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Cape Stakes – Bloomberg Explains

'Phumelela does not control Kenilworth Racing'

Cape racing didn’t escape the recent stakes rationalisation but have shown plenty of independence and initiative in structuring the sums to suit local needs.

It’s been a testing first eleven months in the hot seat for Kenilworth Racing Chairman Robert Bloomberg.

When it comes to social media analogies of hospital passes and sinking ships, the specialist horseracing Attorney has been on the receiving end of some pearlers.

Kenilworth Racing Chairman Robert Bloomberg has made a plea for the industry to end parochialism and provincialism

But in the interests of stakeholder information and clarity, he was willing to chat to the Sporting Post and explain the KR Board’s approach to the recent curved ball of stakes cuts.

He explained that a stakes workshop was held in the Western Cape (“WC”) recently, where the implications and basis of the reduction in stakes was discussed at length.

We asked if he felt that things could have been handled by Phumelela or the RA in a different way.

“The rationale behind the stake’s reduction has already been dealt with by Phumelela in their press releases. I don’t wish to become embroiled in controversy as to whether Phumelela and/or the RA should have prevented the stakes reduction from being implemented. It’s pointless, as it is what it is. At the end of the day you’re probably damned if you do and damned if you don’t,” he said.

Patrick Davis (pic: hamishNIVENPhotography)

Bloomberg went on to explain that Patrick Davis had the ‘thankless task’ of adjusting stakes across the board in Phumelela managed regions.

He feels that, under the circumstances, the Phumelela Racing Executive had done ‘a fine job’.

The unique circumstances of the Western Cape were always going to require some specific tweaking for local conditions and demographics.

We asked him to explain the thinking behind the variation of the other model.

“It was agreed that the WC representatives would be tasked with ‘massaging’ the stakes pot as would be most beneficial to our requirements, bar the general consensus reached that all Gr1 races retain a stake of a minimum of R1 million, and that all Gr2 and Gr3 3 events, with the exception of a few races such as the Gauteng Guineas, be reduced by R50k. In this regard, a WC committee comprising Jonathan Snaith, Wehann Smith, Kevin Sommerville and myself, and including Patrick (Davis), linked up to debate this. We made a few suggested changes to Patrick’s draft which included the introduction in the WC of a handful of maiden handicaps in order to test the appetite of the trainers, and that he then amended accordingly.”

Moonlight Gambler

The KR Chairman said that “the WC committee decided unanimously that they would not introduce a 1% stakes apportionment, as introduced elsewhere, for finishing positions 6 through 10, primarily for the following reasons:

  1. The WC, following the exit of Markus Jooste, has seen a decline of around 30% in our horse population. By virtue hereof, we will not always be able to have 10 runners in a race. The upshot of this, is that the “lost” 1%’s all go into the national stakes pot. As the WC only receives 26% hereof, this is essence means that for each 1% “forfeited” we would lose 74% thereof. Add that up over the course of the season and we would lose significant stakes in the region;
  2. 35% of the WC ownership base is international and we don’t believe that they would be remotely interested in receiving paltry amounts for finishing unplaced. Whilst the 62.5% paid to 1st place is one of the highest in the world, we were not averse to adjusting this 1st stake slightly to the benefit of the current 20% 2nd stake as the handicappers are often penalizing the runner-up in close proximity to the winner, yet the 2nd horse receives less than 1/3rd of the prize money. However, this has not been implemented and the status quo remains;
  3. The WC only has 24 trainers and is dominated by 6 of those trainers to the degree that between them they train around 70% of the horses. Accordingly, the “protection” of the “minority” would not work here as it undoubtedly would in Gauteng”;

Given the reaction to the cut of the Sun Met stake by 40%, we asked why reduce the prestigious race stake to the degree that it has?

The 2019 Sun Met winner Rainbow Bridge (Pic – Chase Liebenberg)

“Firstly, it must be understood that with the stakes reduction, the WC was declining from R81 to R72 million, and in making the necessary adjustments, we thus had to ‘find’ R9 million to ‘shed.’ As the sponsors of the Sun Met had substantially reduced our sponsorship implemented as of the 2019 Met,  we really had no alternative but to now substantially follow suit. I will point out though that this reduction is still significantly less percentage wise than that affected by the sponsors. Further, if we hadn’t taken R2 million ‘off the top’ here, this would have resulted in a complete decimation of the stakes in our minor races,” he added.

Bloomberg suggested emphatically that the Met is SA’s premier open WFA race run over 2000m and would still attract the best horses.

Sun Met

He further stated that the race is still one of the richest races in the country and has a stake R1 million more than the Summer Cup, arguably Gauteng’s premier race notwithstanding the Champions Challenge which has also been reduced from R4 million to R3 million.

He was confident that the Cape racing operator had cut their cloth as best they could in the best interests of their stakeholders and he said that he hoped this would assist the KR board in refuting unsubstantiated contentions in various quarters that Kenilworth Racing is ‘under the control’ of Phumelela.

“To make it perfectly clear, Phumelela has a Management Agreement with KR. It does not control KR. It reports directly to the Board of KR which makes the operational decisions of the company. Management by its very definition involves Phumelela taking decisions in the day-today running of the business and yes, there have been occasions in the past, by their own admission, where they have let KR down.”

Bloomberg said that he hoped that all of our leading trainers and top horses competed in the forthcoming Cape Summer Season and that everyone was welcome.

In finality, he called on the entire industry to pull together and made a plea for “parochialism and provincialism to cease as we cannot survive in these trying times without one another.”

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27 comments on “Cape Stakes – Bloomberg Explains

  1. Chris Swart says:

    Herein lies the benefit of independence and the benefits to owners represented in the region.
    What will work best for their base is best and they’ve always targeted a niche overseas market

    I’m happy there is foresight and clarity in these decisions

    When one considers the exodus of sponsorship and that tap drying up with excess holes in that tub, allowing the KR board to negotiate directly with sponsors would probably change the stakes drastically too


    “Brendon” your response is unfortunately fraught with inaccuracies and incorrect innuendos. If you wish to seek clarity, you have an open invitation to contact me directly and I will address all your concerns. Further, as you appear to believe that you have all the answers and information at your disposal why don’t you step up to the plate and help make a difference? Kind regards

  3. Brendon says:

    @ Mr. Bloomberg, you are welcome to to point out the “inaccuracies and incorrect innuendos”. I have no problem with you addressing my concerns on this platform or if you prefer, I could address further communications to you directly.

    Unfortunately, management and directors have the tendency to go quiet and often run a mile away when I pose difficult questions to them, your operator being no exception. Until the current leadership in the industry steps down, I have no desire to work alongside any of the current leadership.

    My independent views on the industry and its captains are informed by what is published by the industry and their captains. I have no doubt in my abilities or my understanding of the convenient arrangements that bind the parties together at the expense of the industry.

    You will not require more than one meeting with me to either understand the predicament that racing finds itself in, or snap out of being in denial.

    Have you considered showing your true support for the industry by stepping down. Ask yourself, what is it that you can achieve as the chairman of KR, given the fact that you are on the receiving end of instructions from PGL’s leadership that provide you with the lifeline of liquidity. The way I see it, you are unfortunately not in a position to direct your Board nor the management of KR. Phumelela provides the cheque and the road map depicting the strategic direction (instruction) that you as KR, have no choice but to follow. I remain convinced that Davis is the conductor at KR, and not the Board of Directors of KR. Tell me otherwise.

    1. Editor says:

      Lets set up that meeting

  4. BT says:

    What I have taken out of this article is that the directors of KR were left with no choice and their hands were tied. Not even Houdini could have escaped.

    PGL does not own any shares in KR. It is the Racing Trust that does. The RA appoints 5 of the 7 trustees of the Racing Trust. All said and done, the RA is in indirect control of the shares in KR. The RA directly owns approximately 5000 000 shares in PGL and the Racing Trust directly owns about 25% of the shares in PGL. As PGL manages racing for KR, the latter really has no say.

    Just my thoughts.

  5. Steve Reid says:

    Perhaps Mr Bloomberg would be so kind as to explain how a region that punches well below its weight negotiated a set-in-stone allocation of 26% of the Phumelela stakes pot?

    @Brendon take Bob up on his offer, it wont take long before you get blocked.

  6. Michael Jackson says:

    Kenilworth Racing cannot even negotiate a stand-alone meeting for the Met and Queens Plate race days (their “partner” Phumelela taces at Turffontein regardless). So they are clearly not in control of racing in Cape Town!

    The disastrous 2019 Sun Met day was another example of how KR was sidelined by Phumelela and Sun International on the marketing and hospitality front.

    Kenilworth races about 5 or 6 times a month yet Gauteng races almost thrice a week.

    Now tell me that Kenilworth racing is controlling their own destiny. LOL

  7. Brendon says:

    @ Mr. Bloomberg,

    My invitation is not to you in your private capacity. You are welcome with your entire Board of Directors and Mr. Davis to the meeting. Also come through with your Board packs and minutes. I will arrange for a and advocate (who will sign a confidentiality agreement) to be the chairperson for the meeting who will chair the meeting in the interest of us working together (me stepping up to the plate) for the advancement of the industry.

    Give me 2 dates and time slots and I will coordinate.

  8. Brett Maselle says:

    It is a matter of record that Robert Bloomberg and I do not see eye to eye on many issues. Despite this, I must bite the bullet and give him some praise for trying to be transparent and explain how KR found itself in this horrendous position. PHUM and the RA should take a leaf out of KR’s book.

    A personal word to Robert Bloomberg: Continue to be transparent and you will win the hearts and mind of those in horse racing.

  9. Pops says:

    Case No:36/AM/Apr12 In Part this is what is stated
    This merger involves the sale in two transactions of the Western Province horse racing assets of a company called Gold Circle to a newly formed shelf company known as Kenilworth Racing.

    The two transactions considered are: first a demerger of the Western Cape assets and operations of Gold Circle Pty (Ltd) (“Gold Circle”) from Gold Circle to Viacor Trade 72 trading as Kenilworth Racing Pty (Ltd) (“Kenilworth Racing”); and, secondly, a sale of the shares of Kenilworth Racing to the Thoroughbred Horseracing Trust

    Post merger Kenilworth will be owned by a Trust known as the Thoroughbred Horseracing Trust which is also a 35.26% shareholder of Phumelela. Kenilworth will, if the merger is approved enter into a management agreement with Phumelela to manage its business.

    A key question in this transaction is whether Phumelela will post merger control the Western Province assets and thus whether the merger is in reality one between Phumelela and Kenilworth.

    The Commission’s case is that Phumelela, will post merger, be able to control the Kenilworth business. Its ability to control derives from several sources; for this the Commission relies on the management agreement that has already been concluded and is conditional on the approval of the merger, several industry agreements to which Kenilworth will post merger become party to and which regulate its most crucial industry relationships and finally the fact that the Trust is a common shareholder. Thus if the transaction is to be properly analysed, it must be considered as one between Phumelela as an acquiring party and Kenilworth as target despite the fact that Phumelela has not been notified as party to the merger. The Commission argued that if Phumelela acquired de facto control over Kenilworth and hence the Western Cape racing industry, then given that it already operates race tracks in four provinces and controls tote licenses in seven, coupled with the fact that it has industry agreements with Gold Circle who post merger will control the same in the only other province, this will lead to a substantial lessening or prevention of competition in the horse racing operating and betting markets.

    The merging parties offered an array of alternative defences to this theory of harm. In the first place, they contended that even if Phumelela is deemed to control Kenilworth, the merger does not lead to an increase in concentration as the race tracks they administer form discrete geographic markets and thus compete neither for punters nor horse owners, whilst in the betting market, even at its narrowest construction, the relevant products constitute complements, not substitutes. Accordingly the merger, even if Phumelela is deemed to be in control of the target, would not lessen or prevent competition. However their first contention is that Phumelela is a manager and not a controller of the Kenilworth business.

    If these two defences cannot pass scrutiny they contend that Kenilworth is a failing firm with no other realistic prospects for survival than this merger. Finally if they fail to pass muster on competition and failing firm grounds, they argue that the merger can be justified on public interest grounds; the argument here is that if the Western Cape exits the horse racing industry, this will adversely affect the wider economy of the region whilst also, nationally impacting on the horse racing industry as a whole

    The Commission recommended that the merger be prohibited. During argument at the end of the hearing the Commission suggested for the first time that it might support approval of the merger if conditions could be proposed that ensured that Kenilworth was not subject to the control of Phumelela, but rather had a “truly independent” board.22 The merging parties undertook to consider proposing such conditions. Subsequent to us hearing final argument the merging parties forwarded their proposals

    If the Commission is correct and that Phumelela through the merger will be able to control Kenilworth then the tendered conditions do little to alleviate that concern. They are largely window dressing and do nothing to inhibit Phumelela’s ability to assert its influence over Kenilworth. On this issue we agree with the Commission.

  10. Steve Reid says:

    Now we getting warmer. That commission was eye-opening in some regards and Bob was a major player. My question remains unanswered however, how did KR get a larger part of the pot and maybe more importantly – who were the main players behind this?

    By allocating KR a larger slice of the pie, other regions and their owners got screwed over.

  11. Steve Reid says:

    The rationale for paying 1% to the 6th to 10th place, as explained by MdK, was to try generate bigger fields. Isn’t it ironic that the only region in the country that struggles to put together a card with numbers that meet the operators requirements, has rejected this “initiative”?

    Isn’t it time for the powers that be to make some some tough decisions and implement a season of racing in the Cape that will accommodate all their feature races as well as those oh so important international visitors? Do it on a scale similar to the American model where many racecourses are only used to host festivals of racing during their “season” and stand fallow for the remainder of the year. Cape racing in its current form does not deserve to be sponsored ad infinitum by the regions that fill fields, year in and year out.

    If the Cape don’t like it let them go out on their own. I am told that there are many of the bigger owners based down there interested in saving SA racing when Phumelela hits the wall. Charity begins at home, let’s get the Cape albatross off SA racings neck. A good start for Bob and the boys would be to get refunds on those Durbanville zoning broken promises.

  12. MGram says:

    Brilliant. Spot on Steve

  13. pomegranate man says:

    I have a question that no-one seems to be asking. The question is easy and loaded at the same time.

    If Phumelela does not control Kenilworth Racing, why did Kenilworth Racing agree to stakes being reduced?

  14. Pops says:

    Somewhere in that management/control contract between Phumelela and Kenilworth Racing sits a note that states should Kenilworth Racing show a profit,Phumelela has 50% dibs on the profits.

  15. Butch says:

    When Mr. Currie and you were Co-Chairman of KR and Mr. Currie was also a director of Phumelela, were you aware of the content of Case No:36/AM/Apr12 and specifically the control and independence issues noted therein?

  16. Louis Goosen says:

    Pops, RB answered that clearly – the overall, total stakes pot for PGL Regions, of which Cape Racing gets a percentage, was reduced.

    This means that the WC stakes pot is smaller. KR then put forward suggestions on how to spread the reduced amount, for the best result, for their Region. Patrick Davis did the spread for them to approve.

  17. Justinian says:

    The meat and potatoes of this reduction in stakes is that OWNERS end up paying for the Asian Racing Conference in 2020. The hypocrisy is palpable.

  18. jae says:

    well done brendon you go boy

  19. Rod Mattheyse says:

    Brendon, I like reading all your posts. But what I am really waiting for is how are all these textbook and theoretical contraventions of laws and best practices going to turn into action? What’s going to happen when you are continually ignored, as is currently taking place? Are you going to continue to lecture , fail the homework, but the degrees are still going to be conferred?

  20. Leon Smuts says:

    You should know Rod, all comments are nearly always ignored know matter how truthful and relevant. At the same time what could anyone involved or responsible answer without only getting abused and tormented for trying to stand up for the obvious flaws. All we can do is highlight what is wrong and hope that it eats at the conscience of those in a position to directly make a difference. There are still good people out there that can make a difference in time to come but right now speaking up will only set a target on their backs. Tough area, this between a rock and a hard place.

  21. J J Cale says:

    Brendon and Steve KR is racing’s Eskom ,you better believe it .and trying to fob it off or keep throwing money at it is the same problem our esteemed government is facing.KR does have some very big owners ,some very good horses and even some very good trainers and all need to be placated somehow,However I’m not overly concerned about them as they certainly know how to look after themselves,
    According to Mr Bloomberg I’m a part of the that race,.for the 30% that’s left after the big trainers and owners have eaten.My only chance of owning a graded stakes winner will be by the grace of GOD and not by the weight of money I can throw at the game.The only way for me to continue participating is to get more stake money if I happen per chance to win a lowly handicap (90 mr at the present moment ) this has now been cut even more.It is my contention that the graded races should be cut again by some 20/30% and more should be paid for winning maidens and mr handicaps bearing in my mind I’m still only in line for the 30%
    that’s over .The likely owners of the top graded races in most cases are more concerned with the residual value of the win ,than the stake money ( nice to get but an aside) where the other 30% need to keep only 5 steps behind.
    Writing this I am reminded that racing is the sport of kings and not for the likes of the working class but I’m all in so have to make the best of lt.
    So after all this drivel all I’m after is a better spread of stakes so us “others get a chance to eat “ in the true African tradition where average and below is also rewarded

  22. Pops says:

    Stratecon Report 2015/16
    Policy options/Financial Viability of the Horse racing Sector in the Western Cape
    Makes for interesting reading especially the section–Phumelela Requests
    And why policy changes that will bring profits to Kenilworth Racing would not be right as this would be helping a Listed Company(Phumelela) to profit because of the 50/50 profit contract.

  23. Rod Mattheyse says:

    JJ …. 700 before Jock Groom and Trainer, isn’t going to pay the charges for a boost to Croom

  24. Kenny says:

    Is it perhaps not a case of too many race tracks in SA? Hong Kong, Singapore and Mauritius all have a single race track and they are thriving. Perhaps it’s time to let go of the rest and only keep Turffontein, Kenilworth and Greyville.

  25. Cecil Pienaar says:

    Maybe Kenny

    But we’re OK here in Gold Circle country
    Hollywoodbets Greyville and Scottsville 👌

    What needs to be let go – Not Assets, but Snr Management….

  26. Steve Reid says:

    “Let me issue and control a nation’s money and I care not who writes the laws”.
    Mayer Amschel Rothschild

    Change the word nation to Kenilworth Racing and the author to Phumelela/MJ CvN R duP and you have the current situated summed up in a sentence.

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