I read with amusement the Racing Association response to the ‘Time for Change’ article. There is such a long winded justification of actions taken by them that many of my questions remain unanswered, writes Steve Reid.
In essence I asked five questions of the Racing Association.
Let’s deal with these, consider the Racing Association response, and then comment on the validity thereof.
Why do RA board members have to sign a confidentiality agreement with Phumelela? Is the RA there to protect owner’s rights or support Phumelela? If history is anything to go on, the RA is clearly more concerned about the operator than the owners it represents.
The RA response:
The allegation that RA directors having signed confidentiality agreements with PGL is entirely untrue and no such agreements exist.
My response:
The confidentiality agreements are in the stakes agreements. The RA board at the time agreed and accordingly the RA directors became bound.
Patrick Davis – could not divulge information
Furthermore, I have documented correspondence from Patrick Davis in December 2011, then Racing Control Manager for Phumelela, that states that he cannot divulge information concerning either the workings of the Stakes Agreement or the payment of nominations and acceptance fees to the Racing Association from all owners and not only RA members, as these fall under the confidentiality agreement signed between Phumelela and the Racing Association.
I also have the minutes of a hearing where Larry Wainstein says the following:
RA CEO Larry Wainstein – ‘people were very strict’
“The Racing Association and Phumelela, the stakes are paid, is controlled by the Racing Association. The Stakes Committee decides what races get what stakes, and so Phumelela are the pay masters. So that stakes is really generated as we know from the tote. The RA really belongs to the owners. So we then decided in the interests of racing what the stakes are. When I say we, Patrick Davis, myself and two of my other Board members. And the Programme Committee who programme the races over the year, so that we can programme the racing for what’s best for betting turnover. So that’s where that comes in. But the agreement, you can’t go to the Stakes Committee and that was incorrect, Phumelela have a, had a confidentiality agreement and we weren’t allowed to, when I came into office, we weren’t, we were told that’s for us to want to show it to anybody, we had to get their permission because that was set up way before we joined. So that’s where this confidentiality came in. And the people running Phumelela at the time, were very very strict on that and nobody was able to get sight of it.”
Taken from the 27 January 2012 edition of Mail and Guardian:
Quote
The Mail & Guardian requested a copy of the original stakes agreement and all amended versions but Du Plessis said: “The stakes agreement is a confidential document between Phumelela and the Racing Association and its members. However, any member of the Racing Association can obtain a copy from the Racing Association offices at Turffontein.”
Jayes strongly disagreed: “We’ve asked for an original copy of the stakes agreement; they’ve guarded it like gold in Fort Knox. They should also produce all copies of the agreement as it was amended.”
Unquote
Make your own deduction as to the truthfulness of the Racing Association in their reply.
Why is there secrecy around the stakes agreement? What is the Rand difference between the original agreement and the current agreement? Why were the changes to the agreement allowed to the detriment of owners?
The Racing Association forgot to respond to this in their five pages of self pontification and waffle.
The secrecy part has been addressed in my reply to question 1.
There is a massive difference in the stakes pot when the original agreement is populated with the applicable numbers and compared with the current agreement.
To be fair to the Racing Association, I will document what I have told every person that has contacted me for copies of the two agreements:
“Whilst I would like every person who has asked for these copies not to be influenced by my views, the documents are lengthy and cumbersome and require some attention to decipher. The areas showing the major changes relate to overseas racing and sports betting. In the original agreement these fell under “other income” and were pegged at a percentage of turnover. This would equate to a massive different in stakes to be raced for.
This may explain why confidentiality agreements and “verbal” agreements concerning the “revised” stakes agreement were enforced for many years.”
I maintain that should the original stakes agreement be enforced, all owners would be racing for substantially higher stakes.
The question not answered by the Racing Association is why were the agreements amended to the detriment of owners, and why were “verbal” agreements in place for many years on something so crucial to owners?
Why is there no public access to the documentation regarding the workings of the Racing Trust? The trust is the biggest shareholder in Phumelela and is under control of the RA. This powerful body could do much to improve the lot of owners yet it is clouded in mystery. Why is this so if there is nothing to hide?
The Racing Association gives a run down of what the Trust is and what they do.
They do not answer my question as to why there is not a single documented meeting of the trust in any form available to public scrutiny.
Seeing that the Trust supposedly pays over 80% of the dividends from shares they hold in Phumelela to the stakes pot, then surely this should be a matter of audited record, as every owner is affected by this.
Insofar as the suggestion that I contact the Racing Trust, I have witnessed the reaction of a Trustee, a prominent breeder when asked questions by a well known journalist regarding the Trust. If his aggressive “answers” to her are indicative of how questions are entertained on Trust business, I would rather air them on a public platform where perhaps answers will be more forthcoming.
It is disingenuous of the Racing Association to suggest I ask the Trust questions directly, when the RA in essence nominates 5 of the 7 trustees and are clearly able to answer themselves.
Why was it agreed to cap Phumelela expenses on local racing and that the RA paid the difference?
Again I received no direct answer to my question.
The apparent justification of the changes appears to be the excuse that all operators lose money on the staging of South African racing.
This is utter nonsense.
Phumelela is what it is today because of horseracing. The operators may lose money on local racing, according to their financial records, however they make money by selling our product to the international market.
That is also irrefutable and shows in the dividends paid and robust share price. The tote infrastructure is used by Phumelela for all its bets, not only horseracing. A perusal of how expenses are allocated in this regard may be illuminating.
How is it that caps on expenditure on local racing are agreed to when dividends to shareholders are as strong as they are? It is clear that Phumelela interests are more important than those of the owners who the Racing Association allegedly represents.
How could the RA have agreed to the closing of the Vaal Sand track before an alternate synthetic surface was operational on the Highveld? What compensation is in place for owners who currently have sand performing horses in Highveld stables?
What about the owners who bought progeny of proven sand sires at National sales as recently as 8 weeks before the announcement was made? Why have the RA been silent on this track closure that will affect a large portion of its members?
The Racing Association blames the jockeys, “general” stakeholder unhappiness and an unsafe racing surface for the closure of the Vaal.
Why then was the RA not in negotiations with Phumelela to prolong the Sand track until a synthetic surface was laid to replace the Sand? What alternatives were researched? Who were the experts called in to diagnose what the problems with the Vaal Sand were? What possible short to medium term solutions were considered?
Where was the pressure exerted on Phumelela to give owners and trainers more time to make alternate arrangements for horses that acted on this surface?
Above all, what owners and trainers were consulted before the decision was taken to close and what agreement was reached in terms of the timing and position of a new synthetic racing surface?
It is apparent that nothing was done to stop Phumelela closing the Vaal Sand – the Racing Association were compliant in allowing this to happen. We now have the scenario that we will have two unraceable turf tracks at the Vaal when the weather dictates.
The question must also be asked who is paying for the grass seeing that we know there is a cap on expenditure on local racing?
I remain unconvinced that the Racing Association acts in the interests of all owners and have supplied sufficient proof to support my views.
I again call on Racing Association members to table questions at this year’s AGM, and not allow your association to get away with the lack of answers to questions – as they have done in their reply to me.
This is in the interest of all of us that fund the sport.
Ed – A copy of Mr Reid’s email was forwarded to the RA for comment on 3 November. We were informed that Mr Wainstein was away and would return to the office on Thursday 5 November.
