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Cotton-Eye Joe

Where Does It Come From, Where Does It Go?

Larry Wainstein (photo: hamishNIVENPhotography)Larry Wainstein – The RA foots the bill (photo: hamishNIVENPhotography)

In an article published on Tab News on 2 February 2017, RA CEO Larry Wainstein stated that the Racing Association governs all stake money paid to owners and it is them that foot the bill.

In terms of the raised stakes for the Queen’s Plate and Met he said, “That money does not come from the sponsors. When a request was made to up the stakes on those races the guys came to me to see if we could afford it.”

The statement is a curious one. Firstly, the RA is a non profit organisation, which means that while it is permitted to use its resources to further RA causes, it is not, in fact, permitted to use its resources to enrich its members. In other words, there would be something seriously awry if stakes were coming from RA coffers and some pointed questions would need to be asked.

However, with apologies to Mr Wainstein, I suspect he hasn’t understood the arrangement correctly because a cursory perusal of RA Annual Report accounts will attest that this is, in fact, not the case.

Secondly, the entities that do in fact ‘foot the stakes bill’ are the Operator and the Thoroughbred Horseracing Trust. The ‘stakes pot’ is fixed and allocated on an annual basis. Sponsors do not ‘put back into the game’, they contribute to the Operators bottom line and the Operator ‘puts on the show’.

How does it work?

Trying to unravel who does what in terms of deciding stakes is a tricky business made trickier because no-one seems keen to discuss it. A brief overview – to the best of my understanding anyway – is that the Racing Trust owns 35.25% (last time I checked anyway) of Phumelela shares. The board of directors of the Racing Trust is made up of a total of 7 individuals from the RA Board and – somewhat bizarrely – SASCOC.

People better qualified than myself have published material on SASCOC, so I will not attempt to wade into that just here, save to say that it seems odd to have SASCOC on our Racing Trust board when racing is not an Olympic sport and is not affiliated to SASCOC in any way. But hey ho. The Racing Trust is a rather nebulous organisation, which was originally formed during the corporatisation process. They were handed a hefty whack of Phumelela shares and charged with safeguarding the interests of racing. Quite what form this safeguarding takes, no-one seems to know as no-one seems to talk about it. Or write it down. Or publish it anywhere.

While we might not know what they do, we do know who they are (hurrah!). The RA nominates five representatives to the Racing Trust board and the folk nominated to do the job as of 1 August 2016 are Johann du Plessis (Steinhoff director as well as a director of Klawervlei Stud), Mark Currie (Investec & Kenilworth Racing board member), Brian Finch, Chris Gerber (the Racing Trust’s non practicing PR department) and Louis du Preez. Brian Finch was elected to the Chair with effect from 1 August 2016. The last two members of the Secret Seven are SASCOC’s Gideon Sam and Vinesh Maharaj, who have been on the board since the dawn of time.

However, the Trust does not have any time to administer themselves and all admin is handled by the Racing Association (anyone else need a little sit down after all this mental gymnastics yet?). Right, the Racing Trust receives dividends from its Phumelela shares which it apparently spreads around ‘worthy’ causes, one of which, I was rather horrified to find, includes funding rural racing, according to a report in Groundup late last year. But nevermind all that for now. One of their functions is to contribute some funds towards Stakes. And here the RA also helps out and takes care of the pesky admin for them.

The public document that isn’t

The Stakes Agreement – does it exist?

There is a little bit (or more likely quite a lot) of paper that governs this process and it is called the Stakes Agreement. Ah yes, that again. This fabled document is supposedly publicly available (see latest RA Annual Report), but is about as elusive as Big Foot and perhaps there ought to be a prize for anyone who can locate and send in a copy. So Phumelela and an organisation that no-one knows anything about sort out stakes via a public document that no-one has ever seen. Clear as mud. But at least we do know that the monies do not come from the RA. Whew.

As the Racing Association seem rather involved in administering the process, it’s probably worth taking a look at them too. According to the latest Annual Report, the RA board consists of Chairman William Nsele (I do hope he’s finally got his computer troubles sorted out as it really is murder trying to communicate with him), Michael Leaf, W.G.C. ‘Cliffie’ Miller (Free Sate / Northern Cape), M.K. Naidoo, Grant Paddock (Eastern Cape), Rob Scott (Phumelela / Tellytrack), and CEO Larry Wainstein. Chairman Nsele describes the RA as “a members’ association representing the interests of racehorse owners,” but I was rather bemused to read the RA’s current Mission Statement – “To protect and support the interests of the sport of horseracing in general and, in particular, the interests of the owners by working through the Racing Association board of directors and management to ensure that every aspect of the racing industry realizes its greatest potential.” Wow. EVERY aspect of racing seems quite ambitious for an owners’ body (and I rather thought that was what the NHA were for?). Mind you, that probably goes some way towards explaining the hefty operating expenses. Which is just as well as the RA is a non profit organisation, but is funded by membership fees and also by collecting nominations and acceptance fees. It does beg the question why the RA requires so much funding?

Racing for riches

Now that we have that straightened out, it is perhaps a good time to review the rather arbitrary hoiking of stakes, or perhaps the hoiking of stakes for arbitrary races is a better way of putting it – although it is not only a local phenomenon. The Yanks have recently done it with the Pegasus and now the Australians are following suit with The Everest. While big money purses are good for making headlines, what exactly do they do for the stud book and the breed in general? At least in the case of the Pegasus, the organisers went to the time and trouble of having it recognised as a G1. There has been no mention of any consultation with the international pattern committee or whether The Everest will be anything more than a high value publicity stunt. But it’s early days and perhaps that will still come. However, I find it difficult to support stupidly rich races like those because frankly, I don’t see the point.

I have said this before, but I feel the need to repeat it. I realise this may come as a strange concept to some, but if your sole purpose for racing is the hope of earning stakes, then you have things very arse about face. The point of racing is to not to win money (although it is a nice little contribution towards costs), the point of racing is to breed a better horse than last year. We breed horses and then use the race track to test them so that the best ones can be selected for stud so that we can (hopefully) improve the breed in the next generation. This is why Gr1’s are (or should be) indications of the highest merit. They should be hard to win. That is the point. Only the best ought to be able to do it. Yes there is a correlation between high status races and their prize money, but there is a danger that high value non black type races may start tempting owners (for that is the point after all) and bleeding horses from the contests they ought to be in to make them meaningful. We should be striving for stud book excellence, not being held hostage to prize money.

Creating these fantastic purses also serves to drive even more of a wedge in our ownership ranks. When you’re paying exorbitant entry fees and lie at the mercy of a selection committee in order to run for stakes like these, those races become the preserve of a very limited number of people who can afford the horses (or get lucky enough to buy or breed one). Also, as we have seen above, the stakes pot is finite, so to hike stakes in one area, means that stakes elsewhere suffer and we effectively have to rob Peter to pay Paul.

To put that into context, in order to fund the additional stakes for the Queen’s Plate and Met this year, the Operator / Racing Trust had to reallocate R3 million. Which, when spread over two races seems a little, well, unbalanced. We had a similar discussion after the stakes hike for the Champions Challenge and Emperor’s Palace Charity Mile back in 2015. On the premise that it is “a true-run race where the conditions favour the best horse. So it deserves a big stake,” the Presidents Champions Challenge went from R2 million to R4 million, eclipsing in the process all the other Gr1’s in the country at the time. Because “it was time”, the Gr2 (yes GR2!!) Emperors Palace Charity mile went up from R600k to R1million in a season that had proper Gr1 races still being contested for R600k. And now we see non black type restricted races where the cheque for 4th is worth more than the cheque for winning a Gr1. Which just shows how totally out of whack everything is.

I should add at this point that with the advent of sales races, a decision was taken that these would be funded separately, so these monies do not come out of the stakes pot or life might be very interesting indeed! However, it would be interesting to know where the RA’s R20k bonus cheques come from.

What the facts say

The SA Racing Fact Book states that there are around 7000 individual runners on an annual basis, of which around 2,500 ever win a race – that’s 30%. With around 260 feature races on the calendar, that means only around 3% of horses will ever earn a feature race cheque in their career. Those are sobering figures. While big value race days are one thing, 92% of our racing programme consists of non feature races, so if the RA is there to further the interests of owners and there are surely more owners at the maiden level than at Gr1 level – what’s being done for them?

In the case of the Presidents Champions Challenge and Charity Mile, a reader kindly did some arithmetic and found that instead of enriching those two races, those funds could have been employed to raise the stakes for 400 maiden races to R90k. Wouldn’t that have been nice (and perhaps have provided encouragement for a greater number of people to stay in the game at grass roots level?)

The good of racing? You be the judge. But either way, wouldn’t it be nice to understand and have a say in how it works?


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17 comments on “Cotton-Eye Joe”

  1. Absolutely true why put up 5 million for a met when you can increase maiden stakes wouldn’t that attract more owners who can afford to buy a horse

  2. The stakes for normal races are at least 40% below where it shoulf be. Compare stakes from maidens 20 years ago agianst today. One way to kill the sport

  3. Robyn has asked questions that some of us undesirables have asked for years. There is nothing new in what she has revealed. This publication has aired questions raised by myself concerning stakes and the Racing Trust and is well aware that no answers were forthcoming from Larry and his motley crew. The Racing Trust remains the key to exposing this deceit. What a pity we have no investigative racing journos, theres quite some story waiting to be exposed properly.

    1. Yip still looking waiting for investigative racing journos . Well done Robyn nothing really new here. But Steve remember if it’s not good for the game it does not get published. Standard editorial rules.

  4. I don’t really enjoy valentines and all that but it’s a price I pay for being the only male in the house, including pets. Luckily there was racing last night. What a blessing! Thank goodness for Wi fi and Gavin Lerena. Best Valentines ever!!! Every drop of Red got better and better with every bottle. This article is brilliant, that is very clear. Do you think it might be the wine because I am really confused! The Sascoc thing is clearly an appeasement type thing (other might call it something less complimentary) but the rest I’ll read again tomorrow. I must also thank Rob Scott, Ewald & Glenn from Tellytrack for getting my live streaming jacked up. That also added to a great night. Now I just have to resolve the broken television syndrome with my wife. All picture no sound!

    1. So James if you like it that much, take it forward, raise the issue (and the stakes) on your show. The more exposure the better???

  5. When Pumelela was mooted they promised a fixed percentage of turnover to go into stakes. It has never been fixed and varies at the whim of who knows who. It is also not a percentage of turnover but a percentage of take-out. The Stakes Agreement is a joke and has been changed more often than a Greek wrestler’s jockstrap. Horseracing has been “captured” and Zuma and the Guptas are not guilty.

    1. Ian: this is the real mystery of all this. A fixed percentage based on betting handle is the fairest way to establish prize money.

      Robyn, you are an absolute gem!.

      You are my favorite Turf Writer in the world.

      Also, I fully agree with you on the “futurity” funded races like the Pegasus and Everest. What it has to do with anything is beyond me, other than for a bunch of billionaires to flash their cash.

      Keep up the good work. You are a lonely lighthouse and a rare beacon of light in a very and purposely muddled and murky sea.

  6. The punters fund the stakes pot.The owners put down the money.There are no guarantees for owners.All else in the industry are parasitic.Makes no sense for administrators and authorities in outdoing each other for title of richest race or million rand race or best racing festival in SouthAfrica.These are invariably won by the bigger stables and owners anyway so cannot be said that this exhilaration of stakes increase benefit the sport.
    With the sobering figures above, one cannot fathom how racing remains viable with so many owners not even getting percentage of their spend back.
    I don’t believe that al owners of the more than 7000 racehorses are KINGS!!!

  7. Robyn Louw has made me ponder for hours about the subject matter. I have been asking myself whether there is way of resolving this unsavoury state of affairs. The answer came to me when watching an editorial segment on CNN about Donald Trump. The people to blame are the members of the Racing Association. They have put the board of directors in power. They need to show their disapproval by exercising their vote and remove the board of directors. It is thought that the ordinary folk of America voted for Trump because they were tired of the perceived dishonest establishment who were doing nothing for them. When we go racing it is time to look at the people wearing Racing Association badges in a way that they feel embarrased for doing nothing for horse racing.

    1. Gavs – Well done – Somebody finally got it. It is all the RA members faults by not attending the AGM’s and letting the few elite rule for the last how many years .

      I gave in my RA badge six or seven years ago because I swore that I would not be a member of a corrupt system that I do not believe in. By me not being a member has had zero consequences to my enjoyment in Horse Racing . I still own horses I still go to the races , I just don’t have access to their beautiful Elevation room to eat the same buffet week in and week out.

  8. Robyn asks interesting questions. I will try and answer them

    How does it work? NON OWNERS SHOULD NOT CONCERN THEMSELVES WITH STAKES. THE RA KNOWS HOW IT WORKS AND THAT IS ENOUGH. ANY RA MEMBER CAN PHONE THE RA’S OFFICES THROUGHOUT THE COUNTRY AND THE STAKES WILL BE EXPLAINED. HAS ANY JOURNALIST ASKED THE RA TO EXPLAIN STAKES IN WRITING?

    It does beg the question why the RA requires so much funding? IT DOES NOT NEED THE FUNDING PER SE. THE RA HAS MORE WEALTH THAN THE RACING TRUST. THE FUNDING IS REQUIRED TO MAKE SURE THAT THE RA’S CAPITAL IS NOT DEPLETED. IF THE RA DID NOT REQUIRE THE MONEY IT WOULD BE BANKRUPT IN A MATTER OF YEARS.

    However, it would be interesting to know where the RA’s R20k bonus cheques come from. THEY COME FROM THE RA. YOU SEE THE CHEQUES ON TV WHEN GIVEN TO THE WINNING OWNER. WHO PAYS THE MONEY SHOULD BE THE QUESTION?

    The good of racing? RACING NEEDS THE RA. IT IS THE ONLY OWNERS RECOGNIZED BODY BY PHUMELELA AND THE NHRA

    But either way, wouldn’t it be nice to understand and have a say in how it works? IF YOU WANT A SAY JOIN THE RA. ITS LIKE VOTING IN ELECTIONS. IF YOU ARE NOT REGISTERED TO VOTE, YOU CANNOT VOTE. NO USE TO COMPLAIN ON THE SIDELINES. MAKE A DIFFERENCE IF YOU THINK YOU CAN.

  9. Pete D – You obviously have no idea of how this all works , with this current administration. One would think that your idea works in a Democratic country , but don’t you know we live in North Korea . Its a dictatorship and that is the bottom line .

    Just read the article ” Quote the guys came to “ME” to see if we could afford it. Its been like that for years and will always be until there is a positive change for the sake of Horse Racing in South Africa.

  10. Robyn’s piece is a good read.

    Many involved in the South African horseracing industry plod around with blinkers and have no idea of what is going on.

    Robyn’s articles assist those who do not know. She is an educator of sorts. She gets people thinking.

    She hits a nerve every time she publishes a piece.

    Well done to her!

    For many years I have been a detractor of Larry Wainstein and his board of cohorts on the RA. I believe I know more about their transgressions than most.

    As time progresses and the industry learns more and more and it begins to realise that all is not what it seems and appears to be, there will be a groundswell of opposition.

    The rot in horseracing will end.

    I look forward to reading more of Robyn’s didactic articles.

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