Horse racing: Auckland Trotting Club left to carry enormous debt as sale falls through

The Alexandra Park developments are now completed but have left the ATC with huge debt. Photo/ Jason Dorday

Auckland Trotting Club bosses say they have the backing of their bank over an $80m debt after a crucial property deal fell through.

The Auckland Trotting Club (ATC) has been informed by Oyster Capital that after completing its due diligence, the development company will not be going through with the $70 million purchase of the Franklin Park training facility on the outskirts of Pukekohe.

The sale was expected to pay off most of the ATC’s $80m debt, which is still hanging over the club after huge issues with the initial developer of its Alexandra Park buildings.

The ATC won a massive court judgment against that developer, Canam, but that branch of Canam was placed into voluntary liquidation and the ATC has been left carrying the can.

The potential sale of Franklin Park was seen as the quickest way to pay off most of that remaining debt but the ATC will now have to start that process again in the New Year, all with an enormous interest bill adding up.

But most importantly, the club still has the support of its bank, Westpac.

“When we told the bank the deal was off, they said we have no reason to panic, because they aren’t,” ATC president James MacKinnon said.

“The bank have been very supportive and they realise that we still have a lot of assets.

“We haven’t lost an asset through Oyster Capital pulling out, it just means this deal is off the table.

“We have instructed Colliers to inform other parties who were interested before Oyster Capital started their due diligence but if nothing comes of that, the property will be re-advertised around February or March next year.

“We are getting close to Christmas and you don’t tend to get a lot people working on large property deals like this in December and January so it might be late summer before the process starts again.”

While the sale falling through creates uncertainty, it also leaves the ATC having to pay an eye-watering $450,000 per month in interest, which is loaded on to their $80m-plus debt.

The club has moved quickly to capitalise some of its remaining Alexandra Park assets, putting the commercial units it owns at the base of the apartment buildings on the market.

“We have had instant interest in those and altogether, they could be worth as much as $25 million,” MacKinnon said.

“That also helps with the bank, for them to see we have money coming in.”

The club is confident it will be able to sell Franklin Park and pay down the majority of its whopping debt and the most extreme action, the sale of Alexandra Park, is not on the table.

“Under the Auckland Unitary Plan, it is a special-use facility which primarily has to used for racing,” MacKinnon said.

“To even start the process to get that changed could take years and we aren’t looking at that at all.

“We have enough assets to clear the debt but we are going to need help from the industry to help with our future.”

Even if the commercial units at Alexandra Park and then Franklin Park are eventually sold and the Auckland Trotting Club’s debts are paid off, another issue remains: building a replacement training facility for Franklin Park to house and train horses.

Right now, that feels like a problem for another day.

But it is one that isn’t going to go away when and if the ATC solves its more immediate issues.

Michael Guerin wrote his first nationally published racing articles while still in school and started writing about horse racing and the gambling industry for the Herald as a 20-year-old in 1990. He became the Herald’s Racing Editor in 1995 and covers the world’s biggest horse racing carnivals.