Motorsport Australia advises of $1 million deficit for 2023

Motorsport Australia has released its latest financial results, which show a significant deficit on its operations in 2023.

Operating for a January to December financial year, Motorsport Australia announced a net result of a $1,060,928 deficit - a rise from $288,492 in 2022 - while it also confirmed an EBITDA (interest, taxes, depreciation, and amortisation) deficit of $517,792.

While the governing body’s results show it reduced head office costs by 15% and consultant and professional fees by 67% during the year, it advised that insurance, plus travel and events costs increased by $730,000 (36%) and 18% respectively.

A media release from Motorsport Australia explained “inflation and rising insurance costs made for challenging operating conditions.

“While the Motorsport Australia balance sheet and cash reserves remain strong, the sport cannot continue indefinitely to absorb rising costs.

“The increasing costs of doing business, such as travel and supplier increases - which no business has been immune to in the past 12 months - have also impacted the sport, as competitors and promoters and other participants have experienced similarly.”

Despite the seven-figure post-tax deficit, Motorsport Australia’s balance sheet “is strong” with a net asset position of more than $10 million.

However, Motorsport Australia President Andrew Fraser admitted that it is “not sustainable” to repeat the deficit in the future, commenting “business and households are facing the pressure of rising costs, and we are not immune.

“We are working to hold costs down where we can, but ultimately this result is not sustainable if repeated into the future.

“In recent years, we have done our best to absorb much of the inflationary pressures on the sport to date, but we cannot continue to do this and must ensure our sport remains in a strong financial position.

“We have a new CEO, along with other new leaders, who have a clear mandate to deliver organisational sustainability for the longer-term future of the sport.”

Recently appointed Motorsport Australia Chief Executive Sunil Vohra said the finances are one of his biggest focuses, noting “we know that results such as this are not sustainable for the sport on an ongoing basis and the bottom line is: we need to significantly improve our bottom line.

“I can confirm we have put in place new reporting structures and increased financial oversight as we progress through 2024.

“There are a number of working groups and other initiatives already in place to ensure we improve our financial position and reduce our expenses further wherever possible, while also looking at new revenue opportunities.

Discussions are also underway with our insurers to determine how we can address the significant increases in our premiums and what more can be done to reduce our costs.

“Rising insurance costs are an issue for us, for other motorsport bodies and for sport generally.  All options need to be on the table to address this trend.

“As members would be aware, the cost of licences was increased by 15 per cent late last year. This was directly related to the increasing insurance costs we are facing.”

The financial results have been revealed ahead of the sport annual Member Forum, which is being held at 7.30pm AEST this evening.

Fraser went on to say “tonight’s member forum will provide members with the opportunity to hear more from the leadership of our sport, as we present our 2023 financial statements, as well as addressing our future strategic direction.

“I encourage everyone to attend if they are available to do so. We will also be taking questions from members through the Q&A function on the night.”

Image credit: Motorsport Australia.