All bets are off — the uncertain future of SA harness racing’s peak venue, Globe Derby Park
Harness racing is facing an uncertain future with its peak venue, Globe Derby Park, relying on an outstanding debt from a property developer to bail it out of a multimillion-dollar crisis. Colin James reports.
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- January 2020: Developer promises to clear $2.2m debt with SA Harness Racing Club
- May 2019: Deal brokered in bitter dispute
- March 2019: Harness racing in SA reaches breaking point
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South Australia’s peak harness racing venue, Globe Derby Park, is at threat of closing down as it struggles to cope with a deepening financial crisis.
In just over a decade, the venue named after the stallion which dominated Australasian trotting in the 1960s has gone from hosting the Southern Hemisphere’s most prestigious harness racing event in 2007, the Inter Dominion, to the brink of insolvency.
With horse racing under severe pressure globally from online betting, falling crowds, animal rights activism and increasing costs, the financial problems of its operator — the SA Harness Racing Club (SAHRC) — are not unique.
But, according to a group of disgruntled members, they have been exacerbated by a previous committee which poorly managed the struggling club for several years before deciding to sell a prime piece of land to clear debts totalling more than $5 million.
As revealed this week by The Advertiser, the committee handed over the title to 4.4 hectares on the corner of Port Wakefield Rd and Globe Derby Dve to a developer before they received the full payment of $5.5 million.
Instead, they agreed in 2017 to accept a deposit of $2 million — with the remainder to be paid when the Salisbury Council approved a commercial subdivision on the land.
Almost three years later — with the council approval only coming through last July — the club is still waiting for a final payment of $2.2 million to settle the debt and pay creditors, including a former vice president who lent it $1 million at 9 per cent interest.
As the months have ticked by — and the club’s debts have continued to mount — past president Peter Marshall has been among those members who believe the time has come to wind it up and start again.
“As sad as it is, perhaps Globe Derby Park has to be like Lazarus and die so it can be resurrected,” he said.
Mr Marshall and other former committee members, including another past president, have been unsuccessfully seeking a State Government investigation into the financial affairs of the SAHRC, which has operated Globe Derby Park since the early 1970s.
They also have been calling on the peak body for harness racing, Harness Racing SA (HRSA), to appoint an external administrator to run the club, which has been losing money for more than a decade.
Their campaign has centred on the contentious property deal in 2017, which followed a special meeting where members were told by a lawyer that the club would be put into voluntary administration the following day if they did not approve the transaction.
Mr Marshall, who served two terms as president in the 1990s and 2000s, had resigned from the club’s committee two years earlier after repeatedly clashing with its president, Richard Miller, over its financial stability — and the plan to dispose of surplus land.
“I expressed my serious concerns about the club’s ability to remain solvent and about the club’s financial direction and management,” he said.
“Since then I, along with many members, have been extremely concerned with the way the previous committee managed serious financial matters and land transactions, especially when our title was handed over to the developer without full payment.”
Together with other former committee members, Mr Marshall has spent the past three years trying to get a forensic investigation into the club’s financial accounts. They also have questioned the legality of annual general meetings, especially 2018 when the committee sought to reappoint itself without an election. An opinion sought from a top QC found the move was illegal.
Mr Marshall and other club members have written numerous times to the government agency responsible for gaming, Consumer and Business Services (CBS) about the 2018 AGM and other fidicuary issues.
The department repeatedly has refused to become involved. Instead, both former Labor attorney-general John Rau and current Attorney-General Vickie Chapman have suggested the SAHRC members obtain independent legal advice about taking action in the Supreme Court to have a voluntary administrator or receiver appointed — litigation they could not afford.
The club members chose to express their concerns to former Port Adelaide Football Club chief executive Brian Cunningham when he was commissioned by HRSA to conduct an independent review of harness racing.
The organisation ordered the investigation to help determine how the ailing sport — which is under extreme pressure in both the city and regional areas — could reform to ensure its continued survival.
Mr Cunningham’s comprehensive study detailed longstanding tensions between HRSA and the SAHRC, which culminated last year in HRSA stripping the club of its right to hold meetings for three months after it refused access to its financial records.
Mr Marshall said the club’s stance was typical of how difficult it was to obtain information from its committee — half of which was voted out at the most recent annual general meeting last November, including Mr Miller.
“The previous committee thought they were above the interests of members who have a legitimate right to ask questions and hold them to account,” he said.
Mr Marshall said he and other members had been asking questions for three years about the financial situation of the club — and the deal with the property developer — without much success.
He said members first learnt about the proposed land sale only days, and in some cases hours, before the club’s annual general meeting in November, 2017.
Many later complained that they had not been properly briefed beforehand, instead being handed a brochure on the night of the meeting. They also were given financial statements which had not been cleared by the club’s auditors.
Unrest among members escalated when the club sought planning approval to not only subdivide the triangle of land on the corner of Port Wakefield Rd and Globe Derby Dve but also to sell other large areas of land for housing.
The club’s committee had been examining the disposal of surplus land to clear its debts since 2011, when it engaged consultants to prepare a masterplan for residential and commercial development.
The plans to put housing within the Globe Derby Park precinct triggered widespread opposition from residents and some members, prompting Salisbury Council to reject the proposal. Elected members instead approved the commercial subdivision last July.
Mr Marshall said the club had told members that once the council approval came through, the developer which bought the land, GIC, had to settle its outstanding debt. The money was to be used to repay the $1 million loan borrowed from businessman Geoff Easom and a credit union owed $1.45 million.
“That was last July and here we are, it’s now February and we are still waiting for the money,” said Mr Marshall.
“The developer has been saying for two years the money will be paid and nothing has happened. Instead the club has just got deeper into trouble.”
Mr Marshall and other members obtained an independent opinion about the financial status of the club in 2017 after learning about the deal struck with GIC.
According to the report, prepared by a forensic accountant, the club was facing insolvency.
“In reality, an informed analysis of the club’s financial position is likely to conclude that the club is insolvent,” he said. “The relevancy test is the ability to pay debts as and when they fall due. Regardless of whether it is insolvent, there is an urgent need for a strategy for the club going forward.”
It was not the first time serious questions had been raised about the club’s solvency. In 2015, a report commissioned by the Independent Gambling Authority found the club would be unable to meet its debts when they fell due within the following 12 months.
The issue arose again in SAHRC’s 2018-19 annual report when it said the club had “been unable to settle creditor payments on a timely basis”.
“The conditions indicate the existence of a material uncertainty that may cast significant doubt about the association’s ability to continue as a going concern,” it said. “Therefore the association may be unable to realise its assets and discharge its liabilities in the normal course of business.”
Mr Miller went on to assure members in the annual report that the club would return to financial stability once the GIC debt was paid.
However, he said its future ultimately rested on opening a new licensed venue on Port Wakefield Rd to replace its ageing facilities in its grandstand.
Exactly what happens in the immediate future with the SAHRC — which did not responded to requests by The Advertiser for comment — is uncertain.
HRSA chief executive Neal Ross this week met with president Ann Mowday on the orders of new chairman, former Port Adelaide Football Club player George Fiachi.
It is Mr Fiachi’s job to save the club from financial collapse — an event feared by harness racing across the state. Without Globe Derby, the sport has a bleak future. But participants know things cannot continue the way they are.