“They must have an agreement with the NSW racing industry and we will certainly not be giving that approval lightly,” he says.
No one takes V’landys lightly. Last year he brazenly named a return date for the NRL competition while the nation was still in lockdown.
When the competition returned on his planned date in May – it was the first team sport in Australia to resume – V’landys said his only regret was bowing to public and state pressure and shutting down the competition in March. “Racing has proven that you can continue on and if I had my time again, quite frankly, we wouldn’t have stopped the rugby league,” V’landys told The Australian.
On the racing front, V’landys was behind the Sydney upstart race The Everest that has been promoted as the disrupter to the race that stops the nation. “As I’ve said many times, the Melbourne Cup is a race of a different generation and we’re trying to make The Everest for the younger generation.”
And V’Landys is not shy of picking a fight as he showed last year when he referred to the Grand Final of the NRL’s rival code the AFL as “second rate”.
He later retracted. Sort of.
“I will take it back … because you shouldn’t call your support event for the main event – the rugby league grand final – a second rate event,” he told 2GB’s Ben Fordham.
He is not expected to sit quietly while Tabcorp determines the future of the wagering business given what is at stake for the entire racing industry.
The monopoly network of TAB outlets that Tabcorp owns is the most significant source of funding for Australia’s thoroughbred, harness and greyhound racing and the bodies wield significant influence when it comes to handing out the licences.
The fact that racing was able to continue through the pandemic gives an indication of its sway with state governments. In the words of Racing Victoria chief executive Giles Thompson, racing was “the only show in town” during the pandemic.
Potential suitors also face regulatory hurdles in each state where Tabcorp operates, this includes restrictions on any single party owning more than 10 per cent of Tabcorp as the current licence holder.
“They’ve got a lot of regulatory hurdles to overcome,” says V’landys.
If it sounds daunting, keep in mind that an operator like Entain would have a fair idea of what it is in for. Ladbrokes operates a similar network of wagering shops in the UK, and it has not hidden how keen it is on the Tabcorp business.
“This would present an opportunity to acquire an attractive business which, if combined with Entain’s existing Australian business, would create a leading, integrated multi-channel and multi-brand wagering company,” Entain said this week.
Entain entered the local market in 2013 with the acquisition of Bookmaker.com.au and launch of the Ladbrokes brand. This was followed by the acquisition of Betstar in 2014 and Neds in November 2018. It is now the second-largest online-only wagering operator in Australia, with an annual turnover of more than $7 billion.
The only other major rival to Tabcorp in Australia is SportsBet, which is projected to control 12.7 per cent of the sports wagering market this year, according to researcher Ibisworld, more than triple Entain’s 4 per cent share.
And while Tabcorp’s board, with new chairman Steven Gregg, cautioned there is no certainty a deal will eventuate there is no doubting the investor pressure to do something.
Gregg took the top job in January thanks to an investor push that unseated his predecessor Paula Dwyer and chief executive David Attenborough who will depart when a replacement is found.
Both were arguing for patience when it came to yielding the benefits of Tabcorp’s merger with Tatts in 2017 that brought the latter’s lotteries and wagering businesses into the mix.
Investors grew impatient with the underwhelming performance of the merged wagering businesses and the drag this placed on lotteries which has emerged as the jewel in the crown. The merger promised $145 million in synergies by 2021 but the cost of combining the two businesses has blown out by about $40 million, or 40 per cent.
The $25 billion investment powerhouse Perpetual, John Wylie’s Tanarra Capital and Investors Mutual have been agitating for change with no specific agenda, but they are unlikely to disagree with activist shareholder Sandon Capital’s thesis that a breakup of the business would be good for shareholders.
The lotteries business alone is expected to be worth up to $10 billion, according to analysts, which was higher than the market valuation of the entire Tabcorp business prior to the news that suitors had approached the board.
“The merger was built on big promises of fixing the wagering business. Those have failed to deliver,” says Sandon Capital managing director Gabriel Radzyminski.
“The market was not reflecting the true value of the two businesses … and it might be better if it were a pure-play wagering business, and then separating the exceptionally unique and valuable lotteries business.”
Citi analyst Bryan Raymond says the wagering business has been in structural decline due to competition from online-based global wagering businesses that have taken market share.
“Tabcorp’s wagering business needs to be rebased, in our view, with a comprehensive reinvestment in systems and the customer offer, as well as right-sizing the retail footprint,” he says.
“The prospect of an exit from wagering and gaming services looks appealing, given a stand-alone lotteries business would be considered among the highest quality defensive businesses in Australia.”
But V’Landys will be expecting the racing industry to share the spoils of any deal and his summing up of the NRL challenging year in 2020 might reflect his hopes for the industry. “Look, I see a lot of challenges and hardships at the beginning but joy at the end,” he told ABC’s The Ticket.
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Colin Kruger is a business reporter. He joined the Sydney Morning Herald in 1999 as its technology editor. Other roles have included the Herald’s deputy business editor and online business editor.