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Breeder – ‘Hope Is Not Enough’

Proactivity is required - now!

We are reaping the harvest of decades of customer abuse/neglect. Every problem in racing, ultimately, is the product of lower betting turnovers. So, we can’t look at cash flows from auction sales, and not at the same time reference the limited prize money on offer.

Oscar Foulkes writes in the Sporting Post Mailbag that considering the state of the economy, as well as the travel restrictions for international buyers, Sunday’s CTS auction could have been a lot worse.

Oscar and Veronica Foulkes (photo: hamishNIVENPhotography)

The writer and  his Mum Veronica (photo: hamishNIVENPhotography)

Anyone taking a quick look at the upper end of the market might say that everything is just fine. However, that doesn’t take into account the bottom two-thirds of the lots that were sold below production cost.

This has profound implications for professional breeders, and ultimately the supply of the racehorses that will fill the fields that are the basis of betting turnovers. Or carry the colours of their owners to glorious victories.

We know that actions are being taken to get the industry as a whole onto a better footing. In that respect, we should all be issuing a daily prayer of gratitude to MOD for buying the industry a little more time.

We horse people are an eternally optimistic bunch. Not only do we have our beloved horses around us, but we look forward to the races they contest. It gets us through the worst of times.

But hope alone is not enough. We also need to be proactive.

I’ve accepted that – as vendors – we can’t be sure of winning the auction lottery, because in many ways that’s what an auction is at a time when buyers are few.

What I can’t accept is the punitive costs of NOT selling a horse. Entry and acceptance fees, plus commission, quickly add up to a sizeable amount of money.

In the case of sales held at a TBA facility, there is also a roughly R5000 per horse transport cost. If the horse doesn’t sell, then it’s the same again to get it back to the farm.

Until we can be sure of achieving better outcomes at auctions (certainly in the format that has become the norm), we have to find a better way of doing this.

On the subject of “a better way”, how is it that we find it so difficult to attract new people to share our passion?

Think about it: the depth of our feeling for our horses and our sport takes us way beyond the furthest edges of rationality. It must be a very special kind of pursuit if we are this committed.

The ‘burning platform’ of Phumelela’s business rescue and Covid made it easy to reduce prize money. While that was a short-term fix, there must be other big changes we can make in this time of crisis that will make the industry more sustainable.

We must plant the seeds for the harvests of the future.

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24 comments on “Breeder – ‘Hope Is Not Enough’

  1. Preston says:

    This industry is in such a tough space and Covid only compounded the problem. Operational cost is increasing far more than inflation. Shrinking pools and stakes is actually creating a very sad environment where the risk of owning a horse far exceeds the rewards. The only solution is for MOD to issue at 10 yrs convertible bond which is convertible into shares in the company at a later stage with attractive coupon rates. Then take those proceeds and build a racetrack in Sandton which is far safer than Turfontein and is easily accessible to everyone via the Gautrain. This is just my opinion. Please add value instead of attacking my suggestion.

    1. Editor says:

      Thanks Preston Moodley

  2. Russell Parkinson says:

    We all here how the lower betting turnovers negatively affect stake money but it is almost like a vicious circle. I would love to put say a thousand rand win bet or a two thousand rand place bet on a horse on the Tote (to support the industry) but those Win and Place pools are so small that a sizeable bet on the Tote will materially alter the dividend so I think to myself …. why bother ?
    Maybe the ‘take-out’ or ‘the rake’ is just too high but should this take-out percentage be lowered then we will be left with stagnant stake money.
    Seems like the whole business model just isn’t sustainable.

  3. Leon Lotz says:

    Breeding costs are absurd.All you breeders out there voted for Mr Todd and company.The costs start right there, money waisted, the absurd fees to register a foal, the micro chip fees.Then the vetenarian fees sending a mare to stud,these vets easily charge R5000 to feel if a mare has ovulated or not,but remember how many mares he test per day.I do not think there are many jobs where you can earn a bag full of money as easy as that.None of you stallion owners worry about that, no the mare owner must pay. Then the sale, to cover all those costs you need a minimum floor price.As a farmer I do not get a minimum floor price on my wool, mohair,lambs or grain.The middle class or underfeeders like myself can not and will not being bullied into this pay, pay,pay it is your privilege to pay nonsense. I have said it many times ,racing does not listen but yet we are bleeding.
    Stand together as breeders and get the fees down , scrap the Todd fees,fight the vet fees(they need us to make a living).How is it possible that in times of financial distress that the NHRA keep on increasing foal registration fees, money goes to research of so called diseases, do we not know by now what most diseases are?Try and make this affordable for the underfeeders by looking at these costs and we will also be able to support the sale, but not for me if the floor price is in place.Phumelela carry on wit oversea racing instead of promoting SA breeding and racing.Tell me how many people enjoy watching racing all day long if you have to watch horses falling in jump races on the side.This upset me so much that I do not bet on SA races.Are you KINGS in control ever going to listen?

  4. Oscar Foulkes says:

    @Leon: Seasonal vet’s costs are in the vicinity of R6000 per foal. Given that the cost of producing a yearling is in the vicinity of R250k (depending upon service fee), the vets are not the demons. The biggest production costs are feed and labour. The cost of land (or at least the opportunity cost of capital tied up in land) should also be included, but farmers generally don’t.

    Microchipping is a necessity, as is the maintenance of the Stud Book. The R1635 per foal export levy is in the category of ‘grudge purchase’, but everyone’s views will change if it ever happens that we can export direct.

    I would be interested to know from bookmakers what the monetary value of a race is to them. In other words, each race gives them an opportunity to sell bets. What is that service worth to them?

    The situation we have at the moment is equivalent to someone being able to sell tickets to the theatre, but not having to pay for the cost of putting on the production.

  5. Kenny Masilela says:

    Well articulated Leon! Sadly nobody will listen.

  6. Gavin bechan says:

    Well said Leon.. It is only for the rich

  7. Leon Smuts says:

    Mr Foulkes, your pain and the pain of many others are truly felt in this article and comments section. Nothing would give me more joy than seeing new life being breathed into racing as there is so much to gain and so little to lose by doing this.

    The new operator appears to be open to new suggestions, ideas and offers and I have no doubt that new thinking will lead the way to some surprisingly good offers in future.

    Your analogy above about the theatre is very true but I would like to add to it. If just one show was shown year in year out the expected outcome would be a gradual reduction in the numbers it attracted. The same applies to racing and this is what we have seen happening during the many years of neglect and greed.

    The offering has to be expanded and renewed to beyond ownership and punting to make the sport relevant again. Ownership will have economic challenges and exclusivity until such time as the funding model is improved, especially in terms of participation expansion on the punting side. This will only happen with a better value proposition. (better products, service, lower take out, data transparency and the like).

    Finding new income streams (including multiple income formats) through growing markets, better offerings and a more inclusive approach (bookmakers and tote working together) throughout the industry is needed to encourage a unified sport and an economic revival.

    I see this happening in future but will require trust and transparency and a genuine effort to make racing a household name again. It used to be the peoples sport and can yet again acquire that mantle but not by just doing more of the same. Fresh ideas and a focused marketing strategy, backed up by a client centric approach will unlock wonderful opportunities from a very low base.

    The sky is truly the limit if done right.

  8. Steve Reid says:

    Dear Mr. Foulkes please allow me to correct an extremely important error in your piece. You state that “Every problem in racing, ultimately, is the product of lower betting turnovers.”, and cement your argument on this incorrect summation. The reality of the situation is that betting turnovers have never been better. I would advise that you spend a bit of time going through the records of the Gambling Boards – which are easily researched and available to everyone – and you will soon realise that gambling turnover has nothing to do with the problem we find ourselves in. The totalisator is the mechanism that funds racing prize money, and this has shown a steady decline for years. The question must therefore be asked why this decline continues to take place in a betting market that is as buoyant as what it is? The answer in a nutshell is the quality of the competition ie. the bookmakers. I could bore you with the history of how the open bet originated and how it is legally allowed today, but some research into this will give you the answers that you seek. As a young man I worked as a tote operator on the Transvaal tracks and can tell you that the tote and on-course bookies had a very good working relationship. I often got asked to cash up my float so that money could be lent to bookies should the results be going against them on the day. I believe that with proper statesmanship, it should have been possible to have bookies selling tote tickets and be paid a fair commission for doing so, and both forms of wagering could have their place in the sun so to say. I can assure you that the majority of owners would not support a call for bookmakers to stop trading on our racing.

    Corporate greed changed everything. When the decision was made by those upstanding Phumelela “gentlemen” to branch out and incorporate fixed odds betting in their turnover bouquet, everything changed. This coupled with the insensitive, arrogant, and extortionist charges bookmakers were required to pay to allow them to broadcast the racing pictures in their businesses, created a chasm that the new kids on the block will find difficult to remedy. Jooste and his henchmen were that arrogant that they believed that the operators were the only entities entitled to make money out of horse racing. I notice that in the comments section you are now skirting around the ” why dont bookmakers pay for betting on our product” issue. Morally maybe they should. Legally they have as much obligation as contributing to the Cypriot 3rd division football teams that they lay bets on. The reality is that your reasoning is flawed legally and there will be no bookmaker contribution under the current scenario.

    So whats the solution if there is one at all? The first step would be an apology for past behaviour towards the bookies. The second step would be an unequivocal undertaking to get out of all fixed odds business so that NEWCO does not compete against fixed odds layers. The clever third step would to sit around a table with bookies who offer the open bet and offer them a decent commission for selling your product. Not an insulting 4% of turnover or even double that to a very select few – give them the 8% and the rebate that is given by Phumelela to the International syndicates who appear to laundry money through our tote. Supply the bookies the tote machinery and staff to man your machines free of charge and make them partners not competitors. This is the only solution – and this only if bookmakers are prepared to forgive the sins of the past. If you land up earning 1% of bookie open bet turnover, its 1% more than you are earning presently, and this can be renegotiated to a more profitable margin for NEWCO at a later stage. Your prize money dilemma will be no more and just maybe this will increase appetite amongst buyers of race horses who are basically donors now. The bookies being made racings bogeyman is purely a smokescreen to divert attention from the real reason we find ourselves in the mess that we are in. Racing structures were, and still are, inhabited by incompetence, nepotism and narrow minded entitlement individuals. We will go nowhere with that lot still playing a role.

  9. Pieta. says:

    Goeie genade Steve….weer pragtige Brits…..????

    Stem 100% saam ????

  10. Leon Lotz says:

    Oscar
    If I read correct,your concern is that the person who used to buy horses from the middle and bottom end market is not there anymore.
    I am trying to explain to you why we are not there anymore.I understand the microchip,but why do we have to pay the amount we pay.Your local vet can do it for R100.Microchips cost R50.The industry must save money to lower production cost ,for the bottom feeders like myself to participate.I do not care if you want to export horses, breeders battle to sell them in SA,so who cares if you export them or not.I am a livestock farmer , agronimist and the worst trainer with a licence in SA.I am also breeding my own horses and did so for many years.Those horses won me 100 races.Put oats ,maize, lucern in a bag and call it sheep production feed and you will pay R230 for a 50 kg bag.Put the same ingredients in a bag and name it racehorse cubes.Now you pay R450 per bag. Feeding cost is fixed costs and become cheaper depending rainfall,availability of grazing ect.If you have the best mares and the best sires in the world they will always breed nice looking horses(the ones you want to sell on sales) and (edited*) looking ones that you will always battle to sell.You always need the bottom feeders on the sales.The cost of foal registrations,microchips,export bullshit,sale entry fees, transport costs are all out of hand.My advise is start there.Do not be like the rest of industry,at least listen and think what I am telling you.We buy the bad looking horses because they also win.Cut these costs and lower the floorprice and the bottom end of the market might return

  11. Bevin steele says:

    Interesting comments made here and something for both sides to give thought to.
    Much more interesting than the normal drivel about the elites penned by the manager of the most elite grocery store in South Africa and the reply’s made by the know it all from JHB.
    By the way Steve ,Rod(mmm) stuck us away again,the bloke suffers from a serious case of amnesia come the day his has a lively runner.

  12. Dylan says:

    Unfortunately for racing in SA, while everyone fell over the big cahoots of the past, they forgot the smaller man and there is the missing link. The middle market is gone!

    No point complaining about costs etc, no one forced anyone to breed or own a horse, but the least that should’ve been done in the past was look after the smaller owner breeder trainer punter, structure the game to keep people investing in the game everyone claims to love so much.

    I fear the way things are going, too much is being done by the last big wigs and not enough being done again to keep the smaller players involved and long term I see SA racing bumping it’s head against the same wall.

    I hope I’m wrong.

  13. shabir hoosen says:

    Your points are all valid. It is really a concern. Please consider what I am suggesting. Any Tom ‘ Dick or Harry is allowed to breed with whatever they want to. There is no standard set hence the market is being flooded by these poorly bred horses. This is firstly impacting on the breeding industry and secondly the poor horses who suffer. This impacts on now wannabe breeders who cannot sell their horses looking for deals with trainers . This impacts on the other properly run training facilities who lose horses to the cheap under cutting trainers. You then have bad horses who are underfed and not kept properly because of deals. This results in poor racing like I KZN. Then disgruntled owners.
    The authorities need to step in to set standards. If not we on a hiding to nothing and racing will never return to its former glory.

  14. Roderick Mattheyse says:

    to Mr Steele – i just remembered that i must respect my elders – especially when they are as old as the Queen!!! i have just registered for a course on how to get a bullet to answer their phone… After the debacle of the previous week where a plea for a nice strike was answered with a sorry, i was afraid of missing the wedding and going to the funeral.

    By the way chapter 1 of the study guide says – get the bullet to turn the ring tone volume up to maximum

  15. Ugen says:

    Oscar.
    As you being a prominent player in the industy along with others in the game.
    What is your response to horses being recycled by trainers within the industry with such poor form and ratings and being such old horses that in most cases should have retired a while back.
    Do we as owners have to feel pity that because a trainer has fallen on hard times that we must condone his actions.
    There is a recent facebook page of a trainer being sent horses with such poor form and ratings that he is now asking owners to take shares in those horses.
    Remember what we sow , so shall we reap.

    1. Editor says:

      Ugen Naidoo

  16. Oscar Foulkes says:

    Lots of ideas and views flowing … maybe we should have a webinar to explore them further.

    A few responses necessary:

    @Leon Lotz: our feeding regimen is really simple – horses get lucern ad lib (around R3500 per ton, delivered). The grain we use is soaked barley (R2995 per ton). Nothing more fancy than that, and the horses do well on it.

    @Shabir: Normandy Stud breeds Grade I winners at a rate that far surpasses the breed average. I trust we weren’t included in your reference to “poorly bred horses”. Even with this outperformance we struggle to achieve even the average sale price at auctions.

    @Steve Reid: we clearly need a proper conversation – this is too big a topic for the comments section. Fair enough, it’s the lack of Tote turnover that’s the problem. Yes, it’s shocking that bookmakers do a better job than the industry does, but given how dysfunctional Phumelela was/is, that is not a surprise. Whatever one’s views on the matter, it’s wrong (OK, morally/ethically so, rather than legally) that bookmakers do not pay their fair share of the cost of putting on the show.

    As Prof Brian Kantor so famously said in that seminar at Summerhill many years ago, one has to pay for the horses. Yes, it’s possible for bookmakers to lay bets on football without contributing to the cost. However, if we are going to have racing in South Africa, with a breeding industry that supports it, then we ALL need to operate the industry in a way that ensures the cash flows support the entire value chain. That is not negotiable.

  17. Frankie says:

    Frankie Zackey…make no mistake I got the money on Euphoric…Now this is where i have a serious question that needs to be answered by the stipes…why all of a sudden was is there a change of riding tactics on Theravada when my great great grandson knows that it can’t possible win with those instructions…shouldn’t the stipes have notify the public…sis sis sis…who is controlling racing ? I know who…It’s a absolute disgrace to the industry that this is allowed,, and if you don’t know any better,, just clock how Theravada drifted off the boards..

  18. Ugen naido says:

    Editor , u have not published my comments. If this is the case , it’s not the first time. It’s not for you to not publish my comments as I have not mentioned names or have I been rude . If you are not keen to publish my points , is it because you condone the behaviour of some in the industry. I do apologize if you are still to publish my comments.

    1. Editor says:

      Ugen you did not include your surname
      And your email addresses differ

  19. Oscar Foulkes says:

    @Ugen: It’s everyone’s choice whether they want to continue paying training fees for horses that have had many consecutive unplaced runs. Personally, I don’t see any point in it, and it can’t do any good for betting markets (especially when one of those pops up unexpectedly).

    We all want to breed/own/train/ride Grade I winners. Having said that, I get a great deal of satisfaction from horses we bred, like Nordic Rebel, Grape Vine, Philos and others, that show consistent form over many seasons.

  20. Shanil Singh says:

    Just saw the Online Computerform for Sundays Durbanville meeting. It might be new reading glasses required or the date on the cover appears to read 22 October 2021.

  21. Tjaart Venter says:

    Good day all. I agree with what Oscar is saying about letting go of horses that is not performing. Like with many other things in life , you as owner should decide if you are in this business for the passion as is the case with most people’s hobbies and/or interests or if you are actually trying to just turn a profit.
    If a horse’s performance doesn’t justify the training and related costs, then make a decision to retire the horse. As long as the racehorse is placed in a “Safe situation” as I have experienced in being associated with Oscar and Normandy Racing. The horse may excel at being a show jumping horse or on a farm that offers horseback riding etc.,just to mention a few.
    Now the owner doesn’t have that ongoing training costs for a “lost cause” at the track and can put his resources in looking for the next good thing.
    Everybody is happier, owner and horse.

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