The Thoroughbred Breeders’ Association (TBA) has announced that it will be entering into a joint venture agreement with the Equine Group and Michael Holmes Bloodstock to outsource the running of Bloodstock SA. The details of the plan were shared with members at the Cape Breeders Club AGM on Thursday, 28 July 2016 and to KZN Breeders on Friday, 29 July. Karoo breeders will be formally addressed at a meeting on Thursday 4 August.
Explaining the motivation for the new initiative TBA Chairlady Susan Rowett said there had been a number of factors influencing the decision, but that it was primarily due to the poor overall state of the market. “Too many horses on too many sales in a poor economy with political uncertainty is bad for breeders and sales companies alike, as has been evidenced by tumbling median prices seen at recent sales.”
BSA staff salaries and management of the sales ground form a large part of the TBA’s operational costs and a large proportion of these resources are underutilized for parts of the year. Seeking a Joint Venture solution was driven by the need to implement cost efficiencies and Michael Holmes and the Equine Group were selected as partners for their proven sales experience as well as their administrative and managerial capabilities.
The Joint Venture structure will also give the new organisation a more independent structure. Mrs Rowett explained, “When the Boards of sales companies consist of breeders and in some cases the ownership of sales companies also lies in the hands of breeders, that puts them in direct commercial competition with their clients. Under such conditions, there will be always be the suspicion – rightly or wrongly – of vested interests and conflicts of interest and we feel the proposed changes will go a long way towards addressing these issues.”
The Joint Venture will see the TBA’s sales arm continue to operate under the Bloodstock SA Brand. All sales will continue to be held under the BSA banner and all future Michael Holmes sales will also be run under the same umbrella. However, these will be run under an independent Bloodstock SA Board. The new board will comprise five members, including Michael Holmes as CEO, Gary Grant and Chris Haynes from Equine Group and two Breeder Representatives to be nominated by the TBA Council. Susan explains, “This will be a sales board, not a TBA sub-committee, so we would like it not to have TBA Council members on it. However, the two breeder members will be appointed by TBA Council to lend some continuity and stability.”
The TBA Sales Ground will be leased to the ‘new’ Bloodstock SA on a full maintenance lease, including all staff costs related to the sales yard. “They will be renting the complex, and will be doing so on fully commercial footing, so will be able to rent it out for other events and earnings will accrue to the TBA,” adds Susan. “Michael is in the event business and hopes to utilise the facilities more fully, so if other sales companies wish to make use of them, all well and good.”
The arrangement will be based on a 5 year contract, with terms to ensure the safeguarding of the TBA’s interests, including key performance indicators. If these are not met for any reason, “we can always go back to running sales ourselves again.”
Susan confirms that the news was well received by TBA Members at last week’s meetings “One of the questions put forward was why it was not put out to tender. The answer is that we are not sub-contracting, it is a joint venture arrangement and as such we selected what we felt were suitable partners.”
“We feel this step will make BSA a truly independent sales operation. It is a reality that breeders compete with each other in selling horses and handing the operational responsibility to a third party removes any possible conflicts of interest.”
The TBA Council will remain, but will now be free to devote more time to Breed Affairs. Susan adds, “So often the Breed Affairs function was a combined job. Hopefully the cost efficiencies that will be made on the sales side will allow us to employ a full time person to manage the Breed Affairs function in a dedicated capacity.”
Full details are expected to be finalised in August with the new agreement to take effect at the end of October 2016.