We are in lockdown, stressing about life, the universe, hungry people and racing.
If you are like me, most of the racing news is getting funneled to you via Whatsapp in bits and pieces. A constant stream of fake noise too to add to your brief Sunday read.
Tony Mincione writes in the Sporting Post Mailbag in the next few days we may hear something real and something bad about Phumelela.
All that smoke can’t be happening without any fire.
Some people feel a sense of glee that Phumelela is under the cosh. But that’s a mistake because it means we are facing an epic mess.
It is through Phumelela that Racing funds most of its stakes, the NHRA, and operates Tellytrack, the Totalisator.
Phumelela also has significant bookmaking operations (Betting World, Supabet and the bookmaking exchange, Interbet.
The two models we have to run Racing is the non-profit (now Gold Circle and a legacy of the clubs) and the for-profit (Raceco aka Phumelela as applied after corporatisation).
From that other era, we remember Newmarket, Gosforth Park, Milnerton and Clairwood.
The big merger taught us how to wire up the Isle Of Man with Australia’s Tabcorp and sell the racing picture for Pounds and Euros.
But in the coming weeks and months, remember that while horses have owners, corporations have shareholders. And also that companies can have huge expenses and have debt, big mounds of it, perhaps arranged when shares had a high perceived value.
The share has a disappointing trajectory:
April 2017 – R21.00
April 2018 – R17.00
April 2019 – R7.00
April 2020 – R0.80 (and 62c now)
There were originally about 100 Million shares, so at R17 the company was worth about R1.7 Billion.
At that time, the Racing Trust held about 35% of the shares from the original deal and dividends filled the stakes pot.
A further 33 million shares were issued to facilitate the Supabets purchase (changing the Trust’s holdings from ⅓ to ¼) plus some serious borrowing. That purchase of the 50% share in Supabet for R450 Million is going to be the single transaction that gets proper scrutiny, if somewhat belated.
The dividends paid by Phumelela to its shareholders include the Racing Trust who forwards the money to the RA who apparently forwards 80% of that to the stakes pot.
To fit this into the grand scheme of things, over the past decade the dividends paid totals about R650 Million.
It forces everyone to think whether or not racing can afford (what amounts to) the professional management fee of the for-profit model.
Or in other words, do you need a very expensive way to lose money when most of your income is profit sharing?
Is it an irony that all the dividends they paid to themselves is nearly exactly the amount Phumelela received from the government from the taxes collected from winning Punters?
However, all is not lost.
An editorial was covered in the Sporting Post a few weeks ago about the US funding model. Click here to read it
It’s worth reading if you missed it because it shows just how bad Racing could be if we let things “fall where they may”.
US racing is hammered by reliance on Casino subsidies, by a loss of control of its own tote, by losing the connection with its own images, losing its own data rights, a loss of control of its integrity checks, no control at all of the “big dogs”, and a loss of traction with their customers as they lose control of their betting platforms, their betting rights and even their tracks.
A continual slicing away of everything to private interests till it’s all sellotape and paper clips.
By comparison, South Africa racing still has a self-contained cohesion
We own all our tracks (sort of), our trainers and jockeys are largely cooperative, our owners mostly would act in the interest of the greater good, our breeders are a staunch and invested backbone of the industry, a surprising depth of skill and experience within ranks of horse carers, and the industry as a whole cooperates in terms of dividing the schedule and the customers fairly so that everyone gets a shot.
Many people have become tired of the constant gripes with social media’s easy information flow. But given some antics from the industry to its customers, any idiot can see why bookmakers are completely dominating the customer care department in every one of the dozen important ways you conduct business. But that’s on the inside.
From the outside, there won’t be many fans more supportive of their country’s jockeys, trainers, owners and horses than South Africans.
Maybe we can’t all afford trips to London News, to Victory Moon, or Ipi Tombe, or Jay Peg, or JJ or Variety Club. But we are awake and our money is down and we hail them as champions of the world. Every time!
Racing people are different.
Put them together and most have an in-depth knowledge that goes back decades. In a group they only want to talk about one thing.
You don’t need a research project to find that most people would be in favour of a unified South African racing, that puts it’s best foot forward to the world.
We want fierce competition on the track, but we want the best for racing too which only happens if the Cape can shine in summer, KZN can shine in winter, Gauteng with black type racing at sales time, in spring and autumn.
We know overseas people enjoy PE Fridays and there needs to be a place and time for the sand horses on Monday.
We box above our weight division. Hopefully, it isn’t too much to ask that between us all that a path can be found that gives Racing a chance to grow. We have had buckets of poor vision and no vision when it comes to direction.
Amongst us we all fight to get bigger pieces of the pie instead of growing the whole pie bigger. But no section of our industry is strong enough to stand without the others.
Here is the position:
Our Racing endures a shutdown at the same time that our primary funding conduit is caught short, unable to move with no savings and no credit.
Over and above, the entire nation is hobbled with little or no income and our sport is one that really needs good times.
The industry is not one that can be parked in a hanger till things move on either. Our athletes need constant care and attention. And the bills run relentlessly. Most within the industry are sole operators or specialists.
So there is layer upon layer of stresses.
Is it possible, under this maximum pressure, or perhaps because of the maximum pressure, we can escape the mistakes of a failed model, and weld together a model that maximises the foreign exchange and the loyalty of local support?
Now is not the time for bickering over a R500 here or there.
And I’m NOT saying we must all pull together or some platitude, that’s just hot air and what does that gibberish mean?
What works is finding a model through inspiration and calculation that “forces” the flow of whatever income we have to circulate in a sustainable way.
We are not the US, or the UK or Australia or Hong Kong. Whatever works there doesn’t just work here.
And on top of it, we do have a great product.
Whatever the obstacles are, we have a great product. Ask anyone, I have a list, we interview them when they visit and see the sun.
Now really is the time to look at the big picture and figure out in a great hurry, that we either catch what is about to fall and use the momentum to hit the ground running, or let it fall and break…and no, that is NOT going to be better.
