Supercars 2.7M loss

[stevo qld]

Historical financials show V8 Supercars owner got off to a shaky start.

The operator of the Supercars racing competition booked a $2.7m loss in its first 15 months of operations and was likely reliant on its owners tipping in more money to stay afloat, documents lodged with the corporate regulator show.

The 2022 financial accounts for Racing Australia Consolidated Enterprises (RACE) show that the organisation turned over $112.5m in the 15 months to the end of 2022, booking a $2.7m loss in the process.

The reporting period covered 15 months due to the creation of the company in September 2021, with the company then acquiring V8 Supercars Holdings and its subsidiaries.

RACE's current liabilities exceeded its current assets by $4.9m, with a current asset deficit a key indicator of financial distress.

The company flagged this in its financial statements, saying the directors, including former V8 champion Mark Skaife and former QSM Media boss Barclay Nettlefold, had a plan in place to ensure the company could continue to operate.

...

This creates a material uncertainty that may cast a significant doubt as to whether the group will continue as a going concern and therefore, whether it will settle its liabilities and commitments in the normal course of business.''

The organisation's main revenue source for the 15 month period was sponsorships, coming in at $34.7m, followed by broadcast revenue at $31.2m, with "other race related income" accounting for $17.1m.

Ticket income was $12.7m while corporate hospitality income was $9m.

The Australian reported in July last year that the RACE ownership consortium rejected a buyout offer at that time from European media and entertainment business FanTech.

It is understood that offer included buying out shareholders, taking on $45m in debt and the obligation to pay Supercars team owners about $17m annually calculated on a per-car basis.

The RACE board rejected the FanTech offer, and in a statement at the time, Mr Nettlefold said RACE "has received a number of unsolicited approaches", but did not comment directly on the FanTech offer.

RACE bought Supercars in November 2021 from Archer Capital, which had owned 60 per cent of the series for more than a decade, in a $58.1m transaction.

The 2022 financials show $42.3m in debt owed to Equity Trustees and $5.8m worth of "other facilities''.

It was rumoured in August this year that the billionaire Shahin brothers Sam and Yasser, who own The Bend racetrack in South Australia, were in talks to buy the Supercars competition, however Supercars said at the time the business had not been sold.

"Supercars has not been sold and is still owned by RACE,'' Supercars owner Racing Australia Consolidated Enterprises (RACE) said.

"If Supercars were to be sold or discussions of that nature were taking place, it would be communicated to fans by Supercars.''

The Shahins agreed to sell their OTR petrol and convenience business to Viva Energy for $1.15bn in a deal announced in April, with that deal still yet to be signed of by the Australian Competition and Consumer Commission.

Both Yasser and Sam Shahin are accomplished competitive drivers in their own right, and the family has invested well over $100m into the world class motorsport facilities at The Bend at Tailem Bend southeast of Adelaide. The Bend boasts the second longest permanent circuit in the world after Germany's Nurburgring, and has played host to events such as the Asian Le Mans series and Supercars itself.

https://www.theaustralian.com.au/business/companies/historical-financials-show-v8-supercars-owner-got-off-to-a-shaky-start/news-story/891e82b7e5ba00cb516efff7f6d19a54

[Trevor]

no surprise there

[mikeamerica84]

The Bend boasts the second longest permanent circuit in the world after Germany's Nurburgring, and has played host to events such as the Asian Le Mans series and Supercars itself.

Revenue losses aside, THAT (above) was a surprise for me.  I would have never guessed, I guess.

Thanks for the article, stevo.

[madbugger]

no surprise there

And not the first time Skaife has been in this position

[skaifeman]

Whilst the picture doesn't look great, these reports can never paint a full picture, it all depends on money movement and liquid assets up top.
How much salary are the top dogs on? Did all the teams get paid etc, does this account for any Gov. funding?

The $2.7m figure is bugger all and basically a breakeven point. The worrying thing is that they aren't operating at a $20-40m profit similar to that of the AFL/NRL.

no surprise there

And not the first time Skaife has been in this position

On face you're right, but if you are in any way suggesting Skaife is the reason is ridiculous.
There are 3 other board members who would certainly be running their eye over the profitability moreso than the racing.

What is now understood to be a board of four on RACE are QMS Media Chairman Barclay Nettlefold, private equity figure Stephen Macaw (of Henslow), six-time Bathurst 1000 winner Mark Skaife, and property developer Jure Domazet.

https://www.speedcafe.com/2023/02/20/race-supercars-barry-rogers/

[djr18fan]

Without seeing the Financials and understanding the impact of non-cash items such as amortization of the purchase price, the loss reported doesn't mean much. Current liabilities exceeding Current assets is not ideal but it depends to whom the liabilities are owed and when payable. In 1 month or in 12?
Presumably there would have been some adverse impact from the late cancelation of the opening round at Newcastle last year due to covid. Replaced by Sydney with some costs still incurred for Newcastle.
The business is still operating 10 months later.

[madbugger]

Whilst the picture doesn't look great, these reports can never paint a full picture, it all depends on money movement and liquid assets up top.
How much salary are the top dogs on? Did all the teams get paid etc, does this account for any Gov. funding?

The $2.7m figure is bugger all and basically a breakeven point. The worrying thing is that they aren't operating at a $20-40m profit similar to that of the AFL/NRL.

no surprise there

And not the first time Skaife has been in this position

On face you're right, but if you are in any way suggesting Skaife is the reason is ridiculous.
There are 3 other board members who would certainly be running their eye over the profitability moreso than the racing.

What is now understood to be a board of four on RACE are QMS Media Chairman Barclay Nettlefold, private equity figure Stephen Macaw (of Henslow), six-time Bathurst 1000 winner Mark Skaife, and property developer Jure Domazet.

https://www.speedcafe.com/2023/02/20/race-supercars-barry-rogers/

FFS, where the hell did I suggest that Skaife was the cause of it?

[Alan59]

Big issue is that they have to service nearly $50million of debt.
Who would lend them more money so they can keep their heads above water?

[djr18fan]

Big issue is that they have to service nearly $50million of debt.
Who would lend them more money so they can keep their heads above water?

The owners. There's a bit more detail in this speedcafe article. https://www.speedcafe.com/2023/11/01/supercars-lost-2-7m-in-first-year-of-race-ownership/

That article reveals that interest cost would be a farly small proprtion of total expenses. And in August speedcafe reported "Meanwhile, it is thought that RACE has sought fresh investment relatively recently, and it is understood that Jure Domazet, the Canberra-based property developer who sits on the RACE board, increased his shareholding sometime in the past six to 12 months."

[Trevor]

So the rumour of the Shahin family buying it might still come true

[madbugger]

So the rumour of the Shahin family buying it might still come true

And I don't think that would be a bad thing.

[skaifeman]

Whilst the picture doesn't look great, these reports can never paint a full picture, it all depends on money movement and liquid assets up top.
How much salary are the top dogs on? Did all the teams get paid etc, does this account for any Gov. funding?

The $2.7m figure is bugger all and basically a breakeven point. The worrying thing is that they aren't operating at a $20-40m profit similar to that of the AFL/NRL.

no surprise there

And not the first time Skaife has been in this position

On face you're right, but if you are in any way suggesting Skaife is the reason is ridiculous.
There are 3 other board members who would certainly be running their eye over the profitability moreso than the racing.

What is now understood to be a board of four on RACE are QMS Media Chairman Barclay Nettlefold, private equity figure Stephen Macaw (of Henslow), six-time Bathurst 1000 winner Mark Skaife, and property developer Jure Domazet.

https://www.speedcafe.com/2023/02/20/race-supercars-barry-rogers/

FFS, where the hell did I suggest that Skaife was the cause of it?

I didn't. I said 'if in any way.' IF.

[AlbertM]

"IF" wasn't implied either.

$2.7m is chicken feed in the grand scheme. I'm surprised it is so low.

[stevo qld]

Isn't it nice to see that a non-motorsport investment company is prepared to inject even more money just so that we can enjoy Supercar racing.

(The way to make a small fortune out of motorsport is to start with a large fortune. )

[skaifeman]

Turned around to a profit, waiting on interest and taxes:
https://speedcafe.com/supercars-in-financial-turnaround/

Considering the 2023 season, there's certainly room for improvement.

Interestingly, corporate hospitality grew and I'd suggest will continue to with the newly bought in shareholder:
https://speedcafe.com/rogers-sell-supercars-stake-to-overseas-investor/

It references the Supercars website as to a potential increase in revenue, which is an absolute dumpster fire. Never been harder to navigate and requires way too much scrolling for the information at hand. The app isn't much different.