VRC, Tabcorp inch closer to Melbourne Cup broadcast deal with Nine

Big crowds returned to Flemington this year for the Melbourne Cup, but its host club is still finding it hard to make money from the race that stops the nation.

Tabcorp and the Victoria Racing Club are inching closer to finally striking a Melbourne Cup broadcast rights deal with Nine Entertainment that will help alleviate the VRC’s increasingly fraught financial situation.

The VRC borrowed an additional $15m from ANZ during its most recent full financial year, and has racked up more than $45m in operating losses over the past three years, the club’s 2023 financial accounts reveal.

ANZ has now lent the VRC – which hosts the Melbourne Cup carnival at its Flemington racecourse – about $63.5m in a facility through to November 2025 that now only has $20,000 unused.

There is another $10m owing to governing body Racing Victoria on its balance sheet, the VRC’s accounts lodged late last week reveal, and the club made a $14.9m net loss for the year to July. In a statement, VRC chief executive Steve Rosich told The Australian that the VRC was pleased to have reported positive earnings before interest, tax, depreciation and amortisation (EBITDA) of $2.1m in 2023, after $14.3m of depreciation and amortisation, and that the club had made “significant strategic investments during the year and we are well-placed to drive our earnings and enhance our balance sheet for the future”.

“The VRC continues to manage costs … with an ongoing focus on strategic investments in the Flemington racing program that includes prize money top ups of $9.04m … and investment in Flemington race days and the Melbourne Cup Carnival.

“This investment drove strong return crowds during 2022 and the recent 2023 Melbourne Cup Carnival. Given the success of the 2023 Melbourne Cup Carnival on and off the track and the strategic plans in place, (there is) a very positive outlook for the profitability of the club.”

Much of the VRC’s business plan revolves around hosting a successful Melbourne Cup carnival each spring. Picture: Getty Images

Much of the VRC’s business plan revolves around hosting a successful Melbourne Cup carnival each spring, which it was unable to do due to Covid lockdown restrictions in 2020 and 2021 before a return to normality last year and a successful 2023 carnival last month, which will be recognised it its 2024 accounts.

This year’s carnival was the last broadcast by Network Ten, which had its five-year, $100m cash and contra deal expire without an extension as the VRC and Tabcorp sought to clinch a new deal with Nine.

The Australian first revealed the change in May, with the VRC effectively outsourcing the negotiations with a free-to-air broadcaster to Tabcorp as part of a deal for the wagering giant to take control of all the Melbourne Cup broadcast rights.

Sources have confirmed Tabcorp and the VRC have now agreed to a six-year contract – including sponsorship and other wagering rights – that could be worth more than $100m to the VRC, with its finalisation dependent on the clinching of a subsequent broadcast deal with Nine from 2024 onwards.

A contract with Nine, which will pay a small amount for the rights, with the VRC producing the racing broadcast, is likely to be agreed to early in 2024. But if the talks break down, then the VRC will need to renegotiate its deal with Tabcorp, which is in no rush to strike the deal.

Tabcorp is also waiting on the outcome of the next Victorian wagering licence, for which it is in a battle with Sportsbet.

The Victorian government is hoping to announce the licence winner by Christmas, with Tabcorp’s current deal expiring next August.

Sportsbet is understood to have lobbed a higher cash bid of more than $1bn for the licence, though Tabcorp has several decades of experience holding the ­licence.

Meanwhile, the VRC’s total borrowings of $72m – up from $58.5m in 2022 – and current liabilities, which exceeded current assets by $25.9m, as well as operating cash outflows of $5.1m, led to an insertion of a “going concern” note in the club’s 2023 ­accounts.

The current liability position included revenue in advance of $29.5m, the VRC said, largely attributable to sponsorship revenue and prepaid membership fees for the 2023-24 racing season.

“This balance will be realised in the ordinary course of business and is therefore not expected to be settled in cash. Current assets therefore exceed current cash settlement liabilities,” a note said.

“The club has undertaken a comprehensive analysis of its liquidity and going-concern position, by considering its financial forecast for the 31 July 2024 financial year, together with its debt facilities and proposed capital projects. The analysis comfortably outlines that it will be able to meet all its obligations.”

Originally published as VRC, Tabcorp inch closer to Melbourne Cup broadcast deal with Nine