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Racing Victoria (RV) has today released its results for the 2018-19 financial year (FY19) ending 30 June 2019 which demonstrate the Victorian thoroughbred racing industry remains in a strong position.

RV has reported a net surplus of $8.8 million, whilst delivering significant targeted increases in its investment in prizemoney, infrastructure, risk management and club funding to support members, participants and the sustained growth of the industry.

2018-19 FINANCIAL YEAR HIGHLIGHTS

Strong financial performance to support the industry and safeguard its future:

• Net surplus of $8.8 million after significant industry investment expenditure
• Robust balance sheet with managed funds under investment of $81.4 million
• Record wagering revenue of $364.2 million, up 1.4%
• Media revenue growth of 10.9% to $50.3 million driven by digital streaming

Proactive increases in expenditure to support participants and Clubs:

• Significant 12.2% increase in prizemoney paid by RV across all levels of racing
• Commenced new Country Clubs funding agreement
• Special grant available for Club stakeholders from surplus funds
• Record infrastructure investment with major works at 17 Country Clubs

Growing customer engagement:

• Nation high attendances with 3.3% increase to 1.4 million attendees statewide
• More owners participating in Victorian racing with 6.0% increase to 71,388
• Record wagering underpinned by continued popularity of twilight and night racing
• Media assets working to drive growth in both wagering and engagement levels

The delivery of world class racing:

• Investment in delivering the highest levels of integrity, safety and welfare
• Record prizemoney delivering nation high averages per race
• Launch of the fan-voted world's richest mile race, The All-Star Mile
• Continued growth in international participation

Securing the best outcomes for industry stakeholders:

• A four-year commitment to maintain the Victorian Racing Industry Fund to support investments in infrastructure, integrity and welfare
• Compensation to offset the Point of Consumption Tax (POCT) and a Government commitment for its review by July 2020
• Funding from the State Government to facilitate increases in prizemoney and to assist with the relocation of Caulfield trainers

RV Chief Executive, Giles Thompson, said: "Victorian thoroughbred racing has worked hard to maintain its customer engagement, while delivering record prizemoney returns for participants and a strong surplus for the seventh consecutive year.

"RV has achieved a net surplus of $8.8 million for FY19 while facilitating a significant targeted increase in expenditure across prizemoney, infrastructure, risk management and club funding.

"We have also sustained a strong balance sheet, one which ensures that we retain funds to safeguard the sport in the face of emerging challenges with managed funds under investment growing to $81.4 million at the conclusion of FY19.

"Revenue grew by 8.8% to $465.5 million, driven principally by Government funding support for prizemoney increases which saw an additional $23.8 million (+12.2%) paid out to a broad range of participants and the continued allocation of 2% of prizemoney to equine and jockey welfare.

"In addition to substantial prizemoney increases, we continued to increase our commitment to integrity, equine welfare, participant welfare and infrastructure funding which saw industry funding expenditure rise from 73% to 75% of revenue in FY19.

"The core racing product was well received by punters in FY19 with customers driving turnover on Victorian racing to a record $7.02 billion, a 9.4% increase on the previous year. This growth is notwithstanding the introduction of the Point of Consumption Tax in January 2019, the impact of which is expected to materialise in FY20.

"Off the back of unparalleled promotions and generosities from Wagering Service Providers (WSPs), wagering turnover increased across both the 2018 Spring Racing Carnival (up 8.1%) and the 2019 Festival of Racing (up 12.2%), which included the exciting launch of The All-Star Mile.

"Thoroughbred racing remains crucial to Victoria delivering $3.2 billion in annual economic benefit to the state and supporting the equivalent of 25,000 full-time jobs. This positive result for FY19 ensures that we can continue to remain a vital contributor to Victoria."

WAGERING

FY19 saw the introduction on 1 January 2019 by the Victorian Government of an 8% POCT on all wagering conducted within Victoria. The POCT is now also in place across other states of Australia with a 10% rate in New South Wales and 15% in Queensland and South Australia.

With competition for market share at a premium, WSPs maintained their unprecedented levels of promotion and generosities throughout the second half of FY19, however there were signs in the fourth quarter that the POCT was starting to impact their operations and customer offers.

Overall, FY19 saw significant growth in wagering activity on Victorian thoroughbred racing with turnover surpassing $7 billion for the first time. The growth was delivered across both metropolitan (+12.7%) and country (+5.4%) racing.

Total receipts from the Victorian TAB Joint Venture were $209.1 million and included $33.0 million paid by Tabcorp for the use of Victorian race fields by the Victorian TAB. Race fields fees from all wagering operators, including the Victorian TAB contribution, delivered revenue of $188.1 million, up 9.5% to account for 51.7% of total wagering revenue.

PRIZEMONEY

Total prizemoney of $219.2 million was paid by RV in FY19, up 12.2% on FY18. Total prizemoney of $236.3 million was paid by the industry for the period ($219.2 million RV, $12.6 million in Club and other top ups, $4.5m in welfare contributions), representing a 43% increase in prizemoney paid since FY15. Of prizemoney won across the year, 42% was secured at country meetings and 58% at metropolitan meetings.

Victoria maintained its position as a national leader with average prizemoney and bonuses on offer per race rising to more than $56,000 in FY19, with an average $453,000 on offer per race meeting.

Prizemoney increases of $12.4 million commenced at the start of the 2018-19 racing season on 1 August 2018, with a further two-year $40 million increase confirmed upon the re-election of the Labor Government in November 2018. This took effect from 1 January 2019.

Looking ahead to FY20, a further $13.2 million in prizemoney and bonuses on offer was announced in July 2019 taking the total prizemoney and bonuses on offer in Victoria for the 2019-20 season, which commenced on 1 August 2019, to a record $268.1 million.

PARTICIPANT SUPPORT

There was a continuing focus in FY19 on participant support with $25.6 million – up 1.7% – directed towards jockey ride fees, jockey Workcover, workforce development and welfare initiatives.

A focus on participant welfare saw Stableline, a 24/7 counselling and support service for licensed and registered participants funded by RV, expand its offering to include an SMS alternative to phone or face-to-face sessions.  

CLUB FUNDING

Club funding was significantly increased in FY19 by $5.3 million (+7.3%) to $78.6 million. This funding contribution assisted in delivering prizemoney increases, important infrastructure for racing and training use, and raceday expenses.

Additional funding to support Club initiatives was driven by the new Country Clubs agreement, the share of increased wagering turnover, returns from international media coverage and increases in track maintenance subsidies.

FY19 also saw special grants of $2.3 million made to Clubs from surplus funds at year-end to assist in racing-related investments including prizemoney.

A $17.5 million investment was announced in FY19 by the State Government to create new facilities at regional training centres as part of a $40.1 million joint funding package that will support the relocation of Caulfield trainers.

RACING

Between 1 July 2018 and 30 June 2019, a total of 4,428 races were conducted across 549 race meetings at 67 Victorian racetracks, with Winx recording her fourth consecutive win in the Ladbrokes Cox Plate and pair of Godolphin-owned internationals winning the marquee Cups in Best Solution (Stella Artois Caulfield Cup) and Cross Counter (Lexus Melbourne Cup).

The wins of the UK-trained pair came in the year in which Victoria celebrated 25 years of international participation in the Spring Racing Carnival by welcoming its 250th internationally-trained horse to Melbourne.

During the 2018-19 racing season ending 31 July 2019, Victoria's average field size across all race meetings (including TAB, non-TAB and picnic meetings) remained steady at 9.8 starters per race, with the metropolitan field sizes again well exceeding the national average.

Australia's first fan-voted race, The All-Star Mile, was launched in FY19 to grow customer engagement and attracted 139,247 eligible validated votes from the public who selected 10 of the 14 starters. The world's richest mile at $5 million was held at Flemington in March 2019, attracting more than 16,000 fans trackside, and will rotate to Caulfield in March 2020.

Following the successful trial of race free Mondays in FY18, the initiative was expanded to a fourth month in FY19 with a total of 13 race free Mondays occurring between December 2018 and March 2019. During the same period 12 double-header Wednesdays were conducted to capitalise on strong customer interest in twilight racing.

INTEGRITY AND WELFARE

A total of $11.0 million was spent on integrity and veterinary services in FY19 with new integrity head Jamie Stier leading a review of the Integrity Services Department to ensure processes and resourcing are best suited for current and future objectives and requirements.

To support the Integrity Services Department review, the RV Board appointed a steering committee in early 2019 to engage with a broad range of stakeholders on culture and behaviours within the sport and how to best prevent rule breaches. The resulting "Fair Racing for All" report and its recommendations were released on 9 October 2019.

There was an increased focus on welfare initiatives in FY19 with over $6.2 million spent by RV on equine and jockey welfare – well in excess of the 2% of prizemoney that was retained by RV for this purpose. This included $1.6 million in funding for four research projects with the University of Melbourne into the prevention of equine limb injuries.

Important welfare-related reviews were also undertaken in FY19, including one into the industry's Track Preparation Guidelines which has resulted in the requirement for softer racing surfaces in the interest of horse welfare and an inquiry into injuries sustained by international horses during the 2018 Spring Racing Carnival.

MEDIA

Enhanced returns from the provision of digital streaming to WSPs and associated wagering activity saw revenue from media services grow by 10.9% to $50.3 million. This far outweighed a modest 0.6% increase in media services expenditure to $42.9 million.

RV's media expenditure includes funding provided to and direct investments in a number of media assets including Racing.com, Radio Sport National (RSN), Thoroughbred Racing Productions (TRP), Racing Photos, Best Bets and Winning Post.

In FY19, RV with its shareholder Clubs commenced the process for the renewal of media rights deals which are set to expire in 2020 and have been crucial to delivering strong customer engagement and financial returns.

CAPITAL MANAGEMENT

Net assets grew to $143.9 million up from $135.5 million in 2018. This includes the financial assets that RV holds on behalf of the industry as part of an Industry Sustainability Fund (ISF).

The purpose of the ISF is to ensure that the industry retains sufficient funds to protect against industry threats; to ensure the long-term sustainability of the industry; to provide funds to support important industry-wide capital infrastructure and investments; and to assist stakeholders with financing investment that may not be otherwise available.

SUMMARY

Mr Thompson said: "This is a positive set of financial results for our members and the wider-industry, which demonstrates the financial health of Victorian thoroughbred racing.

"It is particularly pleasing to maintain a strong financial position while significantly increasing our investment in prizemoney, infrastructure and club funding. This has allowed us to maintain terrific customer engagement through growth in attendances, media and wagering.

"That said, we remain vigilant with challenging times ahead as the wagering market continues to evolve and the impact of the Point of Consumption Tax materialises. There is much work to be done on our media and wagering frameworks with rights agreements nearing their expiry and the Government embarking on its process for the allocation of the post-2024 Wagering Licence. 

"As an industry, we must also remain focused on integrity and equine welfare which is why we were pleased to last week release the Fair Racing for All Report which is aimed at continuous improvement in culture and behaviours within the sport.

"We'll be working in consultation with the relevant industry stakeholders on the successful delivery of the Fair Racing for All recommendations with many targeted for implementation in the next licensing period, commencing mid-2020 for the 2020-21 racing season."