Supercars lost $2.7m in first year of RACE ownership

RACE wore a $2.7 million loss in its first season owning Supercars and was reliant on its owners tipping in more funding, newly lodged financial documents reveal.

Racing Australia Consolidated Enterprises was formed in 2021 to buy Supercars from Archer Capital and the teams, and officially took control of the business on December 31, 2021.

According to its 2022 accounts, which technically cover the 15 months ending December 31 but essentially reflect a single calendar year only, the business generated revenue of $112.6 million but booked a $2.7 million loss.

Furthermore, its balance sheet shows, as at the end of the 2022 calendar year, current liabilities outstripping current assets by $4.9 million ($45.5 million versus $40.6 million), noting that ‘current’ in financial parlance means realised/due within 12 months.

According to a note in its annual report, the business’s ability to continue as a going concern “is reliant on the ability to raise additional funds from investors to meet ongoing cash requirements and to comply with debt covenants that underpin ongoing support from lenders.”

It adds, “This creates a material uncertainty that may cast significant doubt as to whether the [Supercars] Group will continue as a going concern and, therefore, whether it will settle its liabilities and commitments in the normal course of business.”

That squares with speculation previously reported by Speedcafe that Jure Domazet, the Canberra-based property developer who is one of RACE’s directors, increased his shareholding sometime this year.

Whether other shareholders would have injected further capital, and in what form, is not known.

The financial statements show that the largest source of revenue for RACE/‘Supercars Group’ (RACE being the sole owner of ‘V8 Supercars Holdings Pty Limited’ and all of its subsidiaries) was ‘sponsorships’ at $34.7 million, followed by ‘broadcast revenue’ at $31.2 million.

They also confirm just how much was paid to each team to help fund the cost of building the new-for-2023 Gen3 race cars, specifically $400,000 per Teams Racing Charter (based on 24 cars, reflective of the full-time entry list in 2021).

Curiously, that ‘Teams Gen-3 payment’ of $9.6 million is listed as a current asset.

RACE’s 2023 financials will only be made public after being filed with the corporate regulator and, of course, that reporting period has not yet ended anyway.

However, Gen3 bills are known to have continued with, for example, a second VCAT at Temora in late-February/early-March.

There is also the significant, and much-lauded, investment in upcoming wind tunnel testing, torque sensors, and transient dynamometer running.

Based on how the ‘Teams Gen-3 payment’ has been accounted for, those parity measures may well be capitalised and then depreciated over time, meaning the cost of the wind tunnel testing could be spread over 2024 and 2025, before the Camaro is replaced as early as 2026.

As for the debt which RACE is carrying, current ‘Borrowings’ as at the end of 2022 were $4.5 million and non-current were $43.6 million, including a total of $42.3 million in debt (the $4.5 million current component plus $37.8 million of the non-current component) owed to Equity Trustees.

RACE’s biggest expense in 2022 was ‘Administration’ at $41.4 million, followed by ‘Event operation and production’ at $39.4 million.

The third-biggest expense item was ‘Appearance fees and prize money’ at $17.3 million, which would stand to reason given each TRC is understood to receive $650,000 in annual appearance fees and, on current (2022 and 2023) grid size, that adds up to $16.3 million.

Meanwhile, the prospect of a Shahin buyout of Supercars, a rumour which took off in August, remains unlikely.

As Speedcafe reported at the time, the theory that the Shahins were cashed-up from the sale of OTR Group to Viva Energy was premature given the Australian Competition and Consumer Commission had not approved the deal, among other reasons to suggest the rumour mill was inaccurate.

On September 15, however, the ACCC announced a delay in its decision while it awaits further information on the proposed sale.

The Shahins’ own race track, The Bend Motorsport Park, could also miss out on a spot on the 2024 Supercars calendar, pending talks over its sanction fee.

Five dates and a total of seven events have now been locked in for next season, including this morning’s confirmation of the betr Darwin Triple Crown in its customary mid-June date.