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Racing Victoria to go with Seven on free-to-air: who wins, who loses?

The sun shining at Flemington (via @RacingInsider)
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8th June, 2015
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Racing Victoria confirmed on June 6 that Seven West Media is its preferred broadcast partner, bringing racing to the general public on free-to-air and away from subscription TV – yet Tabcorp’s Sky Racing is unlikely to miss out.

The move has been put to Victoria’s three metropolitan clubs – the VRC, MRC and MVRC – and Country Racing Victoria for final approval.

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Given the clubs would have been involved in negotiations, it appears to be a matter of a rubber stamp following board meetings to be held this week.

Should it proceed further, Victorian racing will be shown on Seven every day of the year – missing just Good Friday and Christmas day – with a five-year deal to show the full 520 race meetings.

Seven West Media (Seven) chief executive Tim Worner was understood to be influential in the negotiations with Racing Victoria (RVL) – he is a racehorse owner, breeder and punter who races horses under the banner of Indian Pacific Bloodstock.

Victorian racing will not receive any upfront payment, but will share advertising revenues from the broadcast, likely to be heavily based around wagering.

It will be shown on a new Seven’s digital channel as soon as August.

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Tabcorp hasn’t been forgotten completely. In the statement, newly installed RVL Chairman David Moodie noted the ongoing “vital importance” of RVL’s alliance with joint-venture wagering partner Tabcorp Holdings.

The statement continued that RVL wished to continue a broadcast relationship with Sky.

“It is RVL’s view that, in addition to the proposed Seven West Media deal, vision of Victorian thoroughbred racing should continue to be broadcast through the Tabcorp Holdings-owned Sky Racing distribution network including its domestic, international and digital platforms.”

So with all that said – who wins, and who loses, and could anything else be in play?

  • On the surface, Racing Victoria has smashed Racing NSW in a heavyweight staying test, and by some lengths. Racing NSW are at a significant loss here. While racing deals are complex, the fact that the full 363 days of racing in NSW cannot be seen easily by the general public is a win to Victoria. Would owners, connections, jockeys and trainers prefer to be on free-to-air or just Foxtel and various digital platforms? The answer is surely clear.
  • Lee Freedman doesn’t see a long term win – telling Fairfax’s Patrick Bartley that racing shouldn’t walk away from the proven revenue streams in place. “Racing is sick of being sold expensive dreams. Racing isn’t going to reverse the trend of decline by spending fortunes on free-to-air,” the hall-of-fame trainer told Fairfax. “I’d like pictures that aren’t going to cost us all a fortune … yet again,” referring to the TVN vs Tabcorp.
  • The Seven deal initially means no upfront payment to Victoria’s three clubs. That money, which was to come from Tabcorp was said to be $300m across 10 years / around $30m per year. While Tabcorp are likely to still be asked to pay for broadcast and digital rights, given the lack of exclusivity, whatever is on offer – if anything – will likely be watered down. Less money short-term is perhaps a concern, but prize money was just increased by some $16.4m by Racing Victoria next season suggesting the bank is in good order. Fairfax hinted that RVL’s Seven announcement is all part of a game against Tabcorp – which would be incredible brinkmanship. The TAB told the Herald Sun and The Roar’s own inquiries it would not comment until later this week after it ­assessed its position.
  • The Australian reported that under the proposed arrangement, the Victorian rights-holder will initially pay about $10-12 million in establishment costs and salaries for personnel bringing together on both sides of the camera. That means $30m each year lost, with $12m more in expenses – a $42m turnaround in upfront funding each year.
  • Can Seven support a significant enough broadcast with just one race every 30-35 minutes? It doesn’t sound particularly attractive. Certainly many are dissatisfied with Sky’s rolling coverage which provides little pre or post-race service. Over the weekend, Brisbane’s major Group 1s were quickly cut away past the post to look at Sydney’s pre-race parade, reducing the atmosphere. NBC’s coverage of the Belmont Stakes showed a truly different perspective on covering significant races.
  • Tabcorp’s problem with TVN have never been publicly stated – but the surfacing of rival corporate bookmaker advertisements was likely a significant part of the efforts to place Racing Victoria and Racing NSW at loggerheads to rip TVN apart. Tabcorp’s dilemma now runs across several areas. Should they look to sponsor the broadcast on Seven or choose to ignore it completely and allow corporates to run their banners across the lot? Some suggest that the company will become increasingly dedicated to a NSW-first approach across its own platforms.
  • The deal includes digital rights, which means streaming by Seven on mobile devices and computers.
  • Sportsbet, who currently stream Racing Victoria races on its digital platform may be less compelled to continue to pay a percentage of turnover on Victorian races given that it is now on TV and on rival digital platforms.
  • Racing.com’s digital platform is also in question but likely to continue given the indications about digital streaming. RVL and Seven are likely to save costs by using the one platform, although it would surprise to see Seven give. Will Moonee Valley come to that party, given they haven’t yet?
  • The deal could include coverage on Presto – Foxtel and Seven’s digital streaming app, although nothing has been mentioned.
  • Can one race club hold the rest of Victoria at ransom if they don’t like the deal? And although board members are meeting to decide around a table, will clubs be canvassing members and participants?
  • The negotiations show a rather interesting distance between Fairfax and News Corp. Fairfax insist Tabcorp are “far from beaten”. News say it’s a rubber stamp away, with the MRC an “unabashed supporter”, and Country Racing Victoria and MVRC “taking their leads” from RVL. Does that mean it’s down to the VRC only, who already have a relationship with Seven due to the Melbourne Cup carnival?

A final thought – surely Australian racing’s continual get-square, us vs them, state vs state approach isn’t creating fierce, profitable competition. It spells disaster in the end. Queensland Racing continues to struggle, having the slate wiped clean yet again.

It won’t matter which state has better wagering when too much time and resources have been spent fighting each other rather than making the code great and getting the best horses on the track more often, rather than making money in the breeding barn.

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Imagine a national body that incentivises a kind of Australian Championship or Nationals event where horses are encouraged to win a Group 1 in at least two or three states to claim a bonus in a season – think the Global Sprint Challenge on a local basis.

All in all, we await to see where the pen lands on this current negotiation process.

Update: Tabcorp has made an announcement to the ASX on behalf of subsidiary Sky Racing this morning, as follows:

Tabcorp (ASX: TAH) notes the announcement by Racing Victoria Limited (“RVL”) on Saturday, June 6, 2015, that it is recommending to its four member racing clubs that its preferred outcome for the broadcast of Victorian thoroughbred racing is to partner with Seven West Media.

Tabcorp made a Formal Offer on June 1, 2015, in accordance with a timetable agreed with RVL. At the same time as submitting its Formal Offer, Tabcorp gave notice that the current interim broadcasting arrangements with Victorian thoroughbred
racing will cease on June 15, 2015.

Tabcorp has not received a decision from RVL and its member clubs in relation to its offer.

This is clearly Tabcorp giving notice to Racing Victoria – saying this protracted negotiation arrangements must end.

Jury Duty – listen below to a discussion with Racing.com’s Shane Anderson, with Wayne Hawkes, Jake Norton from the Melbourne Racing Club, and Michael Lynch on Tuesday’s edition of Jury Duty as they discuss the latest in Racing Victoria’s broadcast rights negotiations – from the start until around the 23 minute mark on this particular issue.

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