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| Tabcorp's $150m chill |
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Tabcorp's $150m chill Tabcorp estimates that a suspension of thoroughbred and harness racing until next weekend would cost it about $150 million in lost turnover. "This will translate to an adverse impact on Tabcorp's group earnings of approximately $5 million after tax,'' Tabcorp said in a statement this morning. No estimate for a more prolonged suspension was made, but it could prove catastrophic for the racing industry, which relies on Tabcorp's wagering revenues for about 80 per cent of its income. The upcoming spring carnival contributes up to 35 per cent of the betting industry's total turnover. State governments will also feel the pain as taxes, levies, commissions and fees in the June year absorbed $885.8 million or 60 per cent of total revenues. Tattersall's, which runs the Queensland TAB business, is expected to lose up to $3 million from the suspension of racing. Betting companies take about five cents of every dollar that punters bet on races. "The real issue is really how long it continues," a CCZ Equities' gaming analyst, Tony Waters, said yesterday. "It seems to be getting worse all the time. It's not panic stations but you would expect the share prices to come off for Tabcorp and Tattersall's." Tabcorp's wagering division has proved to be its Achilles heel over the last two years because of cost blowouts in the installation of new technology and a dispute over broadcasting rights. Betting comprises about a third of Tabcorp's earnings. On Thursday - a day before the outbreak was confirmed - the company forecast profits to be flat this financial year, with a rise in earnings not expected until 2008-09. "It's not great timing, but at least in this case it's outside Tabcorp management's control," Mr Waters said. However, the cancellation of races during the most lucrative part of the year for the betting industry is expected to have a greater impact on Tattersall's because wagering makes up a bigger part of its business. Tabcorp said it had lost $65 million in wagering turnover over the weekend, and warned of further losses if Australian authorities extend a nationwide ban on horse movement. There have been no thoroughbred or harness race meetings since August 25. The country's first outbreak of equine influenza began to spread out of control over the weekend. "There is a risk that the suspension of racing will be extended for a prolonged period. If this were to occur, the weekly loss of turnover and earnings would increase as spring racing is impacted from September,'' Tabcorp said. |
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