John Messara and Peter V’Landy are like Alfie Langer and Kevvie.
They are a team.
Individual players who are great mates, and even better as a combo on the field.
This is the go.
Tabcorp knocked back a $3.5 billion takeover bid because its board if full of jumped up yuppie fools with big tranches of performance rights and share options which will make them millions in a demerger, but be wiped out in the blink of an eye if the company was taken over.
So of course they knocked back the three point five, and decided to go down the demerger route instead.
A demerger is basically splitting the company in half, making the highly profitable lotto arm of Tabcorp one company, and the dog of a wagering and gaming operation another.
It’s cost $70 million to date to do , with another two hundred million plus to come, but hey it’s not the execs money is it, so who cares?
Tabcorp are talking it up as the best thing since sliced cheese, and they and the ‘independent’ experts they paid $770 000 and rising to tell them what they wanted to hear are saying that the new company might be worth $3 billion.
Even at it’s highest that $500 million plus expenses of what they were offered by Entain in a simple deal, but the truth is that if the New Tabcorp – that’s what they are calling the new wagering arm of the split company, would you believe – ends up worth even $2 billion in the on the market sale, then I will walk down Lygon Street naked then travel up to Sydney and stand nude on my head for a week.
It’s a debacle the whole thing, just like Tabcorp has been for years.
That’s a bit of background for you.
Now back to John Messara.
We all know that Messara’s a Racing NSW man, through and through. The independent chairman thing was a crock of shit. He is PVL’s man, and PVL is his, and given the great success that both have had in their respective fields, who could blame them? It works. For them, for racing, and for revenue to the State. As a combination the pair are great, nobody can deny.
The other thing we all know is the Racing Victoria and Racing NSW are at war.
RV is dirty at PVL for doing his job and competing against them by introducing new races in Victoria’s traditional carnival slots, and he is flipping them the bird and using his power to shut down the whole Racing Australia show unless they give The Everest and other slot or top shelf sales restricted races Group 1 status, which they well and truly deserve.
Messara was supposed to go in and end the stalemate, but that was a bit like sending the President of Belarus in as peacemaker to broker a truce in the Russia/Ukraine war.
In other words it was a million to one.
Racing NSW is a whole lot smarter than Racing Victoria, because the people who run it are.
They have a locked in stone agreement with the TAB that PVL and Messara engineered that decrees that the TAB have to pay them a certain large amount of cash every year for the next dozen years, regardless of whether they want to or not, or whether they (Tabcorp) are flying or going like a busted goose.
On top of that, years ago the dynamic duo used their influence with various NSW Governments to get a law passed that says that no company that has a shareholder owning more than ten percent of its stock can hold a license to run the TAB, unless the NSW Racing Minister agrees.
No Racing Minister is ever going to disagree with Peter V’Landys, so what the law really means is that unless PVL agrees, no-one does.
This creates huge problems for Tabcorp and its demerger, because their main share holder Australian Super owns nearly 9% of the current companies shares, and the Tabcorp proposal is that when the lottery and wagering companies split, all current shareholders will be given a share in each.
That sounds alright until you realise that New Tabcorp is going to be about 1/4 of the size of the new Lottery company, and when the demerge happens everyone with half a brain who holds them is going to want to sell out of world class lemon new wagering company while they can, and there are still people silly enough to buy in.
The only people silly enough to buy in will be the institutional investors like the superannuation companies and the private equity outfits that also own upwards of 5% of the shares in the current Tabcorp.
What that means is that their share holdings will rise to above ten percent, and Pete needs to approve it. If he doesn’t there will be no buyers, and the share price of New Tabcorp will collapse, for they would either lose the new buyers or lose its NSW TAB license, or more likely both.
That presents a huge problem, because the new lottery company has pledged to cover any defaults or overdue loans during the initial stages of the creation of the split companies, so they will be up for what would likely be a huge amount of money if Tabcorp welches, which if they lost the right to operate in the largest betting State in Australia they would.
So PVL has got Tabcorp by the short and curlies.
Enter Racing Victoria.
Their TAB agreement expires in a year and a half’s time.
If Tabcorp’s value collapses and/or it loses it’s exclusive NSW TAB license, they ain’t going to be able to bid high on the Victorian rights.
In fact their bid will be very, very low, if they can afford to make one at all.
So what you say, one of the big corporates or some new company will slide in and make a big offer to take Tabcorp’s place running the TAB’s down south of the Murray.
No they won’t.
If they even tried, then Peter V’Landys would shut off the tap to their right to broadcast or bet on NSW racing. He can do it by any number of means. I won’t bore you with them all now, but just trust me he can. Racing NSW own their racing product, they don’t have to share it if they don’t want to.
Without NSW racing to bet on, the Victorian TAB is worth just about nothing, only the revenue it can raise from betting turnover on its own racing and those in the outlier States. So the contract for exclusive rights to run the TAB would be worth nothing too.
You know what that means don’t you?
Prizemoney cuts, huge ones.
No more $8 million Melbourne Cups, or All Star Miles.
RV will be struggling to pay the electricity bill.
This is why Messara has resigned as Racing Australia Chairman.
It’s because he is a winner, and all of a sudden the greedy fools running Tabcorp have handed victory to V’Landys on a platter.
When Peter V’Landys wins, John Messara does too.
He couldn’t end the war Johnny said.
That’s because he didn’t want or need to, Archie replies.
It’s already won.
PVL reigns supreme.
Sucked in Racing Victoria.
If you’d ever pulled your silver spoon fed heads out of arses you would have seen it coming.
You forgot the golden rule.
Old school ties and daddy’s squillions don’t earn you the right to rule on a racetrack
All men and women are equal above and under the turf.
Editor’s note – Anyone with an interest and a week to spare, or who can read and digest information as fast as your author can and knock off 380 pages in a couple of hours – can find the Tabcorp demerger booklet at the link below. It is actually quite interesting reading. This new wagering company is nought but a broken down hack.
Click to access 220331-Demerger-Booklet-registered-with-ASIC_1.pdf