One Game, No Winners As Costs Spiral Out Of Control

Sydney Morning Herald

Friday November 18, 2005

CRAIG YOUNG

Let's play that world-renowned game "Show Us The Money" - racing-style. This one is all about the broadcasting rights debacle consuming racing's heavyweights. Those administrators trusted with the sport's wellbeing. Those planning for the future. At present it's ugly.

This game of "Show Us The Money" comes with a warning. The fine prints states that long-held friendships may well be irreparably damaged. The vitriol from players will be spiced with venom.

This game is about subterfuge, sacrifice, scaremongering and spin. The latter is racing's answer to Shane Warne's endeavours on the cricket pitch. It matters not which side you end up on, the tweaking of truth is insatiable.

It begins with the most powerful race clubs in the country declaring "enough is enough". The Sydney Turf Club, its cross-town rival the Australian Jockey Club, the Victoria Racing Club, Melbourne Racing Club, Moonee Valley Racing Club and those in the country sector down south want to retake their broadcasting rights.

No longer do they want to be dictated to by the national broadcaster, Sky Channel. Of course, the clubs could have bought the channel many years ago but it ended up with Tabcorp, the giant of Australian gambling which many would have as a wolf covered in the fleece of sheep.

So the clubs rolled the dice and came up with their own television channel, ThoroughVisioN. Sky Channel was valued around $400 million and the clubs believed they were entitled to that money because they were putting on the show. Sky's poker-machine-style coverage of greyhounds, harness racing and thoroughbred action wasn't good enough.

It stimulated billions of dollars in turnover but the clubs wanted a boutique channel to showcase their thoroughbred action. They spoke of Channel Seven-type coverage. It is but a pipedream. Why? If all the thoroughbred clubs in the country are on board with TVN, which ones miss out due to its boutique nature? Plenty, and imagine the outcry.

Anyway, it is a noble thought to secure one's own destiny. The clubs rolled the dice again and landed on "financial funding". Go to the bank and secure loans to start a channel. Forget about Sky Channel paying the likes of the AJC and STC $9ma year in rights fees, the clubs want that $400m-odd the national carrier turns over annually.

Shooting the dice across the table, the TVN cartel ended up on FBI. It was decided to keep everything a secret. Don't worry about informing racing's participants - owners, trainers, jockeys, stablehands, punters, etc - about the cost. TVN was a winner.

Financial nirvana for racing despite there being a split television picture. TVN cannot be accessed by country viewers and many punters in flats and high-rise buildings. These two groups are left alienated.

Sky Channel rolled the dice and dropped on a courthouse. It didn't muck around as action was taken on all fronts. TVN ended up on courthouse as well and followed the lead as did Racing NSW, but Racing NSW was thumped in the Supreme Court and couldn't prevent the AJC and STC from taking a slice in the new broadcaster.

The court cases, past and continuing, are costing racing's participants millions in lost revenue. The split picture is hurting betting revenue. To what degree is determined by which spin doctor you listen to. One thing is certain: racing turnover is declining in real terms.

But still TVN says everything is all right on the financial front. It is borrowing money to pay its members rights fees. Why not put racing's participants in the picture and produce the financial model? Say that X amount of millions will roll in in year three. Just be patient.

On Monday, the Herald rolled the dice and ended up on letterbox. Documents that arrived were startling. Two months ago the AJC's and STC's financial exposure in TVN, of which they own half, stood at $9.2m.

There was a letter from the MVRC to TVN chief executive Peter Sweeney dated October 11 concerned about the STC calling on the new broadcaster to reduce rights payments to clubs down south.

STC chief executive Michael Kenny had fired off a letter, also in the Herald mailbox and dated the same day, raising the above matter, along with other pertinent facts.

MVRC chief executive John Cameron stated in correspondence with Sweeney his club "signed a finance facility dated 16 September, 2005, in conjunction with the other shareholders which identified financial requirements for TVN being $18,475,000".

"Does this latest information [STC letter] make this document null and void and will TVN need to confirm an amended finance requirement for Victoria-based shareholders?" it asked.

What's going on? Who knows?

Kenny's letter to Sweeney showed that for the three months from July to September, TVN invoiced the STC and AJC around $700,000 each in expenses for delivering its signal. Kenny stated the STC had agreed to pay TVN invoices dated October 5 of $497,750 and $220,000.

The AJC and STC have now agreed to pay a combined $300,000 a month to TVN to continue delivering pictures of its race meetings and those out of Victoria "until [TVN's] revenue trends are established".

Surely that's a worry for Kenny, who also asked "TVN to enter into an agreement with STC and AJC to guarantee agency sales", while adding the "STC and AJC will be paid sales income from pubs and clubs and agencies in accordance with the Sales Agency Agreement between the STC and AJC with TVN". You would have thought that was already in place but Kenny also wanted "other [TVN] shareholders to provide assurance" that "expenses paid by the STC and AJC to TVN will be included as part of the STC and AJC contribution to funding".

Back to renegotiating, for Kenny asks that "TVN undertakes to renegotiate the rights payments to Victorian shareholders so that the borrowing requirement of TVN is reduced from $12m to, say, $6m" and "TVN undertakes to renegotiate the additional guarantee from the bank to a maximum of $6m".

Could it be TVN needs more funding? Is Kenny advocating TVN stakeholders forgo receiving rights fees - it was getting $9m from Sky - from the channel to curb borrowing? A noble gesture.

Kenny's letter also said the STC and AJC were willing "to pay the invoice for Channel Seven coverage of the autumn carnival" but no fee was mentioned. Interesting, considering most sports bodies receive payment to have their pictures on free-to-air. So TVN picked up the dice and rolled a six. It landed on "kiss and make up".

© 2005 Sydney Morning Herald

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