FEATURE: With TVN and Tabcorp’s SkyChannel falling out after years of short-term agreements and brick-wall negotiations, the way in which people watch horse racing will change.
Sky continues to reject TVN’s demands, and TVN continues to reject Sky’s demands.
Racing NSW has walked away from the dealings completely, effectively removing coverage of NSW metropolitan and country racing from TVN’s channel on Foxtel, and associated online streams via Racing Network. Victorian racing will go it alone – but how that will be possible is not clear.
Where does that leave us, and can logic ever prevail in racing?
This feature is intended to document as much relevant material on the stakeholders involved, providing readers with a summary of public information, plus commentary.
The parties involved
New South Wales racing is regulated by Racing NSW, the Principle Racing Authority in the state. This body was established in 1996 – first called the AJC Principal Club and in 1997 the NSW Thoroughbred Racing Board before becoming Racing NSW in 2004 – taking control from individual racing clubs and handing it to an overseeing body.published functions and powers of the body, racing bodies (eg. clubs) need agreement from Racing NSW when organising broadcast rights. Almost by default, Racing NSW controls all NSW racing broadcast rights – vision, radio and digital streaming. Most recently, NSW Country racing, along with NSW’s Provincial Racing, signed over their broadcasting rights to Racing NSW to negotiate on their behalf midway through 2013. These rights were provided to TVN.
In Victoria, Racing Victoria exists as the Principle Racing Authority. It is set-up differently to Racing NSW. In what might be a surprise to some, Racing Victoria has minimal control over broadcast rights and is at the mercy of the four clubs it offers oversight to: Moonee Valley Racing Club, the Victoria Racing Club, Melbourne Racing Club and Country Racing Victoria, on behalf of Victorian country race tracks. Racing Victoria controls precious little outside of stewarding.
Patrick Bartley reported for Fairfax: “…it’s the only sporting province in the southern hemisphere that allows four racing clubs to hold the vision and media rights”. Former AFL chief executive Ross Oakley told Fairfax that this was an “astonishing situation”, akin to AFL or NRL clubs individually owning their broadcast rights, giving way to self-interest. Would Collingwood, for example, take the same share as Greater Western Sydney? Would the Brisbane Broncos take the same share as the Gold Coast Titans?
ThoroughbredVision (TVN) was established in 2005, half-owned by the four Victorian thoroughbred racing clubs and half-owned by Sydney’s metropolitan racing clubs, the Australian Turf Club (ATC).
TVN offers a standalone TV channel, and previously sold the rights to NSW and Victorian racing to SkyChannel before negotiations broke down in mid-December. http://www.smh.com.au/sport/horseracing/poser-on-tvn-management-20141227-12edqq.html
As recently as Sunday night, Fairfax reported that TVN’s debt is as high as “tens of millions of dollars”.
Tabcorp Limited owns the NSW and Victoria Totaliser, TAB Sportsbet, Keno in clubs, TV channels Sky Racing 1, 2, and World, and Sky Sports Radio. Tabcorp has approximately 2800 TAB retail outlets at pubs and clubs across NSW and Victoria. Tabcorp also owns Luxbet.com, an online bookmaker.SkyChannel, Tabcorp’s subsidiary, is broadcast into pubs and clubs and TABs across both Australia as well as Foxtel, with country pubs and clubs often not holding a Foxtel subscription to allow them to broadcast TVN.According to Tabcorp, the largest shareholders are broker nominees such as JP Morgan and HSBC.
Intriguingly, as with Listed companies, fully franked dividends to shareholders represent approximately an 81% payout of net profits after tax.
In simple terms, 80% of profits flow to non-racing bodies and members.The Australian Financial Review he had ruled out an increase in race fields fees – despite Racing Victoria and Racing Queensland announcing an increase – saying it would hurt Tabcorp.
The future of broadcasting – the full picture – the flow of money
Equations, when it comes to racing, always start with the punter and owners. Punters part with billions, while owners pick up the shortfall between winning and losing for the majority of horses that don’t bankroll themselves. Racing NSW estimated that owners provide approximately $200 million a year in the gap between owning winning horses and owning horses that can’t run a place.Centrebet.com.au, giving it a large slice of the market – and operates from the NT. Irish bookmaker Paddy Power purchased Sportsbet.com.au in 2009, with Sportsbet also regulated in Australia by the Northern Territory.
Racing NSW won a High Court battle which secure $100m for the state in racing funds, based on forcing the bookmakers to change the accounting methodology used to pay turnover fees.Fairfax figures from 2014 indicated that the entire sector based in the Northern Territory paid just $2.3 million tax on turnover of $5.7 billion and profit of $469 million for the 2012-13 period, although these companies did pay additional race field fees.
TVN: A new source of income – or new debts?
TVN operated to attempt to generate income for race clubs – both directly through licensing and broadcast revenue to media rights buyers, and indirectly through further pushing racing to the public and arming punters with as much information as possible – encouraging attendance and betting.AFR points out that TVN has waxed and waned on its advertising arrangements, removing corporate bookmakers from the channel and then reinstating them with a series of packages being offered. reported on the dysfunctional board allowing commercial deals to slip, with chairmanship rejected by former News Limited boss John Hartigan. 1. The first is the deal with Foxtel to establish a racing channel on commercial TV.
The Financial Review … understands TVN is costing itself a further $10 million in profits due to having to roll over its contract with Foxtel. TVN pays $2 million a year to be carried by the pay-TV provider until mid-2013, but management believes Foxtel should be paying TVN up to $7 million annually given the viewers and subscribers it attracts to Foxtel.
2. The second is the extraordinary deal TVN struck with free-to-air broadcaster, Seven. TVN purchase of racing magazines Best Bets and Winning Post from owner at the time, Peter Sidwell. The Sunday Age showed at the time that TVN paid $12 million for the publications, and likely paid an additional $2 million earn-out fee in 2009. Sidwell had purchased Winning Post for $2.4 million in 2006, while already owning Best Bets. by insiders to now be closer to less than half a million dollars as online information takes the place of printed magazines.
4. In 2013, three TVN hosts were suspended for three months by the company, following findings of gross misconduct and serious errors of judgment. The hosts had allegedly accepted shares in a horse gratis, and failed to disclose the ownerships to viewers when making what was deemed to be ‘favourable comments’.
CEO at the time, Stephen Dole, confirmed the suspensions: ”The staff members have acknowledged the gravity of the matter, their serious errors of judgment and sincerely regret their conduct,” he said in a statement.unusual consultancy payments, reported back in 2012. Fairfax writer Chris Roots published the rumoured deals. In particular, a monthly payment of $30,000 to a consultant that commenced at the foundation of TVN in 2006 and continued thereon spelled the end of Peter Sweeney, who lost support from TVN stakeholders before his later retirement.A photo of what appeared on screen on the first day of the 2014 dispute – 17th December. (Image: Jason Cornell)
TVN as stands now – a timeline of events leading to the certain demise of the business
In the lead up to Christmas, TVN and SkyChannel were negotiating the next of their vision contracts – attempting to move on from short-term roll-over deals to a new long-term contract. Both parties have been at war for years. In 2010, another dispute over coverage rights ended up in the Victorian Supreme Court.
Racing Victoria published a 1935 word missive on Boxing Day, backing TVN and slamming Racing NSW for their meddling and the resulting disaggregation. Even so, Racing Victoria has no control over the dealings without the media rights.
Racing NSW and the ATC have provided little public commentary to the decisions made by it, nor voiced their concerns with negotiations outside of short media grabs.
This is very different from an interview given by V’Landys in 2012 when NSW and Victoria came together, and the Racing NSW CEO makes note of the importance of aggregation of rights and the ability to be ‘divided and conquered’ as separate entities:
The future: how you’ll watch racing coverage
NSW: NSW Racing may return to SkyChannel as soon as New Year’s Eve, or from New Year’s Day. One roadblock of the deal has been made public, with V’Landys mounting an assault on the $5 per month extra subscription fee that subscribers must pay to Foxtel to receive the second tier of SkyChannel’s offering, which includes smaller provincial races and world horse racing.
V’Landys has outright refused to broker a deal without the fee for that second tier being removed, in a push to give punters a fairer go – and possibly attempt to gain some goodwill.
Little will change in terms of availability of NSW Racing. Those looking to watch racing in NSW will likely need Foxtel to watch live racing outside of major carnivals, or TABs, and what is available via the Seven Network’s contracted meetings.
NSW racing is unlikely to be provided to corporate bookmakers or offered online.
Victoria: Victorian racing, on the other hand, looks set for a major shake-up.calling it “critical” for the growth of the sport, with the CEO acknowledging that Victorian racing needs to be on SkyChannel in “800 venues” across Victoria.
Victorian Racing will undoubtedly be broadcast by SkyChannel but the permafrost relationship with Sky/Tabcorp is likely to drag negotiations.
Rumours published by News Corporation indicate that the James Packer owned BetEasy is, at least, planning to stream Victorian racing online if a bid is accepted by the Victorian clubs. The Australian notes this offer is likely to be half of what TVN had been quoting corporate bookmakers for rights to NSW and Victoria – previously a fee of 0.5 per cent of turnover on streamed races, with a minimum fee of $1.5 million.
What must happen
While racing claims to be the third most attended sport in Australia, there is a huge divide between keen punters and those that attend more to socialise; the two converge on just a few small days of the year.
Although there is no question that the Melbourne Cup remains the biggest sporting event in Australia, punters – when blackouts aren’t interfering – are usually better serviced at home, with a fast internet connection and more ability to research and get multiple sources of information.
Digital is therefore an intriguing proposition. The question of who will pay the costs of running a significant streaming service for just one state’s racing is an open one. Charging subscribers who simply want to be able to punt and watch their horse and jockey race is not best for punters unless significant premium attributes are included. Advertising on a paid service always rubs those who have paid the wrong way, and advertising alone, in this age, is unlikely to cover enough costs.
The value to the punter and the eventual flow of money back to clubs is hard to quantify from a growth in digital availability, but removing that barrier to entry cannot hurt.
Certainly, an improvement to the quality of broadcast must be sought by all stakeholders. Live sectionals, more parade ring vision and more information should be goals. Tipsters and those providing expert analysis must be held accountable and be transparent. The availability of race replays for form must also continue.
Racing can’t be treated as a pseudo-gaming endeavour, where numbers run around a track at different odds as per the TAB’s TrackSide simulation game.
Racing is often dogged by those unwilling to embrace change. As mentioned by Max Presnell, Gary Lester’s book The Essential Club – A History Of The Sydney Turf, notes former Sydney Turf Club Chairman Pat Parker listing memorable revolts against change: “STC doomed to fail” (1943), “Racing in An Uproar – The STC wants to introduce new equipment, known as the photo-finish camera”: (1946), “Protest Over Mechanical Monster – introduction of barrier stalls” (1948) and “New Race [Golden Slipper] for two-year-olds Certain To Fail” (1953), and more.
The first step is to move on from self-interest and short-term dash-for-cash deals, and place the future of the sport, as a whole, in the best hands.
That would appear to be a national body that removes state and regional conflicts around broadcasting and get the focus of the sport back on servicing patrons, owners, and punters.
Update 1: Fairfax are reporting that the dispute between Tabcorp, TVN, Victorian Racing and NSW Racing has ended, with racing from Victoria and New South Wales expected to be on SkyChannel as early as today, New Year’s Eve.
However, Tabcorp officials told Fairfax the removal of restrictions on vision from Victoria and NSW was “only a temporary measure”.
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