The outcome from Racing Victoria’s work to convince all Victorian race clubs of the merits of free-to-air coverage over the past week is expected to be known by early next week.
RV, led by Media Rights and Wagering Sub-Committee Chairman Andrew Twaits, presented to race clubs, including the Victoria Racing Club (VRC), Melbourne Racing Club (MRC), Moonee Valley Racing Club (MVRC) and Country Racing Victoria (CRV) across late last week and the weekend.
Racing Victoria is working to explain the exact difference between Tabcorp’s up-front take-it-or-leave-it offer and the Seven West Media offer (which still allows for Tabcorp to purchase rights for Sky 1 and 2, international and on digital), as well as the strategic drivers behind the push for the free-to-air deal with Seven.
A meeting with Tabcorp – organised by RV – set for Tuesday, June 9 was cancelled shortly beforehand, with the wagering body then announcing an end to Sky Racing’s broadcast of Victorian racing on June 15th – tonight.
The Roar has established this date was chosen by Tabcorp many months in advance, as a line in the sand moment to force the Victorian racing industry’s hand on the issue.
Tabcorp’s timing is not coincidental – Victoria racing holds just two Group 3s – the Sir John Monash Stakes (1100m) on July 4 and the Bletchingly Stakes (1200m) on July 25 at Caulfield – before the start of the new season on August 1st. Most of the racing world’s focus moves away to Royal Ascot, where four leading Australian horses are engaged.
That gives Tabcorp two months where what appears to be a significant blackout won’t actually make a material difference to core revenue.
The tabled deals with potential revenue from Tabcorp potential costs with Seven West haven’t been reported accurately.
John Stensholt with Patrick Bartley in the AFR provided an excellent initial breakdown of Tabcorp’s offer. The column reveals the Tabcorp offer is substantially less than the reported figure of $300m over 10 years.
The Roar understands the $20 to $25-million-annually figure presented is the most accurately reported summary of the proposed deal which actually stretches nine years, as opposed to a full 10 years, to coincide with the 2024 Victorian retail wagering new license agreement.
A counter column in the AFR, is understood by The Roar to be far less accurate around what is required to be profitable, however, it does further reveal that Tabcorp did offer more Victorian race meetings to be available on the free-to-air Seven Network. The Roar understands that an extra 18 meetings were offered by TAB to be broadcast on Seven, at a cost to RV of some $250k per meeting.
The claim that Racing Victoria are proceeding with “a model under which wagering turnover on mid-week provincial races in one state would have to increase by $500 million annually for them to earn the same” is incorrect and mis-understands the offer Tabcorp have made to Racing Victoria.
Racing.com’s Shane Anderson on Sunday provided the most complete summary to date under the headline ‘Blackout threat galvanises industry’, which The Roar understands is spot-on in accuracy at the current time.
This breakdown is via Racing Victoria’s insiders and details the elements of the deal at play broken down into a split between domestic, digital and international rights.
The domestic rights offer from Tabcorp is approximately $15.5 million per year – but that figure isn’t profit. Costs associated with the broadcast from RV brings the net revenue down by several million to around $12.5 million.
The international and digital rights offer from Tabcorp makes up the rest of the package. Those rights value digital streaming at around $3 million and international rights at around $6-7 million per year for a total of $10m further.
Tabcorp’s current offer is for all or nothing, but that may change should the domestic rights be taken elsewhere, and international and digital are offered again.
Racing Victoria’s modelling of a deal with a dedicated 7Racing channel factors in current costs of Racing.com and expected costs of production for a premium racing product for five years across 520 meetings. Anderson’s article does mention that Seven West Media is eyeing off Channel 78 for the broadcast.
The Roar understands the deal further allows for a presence on Foxtel’s platform to reduce channel-swapping friction, presenting Racing.com as the brand and digital platform.
Domestic revenue will come from the advertising revenue-share arrangement with Seven, and isn’t modelled to be significant in the first year.
However, the shortfall is made up by on-selling non-exclusive digital rights, as is currently done with Sportsbet at the moment, with several other corporates looking at participating. It is understood Crownbet will announce as early as this morning that they will stream Victorian thoroughbred racing on both their app and website.
The direct selling of international rights is also something that RV consider is undervalued and with correct commercial dealings, could bring in more than what was being offered by Tabcorp, with much improved coverage.
There are further factors at play around selling vision to pubs and clubs, improved wagering returns by better understanding customers, and more.
All of this doesn’t mean Tabcorp’s offer is unfair. The company provides a significant portion of revenue and returns back to racing through the joint ventures with Racing Victoria, and indeed, Racing NSW. It has shareholders which want to see more revenue, less cost, and more profit each year, while wagering growth of parimutuel wagering and within Tabcorp on racing has slowed. Sports betting, interstate betting and Tabcorp’s Trackside make up a significant portion of returns to Victorian racing.
The Roar pushed Racing Victoria officials to explain how a single meet at Moe on a Tuesday or Terang on Thursday could command attention, given some two minutes of live racing action during 8-9 races a day across a 24 hour broadcast.
RV insiders explained that any audience more significant than the now-defunct TVN would appeal, and that smaller meetings are not expected to drive significant wagering uptick or audience. In addition, the broadcast will contain full mounting yard coverage, as well and pre- and post-race interviews. This is important to punters, but also to vital stakeholders of owners and connections who. The channel’s coverage may be further enhanced with premium overseas racing from other jurisdictions.
Small audiences won’t place short-term pressure on the five-year agreement, with Racing Victoria in rude financial health, without debt, and generating a profit.
It is understood Racing NSW has been in unofficial talks regarding a change of their agreement with Tabcorp to present more meetings on free-to-air. While those talks were not dismissed out of hand, it is understood Racing Victoria will likely go it alone.
So what will this mean for the racing industry as a whole?
Racing Victoria say this is their once in a generation chance to shake the system up, establish value and breathe fresh air into racing. All principal racing authorities will be watching with keen interest.
The undertone to Racing Victoria’s push for a free-to-air agreement with Seven West Media is not just around media and broadcasting.
While Racing NSW has a 99-year agreement, which many still decry, Racing Victoria are looking to create competitive tension with Tabcorp and Tatts for the next on and off-course retail and parimutuel license agreement.
It is no secret that racing in Western Australia holds the last Government owned tote, and that the WA Government is considering selling it off. Seven West Media present one potential buyer as they consider a wagering operation in some form.
Racing Victoria’s chance to create maximum value for the next license agreement is enhanced with the addition of further competition.
In all, the presentation of racing on free-to-air is the best outcome for thoroughbred racing. Accessibility is key. While free-to-air is losing significance in terms of household attraction, live sport remains valuable – hence the strong figures generated by the AFL, NRL and Cricket Australia in recent times.
Excluding racing to Foxtel’s paid channels is a luxury that has to be paid for. Both V8 Supercars and Formula One coverage have gone across to Foxtel in recent times, with those categories attracting a far bigger upfront audience. Formula One fans with the means to subscribe were delighted – a more premium coverage offering more practice sessions and uninterrupted race coverage were large bonuses. Some fans were left behind, with only key races available on Network Ten.
Racing doesn’t receive those significant benefits from being on Foxtel. The constant race-to-race Sky Racing production isn’t a high quality of coverage and the paywall for what is offered only limits wagering potential. While the wall-to-wall coverage suits wagering’s constant cycle to generate uplift, there’s a notable lack of ongoing education, insight, and analysis to encourage longer-term positive outcomes.
Encouraging ownership by telling the stories behind horses and owners is one small area that Seven currently do well. Punters in it for the long run rather than as a pub-hobby need to be offered parade-ring insight, true form analysis (anything more than ‘looks well in the yard’) and more genuinely insightful and challenging trainer/jockey interviews.
In some ways, Racing Victoria’s go it alone attitude allows Racing NSW, Queensland, SA, WA and the rest to watch on and judge the merits of the move, without risking anything. Racing Victoria are unlikely to allow them to come in late without a cost if the experiment is a success.
Let’s hope what eventuates is a truly premium race channel – far more than a TVN Mark II.
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