The sustainability and ultimate survival of horseracing in KwaZulu-Natal is at stake as members of the Gold Circle Racing Club will be called upon for their support of a funding proposal and change of structure at a Special General meeting on Tuesday 19 September, one labelled the most important in its 25 year history.
Gold Circle’s pressured trading environment and financial woes have been well documented over the past few months and Chairman Sadha Naidoo confirmed in a letter to members on Thursday 24 August 2023 that they are experiencing severe trading difficulties, with losses for the year ended 31 July 2023 expected to exceed R80m, while the projected losses for 2024 will in all likelihood exceed R100m.
These numbers include the damaging loss of the 3% Bookmakers Tax, which is subject to legal proceedings.
The Chairman writes that Gold Circle has depleted its cash resources and, but for the proposal on the table by Hollywoodbets and Greg Bortz, they would have to motivate and request for drawdowns from the ‘Members ring-fenced funds’ to be able to operate for the next financial year.
Based on current projections, those ring-fenced funds will be depleted by 31 December 2024.
In a nutshell, Hollywoodbets and Bortz have offered to rescue horseracing in the holiday province, with Bortz offering to lend Gold Circle R100m to allow the Company to operate until 31 July 2024.
Secondly, Hollywoodbets has offered a capital contribution of R400m to the Company in exchange for the transfer of the shares and loan accounts currently held by the Gold Circle Racing Club to Hollywood Sportsbook Holdings (Pty) Ltd (or a nominated wholly-owned subsidiary company).
Collectively, this represents a much-needed cash infusion of R500m. Should the Hollywoodbets acquisition ultimately be approved by the members and the appropriate regulatory bodies, Mr. Bortz intends to exercise his option to convert his loan into 20% of the equity in the company.
Upon exercise of this option by Mr Bortz, the ownership of the company will be 80% Hollywoodbets or its nominee, and 20% by Mr Bortz or his nominee.
Mr Naidoo outlines Hollywoodbets’ and Bortz’s rationale for making their capital contributions to Gold Circle.
This is to promote the principal objectives of:
- Stabilizing the horseracing industry
- Preserving the Company’s Champions Season as the premier racing season in the country,highlighted by Africa’s most prestigious race, the Hollywoodbets Durban July
- Boosting stakes in KZN
- Preserving and creating jobs in the horseracing industry and ancillary sectors including direct employees of the Company
- Investing in and improving the facilities at the racecourses operated by the Company
- Upgrading and enhancing the betting experience enjoyed by all the patrons of horseracing in KZN and around the country
- Attracting new local and international owners into KZN
- Endeavouring to create more attractive and sustainable prospects in the industry to revitalize and ensure the long-term future of horseracing in KZN and South Africa generally
The offer is subject to the approval of members and the various authorities.
The Chairman adds that the Gold Circle Board has considered the collective proposals and has unanimously approved them as it effectively guarantees the sustainability of horseracing in KZN.
Gold Circle on its own would not be able to sustain its operations for more than eighteen months, after which it would have no choice but to close its doors.
The Board’s decision was underpinned by the turn-around in the Western Cape where Greg Bortz and Hollywoodbets have made giant steps in enhancing not only the racing product but the livelihoods of all horseracing stakeholders in the Western Cape.
History shows that Gauteng racing operator Phumelela was placed under business rescue in 2020 and Kenilworth Racing faced bankruptcy in 2022.
Horseracing in both of these jurisdictions was rescued with cash injections by Mary Oppenheimer & Daughters, and Hollywoodbets, together with Greg Bortz, respectively.