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Is It All Doom And Gloom?

'Industry Not Dying' - Rian Du Plessis

Despite a packed Greyville racecourse and the thrill of the Vodacom Durban July, news has emerged of J&B pulling out of its 39-year association with what is arguably the second-biggest event on the local racing calendar, Cape Town’s J&B Met, posing a question about the future of the sport.

J&B Met

Racing started in 1797 on the Green Point Common in Cape Town and has proved resilient, now being well into its third century.

The sport of kings, however, has undergone myriad changes over the years, including an interim board being formed to create what eventually became Phumelela Gaming and Leisure.

Horse of the Year - Variety Club's connections: breeder Anton Shepherd, owner Markus Jooste, trainer Joey Ramsden

Sport of the elite

Horseracing long maintained its position as a sport of the elite, but despite having shed that status to a large degree, it has been abandoned by many for quicker, cheaper and more accessible gambling alternatives.

Phumelela's Rian Du Plessis

Phumelela’s Rian Du Plessis

Asked whether he believed the industry was dying, Rian du Plessis, CEO of the only listed horse-racing company, Phumelela, said: “Absolutely not.”

But if the numbers of those directly involved are any indication of an industry in decline, they are telling.

South Africa went from 14 race tracks down to nine, and the number of registered breeders of thoroughbreds has dropped from 1400 to 200 in the past 20 years.

Despite the gloom surrounding the withdrawal of J&B’s sponsorship, Du Plessis said not much should be read into it.

The brand had “embarked on a new marketing strategy, which focuses less on brand awareness and more on the acquisition of new customers. It had nothing to do with the popularity of the event or the disassociation of horse racing.”

phumelelaHome

He said Phumelela was in the final stages of enlisting a new sponsor “that we are excited about … we are about to sign in the next couple of weeks”.

But despite the news of a new sponsor, there’s no doubting that the numbers involved in the sport are dropping.

Leon Smuts, a dealer for global markets at Rand Merchant Bank and a horse-racing industry analyst, said the lack of growth in the number of players in the sport had had an adverse effect on sponsors and the size of sponsorships, which were an important part of funding for racing.

Clairwood

Clairwood racecourse – disposed of

“Very little investment has taken place and in most instances there has been a disinvestment through the selling of assets [racecourses] and a reduction in the number of people employed.”

He said local operators were spending a lot more money, but not necessarily on racing-related investments, adding: “The sport has definitely not been growing.”

The corporatisation of horse racing was a requirement of the government when other forms of gambling were legalised.

Taxation on the sport had to be amended to allow for competition because, before 1997, betting on horse racing was the only legal form of gambling in South Africa.

Robin Bruss

Robin Bruss

Racing consultant Robin Bruss said the only way to make horseracing “truly sustainable” was by having a big thoroughbred export market.

“If we had, for example, a collective export market worth a billion rand a year, which is three times the amount of total prize money paid out, that would make the whole thing sustainable.”

Bruss said the only reason horseracing was still alive in South Africa was the number of extremely high-net-worth individuals involved in the sport.

Smart Call And company

“In most countries where the rich and famous race, it makes no difference to them if they lose a big percentage of their investment. As long as you have the willingness of the wealthy to keep on doing that for the love of the game, no problem.”

In Good Hands. Jessica Slack manages the Abington operation

Oppenheimer granddaughter Jessica Slack and her champion trainer Mike de Kock

Families such as the Oppenheimers, who acquired their wealth through vast mining interests, remain major participants in the sport, and have won numerous big races, some several times.

Bernard Kantor

Bernard Kantor – international owner

Many other super-wealthy people have joined the sport over the years, including Markus Jooste of Steinhoff, PG Bison’s Chris van Niekerk, and Bernard Kantor of Investec – and all are big investors in the sport.

Gaynor Rupert, Johann Rupert’s wife, has a large stud farm in the Western Cape.

Her Drakenstein Stud is on the wine farm L’Ormarins on the bottom slopes of the Groot Drakenstein mountain range.

Robert Bloomberg

Robert Bloomberg – ‘an elitist sport’

Robert Bloomberg, an attorney and consultant to the horse-racing industry, said it cost about R10 000 a month to keep a horse in training. “It is an elitist sport. Whichever way you look at it, people need spare cash to own a horse.”

He said that for money to remain in the industry, it was important that players made their bets on the tote, as opposed to bets with bookmakers.

Prize money for horse owners comes through the tote, while “bookmakers don’t contribute to the running of horse racing in South Africa”.

When one bets on the tote, the money goes into a pool, a percentage is taken by the industry, while the balance is paid out in winning bets. Payouts are determined by the number of winners.

With a bookmaker, however, one is given fixed, agreed-upon odds in advance and the bookmaker manages the risk by balancing his book accordingly.

“On all racing bets you pay 6% tax, so that is all the bookmakers are paying over,” Bloomberg said.

Bookmaker_odds_1625089cBookmakers were allowed to lay bets based on tote payouts, commonly termed the open bet, “which is killing the industry. They are doing it legally, but it is something that the government is looking at,” Bloomberg added.

According to a PwC gambling outlook report, horseracing in South Africa has grown less than 5% over the past four years, while sports betting in general is expected to overtake horse-racing betting next year, and account for 57% of the market in 2019, compared to 46% in 2014.

The report said the sports betting market was expected to continue to benefit from the growth in bookmaker outlets and expanding penetration.

Report  by Palesa Vuyolwethu Tshandu and Andrew Linder

  • Article reproduced by kind permission – Sunday Times Business Times

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15 comments on “Is It All Doom And Gloom?

  1. Michael Jacobs says:

    the game is certainly dying in Cape Town.On Saturday Kenilworth racecourse could not even open up the course and provide betting facilities for their few regular,loyal patrons! Turffontein had July in Jozi, but Kenilworth racecourse simply shut its doors and left its patrons to hang around offcourse totes! A marvellous marketing opportunity to reward loyal patrons gone to waste. And then they wonder why the racecourse is empty every week!

  2. vincent says:

    And the fact that punters in general can barely win consistently, as form and merit ratings mean nothing, or very little. Saturday’s Greyville a good example.
    If punters generally loose more than win, they will also start pulling out. And without the millions punters throw in,daily, where will that lead?
    Handicapping, form and merit ratings need to seriously be looked at.
    And above and beyond this, jockeys or individuals ‘pulling’ horses is something that must seriously be looked into.
    A lot of races end in conditions that points at a 90% chance of race fixing.
    Many punters I personally know are pulling out. Sa horse racing has become a joke.
    Its impossible for any average punter to get a decent win.
    Once 50% of punters are pulled out, what WILL happen to sa horseracing?
    Just the elite competing amongst themselses to see who’s horse is the fastest?

  3. Philip Goldberg says:

    The sooner Phumelela signs a deal with Betfair, the sooner everyone, including the Industry will become a winner.Racing and Sport where the man in the street can back and lay.Their Sponsorship alone should take care of lot of our stake money the Industry so desperately needs.
    Why is it that this product is so recognised (Queens Award)and so successful in the UK, and here we do not want to get involved,
    Still waiting for the answer.And don’t BS me about exchange control.

    1. Sandhiran says:

      I think someone need to look at reopening Clairwood park race course . It saddens me when I drive pass the course to look at a place once a landmark but now just barren

  4. Joao says:

    Because of the following:

    Betting is SA is small…..bookmakers “take” high volumes but those are all credit bets. Try go and put R100 000 CASH on a 5/1 shot. You can’t.

    Same with the theory that the open bet is a problem. Again this is not the case because most of the volume is on credit.

    Betfair if they saw a market there they would have been in there long time ago. Fact is its non existent. I was there in feb to potentially purchase a bookmaker in Cape Town. Part of our visit was to look at interbet – i can’t access the lay side of interbet so i was an eye opener to see the volume traded…..laughable

    Then i spoke to a few connected people in the Cape, one own the fairest Cape’s most prominent owners and punter of note is betting anything from R10 000 to R100 000 a day (not every day) He settles once a quarter and its all leaker like a cracker

    Then i was in a meeting in London with some clients that like a bet and needed a facility which i was arranging. There were 2 brothers there, their minimum bet on a football match is £250k yep saw it with my own eyes.

    Betfair and the rest won’t waste their time is SA, the upside is non existent.

    What can be done in SA is YOU ALL boycott all bookmakers for 2 weeks start punting ONLY on the tote. Let it become a super power…..

    1. MGram says:

      Joao in theory you are correct that if all betting volumes went through the tote, a “super power’ as you describe it, will be created. Theory is a warm and fuzzy thing that unfortunately will remain just a nice idea. The reality of the situation is tote monopolisation will lead to greater exploitation. Aussie mystery punters, lucky numbers distorting payouts, bets going into the system after the race has run, undisclosed rebates and commissions to “foreign” agents offering SA racing, the list of raking at punters expense is long and shameful. Did I mention Dutch quartet meisters in my exploitation list???? The reality of the situation is that Betfair would be a welcome addition to South African racing and that Phumelela Gold have objected to their operations here for one reason only – they will lose business to a far superior product.

  5. Dean says:

    Robert Bloomberg what a hypocrite! He is a huge customer of one of the biggest open bet chains. Ho ho ho!

  6. Paul Rose says:

    The reproduced article reminds me of the bs spoken by the George Bush administrations about weapons of mass destruction in the hands of Iraq prior to the US led coalition invasion. Now that we know that there was no weapons of mass destruction the Americans are trying to sell their mistake as a victory for democracy and freedom for human rights.The truth is in plain sight. The bs has been used to save those who made the bad decisions. Horseracing is no different.

    Except for Leon Smuts everyone interviewed by the Sunday Times is an integral part of horseracing and has something to lose. They are much like the George Bush administration pushing as much bs as possible while sitting in the white house having free lunches. To them all is well when it is clear that it is not.

    The wrong people were interviewed by the Sunday Times which has become more like a british sensationalist tabloid with little news. If a selection of punters, trainers, grooms and owners were interviewed a completely different picture will emerge.

    Horseracing is in turmoil and its future is becoming less and less predictable.

    I end off with the following thought – When one goes to a SA casino and plays the slots, the odds of return are on average 93%. The gambler gets returns but at the same time puts the money back in to the slot machine. Very very few gamblers will say they never got a winning payout. Horseracing does not have returns like the slot machines. A lot of punters may never see a return on a days racing. People do not like losing. They like coming back for more with the hope of winning more. Day after day their are Pick 6 carryovers. To me, that is a sign that the majority of people are losing money. Punters are becoming discontent. No-one likes losing. When you lose most of the time, you eventually stop returning. Horseracing rules need to change to allow punters to win more.

    The bookmakers offering the open bet will not be able to survive should more and more punters start winning more. The tote can never lose. The wrong people were in the white house when the Iraq invasion was decided. With horseracing, the wrong people are running the show, there remains little time but they need to go and go quickly in order to save horseracing.

    1. keniza999 says:

      bull’s eye: “People do not like losing. They like coming back for more with the hope of winning more. Day after day their are Pick 6 carryovers. To me, that is a sign that the majority of people are losing money. Punters are becoming discontent. No-one likes losing. When you lose most of the time, you eventually stop returning. Horseracing rules need to change to allow punters to win more.

      The bookmakers offering the open bet will not be able to survive should more and more punters start winning more. The tote can never lose.”

      1. Ernest says:

        Pick 6 Carryovers!!! Bring back couplings so everyone has a chance, not just the few who can now afford a selection in each race.

        Only 3 winners of the pick 6 on July day R4,5 mill each.

        Lets give everyone a chance to win at least something!!

  7. Durnban Night says:

    If any director of Kenilworth Racing, Phumelela, Gold Circle or the Racing Association is punting with competitor of the Tote, the director should be removed from office without delay. Why should we believe or trust a person who does not live according to his public beliefs?

  8. Steve Reid says:

    Either Mr. Bean is a confused man or I need my ears washed out. I have heard du Plessis on more than one occasion, make the statement that South African racing is running at a loss and that were it not for international business and the other sideshows involving soccer balls and random number draws, the business would not be profitable. Perhaps the story changes to suit the situation? Wouldn’t it be a travesty for the truth to get in the way of a good story?

  9. Ian Jayes says:

    A golden rule is that where there are no bookmakers horseracing flourishes. It is therefore, in our situation, doubly important to have a marketable commodity.
    The problem is you cannot be a little pregnant and you either have honesty or dishonesty.
    A sport/industry that depends on proper controls and integrity to prosper, must be run in a truly exemplary manner. Its image must reflect its substance and like Caesar’s wife, it must be above suspicion.
    Unfortunately, horseracing in South Africa does not meet these standards and while this situation prevails, it will be very difficult, if not impossible, to market it successfully.
    It may be true that what the eye does not see, the heart will not grieve over, but the fact remains that Phumelela has not only destroyed the ethos of our racing and decimated jobs,but it has also sold off the assets at sometimes give-away prices.
    They sold Gosforth Park for R12 million when the replacement cost of the members’ and steward’s quarters and grandstand alone would have been nearly double that figure.
    If that’s confusing, try getting your head around selling a racecourse with the best facilities like Gosforth Park for R12 million and a slum by comparison like Bloemfontein for R30 million.
    Newmarket was also a first-class racecourse equipped for night racing and was sold for R22 million.
    The purchaser subsequently paid Phumelela an extra R40 million to stop racing there and Phumelela subsequently spent R56 million to install lights at Turffontein for night racing.
    In addition, the ANC Gauteng government saw fit to give Phumelela in excess of R30 million of public money grants, R14 million of which was used to directly enrich its shareholders.
    None of this has ever been properly explained, or inquired into and it remains a festering sore.
    In the final analysis, when people are fined and not warned-off for serious offences like doping and stopping horses from winning and officials can assault members of the public in front of the grandstand, then horseracing deserves the image it has and the low perception the public has of it.

  10. Leon Smuts says:

    A business mentality is what racing needs,so corporitisation is not necessarily bad for the industry provided that the commitment to racing is guaranteed. My criticism of operators have very little to do with their ability to manage a business well, as they are clearly capable of doing, but my concern is that an entire industry and all of its dependents are relying on workable long term solutions being found.
    The profitable solutions introduced at present does not have any racing origins which will ultimately result in racing either becoming the sacrificial lamb at some point or an industry merely existing on subsidisation hand outs. This cannot be good for SA or the properity of anyone that earns a living or is trying to earn a living from this wonderful, labour intensive industry.
    Operators should continue to do most of the things that they are doing right now but the search for a racing originated solution should not take a back seat if the sport is to prosper again. This industry still has a lot of potential and a lot of good people who cares for it.
    My recommendation to ease the burden on operators and make racing more attractive to owners and punters are for the industry to fund autonomous projects aimed specifically at attracting new interest in the sport and with all profits directly benefitting racing in the form of supplementary stakes and racing related charitable causes.
    This could be done in a way that will benefit both the industry and the operator with racing getting direct gains and operators and racing jointly receiving the indirect benefit of an expanding customer base that will lead to greater relevance through numeric gains.
    Numeric significance and customer diversity are the key elements to renewed media exposure, sponsors and sponsorships as well as increased pool liquidity and growing funding through increased turnover.
    It is abundantly clear that a true racing solution will have lasting benefits for the industry as a whole and not just individual organisations and any such effort should be supported on merit.

  11. Geoff logan says:

    Different subject but it appears Richard Fourie is back with Justin. He has a full house of rides for the stable on Saturday.

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