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Stakes & Turnovers – More Questions, Than Questions!

An authoritarian and dictatorial attitude prevails

The long established view of stakes relating to turnover is a moot point.

James Goodman writes in the Sporting Post mailbag that the industry has argued that stakes are directly related to turnover and in pure business talk this seems imminently workable and is the only clear indicator of how to set the stakes for a racing centre.

All well and good and owners and trainers have accepted this rationale as a means for determining the stakes paid in the various regions. But is this actually happening?

A cursory glance will indicate that this is very far from the actual facts. This is because income on away meetings only concerns the totes in your region

In gathering the information on stakes and how they are paid I decided to firstly track the stakes paid on a race meeting and the turnovers generated at the race meeting concerned. I then did it for the next day’s racing at a different centre .Monday at Kimberley and Tuesday at Kenilworth.

I specifically used 2 days following each other to give an idea of how the turnovers fared. Obviously in order for this to be definitive one needs to take meetings on a daily basis and be given all the data.

Patrick Davis (pic: hamishNIVENPhotography)

I approached Patrick Davis (Racing Executive Phumelela) for some help. This was not forthcoming and in fact my queries were rebuffed and the questions asked about Kimberley were met with a distinct “I will not divulge and it’s none of your business” reply.

I mainly enquired about the expenses related to Kimberley but was given short shift.

Why Query the expenses you may ask? Well I have always had concerns about the actual costs in running Kimberley and how these costs, if real, can be cut. These were quoted as R10mil per annum. I am not sure if this includes the stakes paid?

So let’s look at a specific meeting and 13th January gives us some insight into the turnovers at Flamingo Park and then the 14thJanuary at Kenilworth

  • Flamingo vs Kenilworth exotics nett pools:

Bi Pot        R168k                                         R193k

Place acc   R432k                                       R472k

P6               R311k                                       R903k

Jackpot      R527k                                       R227k

Totals         R1,438,000                              R1,750,000

These are figures rounded to the nearest R1000. This show the exotics for the 2 meeting shows a turnover of R312 000 more for Kenilworth.

The glaring difference in these figures is that the P6 at Kenilworth was 3 times as big as the Kimberley P6.

I have no idea why as the jackpot at Kimberley is twice the size of the Kenilworth Jackpot. Maybe because of the results of the meeting leading up to the closing of those exotics?

Now let’s look at the gross stakes paid for both meetings.

Flamingo Park   R395k        Kenilworth R580k

I also took screenshots of later races at each meeting and these show that the Kimberley meeting has a marginally higher turnover than the Kenilworth meeting the next day.

These figures might have different forces but on the whole Kimberley is remarkably similar to Kenilworth in turnovers.

Unfortunately I am not able to access exact figures as Patrick Davis of Phumelela was unwilling to give me these!

Larry Wainstein of the Racing Association was very helpful and explained that they were given all the information they had by Phumelela, but no tote figures.

The most helpful was Michel Niarac of Gold circle.

He explained how the stakes pot was derived and what is most glaring in the problems Kimberley faces is that they get 3% of the turnovers on other race meetings – BUT the 3% is from the tote branches in their region.

Well they only have 3 outlets in the Northern Cape as opposed to hundreds of outlets in KZN and Gauteng.

So 6 or 7 times a week when racing is at any other course the money generated for Kimberley stakes comes from 3 tote outlets in the region.

Speaking to the trainers the tote in Kimberley is not in good shape and who knows what the other 2 totes are like?

If one reads the sign (see below) posted on the tote machine at the racecourse for the above meeting I realise that not much effort is put into Kimberley by the authorities that run this meeting.

This is the only terminal available to the on course public!

In effect the tote operator did not bring ANY change to the races and as a punter you had to have the exact amount of your bet. This cannot be conducive to enticing the public to have a bet on course.

This exercise would be so much more incisive if I was given exact figures and on all meetings.

If the Phumelela management was approachable and did not hide behind the ‘we are a public company and not at liberty to give specifics’ catch phrase, we would know the actual answers.

Unfortunately I am not the only concerned person who has been stonewalled by their authoritarian and dictatorial attitude!

This exercise gives food for thought.

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16 comments on “Stakes & Turnovers – More Questions, Than Questions!

  1. Ralph Fell. says:

    The abomination of the notice in the Tote stuck, doubtless with Prestik, is indicative of the malaise that has befallen the Tote for years. This utter disregard of punters’ welfare is an indictment on the cluekezs suits in the corridors of power. ‘They’ can swan around at prestige events with their mealy-mouthed claptrap whilst handing out trophies but to plan to kick butt in the squalid Totes is way below their presumed station in life. I am incensed by this dereliction of duty and would put all of them in stocks if I had my way. As for the untrained staff who are, with respect, clueless with whom does the Buck stop there. The notice in the Tote window should be prominently displayed in forthcoming racecards to highlight the mediocrity to which this noble sport has sunk.

  2. Graham HJ. says:

    Its an agenda.

  3. SILLY SIBON says:

    Mr Goodman may be on to something here. I am pretty sure that the rest of South Africa subsidises the Western Cape. Let me challenge Mr Davis to disprove this belief by laying the numbers open for inspection. What are you hiding?

  4. Steve Reid says:

    James you have come late to the party but its not surprising to see that Patrick Davis has remained constant in his dealings with questions around stakes.

    Insofar as the Cape racing goes, Phumelela sold Gauteng, PE and Northern Cape owners down the river by agreeing to give the Western Cape 26% of the stakes pot regardless of their contribution to the equation. Bob Bloomberg earned himself seven figures for doing the deal as the legal eagle for WC racing. He did a great job for himself and the Western Cape owners but in effect screwed over the rest of Phumelela owners in doing so. I am told that WC contribution to the stakes puts is way below the 20% mark. The difference between current performance and the 26% amounts to many millions and you have got to ask why this agreement needs to continue particularly seeing that the great fraudster is no longer on the scene. Jooste wanted the Western Cape badly and the deal was done at his insistence. Steinhoff head office moving to Stellenbosch from Gauteng was just another part of the puzzle.

    I hope Bob gave a kiss to the owners he affected because he surely didnt use any vaseline.

  5. SILLY SIBON says:

    How does the cost of operating two racecourses in the Western Cape compare to the Highveld? The Highveld has nearly double the race meetings and its recovery of cost is almost certainly far higher than the Cape. This together with the excessive stakes contribution implies the Cape has captured South African racing and is bleeding it dry. No wonder the numbers are not being disclosed. Rather than closing Flamingo Park the most prudent action would have been to close one of the two tracks in the Cape.

  6. Brian says:

    .There are laws which can force Mr Davids to supply the information.

    But, Mr Davids, why?

  7. Brendon says:

    The response from Davis / Phumelela management reaffirms their misunderstanding of what constitutes “commercially sensitive” information in general and “price sensitive” information in terms of the JSE Listing Rules. Disclosure of the requested information would neither prejudice nor compromise the business model of Phumelela in relation to Kimberley nor is it material to Phumelela’s financials.

    Phumelela management need to familiarise themselves with the JSE Listings Requirements, and in particular the continuing obligations, promote investor confidence in standards of disclosure and corporate governance.

    Did the Board of Directors, Executives and Management of Phumelela not publicly request the industry to pull together and work together? So how does the dismissive response provided by Phumelela to Mr. Goodman serve the company or the industry?

    Mr. Davis is reminded the that he (accompanied by Mr. Wainstein) voluntarily disclosed similar financial information (to what is being requested by Mr. Goodman) to the stakeholders in Kimberley a few months ago to justify the closure of Flamingo Park. So what’s changed?

  8. Basil says:

    I have read this article with great interest. Prima facie, the pools and stakes comparisons between Kimberley and Cape Town appear to be imbalanced but further information is required to make an informed and intelligent analysis. It is relevant to know at which centres/regions the pools were created, for eg was the major portion of the Kimberley pool created in the Gauteng area?
    One also needs to know where “telebets” were waged as totes are not the only source of pool creations. I have discussed these issues in previous contributions but never received any intelligent responses thereto due mainly ,I believe, to the sensitivity of these issues which I outline below:
    If I take a troupe of actors from Kimberley or Cape Town to perform in Gauteng I will pay for the transport, salaries and venue rental etc and return home with the remaining proceeds. We are entitled to this as we created the entertainment. Likewise if Kimberley and Cape Town have race meetings (paid for by local owners) they are entitled to the net proceeds after for eg Gauteng has deducted their costs incurred for collecting the pools in their region.
    Cape Town has major race meetings like the Queen’s Plate and Sunmet which attract large pool contributions in the Gauteng area. The contribution made by the WC will change dramatically if the current system is amended. Furthermore the situation is exacerbated by the Cape season being shortened resulting in more black type races being run on one particular day than before. This has a lowering affect on especially exotic bet pools over the racing season.
    We also need to analyse stakes in the various regions as stakes and black type races promote owners to move their horses to centres with the greatest attraction.Like many things in life the “chicken and egg” scenario is relevant to which answers/solutions are difficult to find. As a result small fields prevail in the W Cape.
    The imbalance in the “pools to stakes” question in the current system is basically that pools created by punters in a particular region benefit the owners in that region irrespective of which regions are creating the entertainment and/or betting medium.

  9. Tony says:

    The hat I wear here is a punter’s helmet. So I am only interested in two components of stake money: the one is I hope it’s enough to provide interesting racing fields, and the other is my concern about the take-out, the rake, the tax, the vig, that I am being charged.

    As a racing fan (a punter and your customer) I wonder if there is a disconnect between the opinionistas and the management of racing-for-profit?

    So Mr Goodman, all this bickering is very much like observers in a Supermarket debating the merits of the different departments (eg fish, meat, bakery, dairy, fruit&veg) based on how much they make.

    What you’all need to realise is that if you get rid of a “department”, your customer will just choose to leave your shop and another visit another shop who does keep their loss-leaders.

    All the loss of income is because racing has lost punters and growth in every aspect except take-out, expenses and taxes. All subsequent losses follow that. 99% of racings worries is seems to be stakes, while 1% is worrying about your customer. How is thinking about your customer last in every plan, a winner? First you grow your business and your customers, then you get the rewards.

  10. George aka Silly Sibon says:

    You have the horse pushing the cart Basil. Who cares where punters are located? This is not an issue of the locale of the money in play but rather the amount wagered at each region’s attraction/meeting. The question is being asked whether Cape Town attracts as much money, irrespective of the origin of this money, in relation to the stakes on offer in the region. Nice try at confusing a very simple issue. You seem to have gone back to 1920 where on course wagering was the lifeblood of the racecourse and the only means to fund stakes while presently there is no such restriction and stakes can be funded from multiple sources and multiple regions. The evidence appears to show that Cape Town is being overpaid for the attraction it stages. The wagering pools which are currently hidden will prove as much. The question that needs answering is whether the content Cape Town provides is worth the premium paid for it? Racing in Cape Town has become the Eskom of South African racing and the ongoing issues are slowly bleeding the rest of the country dry. It is time the rest of the country woke up to this. Just why Phumelela are protecting Cape Town at the expense of others is another question which needs answering.

  11. Basil says:

    George I find your remarks quite inadequate in answering the remarks made by James and my additions thereto. I suggest you read my contribution again , especially the last paragraph and advise (in detail) why punters in a region should facilitate higher stakes for owners in that same region while entertainment is provided in other regions. I believe that your sensitivity to these issues has probably some underlying reasons and I suggest that you refrain from making derogatory statements about the WC until proven correct. Hopefully based on my analysis James can acquire the figures required to establish the truth.

  12. Joe says:

    AS a JHB owner i was not aware of the Robert Bloomberg deal.
    Something must be done to rectify the situation.

  13. George says:

    Basil has been asleep for forty years and has awoken recently to a new world. I wonder if he realises how ridiculous his last sentence is in his original comment.

  14. Rod Mattheyse says:

    Tony – I am with you on this one.

    Unfortunately stakes are not enough to attract interesting racing. In 2 years there will not be enough horses for the low stakes – the arithmetic will work out a little like this 25% of Zilch is Zilch

  15. Graham HJ says:

    Nailed it…..both of you. The slowest car crash ever has picked up speed…..A whole industry is being abused from within and they hit two jugulars a while back, now we are going to see the fallout. Been calling it but here we are…..

  16. Vassie says:

    Hi just like to say please let Mr lafferty do what is good at training horses because he is definitely not a good presenter there is plenty young people looking for this job employ please drop the unemployment rate Paul i’s a bit of real old school white man proof is in is rising sun interview 2018 with jockey Bernard fayerdbe

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