Competition Vs Monopoly?

Sales shocker sees players squaring up

Adrian Todd

Adrian Todd

Adrian Todd the chief operating officer of Cape Thoroughbred Sales (CTS) has emphasised, in light of this week’s announcements that rocked the racing community, that his company was in no way intending to affect the working operations of the Thoroughbred Breeders Association (TBA).

On Tuesday, CTS announced their intention to hold a Ready To Run Sale in Johannesburg in November and a select yearling sale in April next year, both apparently in direct competition with sales held by the Thoroughbred Breeders Association (TBA) under the banner of BloodStock South Africa.

When contacted yesterday chairman of the TBA, Susan Rowett, said her phone call to the chairman of CTS, Chris van Niekerk, had not been returned and she had also not been contacted by Todd.

As a result she is currently viewing the actions of the latter company as aggressive and unethical. However, she is hoping that a meeting will be forthcoming. When contacted, Todd said that no discussions had taken place “yet”, but added that CTS would also be willing to meet.

Susan Rowett

Susan Rowett

The above sentiments were voiced in the wake of Tuesday’s news that Mick Goss had given notice to the TBA that his Summerhill Stud was withdrawing their draft from BloodStock South Africa’s Emperors Palace Ready To Run Sale 2014, while on the same day CTS announced that they would be holding a Ready To Run Sale in Johannesburg to co-incide with the big Turffontein racemeeting on November 1, the same racemeeting that the TBA’s sale co-incides with.

CTS also announced that they would be holding a select yearling sale in Johannesburg next April, the same month in which the TBA’s National Yearling Sale is always held.

Todd said, “We were approached by several vendors who requested this move and we are definitely not trying to kill the TBA, we are merely catering for our clients. It must be remembered that most of our clients are members of the TBA.”

Todd said that the exact dates, times and venues for the respective November and April sales were still being decided upon.

In Australia the Magic Millions Ready To Run Sale on the Gold Coast and the Inglis one in Sydney are held a week apart, giving buyers the opportunity to attend both.

However, Todd said that CTS’s November Ready To Run Sale would be held in the same city as the TBA’s, allowing buyers to drive between venues beforehand and view horses. He implied that buyers would also be able to attend both auctions by adding, “There is no way that if the one auction is starting at 9 am that we would start ours at the same time. We always make every feasible effort to create the best possible platform for both buyers and vendors.”

Todd pointed out that in the USA the Keeneland Select July Yearling Sale and the Fasig-Tipton July Yearling Sale are usually held every year on the same week in Lexington Kentucky (although not on the same day).

Mick Goss

Summerhill supremo Mick Goss gives reason for his decision

The original TBA Emperor’s Palace Ready To Run Sale was always going to be conducted over two days, the Friday and the Sunday, and exactly the same horses will be sold, except that they will now be split between two sales. A meeting between the TBA and CTS could well result in the one sale being held on the Friday and the other on the Sunday. Mick Goss emphasised that this scheduling was what he wished for and believed it would happen.

One of South Africa’s most internationally experienced bloodstock agents, Andy Wiliams, said, “A monopoly is bad but competition is good. The TBA has been going for decades, so it is up to breeders to decide whether to continue supporting them or to support a new company, there is no problem with that.”

However, he added that in Australia the two chief companies, Magic Millions and Inglis, competed but neither would ever institute a new sale at the same time as an existing one. He himself will shortly be attending both of the chief Australian Ready To Run Sales and in the same way implied that it would be in the best interests of buyers to be able to attend both Johannesburg ones. He added, “Otherwise buyers would have to compare catalogues and decide which one to attend.”

Mick Goss confirmed that his Ready To Run draft would now be on the CTS November Sale and that there were a number of reasons for the decision.

In his opinion the numbers on the TBA’s Emperor’s Palace Ready To Run sale, especially after last year’s increase to 250 lots, should have been limited, due to the fact that the expensive sales race attached to it only has 16 slots. Therefore, the more the lots on the catalogue the less attractive the sale becomes to the buyer. He said that a figure of 200 for the intended R4 million Emperor’s Palace Ready To Run sale race compared favourably to the CTS’s US$1 Million Sales race, which was eligible to 500 or 600 horses.

Mick Goss

Mick Goss has his say

He added that a buyer’s levy of R10,000, that would contribute to the sales race stake, also corresponded favourably to the CTS’s levy. Goss was adamant that it had been agreed between himself, the TBA and the sponsor that the catalogue this year would be limited to 200 lots and that the levy would increase from R7,500 to R10,000. He does not know whether the form sent out to breeders stating that there would in fact still be 250 lots was due to a miscommunication in the whole process, but objected strongly when his immediate reaction was met with a response that the numbers and levy could only be discussed again after this year’s Ready To Run Sale and that any consequent change would only be effective from next year. He added that it was ironic that, due to Summerhill’s subsequent withdrawal, that the number of lots, below 200, and the buyer’s levy amount, which has consequently been increased to R10,000, is now at his recommended levels.

Goss said that his recommendations should be seen in the light of Summerhill having been the innovative force behind South Africa’s Ready To Run and Sales Race institution. He also pointed out that as his farm depended entirely on the thoroughbred business, the CTS’s guarantee of payment to vendors was also an attractive feature of their package. He concluded by saying that Summerhill’s allegiance to the National Yearling Sale had not changed.

Rowett responded by saying that Summerhill horses now only constituted 55% of the lots on the Ready To Run sale and that the interests of all of the stakeholders concerned had to be taken into account before decisions were made. She was not surprised by the attraction of CTS’s guaranteed payment to vendors, but added that in an industry that virtually had a culture of non-payment, the costs to the company can quickly compound.

Some view having two sales companies in operation in South Africa as detrimental, because it dilutes the amounts that can be paid back to the industry.

For example, the TBA used to contribute to the funding of the now disbanded Racing South Africa and will now contribute to a new equine health fund instead. A foal levy on breeders contributes R1,2 million of the R1,9 million amount contributed and the TBA makes up the shortfall from profits.

However, Todd said that the CTS contributes in the same way indirectly by improving the bloodstock platform. For example, the ‘guaranteed payment to vendors’ feature doesn’t come without a cost and CTS also spent substantial amounts every year to attract overseas buyers to their sales.

There was at one stage talk of the two companies amalgamating, but this did not pan out.

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