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RV releases 2019-20 results - year of two halves

Racing Victoria (RV) on Monday released its results for the 2019-20 financial year (FY20) ending 30 June 2020 which document a contrasting tale between the periods prior and post the commencement of the COVID-19 pandemic in March 2020.

Through prudent management and the successful continuation of racing under strict biosecurity protocols with the support and cooperation from all industry stakeholders, RV has reported a net operating surplus of $10.7 million. This comes despite the impacts of COVID-19, and after allowing for the payment of record prizemoney and the distribution of additional club funding support.

The FY20 surplus will be critical to the Victorian racing industry navigating ongoing COVID-19 challenges in the 2020-21 financial year (FY21) where the state’s premier annual racing event, the Spring Racing Carnival, is currently being conducted without crowds.  

In detailing the FY20 results, RV also announced that it has committed a further $15 million from 1 October 2020 in special grants to be shared among all Victorian Racing Clubs to ensure their ongoing viability in the absence of vital attendance and hospitality revenue over this peak spring racing period. 

This commitment brings to nearly $32 million the additional funding support provided to Victorian Racing Clubs during the COVID-19 pandemic through special grants and close to $5 million being invested in lieu of Club prizemoney top-ups for feature races during the 2020 Spring Racing Carnival.

RV further noted that the future impacts of the COVID-19 pandemic remain unclear and thus a cautious fiscal approach would continue to be taken during FY21 to help protect the long-term health and sustainability of the Victorian racing industry.

Flemington, picture Racing Photos

2019-20 FINANCIAL YEAR OVERVIEW

Decisive action taken to keep racing going and mitigate the impacts of the pandemic 
Strict biosecurity protocols allowing for the safe continuation of racing and training
Crowds prohibited from attending racetracks from 13 March to the end of FY20
Cessation of non-time critical spending and the deferral of some capital projects
Over 40% of RV workforce stood down or placed on reduced hours
RV directors, executive and senior managers took voluntary salary reductions
Prizemoney reduced by 20% for metropolitan races and 10% for country races from 6 April 2020 until 31 July 2020
Significant industry advocacy to secure important Government support for the broader racing industry

Record prizemoney paid to participants despite temporary COVID reductions

$229.2m in prizemoney paid by RV - up 4.6% on the prior year
52% increase in total prizemoney paid since 2014-15 financial year
Total prizemoney and bonuses won (including Club top ups) $251 million – up 6.2%
Nation high average for prizemoney and bonuses on offer per race of $59,709

Critical support for Racing Clubs during unprecedented challenge

Funding support to maintain racing and training operations during pandemic
$12 million in special funding grants to assist through the initial COVID-19 period
Commitments made for FY21 to ensure prizemoney levels and emergency support
Further significant financial support of $20 million committed post year-end to support clubs through the 2020 Spring Racing Carnival period

COVID dynamics help deliver record turnover, but structural changes drive a decline in wagering revenue

Total turnover on Victorian racing grew 1.1% to a record $7.1 billion
A 2.9% decline in turnover until the end of February 2020, due in part to the impact of the introduction of Point of Consumption Tax (PoCT) in January 2019
Wagering turnover grew 17.8% during the period from March to June 2020
Wagering revenue fell 2.4% to $355.6 million for the full year – noting that the pre-COVID period was impacted by wagering operators’ responses to PoCT and reduced promotional investment; while the COVID period was significantly impacted by retail closures affecting Victorian TAB Joint Venture
Race fields income was the beneficiary of favourable margins and COVID turnover increases

RV retains healthy financial position from which to support the industry’s ongoing sustainability

Total FY20 revenue up 2.7% to $447.8 million, with expenditure down 1.8%
Net asset position grew to $154.3 million – up 7.3% despite COVID impacts
Investments under managed funds grew 12.3% to $91.3 million at the end of FY20
Industry Sustainability Fund (net cash after cash claims) sitting at $67.2 million

An enhanced commitment to protect equine athletes before, during and after racing

A minimum $25 million investment over three years announced in October 2019
Investment to accelerate equine welfare strategic plan released in July 2019
FY20 focused on building equine welfare taskforce; audits; and identifying, evaluating and building programs and initiatives
Framework developed for major investments in programs and initiatives in FY21

Media remains crucial to showcasing Victorian racing to a wide audience

Media revenue up 5.4% to $53 million off the back of digital wagering growth
Investment in media services up 0.6% to $43.2 million
Reduced expenses negotiated with media suppliers in Q4 due to pandemic
Significant increases in free-to-air and digital engagement during COVID period
Commenced renewal of multi-year media rights and asset arrangements to support future growth

Elite racing underpinned by strong participation and engagement

Australian-bred, owned, trained and ridden victory in the 2019 Melbourne Cup
First Japanese victory in the 2019 Cox Plate and second in the 2019 Caulfield Cup
4.6% increase in non-Victorian trained horses competing in Spring Racing Carnival
Prizemoney raised for 63 Group and Listed races in 2019 Spring Racing Carnival
A leader in average field sizes – 10.1 starters per race vs 9.8 for the rest of Australia
Despite COVID, owners participating in Victorian racing grew by 1.2% to 72,249

“FY20 was a financial year like no other with a once-in-a-century event dramatically changing the landscape for thoroughbred racing in Victoria and indeed globally," said Racing Victoria Chief Executive, Giles Thompson.

“Throughout the COVID-19 pandemic our objectives have been to protect the health of industry staff, participants and the wider community; maintain 25,000 full-time equivalent jobs within Victoria; and ensure daily care and exercise can be afforded to all thoroughbred racehorses.

“I’m incredibly proud and thankful of all within Victorian racing for their cooperation and diligence to ensure the safe continuation of racing and training since the pandemic began and, as a result, this coming weekend we are scheduled to run our 2500th race under strict biosecurity protocols.

“While racing has continued, all within our industry have made sacrifices and felt the pain, through temporary prizemoney reductions, staff stand downs and lost opportunities, to ensure that our industry is best placed to rebound out the other side.

“The tough decisions made in the face of the pandemic and a better than expected wagering performance through Q4 mean that we have finished FY20 with a net operating surplus of $10.7 million which is positive news for our industry.

“Those surplus funds are playing a huge role in helping maintain the viability of Victorian racing, assisting those industry stakeholders in greatest need, and providing further security against the unknown future impacts of the COVID-19 pandemic.

“Crowds have been prohibited from attending Victorian racing for seven months and with the Spring Racing Carnival in full swing, our Racing Clubs have lost their primary funding source. That’s why we’ve provided a further $15 million in relief funding to our Racing Clubs this month, which comes on top of $12 million provided in May and prizemoney top-ups announced in June.

“Despite the impacts of the COVID-19 pandemic and the necessary mitigation initiatives, Racing Victoria still paid out record prizemoney in FY20 and Victorian racing still generated record turnover, in excess of $7 billion for the second financial year.

“Prior to the pandemic, we saw the impacts of the Point of Consumption Tax take effect and contribute to a 2.9% downturn in wagering turnover, however the absence of other entertainment and discretionary pursuits saw turnover increase by 17.8% during the period from March to June.

“Whilst turnover increased by 1.1% year-on-year, the differing structures between the industry’s two primary funding streams meant that wagering revenue was down 2.4%.

“The growth in race fields income during the COVID-19 period wasn’t sufficient to offset the material impacts to the Victorian TAB Joint Venture, owing to the ongoing closure of retail networks and the unavailability of domestic and international racing and sporting product.

“Punter engagement has remained very strong throughout the first quarter of FY21 with significant social restrictions still in place across Victoria. Looking ahead, it is unclear what impact the easing of social restrictions and Government support will have on engagement and ultimately revenue, so we need to tread cautiously.

“That said, we were presented with a unique opportunity to grow digital engagement and viewership of Victorian racing this year and it will be important for us to capitalise on those strong numbers throughout FY21, be that remotely or when crowds can safely return to the track.

“With great uncertainty still ahead, it is important that we continue to strike a balance around continued investment in our industry to promote growth and engagement with ensuring we take a prudent approach to financial management.”

Notes

Wagering

Total receipts from the Victorian TAB Joint Venture were $186.5 million and included $31.9 million paid by Tabcorp for the use of Victorian race fields by the Victorian TAB. This represented a 10.8% decrease from FY19 on total receipts from the Victorian TAB Joint Venture (JV). Race fields fees from all wagering operators, including the Victorian TAB contribution, delivered revenue of $201 million to account for 56.5% of total wagering revenue – up from 51.7% in FY19.

Prizemoney

Total prizemoney and bonuses of $251 million was paid by the industry for the period ($229.2 million RV, $15.9 million in Club and other top ups, $5.8m in welfare contributions). Of prizemoney won across the year, 39% was secured at country meetings and 61% at metropolitan meetings.

Government Funding

In June 2020, the Victorian Government committed $16.6 million to RV in COVID-19 emergency support funding for the June to September 2020 period. These funds were specifically directed towards sustaining returns to participants (prizemoney); securing jobs within the industry; maintaining participant and animal welfare standards; and providing Clubs with ongoing financial support to maintain their viability. Only $4.1m of the committed COVID support impacts the FY20 result with the balance of $12.5m to be reported in FY21.

   
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