What you need to know:

• Tabcorp is cutting 200 staff, the latest in a series of redundancy rounds over the past 18 months. Of these, 50 are coming out of the customer division including marketing, trading and data-analytics.
• The latest layoffs come as the beleaguered wagering and betting company hunts cost efficiencies under new CEO Gillon McLachlan, and become a simpler, more productive and digitally competitive outfit.
• It’s just one example in a swathe of cuts to occur this year across media, agencies and marketing.
• For some, such as Australian HR Institute CEO Sarah McCannBartlett, redundancies aren’t just cost cutting, but also about resetting business models.
• For Publicis Sapient MD, Angela Robinson, however, they’re a sign of the more sluggish growth and new normal facing organisations – even as green shoots of economic recovery appear to emerge.

About one-quarter of 200 fresh redundancies executed across the troubled Tabcorp business are coming out of its customer team headed by chief customer officer, Jenni Barnett, Mi3 has learned.

The latest round of cuts at the ASX-listed company kicked off in October after being foreshadowed by Tabcorp’s recently installed CEO, Gillon McLachlan, during the company’s annual general meeting.

An estimated 50 job cuts are understood to be hitting the customer division – encompassing marketing, trading, VIP customers, content and social media platforms, media buying and data and analytics. Mi3 understands this leaves only about half a dozen employees in the marketing function itself; with significantly larger headcount maintained across the other functions sitting under Barnett’s customer remit. Barnett, a former Commbank and Telstra exec, was appointed TAB’s first dedicated customer chief in May 2022 with a remit across digital, data, product, revenue, brand, marketing, sponsorship and events.

Officially, a Tabcorp spokesperson has confirmed roles are going across finance, customer, operations, technology and legal.

“Tabcorp is creating a fitter organisation and a new cadence to move more quickly in a changing market,” the statement read. “As outlined at the company’s AGM, Tabcorp has an ongoing cost reduction program. We have reduced the number of roles and external consultants to create a simpler and more efficient way of working that can deliver an even better customer experience. Tabcorp acknowledges the significant contribution and service of staff who played a key role in building the foundations of Tabcorp during the first phase of our transformation.” 

Among the latest exits – but understood not to be one of the redundancies – is GM of marketing and media Vanessa Sanford, who joined the firm in May last year from Commbank. She finishes up at Tabcorp on 17 December. While a voluntary decision, her departure is being rolled up into the latest headcount reduction figure. Tabcorp head of marketing, brand and campaigns, Luke Feddema, will become interim acting GM of marketing while the dust settles after the latest employee cuts.

“Vanessa is an outstanding leader and commercial marketer and has been instrumental transforming Tabcorp’s brand, digital marketing, partnerships and marketing ROI since the demerger,” Barnett said in a statement sent to Mi3. “Myself, and I know our Board, are grateful for her valuable contribution and have no doubt she will continue to succeed in whatever she does next.”

It’s not the first round of redundancies to hit employees at Tabcorp this year, but one of several rounds of cuts over the past two years as the beleaguered wagering and betting business continues to pursue what’s known as the ‘Genesis’ cost reduction program. Earlier this year, redundancies also made their way into Tabcorp’s Sky Racing division, saving it from further cuts in this latest round.

Last March, 130 staff were also culled from the business. According to a report from the Sydney Morning Herald at the time, those cuts spanned group marketing and VIP departments, retail, tech, legal and HR.

New normal?

Tabcorp isn’t the only firm cutting. The Australian HR Institute’s September 24 Quarterly Work outlook found 27 per cent of Australian employers were planning to carry out redundancies in the third quarter this year, up 4 per cent from Q2, 2024. Its latest December quarterly figures show a slight dip in redundancy expectations to 25 per cent – yet still higher than when the year started.

Overtly or by stealth. media and agency sectors have also undergone significant lay-offs this year. Among these are 200-plus cuts at Nine, first announced in June; widespread layoffs at Southern Cross Austereo across podcasting, content, sales, creative services, corporate affairs and publicity that also included longstanding CMO, Nikki Clarkson; about 150 redundancies at Seven West Media including CMO, Mel Hopkins and chief revenue officer, Kurt Burnette; and dozens of jobs at News Corp.

Known agency cuts this year include hundreds of job losses at Dentsu, encompassing at least 100 out of the Merkle business. Merkle boss Kim Douglas cited clients mothballing big projects and a scramble for short-terms wins as key factors.

Elsewhere on the corporate side, 2,800 jobs will have come out of Telstra this year amid a range of cost-cutting measures and poor performance across its enterprise division.

There are ominous signals more cuts are still to come as the entire industry recalibrates to a slower-growth economy – which Publicis Sapient MD, Angela Robinson describes as the “new normal” of business for years to come.

“There’s less money coming in from consumers and more distress. All of that results in pressure on the books and what you can invest in,” she told Mi3. “We’re seeing projects being delayed, or otherwise a real laser focus on the business case and what can be pushed back versus what absolutely needs to be done. It’s no different to what’s happening globally but it is particularly pronounced in Australia.

“Not everybody is accepting the economic normal we’re living in right now may very well be our economic normal for some time, and that the business cycles we’ve enjoyed over the last 20-30 years will not be the kind of business cycles we’re going to be enjoying into the future. It is going to be more tumultuous, more challenging and you’re going to need to be more nimble and agile.”

In a recent interview on the AHRI’s quarterly redundancy figures, the institute’s CEO, Sarah McCann-Bartlett suggested the increase in redundancies was more likely to be driven by restructuring than pure job cuts.

“This is potentially about the different skills that are needed as more organisations embrace digitisation, automation, and AI in pursuit of higher productivity and growth,” McCann-Bartlett said. “The redundancy figures could therefore be about restructuring and preparing for the future rather than cost savings.”

Tabcorp’s recalibration

Tabcorp’s FY24 financials lay clear the reasons for more job losses. As one industry observer put it to Mi3, the business has been “losing money hand over fist”, reporting a net loss of $1.36 billion after incurring non-cash impairment charges totalling $1.38 billion (after tax) to its wagering business, predominantly in NSW and South Australia.

Tabcorp’s full-year revenue was $2.34 billion, down 3.9 per cent year-on-year, reflecting a softer wagering market overall, with group EBITDA before significant items coming in at $317.7 million, a drop of 18.7 per cent on FY23.

As stated by Tabcorp outgoing chair, Bruce Akhurst, the company is continuing its “relentless focus on cost efficiency and growth to unlock the value we know lies within this great Australian company”.

To get there, McLachlan said he’s working on a detailed review of the entire operating cost base as well as capital spend to identify and execute on further opportunities to slash the cost base. All this is part of a broader structural shift of the business away from its core reliance on retail and towards becoming a more sophisticated online wagering player against competitors such as Sportsbet and BetFair. (Hence Barnett last year telling Mi3 her the entire company has an overarching KPI: “Digital revenue market share.”)

“I’m focused on making Tabcorp a fitter organisation. That requires a reset of team, culture and cadence around the business. An organisation that can do more with less because we are simpler and a more focused organisation,” McLachlan said at the AGM. “I acknowledge much work has been done in reducing headcount, management layers and outsourcing transactional work. But I am clear more can and will be done. This time next year I’m confident that we will be a simpler, more cost-effective organisation.”

McLachlan was appointed CEO in August after former chief, Adam Rytenskild, abruptly left in March following allegations of inappropriate comment of a sexual nature about a Victorian regulatory figure. He’s since taken Tabcorp to the Fair Work Commission for unfair dismissal.

“There’s a new cadence happening at Tabcorp now. We’ve implemented a new execution framework with greater accountability that is immediately reducing costs, creating simpler ways of working and uplifting capabilities,” McLachlan told the AGM. “I’m also developing an evolved strategy, that will leverage the key strategic differentiators in order to create value for Tabcorp’s shareholders.”

Tabcorp Holdings demerged its Keno and Lotteries businesses in 2022, with the latter now known as The Lottery Corporation. Tabcorp meanwhile, put its emphasis on wagering, media and gaming services via its brands, TAB, Sky Racing and Sky Sports Radio, and MAX.