Chief Executive’s Report - 2006/07

JC Dumesny

In a year of adversity the Club has returned an operating profit of $24,326. Further, after adding back the non-cash items of Depreciation and Impairment, the Club achieved a cash profit of $978,945.

The adversities encountered after the difficult previous period ruled by the TVN/Sky Channel imbroglio were in the form of increased activity from betting exchanges and corporate bookmakers, an expansion of thoroughbred racing on Friday night, the introduction of two National Rugby League matches on our traditional Friday night and for the Sydney CBD the ending of the dreaded drought.

There has however been significant forward planning for the Club accomplished during the past year. The Board engaged an independent consultancy company referred by HRNSW in DBL Property, which initially carried out a comprehensive Property Options Review. Again with the assistance and support of the peak commercial authority, the Board engaged the same company to complete an exhaustive investigation of alternate locations should the operations of the principal track in NSW not be at Harold Park.

This investigation under the parameters set by the Board, which took in a considerable number of sites within the entire Sydney basin, in conclusion identified Menangle Park Paceway as the most viable alternative. The Club will now embark, again with the valued assistance of HRNSW, to engage an appropriate consultative institution to complete a report comprising Economic Appraisal and the Benefits to the Harness Racing Industry.

The current re-development of Menangle Park, whilst being impacted by the horrendous weather conditions experienced during May, is progressing to the extent that the definition of the track is apparent. The Tender for the Refurbishment of the existing buildings has been finalised and work is expected to commence in October. Works on the raceday stalls which included covering the centre breezeway and concreting both the centre and an apron around the stalls and other ancillary and security improvements have also been completed.

Consultants Michael Brown and Stephen McMahon have completed the Master Plan Concept for Menangle Park which has been lodged with Campbelltown City Council.

The re-emergence of wagering from the telecast battle has not been encouraging with in fact very little or no growth on local racing product across all three codes. The slight growth (less than the inflation rate) in TAB Distribution to racing has only been as a result of activities on interstate and international product. In real terms it could be considered that the increases are only as a result of the significant increase in the total amount of product now being covered by Tabcorp.

Whilst the advice late last year that the state government would introduce special legislation to gain income from those who were wagering on the racing product without paying a fee, was welcome, to date this process has been excessively long and with yet no outcome.
The increased number of Victorian thorough-bred meetings being conducted on Friday nights has impacted on the individual wagering turnover of each of the traditional race clubs. In fact the turnover on the Club’s flagship event the SEW Eurodrive Miracle Mile decreased by $393,520 over the previous year. The increase in total wagering hold on the TAB for the night with the inclusion of the additional Moonee Valley thoroughbred meeting was $401,456, proving that such actions of cannibalisation do not assist the overall well being of the racing industry.

The immediate downturn in wagering at the “kick-off” of one rugby league match was evidenced in 2006 however the impact of the introduction of two matches and an earlier start for the free to air telecast in 2007 proved to have a much more severe downward effect on wagering. The Club immediately addressed this situation and introduced earlier commencement times for the Friday night meetings which corrected the downturn to some extent.

Whilst the drought still rages throughout the harness racing heartland in the country areas, it certainly came to an end in a spectacular fashion at Harold Park with the abandonment of three consecutive meetings in May. This had a detrimental affect on the income earning capacity of the Club as the revenue from the meetings was lost but the races not conducted were still required to be run.

The most significant movement in the Club’s Balance Sheet is in total borrowings. The collection of trade and other receivables outstanding at 30 June 2006, has subsequently resulted in a decrease in total borrowings of $1,132,000.

Administration expenditure even considering an inflation rate of almost 3% was reduced by $89,624. Whilst interest rate charges have risen the Club has reduced this expense by $56,160 on the back of a reduction in borrowings. Due to the aging of the Club’s properties there has been an increase of $75,981 in expenditure on racecourse maintenance over the previous financial year.

This Club however is not unlike our counterparts in the thoroughbred and greyhound codes with erosions to our core revenue sources. The most significant of these was TAB Distribution down 4% however admissions and on course wagering have also suffered. The revenue improvements in the catering operation and facilities rentals are encouraging.

The Club continues to take a position of assisting, if requested, for the betterment of the entire industry. This has never been more evident with the Clubs representation of harness racing in intricate negotiations at all levels during the equine influenza crisis.

The impact of this exotic disease on the equine racing industry will be felt for not weeks or months however for years and the Club must brace itself for the future ramifications of this natural disaster.

Finally a Club such as Harold Park can not function effectively without the expertise of a collective of administrators at Board level who have a passionate desire to succeed. I can assure Members that the Board has such desires and expertise and I expressly thank the Chairman John Baker, Deputy Chairman Rex Horne, Executive Director Ray Sharman and their fellow Directors for the immeasurable support given to the management team. I also thank all staff for their tireless and unwavering efforts during the past year and look forward to their continued commitment to the Club in the future.