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A Brave Face Is Not Enough

Punters & Owners - what can they expect?

I watched the National Yearling Sale from start to finish.

I have always enjoyed the spectacle offered by horse sales and this year was no different although the introduction of bidding on Zoom added a really interesting new dimension.

Garrick Bergh writes in the Sporting Post Mailbag that what does, however, really bother him is the totally overstated optimism that followed once one critically analyses the statistics and the comments (spin?) by the usual tame insiders.

  • 479 lots were ‘carded’.
  • 46 were unsold. This is one of the few statistics which actually did not deviate much from previous years.
  • 138 lots were withdrawn. This is a staggering statistic. I have seen little to no comment or meaningful analysis as to why so many lots were ‘no shows’.
  • 295 lots found new homes. This number was 39 lots below the previously recorded all time low dating back to 2007 (source: BSA).

But it is the ‘story of the money’ that reveals the harsh reality of the state that the industry currently finds itself in :

  • The aggregate of R87,065,000 is a drop of 37,4% from 2019 and a sobering reminder that back in the heady days of 2008 (when admittedly more yearlings were consigned and sold) the sale took in no less than R 201,050,000. Adjust these figures for inflation and the diminishing value of the rand and you quickly see that horse sales are actually a shockingly pale shadow of what they once were.
  • The above history needs to be measured against the reality that other sales companies have entered the market so the virtual monopoly enjoyed by BSA in years gone by has been eroded in the last decade. Nevertheless – as the generally accepted premier sale in South Africa – it makes for disturbing reading.
  • A glance through the ‘released by’ column of the sale results does nothing to instill confidence and hope going forward. Trainer representation as ‘purchasers’ has been drastically curtailed whilst private buyers – often referred to as the middle/lower market – have all but disappeared. A number of industry insiders continue to allude to this situation with an almost ‘who cares?’ attitude. They should! It won’t take too long before they struggle to fill fields through a sheer shortage of racing stock.
  • Lastly – probably the most unsettling of all the signs that I had sight of in the last week was this extract from a Phumelela letter dated 29.07.2020 regarding the road ahead. (The italics are mine) :

‘Several attractive proposals have been received from parties interested in acquiring some or all of the assets and/or businesses of the Company.

The business rescue practitioner and his team are busy evaluating the proposals and are in addition engaging with these proposers with a view to concluding agreements which will achieve the best outcomes for creditors and shareholders and in doing so successfully rescue the Company.

Readers can draw their own conclusions but may reflect on the following:

  1. Does this perhaps throw some light on why the team that was formed to guide us into the future has been remarkable by their silence in recent weeks. Have they been ‘paused’ pending the outcome of negotiations? Or are they actually devoid of ideas as to how to re-ignite the sport outside of protecting narrow interests?
  2. Nowhere has reference been made to the sports’ two most important players and what they might expect going forward :
  • The PUNTERS who continue to fund this largely broken mechanism; thereby keeping the flickering flame burning whilst ‘interested parties’ plan their assaults on the prey.
  • The OWNERS who also continue to nurture the raw material (the horse) for vastly reduced remuneration; thus ensuring that the activity is still actually functioning at all.

Why do I get the impression that we are about to witness a ‘change of jockey’ with absolutely no change in behaviour?

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9 comments on “A Brave Face Is Not Enough

  1. Nadine Backos says:

    What really gets me is that a horse I buy for about R300 000 will have to win 10 times before I even get my money back.Thats the reality of racing in South Africa at the moment🥺How can a small trainer like my dad carry on training😒

  2. Preston M says:

    Hi Nadine. In the investment world, risk and reward needs to be assessed even before you bid. 2 factors is at play in your circumstance namely diversification i.e buying 3 horses at R100 000 thereby increasing your probability of being successful and the second strategy is “hope”. Unfortunately hope is not a strategy. Please note there is no sarcasm attached to the above reply. This Is only one person opinion which I paid expensive school fees .

  3. imfourie says:

    True Nadine.
    If you work out the math its a no brainer for the owner or even the small trainer to think twice before getting involved or trying to make a profit at all.
    If you take the purchase price of the horse and the monthly training fee your horse almost needs to win more then once a month just to break even.
    We all know most of us as owners are more in it for the thrill and love for horses ,but in the past you were at least able to break even or make money on some of your horses.
    Its now almost impossible to do so.

    How will we be able to get new blood into the sport were you tell a owner if you invest R200 000.00 in a yearling and your horse wins 10 times . You would then sit with a loss of R200 000.00 that’s if you only run it for a year ,if you calculate pre training , training fees ,insurance etc . If you sit down and do the math you will be shocked to see that there is no way at the current stakes to make a profit at all.+
    We are all sticking around hoping Stakes will go up and very soon. As i am sure if this does not happen a lot of the smaller owners and trainers will disappear .
    My biggest worry on the sale was there were very view private buyers, and some of the trainers that top the buying market every year did not spend much this time around. Some not even pitched for the sale.

    And what is most worrying is the above statement that says The Road Ahead “Phumelela will do what is best for creditors and share holders. What about doing what is best for racing? Or the future of our sport?

  4. imfourie says:

    HI Preston , please note the outlay of a horse is the least of the cost. If you buy 3 its training fees for all 3 . So i think if you do the math you will understand the worry the smaller trainer and owner has about there future of S.A racing in its current state.

  5. Hamisj Stewart says:

    The solution to stakes problem a very simple one.Tax winnings on the open bet af 5%.The punter always on the receiving end.Alternately sell or give all the totes to hollywoodbets lock stock and barrel.If anyone knows how to run a business Owen Heffer can

  6. donald bradshaw says:

    Good solution Hamisj , here is another one , put out two tenders to own and operate the national totes in South Africa , the winners of the two tenders will have to operate in every province and both must have a vast footprint in all the major cities and on the race courses.

    Done correctly , not only will you have competition between the two which leads to quality service to horse racing customers but the remaining bookmakers will find their bottom lines severely impacted.

    The arithmetic of owning race horses with stakes as they are is a MAJOR problem that having the two totes in operation will go a long way in solving as the current bookmakers takeouts are draining the sport of much needed stake funding.

    Ask yourself one question ” if there were no bookmakers in South Africa would the current stakes problem be an issue ” ? ?

  7. Graham Hurlstone-Jones says:

    Bottom line everyone collects while the owner and punter pay in……Name me any other entity in the “industry” that pays into racing ? now give me the list of every entity that takes out……You can collect money all day long from taxes but who is it for ? ….think about what is going on here and has been for many many years….

  8. Joao Da Mata says:

    @Donad Bradshaw I too often wondered if there were no bookmaker’s in SA how things would look?

    I think they would look different for sure but perhaps not in the direction you think. If the open bet did not exist then instead of paying out R660m in dividends phumelela would have paid out billions.

    This issue with SA racing is not bookmakers its poor management of the product. Their product should be robust enough to withstand any competition even the open bet. BUT they could not.

    The open bet is obviously not good for racing but its a far less evil than the mismanagement.

  9. Hamisj Stewart says:

    The bookmaker is not the problem but the stakes money lost to the open bet.We pay tax on doubles and trebles so why not on a winning open bet.Costs bookmaker little

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