Only sure bet is controversy

GOLD Circle is being managed like a poorly run golf course, says racehorse trainer Joey Ramsden.

This is a damning indictment of the company that runs the Durban July, which took place yesterday, and which stands to make a mint from the event.

Ramsden might be the only trainer who this week agreed to go on record with his views but he was not the only one who voiced this opinion. Cronyism, dubious decision-making and a lack of transparency were some of the allegations made.

The biggest frustration the trainers had was the way money was being “frittered away”.

With the volumes of cash the company generates from events like the Durban July, the profits were tiny, said Ramsden.

In the six months to January, the company had a turnover of R1-billion — and an overall loss of R3.2-million.

Gold Circle operates racing in KwaZulu-Natal and the unprofitable Western Cape. The company said in its interim financial results KwaZulu-Natal managed a profit of R4.6-million but the Western Cape operation was down R7.8-million.

The overall profit from such large turnover was unacceptably low.

Gold Circle CEO Michel Nairac, while assessing the going at the Greyville racetrack on Friday ahead of the big race, said the company’s Western Cape operation had long been bleeding profits that came from KwaZulu-Natal.

But he painted a picture of a company that was not wasteful and used its money wisely — against tough odds.

After protracted competition investigations, the Cape operation is being excised from Gold Circle.

Nairac said Gold Circle was operating three racetracks in KwaZulu-Natal, which was more than the industry could support. Last year, it spun off Clairwood Racecourse near Durban for R430-million and, without taking the capital gain into account, the benefit to the bottom line would be substantial.

One of the reasons the company suffered a loss, it claimed, was because unusual rainfall in KwaZulu-Natal at the end of last year made racing impossible.

Greyville Racecourse was put out of action for a few months because of building.

Gold Circle said another factor was the difficulty in broadening its betting footprint in the province “due to not being appropriately licensed”.

The greatest contribution to Gold Circle’s profits comes from Phumelela Gold Enterprises (PGE), a joint venture with Phumelela to export South African racing by broadcasting races and racing information to other parts of the world. PGE also sets fixtures for all South African racecourses and owns domestic horseracing TV channel Tellytrack.

During the same period, the JSE-listed Phumelela showed

With the cash Gold Circle generates from events like the Durban July, profits are tiny

income of R491-million and made a profit of R39-million. Phumelela administers racing in Gauteng, Eastern Cape, the Free State and Northern Cape and provides tote betting services in all provinces except KwaZulu-Natal and the Western Cape, where Gold Circle is active.

Unlike Phumelela, which is geared to making profits for shareholders, Gold Circle’s profits cede to its stakeholders through putting up prize money, hosting races, maintaining tracks and subsidising vital operations such as a jockey academy.

Ramsden said he did not believe there was anything dishonest about Nairac or the rest of the board, but said “they have the incorrect team and [management] infrastructure to handle the volumes of cash that go through their hands”.

He said they were trying to do the right thing for racing, but going about it the wrong way.

Ramsden said no one else could run Gold Circle because no one else had been groomed to do it.

“There is no succession plan,” he said. This did not mean Nairac was the right man for the job, he added.

It simply meant no one else knew the inner workings of the operation like he did.

Last year, Gold Circle’s sole asset, Clairwood Racecourse, was sold. All the other tracks on which Gold Circle operates are leased.

Ramsden said the sale of the “best track in the country” was unnecessary as the company was turning a profit. Clairwood had been leased back from the new owners until the middle of next year.

Nairac said the board decided to sell Clairwood because running it as well as Scottsville and Greyville in KwaZulu-Natal was not paying sufficient dividends. He said the idea was to try to consolidate races and events at Greyville by putting in an all-weather track.

But several trainers complain there is not enough space at Greyville for a second track. One said the Clairwood grounds were better positioned for it as the one thing it had was space.

Ramsden said Dubai had limited success with artificial tracks, but they worked well in the UK’s wet and humid conditions.

Despite their misgivings, the trainers said they would have to use the track if it was installed because of the value of Greyville to local racing.

Trainers also complained about lack of transparency.

Because Gold Circle is not listed, reasons for decisions and where money goes are not open to public scrutiny.

Ramsden said there was a divide in the industry between trainers who “had the ear” of Gold Circle management and those who did not. He said decisions were swayed by those in the inner circle. There was inordinate “fiddling” with processes to facilitate friends.

Controversy has for a long time been the only sure bet in the horseracing industry. It looks like it is a horse with legs to run for a long while yet.