under investment growing to $78.750 million at the conclusion of FY18.
“Investments in integrity, equine welfare, participant wellbeing, infrastructure and prizemoney remained central to the business in FY18, as did our income-generating expenditure which grew by 11.2% to promote customer engagement with the sport, particularly through wagering.
“The core racing product was exceptional in FY18 with customers continuing to embrace night racing and warmly supporting the introduction of Wednesday twilights as part of our race-free Mondays trial. A nation-high 1.33 million attended race meetings across the state as communities, big and small, gathered to enjoy thoroughbred racing.
“Thoroughbred racing remains crucial to Victoria delivering $3.2 billion in annual economic benefit to the state and supporting the equivalent of 25,000 full-time jobs. This positive result for FY18 ensures that we can continue to remain a vital contributor to Victoria.”
WAGERING
FY18 was a year of significant evolution within the wagering market with the merger of major operators Tabcorp-Tatts and Crownbet-William Hill (rebranded BetEasy) and the introduction of new regulatory restrictions on advertising and credit betting, ahead of the implementation of a new POCT on wagering from 1 January 2019.
Nevertheless, domestic wagering on Victorian thoroughbred racing in FY18 continued to grow to a record $6.39 billion, up 2.5%, as the global trend towards fixed odds and digital betting continued.
Total receipts from the Victorian TAB joint venture were $216.716 million and included $29.474 million paid by Tabcorp for the use of Victorian race fields by the Victorian TAB. Race fields fees from all wagering operators, including the Victorian TAB contribution, delivered revenue of $168.310 million, up 6.82%.
Ensuring Victorian thoroughbred racing remained a product of choice was a focus for RV in FY18. This commitment was supported by the introduction of a Trade Marketing Fund to which RV provided $3.342 million to support a broad range of product and customer promotional initiatives by wagering operators which drove engagement and increased wagering turnover.
PRIZEMONEY
Total prizemoney and VOBIS bonuses of $206.970 million were won in FY18 with $3.664 million of that retained to fund jockey welfare and equine welfare programs and initiatives. This represented an increase of 8.0% on prizemoney and VOBIS bonuses won in FY17.
As part of Victoria’s positioning as the home of stayers and the place to race three-year-olds, Saturday metropolitan prizemoney for races of 2000m or further and for three-year-old races rose to a nation-high minimum of $125,000 per race from 1 August 2017.
On 1 June 2018, RV announced prizemoney increases of $12.4 million for the 2018-19 racing season commencing 1 August 2018, thus taking to $228.400 million the total prizemoney and bonuses on offer and maintaining Victoria’s nation-high average of $52,057 in prizemoney and bonuses on offer per race.
Subsequent to year-end, both the Andrews Labor Government and Liberal Nationals announced in October 2018 that they would invest $33 million in minimum prizemoney levels from 1 January 2019 if re-elected. RV has committed to an additional investment in prizemoney levels of at least $7 million over the period from 1 January 2019 to 31 December 2020.
This will result in total prizemoney and bonuses on offer of approximately $250 million per annum, an increase of over $76 million or more than 44% since 2015.
PARTICIPANT SUPPORT
Total expenditure of $25.178 million – up 2.61% – was directed towards jockey ride fees, jockey Workcover, workforce development and welfare initiatives in FY18. An increased focus on participant wellbeing saw the February 2018 introduction of Stableline, a 24/7 counselling and support service for licensed and registered participants funded by RV. Other initiatives around diversity, respectful workplaces and a review of the participants’ working week were commissioned in FY18, for implementation in FY19.
CLUB FUNDING
New three-year funding agreements were formulated with the three metropolitan Clubs on 1 August 2017. These agreements have both fixed and performance based components, including incentives to grow customer engagement, with the three-year term providing certainty for all parties.
The country Clubs funding agreement was also subsequently extended for a period of two years ending 31 July 2020, with an option for a third year at the discretion of Country Racing Victoria (CRV).
Normalised Club funding increased by 6.5% in FY18, to $73.900 million. This included a special grant of $3.600 million paid to Clubs, over and above their annual funding agreements, from RV’s net operating surplus to support a range of future racing-related initiatives.
RACING
A total of 548 race meetings were conducted across 67 Victorian racetracks in FY18. Nation high attendances of 1.33 million were recorded, including a 5.6% increase over the 2017 Spring Racing Carnival, despite the impact of major grandstand construction works at Flemington.
Victoria remained a destination for the world’s best horses with the number of internationally-trained visitors for the Spring Racing Carnival since Vintage Crop’s landmark Melbourne Cup victory in 1993 rising to 227 in FY18. Victoria was also the only state to increase its average field sizes and maintain an average above 10 starters per race.
A key FY18 strategic initiative was a trial of race-free Mondays to maximize industry revenues and to provide a break from racing for participants. This saw 10 Wednesdays from January to March 2018 host both a day and twilight meeting with the result being a collective uplift in turnover of 14.1%. The trial will continue in FY19 and has been expanded to 13 weeks commencing in December 2018.
INTEGRITY AND WELFARE
From the commencement of the racing season on 1 August 2017, 2% of prizemoney was retained by RV for investment into equine welfare and jockey welfare programs and initiatives. This totaled $3.664 million in FY18. A further $1.698 million was invested by RV into equine welfare and jockey welfare, delivering greater support for the equine and human athletes taking to Victoria’s racetracks.
A total of $11.247 million was spent on integrity and veterinary services in FY18. The appointment of renowned integrity official Jamie Stier to the position of Executive General Manager – Integrity Services with effect from 2 May 2018 heralded the commencement of a review of integrity strategies and resources to maximize effectiveness.
MEDIA
RV continued its investment to grow its media assets, build customer engagement and drive wagering revenues. Media services expenditure grew by 7.19% to $42.682 million in FY18, which in turn enabled significant growth in wagering and media revenues, the latter growing by 4.14% to $45.339 million.
In FY18, RV completed the process of securing management of the domestic media rights for all Flemington meetings, outside the four days of the Melbourne Cup Carnival, until 2030, aligning with the Melbourne Racing Club’s (MRC) rights. Moonee Valley Racing Club (MVRC) and CRV’s media rights were previously secured by RV until 2045.
CAPITAL MANAGEMENT
Financial assets grew to $78.750 million, up from $61.537 million in 2017. RV holds these financial assets on behalf of the industry as part of an Industry Sustainability Fund (ISF). The purpose of the ISF is to ensure that the industry retains sufficient funds to protect against industry threats; to ensure the long-term sustainability of the industry; to provide funds to support important industry-wide capital infrastructure and investments; and to assist stakeholders with financing investment that may not be otherwise available.
SUMMARY
Mr Thompson said: “This is a very positive set of results for our members and the broader industry, which demonstrates the financial health of Victorian thoroughbred racing.
“We’re really pleased that engagement with our sport has continued through the start of this year’s Spring Racing Carnival, as evidenced by strong turnover growth and attendances, and we look forward to that continuing at Flemington throughout Melbourne Cup week.
“That said, there are some potentially significant challenges on the horizon, particularly around the rapidly evolving wagering environment with the introduction of the Point of Consumption Tax and the impacts of regulations and consolidation which will be seen in the second half of FY19. We will watch these with interest and continue to work closely with Government and other stakeholders to ensure that the potential negative impacts to the industry are mitigated.”
RV Chairman, Brian Kruger, said: “The new RV Board was appointed in October 2017 and throughout the remainder of FY18 our focus was on ensuring that the right governance, executive and leadership models were in place to help facilitate successful outcomes for the industry now and into the future.
“One of our commitments, as a Board, is to be as transparent as we can with our members, stakeholders and customers on the performance of RV and the industry.
“As part of that commitment we have refined the presentation of our financial statements to better reflect our role in both regulating and growing the sport and to assist stakeholders to better understand the Racing Victoria business model - and with that we are today providing the most comprehensive view of our performance ever.
“As a Board, we are proud of the work that our executive and staff, led by Giles Thompson, have done in delivering a sustainable surplus for FY18 whilst increasing our investments back into the industry to support our stakeholders and promote continued growth.”
CLICK HERE TO VIEW FY18 RESULTS PRESENTATION