Australian Turf Club issued show cause notice by Racing NSW as $175 million debt revealed

Racing NSW has slapped the Australian Turf Club (ATC) with a show cause notice over the lingering financial and governance concerns.

The governing body - led by chief executive and rugby league supremo Peter V'landys - has stepped in to attempt to save the struggling club.

The Sydney Morning Herald reports that the ATC owes $175 million - including a $30 million bank loan - while there have been ongoing corporate governance concerns.

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It comes after chief executive Matt Galanos was axed from his role on Monday, while two directors - Ben Bayot and Natalie Hewson - also resigned from their positions.

"I don't see a positive future for the club under this board," Bayot told the Herald.

"Unfortunately, it was untenable to continue working with a dysfunctional board."

Racing NSW gave two weeks for the ATC to respond to the notice, and chairman Tim Hale sent an email to members on Friday afternoon addressing the situation.

"Racing NSW has issued a show cause notice as to why Racing NSW should not appoint an administrator to conduct the affairs of the ATC," he said.

"The ATC will cooperate with this process and work with Racing NSW to maintain the club's ongoing financial position and sustainability.

"The process will help our long-term viability, but I'd like to emphasise that the ATC remains asset-rich, resilient, and strong.

"Be assured, the club has a clear direction: that is to strengthen the ATC and invest in the future of Sydney racing across all metropolitan racecourses.

"The priorities are unchanged - members and our racing come first, particularly as we tomorrow officially launch the Sydney Everest Carnival."

The club owes Racing NSW an estimated $145 million in the form of a non-interest loan, which is only repayable if it sells a major asset, according to the Herald.

Earlier this year, an attempt from the ATC to sell off Rosehill Gardens was shut down by a member vote, costing the club millions of dollars.