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Was the Australian Turf Club inevitably heading towards administration after a week where its corporate governance and finances have been called into question?
The removal of chief executive Matt Galanos, who is also the company secretary and chief financial officer, followed by the exit of Ben Bayot and Natalie Hewson from the club’s board, led to questions about the stability of the ATC’s leadership.
The club has the bare minimum to form a quorum at the board level.
Bayot failed in his attempt to become ATC chairman in July, and now the three votes he had from ex-chair Peter McGauran, Hewson and himself in the election are all gone from the board.
He cited corporate governance and “financial strain” as to why he left the board on Thursday, but he and Hewson have also been seen as closely aligned to Racing NSW.
“The board lacks alignment, recently shown poor corporate governance and faces significant financial strain. I don’t see a positive future for the club under this board,” he said
Bayot and Hewson should not be able to return in any role at the ATC, given they have been part of the destabilisation of the club this week.
Racing NSW will follow due process and give the club a two-week Show Cause before any potential moves to put it into administration.
It happened in the cases of Hawkesbury, Tamworth and Queanbeyan that have been placed into administration by Racing NSW in the past.
But to do it to the biggest club in the state would be a massive step and would not be taken lightly.
The regulator is responsible for overseeing race clubs as part of its responsibilities under the Thoroughbred Act, which is currently going through a review process after the Rosehill parliamentary inquiry.
The Thoroughbred Act was formed to split the regulatory and commercial operations of the sport. But in the past decade, Racing NSW has become more commercial, given its income from racefields, which continues to grow as the traditional TAB distribution shrinks.
The ATC has cash reserves to keep trading, but it depends on guarantees and funding from Racing NSW to operate. Effectively, Racing NSW controls the cash flow at the ATC and other clubs in NSW.
The ATC will have to prove it is able to control its own finances and corporate governance to avoid administration.
NSW clubs have cried poor and have lobbied to have the funding model changed for many years. They want to get formal access to money from racefields despite a long-term financial arrangement being in place.
Racing NSW believes it has a financial responsibility for the industry to make sure a club is stable and viable.
It would argue that a club in administration is independent of it, but all clubs are dependent on it for funding.
Heading into the biggest time of the year for the sport, Racing NSW should support the ATC and, only as a last option, force it into administration.
However, Racing NSW would want to be seen as proactive in this situation and there might be only one decision available to be made, which could happen within days.
