|
|
|
First winner for Trilogy Syndicate
Tuesday 03-Apr-07 12:52 PM
If we could package adrenalin and sell it we would have made a fortune from the supporters of Seat of Power, a recent winner at Newmarket. The atmosphere amongst the Trilogy Syndicate members was electric. Many of the members are first time owners who have for years had a passion for racing but have never had the privilege of owning a horse.
...More>>
|
Plush new-look facility for members at Turffontein
Wednesday 28-Feb-07 05:25 PM
The Elevation Room, the RA members' facility at Turffontein, is to be totally renovated in a joint exercise between the RA and Phumelela.
...More>>
|
|
|
|
 |
|
 |
|
Welcome to the website of the Racing Association.
The main aim of the Racing Association is to support and protect the interests of the sport of horseracing and in particular, the interests of racehorse owners to ensure that every aspect of the racing industry realises its greatest potential.
We are always striving to provide our members with what they want, so please drop us an e-mail if you have any suggestions or queries
____
A MESSAGE FROM THE DIRECTORS TO THE MEMBERS OF THE RACING ASSOCIATION On 16 March 2007 a requisition was received by the Racing Association ("the Association" or "the RA") in terms of section 181 of the Companies Act. In essence, a group of members are calling thereunder for a meeting at which they intend to vote on the removal of the entire Board ("the Board").
The following persons presently serve on the Board of the Association (appointment dates reflected in brackets):
Chairman: Bruce Gardner (appointed 19 November 2001)
Directors: Michael de Broglio (8 December 2003); Alec Hogg (29 November 2004); Markus Jooste (18 November 2002); Charles Laird (19 November 2001); Michael Leaf (30 November 2004) - co-opted; Peter Miller (8 December 2003) - Free State/Northern Cape Chapter Representative; Peter Naidoo (29 November 2006); Ashley Parker (29 November 2005) - Eastern Cape Chapter Representative; Chris van Niekerk (18 November 2002)
Some members of the Board have interacted privately with the personalities behind the requisition to establish whether the matter could be addressed differently. Although some progress was made, the view of these members seems to be that they have started something which they would like to see run to its logical conclusion - i.e. a vote by the RA's 1 800 members on whether the current Board is serving their interests.
Although they did not initiate it, the Board welcomes this process as it provides an opportunity to further communicate with members about the progress that has been made, particularly in the past three years. Racing is an emotive sport, and unfortunately yesterday's rumour often becomes tomorrow's "fact".
The Board has been aware of some misunderstanding among members for some time, but despite its best efforts, has found it difficult to address these through the communication channels available to it. Sadly, the Annual General Meetings where the Board's strategy has been comprehensively articulated, are generally poorly attended. From the perceptions which exist among the unhappy members, it seems that the readership of the regular RA newsletter, industry issues in the Racing Express and the Association's Annual Report, is not high.
The Board has not been formally presented with the grievances of the concerned members seeking its removal, but in the Sporting Post of Friday, 16th - Sunday 18th March 2007 four issue were outlined, specifically -
The closure of the Race Tracks - Gosforth Park, Bloemfontein and Newmarket.
The current stakes we race for, in comparison to the costs incurred in owning a race horse.
The concern that the current Racing Association is not taking decisions in the best interest of the Owners.
Decisions are being made to ensure that the Phumelela Share Price increases and not to improve or change the betterment of Racing in South Africa.
The purpose hereof is to apply the relevant facts to each of these issues. The RA directors are confident that once members are fully appraised of these, they will vote against the proposal which will be tabled at the forthcoming special general meeting.
Background and Chronology of Material Events After the introduction of casinos into metropolitan areas of South Africa, the once monopolistic horse racing industry fell into considerable distress. A tax rate of 13% on all bets put the industry at a massive competitive disadvantage to its new competitors, whose tax rate was a fraction of this. As a result, by the mid 1990s, three of the four Racing Clubs on the Highveld were in dire financial straits and technically insolvent. Racing appeared to be in terminal decline and in real danger of dying.
In September 1996 after prolonged negotiations between the industry and the newly elected authorities, representatives of Gauteng's Racing Industry entered into a Memorandum of Understanding ("the MOU") with the Provincial Government. Central to the agreement was a "rescue package" where the racing betting tax would be reduced to 5% of turnover and on an equitable basis with other forms of gambling. In return, the authorities required that the industry be corporatised, a significant Black Empowerment shareholding guaranteed, and the new company (Phumelela) be listed on the Johannesburg Stock Exchange.
The Association was established at this time to safeguard the interests of racehorse owners in Gauteng. The Racing Trust, which now owns 38% of the shares in Phumelela, was also established at this time.
On 22 September 1997 Phumelela Gaming and Leisure Limited was incorporated in terms of the MOU. It was the vehicle into which was injected all assets of the Gauteng Clubs, the Totalizator Agency Board and the Highveld Racing Authority.
On 22 January 1998 Phumelela and the Association concluded a written agreement governing the levels at which stakes are to be paid by Phumelela for horse races in Gauteng ("the Stakes Agreement"). When the Stakes Agreement was concluded, it was acknowledged that it was likely that corresponding racing interests in other provinces would join in the "corporatisation" process and that the stakes agreement would be amended to accommodate such interests in an appropriate manner.
On 1 April 1999, pursuant to the MOU and in terms of a proposal approved by the members of the Gauteng Clubs at special general meetings, the Clubs disposed of their businesses as going concerns to Phumelela. The businesses, assets and liabilities of the three racing clubs in Gauteng, the TAB (Tvl) and the HRA were sold to Phumelela for R115,5m, raised as a Racing Association loan to Phumelela. In due course, The Vaal Turf Club, Bloemfontein Turf Club, Totalizator Agency Board (Free State), Griqualand West Racing Club and the East Cape Racing Club also concluded agreements with Phumelela to dispose of their businesses as going concerns to Phumelela.
It was a requirement of the MOU - and critical in the negotiation to reduce the betting tax from 13% to 5% - that members of the racing public and Previously Disadvantaged Individuals would have the opportunity to participate in the new corporatised entity by becoming shareholders of Phumelela. Hence the process which resulted in the listing of Phumelela on the Johannesburg Stock Exchange in June 2002.
It is important to note that ongoing negotiations have resulted in a further reduction to the current tax rate of 1,6%.
Facts Relating to the Concerns Raised
The Closure of the Race Tracks
In the Association Chairman's Report at the 2000 Annual General Meeting, members were informed that because of the process being forced upon the industry, one of either Newmarket or Gosforth Park would be closed during 2001, with the other track closing the following year. Members were asked to vote on which track should close first and selected Gosforth Park. Phumelela was under no legal obligation to consult with the RA in this matter as ownership of Gosforth Park and Newmarket never vested in the RA.
At the time such agreements were concluded none of the members of the current Board was serving on the directorate of the Association. They inherited what was effectively a fait accompli. The Board, through constructive engagement with Phumelela, was able to extend racing at Newmarket until 2007. Among these actions was the negotiation of an agreement on the sale of the centre to a property developer on the basis that the racecourse would remain in operation for at least a further seven years.
The property developer subsequently changed its mind on incorporating racing as a central theme in the proposed R600m development. Faced with the prospect of having racing at Newmarket massively disrupted during an extended period of construction, Phumelela negotiated a R40m settlement to cancel its Use Agreement. The RA supported Phumelela's decision on condition that the R40m would be reinvested into the Turffontein facility and, specifically, through lighting of the Turffontein racecourse to ensure night racing could continue and turnovers - and hence stakes available to RA members - be minimally impacted.
Members should appreciate that the current Board was appointed long after the sale and subsequent closure of Newmarket had been decided upon. The Board has used its best endeavours to ensure that in this process, the interests of its members have been protected.
"The current stakes we race for, in comparison to the costs incurred in owning a race horse."
The RA board has engaged constructively with Phumelela in discussions to amend the Stakes Agreement in a manner that will ensure local racing benefits from the growth which the company has achieved through its international activities. However, Phumelela is under no obligation whatsoever to alter the Stakes Agreement which was concluded way back in January 1998. This agreement was concluded long before any member of the current RA board was appointed - again, it was an inherited position.
According to the Stakes Agreement, increases in stakes are regulated by a formula. The relevant clause in the Stakes Agreement, under "Duration" reads: "This Agreement shall commence on The Effective Date and shall remain in force for an indefinite period which may not be terminated by either party for any reason."
The Stakes Agreement may be terminated by either party "if and only if" any one of the following events occurs:
- if the other party commits a breach which is material and goes to the root of the Stakes Agreement and, being such a breach, is not capable of being remedied by specific performance by payment of damages; or
- if the other party is placed under any final order of winding-up or judicial management or passes any resolution for its winding-up, otherwise than for the purposes of an amalgamation or reconstruction duly sanctioned by a court having jurisdiction; or
- if Phumelela ceases permanently to carry on the business of horse racing; or
- if the parties agree in writing to terminate it.
Moreover, the Stakes Agreement contains a non-variation clause that reads as follows:
Non-variation
No agreement to vary, add to or terminate this agreement shall be of any force or effect unless reduced to writing and signed by or on behalf of the parties to this agreement.
"The concern that the current Racing Association is not taking decisions in the best interest of the Owners."
This is an emotive allegation. No particulars are provided. Members are reminded that the current Board are served by persons with substantial investments in the thoroughbred industry, primarily because of the enjoyment they derive from owning and racing these magnificent animals. It is illogical to suggest that they would act against their own interests as racehorse owners. Also, members should be aware that the Board voted unanimously to forego all of the fees traditionally paid to RA directors, and injects these monies directly into the Stakes Pot for the benefit of all members.
"Decisions are being made to ensure that the Phumelela share price increases and not to improve or change the betterment of Racing in South Africa."
Members of the Board believe they act at all times in the best interests of South African horse racing and, by definition, racehorse owners. The Board took a strategic decision in 2005 to insist on extending the right in the MOU - which had expired earlier in 2005 - which enabled the RA to appoint three directors to the Phumelela Board. These appointments were part of the Board's decision to embark on a process of constructive engagement with Phumelela and to represent racehorse owners' best interest.
The current Board includes three members - Alec Hogg, Markus Jooste and Chris van Niekerk - who have also been appointed to the Phumelela Board. They have played an active role in promoting and protecting the interests of racehorse owners at the Phumelela board level by refocusing that company's attention on the need to invest for the long term to improve racing in South Africa.
The Board, and particularly its representatives on the Phumelela directorate, fully appreciate the workings of the stock market and regard as disingenuous any insinuation that their decisions are taken to influence the company's share price. The value of a company is not enhanced by short-term decisions driven by expediency, but through carefully considered strategies that enhance the environment within which that business operates. In this respect, the RA directors believe that the interests of the RA and Phumelela converge - namely in the building and maintenance of a strong South African racing industry which is sustainable and positioned to thrive over the long term.
Concluding Observations
A perusal and consideration of the material clauses of the Stakes Agreement ought to make it clear to members that there is no basis upon which the formula that determines the quantum of stakes can be amended on a unilateral basis. Notwithstanding the constraints contained in the Stakes Agreement the Board has at all times sought to engage Phumelela management on a constructive basis with a view to increase stakes. These attempts have yielded substantial success. The efforts of the Board in this regard continue on an ongoing basis.
Phumelela is an independent company with a broad stake of shareholders and the Association is in no position to interfere with its operational management. Notwithstanding legal and contractual constraints, the Board has adopted an approach of constructive engagement with Phumelela.
The Board is committed to full transparency and open communications about its decisions and policies. It will continue to provide members of the Association with further information regarding the issues sought to be addressed herein. The Board wishes to thank members for their support, contributions and participation in addressing the challenges faced by the sport of racing in this country.
The Directors of the Racing Association
Johannesburg
29 March 2007
|
|
|
|
|
Margaret O'Hare
|
|
|
Margaret O’Hara, who owns shares in two of the most promising horses in training – Dash For Gretna and Ice Bouquet....
...More>>
|
|
|
|
|
Peter White
|
|
|
Racehorse owner and breeder Peter White is thoroughly enjoying semi-retirement....
...More>>
|
|
|
|
