Let’s settle it out on the track!

Mark Twain said it best.

“It were not best that we should all think alike; it is difference of opinion that makes horse races.” Mark Twain

I’ve spent years understanding the opinions of horse racing and garnered them from the kings, queens, robbers and thieves of horse racing. What I can tell you is that horse racing is not short of opinion. As diversified as the views are from the private boxes to the paddock totes, these opinions are the lifeblood of the industry, they drive tote turnover, spark debate and ultimately make for great horse races.

So then why is that as an industry we are accepting a less competitive outcome? Why is it that we are turning our backs on the debate and selling ourselves into a racing future that will be won in a one horse race (I guess you can’t call it a race anymore)?

Money you say? Mmm how simple that would be, for then surely the most expensive horses would win the race. Were that the case would we, joe public, race? There would be no need of opinion, or for that matter training or thought! What for? Surely we would just follow the money.

So I’m pretty sure you all agree it’s not about money, right? It’s about opinion, that leads to discussion and debate, that leads to action and innovation, that leads to change and a chance of winning the race.

The greatest stories of our time come from a difference of opinion. I’ve talked to a lot of you and I’ve seen you nod your heads, I’ve sat face to face and listened to your opinions, debated alternatives with the so called left and right wings of racings establishment and I can tell you for sure that the future of horse racing will only be secure if we give opinion a platform to compete, to innovate, to race to win.

For what it’s worth, these are some of the opinions I’ve formed, some of them are yours too.
Fundamental to my view is that interests of horse racing must be secured through strong, transparent, professional competition. It’s no surprise that the Competition Commission was setup to ensure that competitive forces are secured, as they are inextricably linked to the development and improvement of any industry. You only have to look to the competitive forces recently at play in the thoroughbred breeding and auction industry and note that regardless of the tactics, in the result the buyer has more choice and is getting a better deal.

Imperative to the future success of the horse racing industry lies my belief that the currently fragmented gaming landscape will be better served by an integrated gaming strategy that benefits from several sources of revenue, efficiencies of scale, broad based stakeholder participation and deeper distribution and access to clients through gaming partnerships.

As South Africans we should demand that horse racing embraces diversity and transformation by effecting wholesale change at every level of participation.

Membership structures, badges, votes and privileges must be transferred to economically aligned, broad based shareholder interests and voting rights. The business of horse racing needs to secure commercial & legal structures that are designed to protect and retain the fair economic value of the members and stakeholders today and into the future. At the same time these structures need to empower the management to direct the strategic plans of horse racing so that it can more aggressively and effectively compete for its share of the gaming Rand.

These structures should include, amongst others:
Ring fencing the assets of horse racing from the business of horse racing and gaming
Introducing new sources of risk capital willing to invest in the turnaround strategy
Contractual, underwritten annual increases in the stakes
Transfer of membership rights and industry service to shareholding
Bottom up, broad based black economic empowerment benefiting racings labour force

In the final outcome, the operations of “putting on the show” should be secured through separate commercial bodies but contractually governed through a revenue levy like structure. In order for this to be possible the fortunes of horse racing must first be turned around and this cannot be done without substantial investment in a new plan.

This integrated gaming model and the eventual separation of the business of horse racing from the operations of horse racing has worked well in other markets, most notably in Australia where Tabcorp operates an integrated gaming model built from the business of horse racing and has developed into the second largest listed gaming company in the World with a market valuation of c. AUS$ 2.2 billion, some 22 times more than the comparative valuation of Phumelela. Whilst some would argue that this is not achievable in South Africa, given the relative size and demographics of the country, I would argue that on a relative basis South Africa’s GDP is 60% of Australia’s GDP and we have more than double the population yielding an opportunity that on a like for like basis could be worth near R10 billion in today’s terms. Whilst achieving this might be some way off I have no doubt that the opportunity is real and goes some way to explaining the lack of liquidity in Phumelela’s shares. What’s more is that Tabcorp does not enjoy exclusivity over the assets and operations of racing in Australia and publicly competes for its gaming revenue on track, online, in store and internationally.

Importantly some of the key pieces in the integrated gaming puzzle that will help deliver these strong returns are set to be cast down over the coming years. These include the much anticipated online casino, poker and betting exchange licenses coupled with medium pay-out machines that will no doubt fuel the transformation of racing venues to “Racinos” over time and better utilise the land based assets which stand empty 6 out of 7 days a week.

Horse racing is well placed to secure such licenses as a significant employer and contributor to the South African economy and in fact, in my view, makes a stronger case for these licenses over the land based casino operators who employ 1/20 of the people for every gaming Rand earned.

Whilst horse racing’s dividend demise and ‘blame it on the bookie’ continue to be the hymn sheet for the industry leaders it is interesting to note the success the operators are enjoying in soccer pools and international broadcast rights. Both are inextricable linked to horse racing, obvious enough when considering the picture, but what about the tote which enjoys national exclusivity in being one of only two gaming platforms (the lotto being the other) that is capable of running national pools or jackpots, consider for a second the value of that alone in the hands of a casino operator.

So while the dividends continue to flow out of an industry under siege you have to question where would these same shareholder be were it not for horse racing? The answer is not as obvious, nowhere! Horse racing if you like is the seed, from which all other initiatives grew, and like seed capital providers the world over it deserves an unashamedly disproportionate return for its upfront investment, laid down over almost a century of racing in the country.
I have expressed a number of opinions, some of them are yours, and I would love to hear more?

Isn’t that exactly what horse racing should be all about, opinions that we settle out on the track.

Charles Savage
Chief Executive Officer
PURPLE CAPITAL

Racing just got a little wilder

All I can say is MMMmmmmmmm.....Why don't I trust this guy........

Homer ... Perhaps because you've never dealt with or met me! Pretty standard response I've come to expect from racing, try bring my "trust" into question! Anyway I'm not asking you to trust me I'm happy to have my actions judged. What I am looking for though is that the indusrty debate the contents of my article and not let it be cast to a side show while my trust gets drawn into question.

are you involved with the black lady who is taking phumelela on charles?

Phindi K? No

@teamwildracing Wrote:

---

> Homer ... Perhaps because you've never dealt with
> or met me! Pretty standard response I've come to
> expect from racing, try bring my "trust" into
> question! Anyway I'm not asking you to trust me
> I'm happy to have my actions judged. What I am
> looking for though is that the indusrty debate the
> contents of my article and not let it be cast to a
> side show while my trust gets drawn into question.


Nothing to do with trust - too many agendas in racing - and normally racing is used to further those agendas. Maybe and hopefully not in your case - time will tell....

Singing from my hymn sheet so I am happy. But I am a lowly internet punter so do my thoughts matter?

I would like @teamwildracings views on alternates to the sale of Clairwood.

I don't know the full details on Clairwood, from the outside the deal looks like it was inevitable given the port plans, if so maximising value while ensuring enough time to build out the alternative track and training facilities would have been the balancing act that GC had to navigate.

But if I'm wrong in my assumption that horse racing would have to cease at Clairwood given the port plans then I would have to say that any alternative would need extensive capital to achieve given the current state of racing. Its very hard to draw judgement on the sale or offer alternatives without knowing the facts. What i do know is that the sale provides a lifeline of much needed capital that must be wisely invested in the turn around of horse racings future as failing that the asset register is a little thin in KZN land!

The financials of GC over the last few years paint the picture well and the recent sale of assets might keep the wolves from the door but don't provide a sustainable solution into the future.

japan.

I am not attacking, just questioning. You mention the ring fencing of assets in the article but then hint that the sale of assets may be ok in certain instances.

Keeping the "wolves from the door" and "sustainablity" surely cant be used in the same sentence. It seems the sale of assets is a matter for the heads that drive these decisions and these heads can easily turn. So what is good today may be off tomorrow.

We agree on the idea of competition and the old excuses are tired.

On the Ausie comparison, from what I have been told, a person can place a bet on a horse in a bar in Aus. We also have to equate standards of living between countries and factor in the fact that Ausies are for more educated punters. (Punting edcuations not school education.) For me, it would be difficult to draw direct parallels between the two. For starters there are not too many of the population of Aus living in squalor in squatter camps. Standards of living; chalk and cheese. The knock on effect to racing should be obvious.

What with plans to install an all weather track at pear shaped Greyville. That will be a front-runners dream catch-me-if u can track where the draw bias is bound to be significant and horses coming off the pace may just as well go home. Also to eat into the turf track proper and steal a few metres cud have disastrous results for large fields, so I hope and pray that this whole process is planned properly like the New KIngsmead/ Moses Mabhida replacemnt was.The loss of the Garden Course is a tragedy and nothing will ever replace that piece of paradise that is tucked away South of Durban.Perhaps the Bestels cud write a book on Clairwood Park?