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Gold Circle Talks To Members

Non-feature stakes increases announced

Dr Phumla Mnganga (pic: Gold Circle)

Dr Phumla Mnganga

Whilst the euphoria of the past Champions Season brings back fond memories, the reality of the underlying financial status of the company continued to negatively impact on profitability. A general increase in non-feature race stakes will still be implemented.

So writes Gold Circle Chairman Phumla Mnganga in a recent letter to Members

Members were enlightened on the reasons for the concerning declines in turnover as early as December 2016 and thereafter as reported at an informal meeting of members. Regrettably the trend has continued and consequent remedial actions  have and will be taken.

Company Restructure

At the informal information meeting held on 6th April 2017 Members were updated on the broad detail relating to the company restructure which would involve a down-sizing of the Gold Circle business including a major retrenchment programme. Details of the restructure were notified to personnel and consultations commenced immediately. The total cost of the retrenchment programme was extensive, the majority of which has been brought to account in the 2017 financial year.

Gold Circle CEO Michel Nairac

The composition of the Gold Circle Executive Management was reviewed and now only comprises five persons as follows:

 Michel Nairac – Chief Executive Officer

 Stuart Gardner – Acting Chief Financial Officer

 Patrick Loker – Commercial Executive

 Raf Sheik – Racing Executive

 Veronica Jack – Corporate Services Executive

Operational models and practices have been reconsidered and changes have been made in several areas of the business to become more cost effective and efficient. Whilst there is still a long road ahead, the remedial actions taken to date will have a positive impact in the year ahead.

Stakes and Nominations

Along Came Polly

As part of the restructure an in-depth review has been undertaken into the racing fixtures and programmes offered in KZN having particular regard to the number of dual nominations being received for raceday programmes. With a view to bringing more efficiency it has been agreed that nomination fees will be reintroduced into the administrative process for implementation in November 2017. This will have a positive controlling influence on the number of horses actually intending to participate in any particular race.

The return on investment to owners in horse racing has always been a top priority for Gold Circle as this forms the core of its business income generation. Over the past two years, given the general economic condition in the country and the racing industry, Owners have not been afforded meaningful stakes increases to offset their increasing costs. The business’ restructure and the consequent cost savings have allowed the company to review the funding available for Stakes in the year ahead.

Gold Circle is pleased to announce that it will implement, effective from 1st November 2017, a general increase in stakes values for all non-feature race categories. Priority has been given to races in the lower divisions such as Progress, Graduation and Maiden categories.

This increase should greatly assist owners when racing in KwaZulu-Natal.

Financial

The Annual Financial Statements for the year ended 31 July 2017 have been audited and are passing through the internal approval processes prior to being circulated to Club members. As was expected, the company sustained a consolidated loss on trading amounting to R12 million compared to a profit of R6 million in the prior year. This loss has been tempered by a surge in investment returns in July 2017 as well as certain other IFRS accounting requirements.

The crowd at Greyville on Saturday

The current 2017 / 2018 trading is reflecting mixed results. Totalisator turnover income generation continues its concerning negative trend when compared with the prior year. Whilst the downturn trend was taken into account in the preparation of the 2018 budget projections the aggregates to the end of September 2017 were still marginally negative.

Several sectors within the company are achieving better than expected operating results and the Management accounts at the end of August 2017 reported a trading profit of R1.4 million however, this was only the first month of the new financial year. Management are cautiously optimistic that improved returns will be achieved in the year ahead.

Racing

The turf racing surface at Greyville has undergone its annual scheduled maintenance programme and should be ready for the first racing programme scheduled for 22nd October 2017. Scottsville is presently under maintenance and racing returns to Pietermaritzburg in December 2017.

The night racing programme at Greyville on Friday nights has commenced and will run through to April 2018. The continuity of this programme has significant benefits to the company in both the local and international betting markets.

Members will no doubt be aware of the major storm the best the coastal region on Tuesday 10th October 2017. Over 100mm of rain was recorded at Greyville within a very short period and facilities were tested particularly from wind damage. Whilst there was infrastructural damage caused by the storm most of the repair work has been effected. It was impressive to note the rapidity of water egress from the polytrack surface following the storm.

 

Legislation

The KwaZulu-Natal Gaming and Betting Act 2010 is still under review and whilst Gold Circle has proposed certain amendments which would facilitate statutory and operational efficiencies for the company, it is not expected that promulgation the amendments will take place in the near future.

The Board of Gold Circle has had several positive interactions with the Office of the Premier as well as the KwaZulu-Natal Gaming and Betting Board. It is important that these relationships be maintained as they ensure that there is a greater understanding of the racing industry from a regulatory perspective.

Litigation

The several matters previously reported to Members in respect of various actions by the bookmaking fraternity against the Racecourse Operators mainly with reference to Tellytrack have not as yet been resolved. Any outcome on these will be communicated to Members in due course.

AGM

Members are reminded that the Gold Circle Racing Club AGM has been scheduled for 5 December 2017 at 17:30.

Have Your Say

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7 comments on “Gold Circle Talks To Members

  1. Leon Smuts says:

    I am sure that owners must be very happy to see increased stakes in a climate where costs have risen alarmingly in relation to potential revenue. Gold Circle is facing a very difficult task to keep racing healthy under very trying circumstances that will get even tougher in future.
    Although rationilisation and restructuring is understandable it is very sad that large scale retrenchments have to happen against a back drop of a struggling economy battling to create and protect employment opportunities.
    It will no doubt buy some time but without substantially growing revenue will not stop the rot.
    It is high time that the income aspects of racing be given more meaningful consideration and management should look at ways to create future capacity through sustainable customer growth. This is a long standing racing problem that has no instant solution but where the outcome will very much depend on the foundations that are laid now.
    I urge management in all racing jurisdictions to make provision in the budget for new projects to grow a new racing interest from scratch.
    Give serious consideration to new ideas and products as there are many opportunities to make racing successful again.
    The future of the sport and the welfare of the industry requires racing solutions, not excuses and diversified subsidies.
    This industry requires a commitment and creative thinking to save the remaining stakeholders from further rounds of enforced economic agony.

  2. Don says:

    The return on investment to owners in horse racing has always been a top priority for Gold Circle as this forms the core of its business income generation. quoted from report above. I thought PUNTERS were the core income for racing….

  3. Michael Jacobs says:

    This gentleman Mr Smuts is always on about “new racing solutions”, new ways to “grow the customer base” and “new ideas and solutions” yet not once has he given one new product or solution! For years he has been writing about this, yet in all his correspondence I have yet to know exactly what his ideas are. He is very secretive, yet every few months he writes letters to the press about these “wonderful ideas” that he has. Can he give just one example of a new product that will bring in new customers?

    1. Leon Smuts says:

      Dear Mr Jacobs, you are right that I am not in the habit of publishing ideas or product information as past experience makes this a very unwise thing to do. Rather than dwelling on the reasons I can assure you that the sport of racing can be successfully marketed with the right product approach. Rod is correct in what he has mentioned below about one product called Scoreline and the multi-layer approach that it utilises. The PA analogy rather less so, as Scoreline will create many big winners on a regular basis, facilitate rapidly growing pools and ensure both entertainment and guaranteed winners daily.
      Entertainment is ensured because there is no elimination in a game which is also longer than any currently offered product as it consists of 8 legs daily. Pay outs are guaranteed by using a points scoring methodology that ensures that there will be winners on each occasion, no matter how difficult the results were to correctly predict. Keeping people interested in an entire game is a marketing necessity which is why non-elimination is so important where newcomers are concerned and whilst skill and interest is still being developed.
      You are welcome to e-mail me at [email protected] and I will explain Scoreline in detail. I am however busy with multiple new designs that I only discuss with parties that are serious enough to sign an NDA.
      Apologies for being vague but it doesn’t make what I am working on any less significant for racing,
      You are right about writing in vain which I will take to heart and probably refrain from doing in future as it is rather futile when dealing with people that don’t share the enthusiasm that some of us still have for racing.

      1. Michael Jacobs says:

        My point is not to criticise you, but you have been writing about this for years, yet there is no traction. Maybe you are not getting through to the operators and/or the punters because no-one actually knows what you are talking about? If you cannot get through to the operators maybe you can get through to the punters if you “sell” your idea less secrtetively and more openly. Get the “customers” to embrace your idea, remember the customer is always right. Get a bookmaking firm to trial your idea and if it takes off, maybe it can go national. But I know you have been writing about this for years yet nothing has ever come of it. Thanks

        1. Leon smuts says:

          Hi Mr Jacobs, no offense taken and happy to receive criticism anytime as it is healthy for debate and introspection. Drop me a PM to the e-mail address provided and I will fill you in with some interesting details and plans.

  4. Rod Mattheyse says:

    It’s called scoreline and the operators have shown no interest. It’s a pool product that has a few layers of returns. The methodology is that if you have more winners that would enhance the entertainment value and hence more people partaking. I think there is a real risk of boring people to death by getting 10% back for being a leg out of the PA or whatever. I suppose Leon is entitled to a return for his time and effort and IP, but then only when someone is willing to pay for it.

    It’s an uphill task getting a horse racing gambling product licensed without the operators on board.

    The league type product Gold Circle ran has also not worked out I don’t think.

    The spread of betting opportunities is enough. Work on the integrity of the product and the information related to the product. That should have us whingers settled for a while.

    Sectional timing should be an easy win. Much time and money has been spent. How hard can it be?

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