The Everest Looms As Sydney Racing Splinters

ON MONDAY, arguably the world’s best horse, Ka Ying Rising, walked off a plane and into a foreign city to prepare for what will be one of the most anticipated Australian races in recent history.

For a concept that thrives on being a marketing machine, the seemingly impenetrable Hong Kong super sprinter trying to win his first overseas race in the A$20 million Everest is a promoter’s dream.

But while Ka Ying Rising’s flight into Sydney Airport was smooth, it’s been anything but for the city’s racing scene.

Beset by factional divides, a CEO exit, mass resignations, financial fights and a threat to the Australian Turf Club (ATC), horse racing in Sydney is in a state of chaos on the eve of its most important few weeks of the year, leading into Ka Ying Rising’s appearance at Royal Randwick.

Last week, the state’s regulator Racing NSW issued a show cause notice to Sydney’s sole race club which hosts The Everest, the ATC, effectively giving it two weeks to prove why an external administrator should not replace the board of directors and take control of all affairs.

The news sent a tremor through the horse racing industry, and came less than 24 hours after ATC directors Ben Bayot and Natalie Hewson quit, with Bayot claiming he “didn’t see a positive future for the club under this board”.

Earlier in the week, chief executive Matt Galanos was told he was no longer required.

The board resignations have left the ATC with only four directors, the minimum number to form a quorum, just months after the proposed A$5 billion proposal to sell its major asset, Rosehill Gardens racetrack in Sydney’s west, was blocked by rank-and-file members.

There was already a vacancy on the ATC board before the sudden exits of Bayot and Hewson.

ATC chairman Peter McGauran was the biggest proponent of the generation-proofing Rosehill plan to build a 25,000-home mini city on the land to help alleviate Sydney’s housing crisis. He quit the committee in July when the project which would define his legacy was rejected.

In a series of discussions with industry insiders both on and off the record, Idol Horse can reveal details of the show cause notice which has left the immediate future of the ATC in jeopardy.

The letter from Racing NSW expressed, among other issues, governance concerns with the ATC and doubt over the club’s financial viability.

Some of the issues raised go as far back as a decade, with Racing NSW insisting the historic nature of their worries all form part of the basis why they felt they needed to issue a show cause notice now.

The timing of the action has caused extreme angst within the industry. Several participants spoken to for this story questioned how much of an effect the show cause notice will have on Sydney’s spring carnival, saying that the action could stifle the ATC from making a submission to the ongoing review into the state’s Thoroughbred Racing Act, which outlines the regulatory and commercial powers of the peak body.

Racing NSW denies this.

Former NSW health minister Brad Hazzard will head the review into the state’s industry and has already started meeting key figures, although his scope won’t include the contentious funding arrangements.  

In a damning letter sent to participants on Monday night, Racing NSW laid bare its reasons for taking the almost unprecedented action, eviscerating the ATC as having “lost its financial resilience”, accusing the club of owing millions of dollars and constantly needing bailouts (including once to pay out its own staff who were made redundant) and further boasting of having evidence of unnamed ATC board members breaching the club’s code of conduct.

It’s hard to imagine Racing NSW and the ATC could be further wedged apart, but the scathing document seemingly achieved it.

So, why has the relationship between Racing NSW and the ATC plumbed to this depth? And why does one essentially claim they’re sick of funding the other?

Many years ago, the Australian Jockey Club (AJC) was once the most powerful institution in Sydney racing, hosting race meetings at Royal Randwick while also in charge of the regulatory functions of the industry, including stewarding.

That integrity power was stripped off the AJC in the late 1990s, later transferred to Racing NSW, and by 2011 the financially-stricken AJC and the Sydney Turf Club, the other major race club in the city which primarily hosted meetings at Rosehill, accepted a A$174 million carrot from the NSW government to merge into the one organisation. The Australian Turf Club was formed.

Racing NSW’s power, undoubtedly, increased and those of the state’s clubs diminished when its longtime chief executive Peter V’landys fought – and won – a High Court decision in 2012 for Australia’s online bookmakers to pay fees to bet on horse races.

Suddenly, the regulator was flush with cash and as the digital betting boom took off, so did the Racing NSW coffers, pocketing the proceeds of the new income stream while clubs were, and still are, tied to legacy revenue deals from Tabcorp distributions.

The court ruling set the scene for more than a decade of wealth transfer to Racing NSW. According to its latest annual report, the regulator now boasts A$338 million in cash on deposit and A$155.8 million in property, plant and equipment.

The Australian Stock Exchange-listed Tabcorp has traditionally been Australia’s biggest bookmaker, but as its market share eroded and punters turned away from parimutuel betting for fixed odds wagering, clubs have seen a gradual and continuous dip in their returns.

Racing NSW claims it has topped up the ATC’s share of wagering each year to the same A$80.7 million figure it earned in 2015, despite only being entitled to A$68.6 million in 2025. It also says it provided an extra A$164.7 million in funding to the club in 2025, which was used to pay prize money, while negotiating a further A$42 million for the ATC from agreements with Tabcorp, Sky Racing and the Seven Network.

How it receives that money is now also a point of contention.

There are concerns Racing NSW will vary the terms of its payment structure to the ATC.  It was receiving its distributions as monthly payments but it’s unclear whether that will be changed to less regular transfers under the club’s new leadership.

Untangling the financial web between Racing NSW and the ATC isn’t just exclusive to the funding model, but also loan agreements which highlight the power imbalance between the two.

The ATC has a $30 million loan with the Commonwealth Bank due to be repaid by October next year. How the loan facility came about is fascinating.

More than two industry insiders told Idol Horse the ATC was asked by the bank to nominate one of its Sydney racetracks as a form of surety in case of not being able to meet the loan conditions. It was willing to do this until Racing NSW then offered to act as guarantor.

But before the loan was finalised and as a condition of the deal, Racing NSW told the ATC it would act as guarantor on the proviso it charged 1.25 per cent interest on the deal. It stipulated the ATC would only pay the interest, which now stands at more than A$700,000, if it sold an asset worth more than A$1 million. The ATC is yet to pay any interest, but knows cashing in on any property will also come at a cost with the regulator.

That caveat is at the heart of Racing NSW’s frustrations with the ATC, with Druitt Street sources claiming it is sick of seeing Sydney’s race club consistently cashing in on small parcels of property to stay afloat, and not maximising its non-raceday revenues from its lavish grandstand facilities at Royal Randwick and Rosehill. It’s fed up with what it perceives to be years of underperformance from the ATC and figures it has to step in.

The contrast between the two property portfolios of Racing NSW and the ATC is stark.

Having failed to convince enough members of the merit in selling Rosehill, the ATC still has two major property projects on the go: the King Street site at Canterbury, which has already triggered an A$8 million payment from developers Mirvac to redevelop a parcel of land into residential dwellings but which has since stalled while the Rosehill issue was debated, and its long-held Camellia precinct on neighbouring property next to Rosehill. Both could still generate significant cash injections.

Meanwhile, Racing NSW can’t stop buying real estate. Its business model invests in the two “Ps”: property and prize money. What it doesn’t use to trump other Australian states in the race to offer the most stakes money, it invests in properties throughout the state with its unmatched financial muscle.

Racing NSW has even signed a lease for a portion of land at Royal Randwick to build a A$7 million corporate facility out of shipping containers to be launched during The Everest carnival, a response to Flemington’s famous Birdcage which attracts VIPs and celebrities. It will be dubbed Base Camp and can entertain 3,000 guests at any one time.

But not everyone believes clubs should be living hand to mouth while Racing NSW spends up.

According to sources not allowed to speak about the matter publicly, a group of powerful trainers took their concerns about the ATC show cause notice and the industry’s distribution model directly to the Racing NSW board on Monday, putting V’landys in the spotlight.

The trainers were already at odds with the ATC over an imminent proposed 10 per cent stable rent increase, but felt obliged to air their grievances with the Racing NSW board over the action taken against the club, which subsidises training at its racetracks to the tune of about A$8 million each year.

V’landys has spent more than 21 years as Racing NSW chief executive, and survived a bruising assault on his position during the Rosehill saga, which included a parliamentary inquiry into the merit of the potential sale, examining who knew what and when.

Maverick politician Mark Latham sensationally butted heads with V’landys during the hearings, and has continued his relentless attacks since, supported by other industry identities from the shadows.

V’landys wields so much influence in the sporting and political sphere he not only runs Racing NSW, but he’s also the chairman of the Australian Rugby League Commission, one of the country’s two major winter football codes.

His connections extend all the way to the top, famously accompanying Australia’s Prime Minister Anthony Albanese to the White House to meet then United States President Joe Biden in 2023. What he wants, he usually gets. 

But his action on the ATC is being viewed, in some quarters, as gross overreach.

Sydney’s premier trainer Chris Waller stopped short of saying that, but stressed the ATC needs help, leaving few doubting where it should come from.

“The ATC puts on a great show 52 weeks of the year and, yes, they can do some things better, but they need some support,” Waller said on Saturday.

“And everybody knows that the funding model has changed, and they don’t get as much money, and Racing NSW gets a lot of money now. Everybody knows that, so that needs to be publicly addressed.

“We’ve got a great leader in Peter V’landys, and he needs to address the participants and tell them what the story is.”

V’landys didn’t do so himself, but the bulletin sent under the name of Racing NSW’s low-profile chair, Dr Saranne Cooke, certainly did.

The statement said the “governance failures compound financial weaknesses, making it harder for Racing NSW to trust and rely on ATC’s management to effectively operate our metropolitan race club”.

For their part, the ATC maintains it is a business which is viable. It has A$21 million cash in the bank (albeit down from A$50.1 million 10 years ago) and more than A$300 million in assets.

How the ATC fights for its immediate future will be up to its small team of remaining directors: new chairman Tim Hale, Caroline Searcy, David McGrath and Annette English.

The old seven-person board was deeply divided over the merit of the Rosehill sale, but had just enough support to put it to a vote of members. Once McGauran fell on his sword, Hale won a showdown with Bayot for the leadership. He and Searcy were the most vocal opponents among the ATC directors to the ambitious Rosehill plan and now hold sway.

Hale declined to comment to Idol Horse on the show cause notice other than to say: “We’re managing it at the moment and we’re working through the process with Racing NSW.”

Bayot and Hewson were both members of the ATC’s finance subcommittee before quitting.

Idol Horse has been told the remaining ATC directors wanted to move swiftly to replace Bayot by putting out an expression of interest to members about a temporary spot on the committee becoming available.

Once the show cause notice arrived, those plans were torpedoed as the club shifted into “caretaker” mode, in which major decisions are now at the whim of the Racing NSW process.

Bayot did not return a call on Tuesday and Hewson declined to comment about ATC board matters.

“The board is united,” interim CEO Steve McMahon said. “We will spend the next weeks putting together a strong case as they consider important matters raised. Whilst there are challenges at present, our asset base is strong and we have a bright future.”

At least one prospective ATC employee has turned down a job offer because of the show cause revelation, and a potential sponsor has also relayed concerns about committing financial support to the club with the looming threat of administration.

In the meantime, the show will have to go on.

Ka Ying Rising will headline The Everest, and the first Golden Eagle to be run at Royal Randwick will be a fortnight later, with Racing NSW abandoning its traditional home at Rosehill to move it to Sydney’s eastern suburbs, which attracts stronger raceday attendance.

The day will feature a new concept called the Golden Mingle, where singles will be encouraged to mix in an area of the Winx Stand.

It’s not dissimilar to a pilot tried by AFL club the Sydney Swans, who had a designated pre-match function for those looking for a date, which could then be continued at a pre-determined seating bay at the Sydney Cricket Ground for the match.

The ATC had previously fielded an approach from online dating app Tinder, but Racing NSW has driven the Golden Mingle in a bid to boost its crowd for the $10 million race. It might work, it might not.

But the real question is: can Racing NSW and the ATC ever fall in love again? ∎

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