Racing NSW chief Peter V'landys confirmed that his organisation was in negotiations to buy the Racecourse Road track from Newcastle Jockey Club (NJC).

The money raised would help NJC build 400 stables and more than 100 new raceday stalls at Newcastle Racecourse.

Cessnock would eventually be closed to racing and converted into a pre-training facility.

Mr V'landys said there still could be some racing at the site, but that regular race meetings would be moved to Newcastle.

"Racing is not going to be lost to the area," he said.

"We're not ruling it out completely. But Cessnock isn't the greatest of racecourses."

NJC chairman Geoff Barnett said the track had long struggled with water shortages, forcing several meetings to be transferred to Newcastle.

"We've had a lot of trouble with getting enough water to keep the track in a good conditions," Mr Barnett said.

"It has been quite challenging. When it does rain there's a nasty patch near the 600-metres and when it gets rated badly, the whole track does.

"We have looked at fixing it, but it's such a massive job."

Mr V'landys said converting the track to a training centre would involve "significant investment" in the site, in the tens of millions of dollars over several stages.

He said the establishment of a pre-training facility would create new employment in the area, particularly for unskilled workers, as it would be used year-round.

NJC chairman Geoff Barnett hailed Racing NSW's plan as a win-win for both his club and the Cessnock region.

"It's a large parcel of land, about 120 acres, it's level, there's a sand track, dam, a manager's home, so it's got potential," he said. "And it's so close to Newcastle, Wyong, Gosford and Muswellbrook and there's the expressway to Sydney, so it's an ideal spot."

Mr V'landys said trainers from all over the state would use the facility.

"A lot of pre-training is done at actual racecourses," he said. "This will be a major centre for pre-training. It's already got facilities there.

"It will certainly be used by a lot of trainers from metropolitan areas."

Mr Barnett said the Cessnock track had been valued and "I think everyone will be quite happy and comfortable with what the deal is".

As well as money from the sale, Racing NSW will also make a contribution to NJC to build the additional stables in Newcastle.

Mr V'landys said the two parties currently had an "in principle" deal, with a finalised agreement expected in the next few weeks.