Horse Racing Association briefing

Meeting report

Opening remarks on school sports and KZN Rugby Academy
The Chairperson indicated that it was the responsibility of the Portfolio Committee to provide oversight on the notion of school sport.  He did not agree that facilities were the major obstacle in achieving transformation. The problem was much deeper than facilities and facilities had a minimal impact. He requested further discussion from the Committee on this issue. Provinces and Clubs were the main problem in obtaining transformation in sport and national teams could not be blamed. Provinces and Clubs were slow to open up facilities for equalised opportunities to all races of the country. The Committee would be going on a study tour to the United Kingdom and Argentina to gain insight and evaluate its school sports models. This tour would help them to develop early intervention strategies regarding school sports. It would be one tour over a period of 14 days and members should to do research on the countries in the meantime.

A COPE member agreed with the Chairperson that the debate on transformation was af necessity, but disagreed on some comments made by the Chairperson. Most people did not have the opportunity to partake in certain sports because of the lack of facilities. This was especially evident in the rural areas and disadvantaged communities.
 
The Chairperson informed the Committee that the KwaZulu-Natal Rugby Academy had sent an apology as it was not in a position to come. This was not a good reflection on the Rugby Academy to cancel its meeting with the Committee at such short notice. The Rugby Academy would be invited again to present a report. The Committee and Government were not in charge of horse racing and more needed to be done to bring the sport closer to the Sports Portfolio Committee and the Department of Sports.

Racing Association briefing
The report of the Racing Association was presented by Mr Larry Weinstein, the Chairperson of the organisation. He said the primary function of the racing association was to protect and support the interests of racehorse owners. The Racing Association was incorporated in December 1997 following the signing of a Memorandum of Understanding between the Horseracing Industry in Gauteng and the Gauteng Provincial Government. The parties agreed to reorganise and restructure the business of the racing industry into a single corporate entity to be listed on the Johannesburg Stock Exchange (JSE). The new company was to have a broad base of shareholders with specific emphasis on previously disadvantaged communities. The transformation initiatives of the Racing Association consisted of a credit sale for Black Empowerment Groups (BEGs); a young achievers’ day; a women’s day; race course tours for black owners and punters; trilogy racing; a new racecourse project; a Transkei-Berlin racecourse; introduction of black owners to horseracing; and a groom soccer field.

The Racing Association provided funding to several BEGs in a credit arrangement in 2002 - with the listing of Phumelela Gaming and Leisure Limited. The credit arrangement had been the single biggest transformation initiative of the Racing Association. The credit sale involved the provision of funding to enable the BEGs to acquire a substantial number of shares with a minimal outlay and favourable repayment terms. The BEGs which benefited from the credit sale included Dihla Investment Holdings, Gride Investments, Indyebo Investments and Phumelela Investments. Three of the BEGs were still holders of Phumelela shares which had appreciated by an average of 200% year on year since 2002. The initiative had proven to be very successful. The companies which still held Phumelela shares were Gride Investment, Dihla Investment Holdings and Vela Phumelela Investments. The initial financial benefit for the credit sale arrangement was approximately R9 million, excluding the positive effects of the repayment terms.

The Racing Association initiated the young achievers’ day as a way to introduce youth (aged 12 to 25) to the sport of horseracing. The initiative was started in 2009 when 600 young achievers from all demographics were invited to, and entertained at, the Turffontein racecourse. The major draw card was that each young achiever was entered into a draw to own a 5% share in a racehorse. Each winner of a 5% share in a racehorse were made out of the following ethnicities: 6 Black Africans, 2 Indians, 11 Whites, with the final share being retained by the Racing Association for control purposes. All fees associated for the horse were covered by the Racing Association and the next event was scheduled to take place in April 2011. The Racing Association had contributed over R70 000 to this cause at this stage. The first women’s day event was held on Sunday 8 August 2010 at Turffontein racecourse. The Racing Association treated 300 Black African women from the ANC Women’s League, Rhema Church, and South African Football Association (SAFA) to a fantastic day of horseracing. The entity decided to hold the event annually in recognition of the contribution of women, especially the previously disadvantaged, to society as well as to promote horseracing as a tool for transformation. The total costs of Woman’s Day was between R55 000 and R65 000.

The Racing Association’s Marketing Committee decided to introduce racecourse tours for black owners and punters in recognition of the role of Black Africans in the horseracing industry. The tour gave the owners and punters a chance to meet with other owners, punters, trainers, and industry personnel. The tours took place on a race day where a director of the Racing Association took the owners and punters to the various activities happening behind the scenes to give them a better understanding of the sport. Trilogy racing was a syndicate set up by the Racing Association in 2006 in an effort to introduce Black African owners to the sport of horse racing. The syndicate was made of eight Black South African members with ownership in three racehorses worth R1 million. The Racing Association covered all costs of ownership in excess of R15 000 per month. The initiative proved successful in that four out of eight owners were currently owners in their own right.

The Racing Association was currently investigating the opportunity of opening a new racecourse in the North in conjunction with a developer. It had been made clear by the Racing Association that the initiative on the new racecourse would need to include a transformation and/or skills improvement initiative. The project was said to include a low cost housing project with accommodation for staff and/or a Groom’s Academy facility. The investigations and plans were proceeding well with the final draft expected in 2011.

A community in Berlin, in the Transkei, had approached the Racing Association to assist in the development of a racecourse in late 2008. The Racing Association had contributed significant time and expertise to make the project a success, and the project was in its infancy stage with the environmental impact and feasibility studies being conducted. Regular meetings were conducted with local governments to ensure that the project coincided with local strategy. The objective of the Racing Association was to ensure that the project was sustainable with the creation of long-term jobs and the broadening of skills to uplift the community.

The Marketing Committee from Racing Association had been involved in introducing new Black African horse owners to horseracing over the past four years and approximately 40 new owners had been introduced. The initiative involved inviting and entertaining Black African owners at race days, with emphasis on transferring racing knowledge and enthusiasm for the sport. The social nature of horseracing proved to be an important tool for introducing new Black African owners as the setting was conducive to the conduction of business as well as entertainment.

The entity had started fundraising for a grooms’ soccer field which would be built at the Vaal racecourse. The isolated nature of the Vaal racecourse provided little opportunity for grooms to partake in activities outside their daily jobs, and the Racing Association therefore decided to start a fund to provide a soccer field for them. The fund had raised R30 000 thus far and would require a further R 0 000 to reach the required R100 000 to build the soccer field. The Racing Association was planning several fundraising events for early 2011 with the intention of building the soccer field by mid 2011. 

The principal objective of the trust was to promote the interests of all persons interested in, and affected by, thoroughbred horseracing in South Africa with a view to long-term viability of thoroughbred horseracing. The trust was created for the corporatisation of the racing industry in Gauteng. It also ensured the continued existence of the sport of thoroughbred horseracing in South Africa by ensuring that non-commercial interest of thoroughbred horseracing continued to be developed and supported after the corporatisation process. The Board of Trustees consisted of seven members. The Racing Association was entitled to appoint five trustees to the board while the South African Sports Confederation and Olympic Committee (SASCOC) was limited to two. The Trust owned 35.6% of the shares in the issued share capital of Phumelela Gaming and Leisure Limited, which constituted the Trust’s main assets. The dividends received from these shares constituted the sole source of revenue of the Trust. The Trust applied 80% of its revenue through stakes in the racing industry and the balance of the income was used to promote thoroughbred horseracing by undertaking and supporting various projects. The projects undertaken by the Trust were all aimed at achieving transformation in the thoroughbred horseracing industry.
 
Discussion
Mr M Dikgacwi (ANC) asked how the Gambling Board was constituted in terms of race, and if Phumelela and Dihla Investment Holdings were African groups or only given African names. He was aware that some institutions and organizations had African names but were owned by Whites. He noted the memorandum of understanding between the Horseracing Industry in Gauteng and Gauteng Provincial Government and asked if other provinces were not involved.

Mr T Lee (DA) also expressed his concern about the exclusion of other provinces in the memorandum of understanding and asked about the involvement of the Eastern Cape. He knew about two existing race courses in the Eastern Cape and noted the development of a third one in Berlin. He watched horseracing on television and thought it would attract more people from non-white backgrounds if certain things were done differently. He asked how long it took for the grooms to become professional jockeys as he understood it to be important in creating opportunities. He asked why SASCOC was represented, its involvement, and if its involvement in the Trust was related to finances. South Africa was a multiracial and multiparty country and Mr Lee requested other parties be also invited to future events of the Racing Association, not only the ANC.

Mr G McKenzie (COPE) asked whether the Racing Association was of Gauteng, South Africa or only where Phumelela was operating; and who controlled the bodies with elements of horse racing in the country. He asked if the Racing Association agreed that Phumelela and Gold Circle would share the racetracks and how it came to such an agreement. He asked how many owners, breeders, and jockeys were black since 1997. He asked what happened to a racehorse when it reached the end of its career. He was aware that horses were often sent to countries with less desirable track records in horse racing and were used as horse meat.

Mr L Suka (ANC) asked if the constitutional practice of the Racing Association was national or provincial, because its emphasis was one province - was it a national or provincial structure? He noted that the Racing Association entered into an agreement with Gauteng Provincial Government and asked why not with National Government. He asked about the demographics of the disadvantaged people mentioned in the report and where they came from. He understood that the Racing Association was economically sound and asked about its social responsibility towards the communities. He noted that the document reflected on Whites, Blacks and Indians, and asked about the involvement of Coloured people. He asked why the word ‘syndicate’ was used on page 5, because it usually had negative connotations. The presentation indicated that the Trilogy Racing initiative proved successful in that four of the eight owners were currently owners in their own right. He asked what happened to the other four.  The Racing Association indicated that it was currently investigating the opportunity of opening a new racecourse in the North. He asked which part of the North was the Racing Association referring to and asked for more details on the low-cost housing project. He noted that the Racing Association was approached by the community of Berlin in the Transkei to assist in the development of a racecourse in late 2008. He asked for more information on this project. He noted that 40 new owners had been introduced; and asked from where those people were, and their demographics.

Mr Weinstein replied that he should have taken more time to explain the content of the report. He mentioned that Phumelela and Gold Circle owned various racecourses across the country. The tour operators received their gambling licences from the betting board and there was a national and a provincial betting board. The South African government asked SASCOC previously to sit on the board and it produced its own funding. The owners funded all things related to horses and the Racing Association had no control over Gold Circle and Phumelela. Phumelela was listed while Gold Circle was not. Phumelela was not entirely black owned. There were approximately 4 000 horse owners in South Africa and Racing Association had 1 300 members.   Racing Association could not speak on behalf of all South African horse racers because not all owners belonged to its organisation. Indians and Coloureds were well represented but Blacks were taking time to be part of the system, while Gold Circle mainly consisted of Indian members.

Approximately 60% of the jockey academy consisted of Black Africans and most of the top professional black jockeys came from this academy. The Vaal racecourse was owned by Phumelela and all breeders were from the Thoroughbred Breeders Association (TBA). ‘Syndicate’ referred to more than one member who earned shares in a horse. All horses that came to the end of their career were cared for and found a good home. The low cost housing project was similar to that of mines where accommodation was made available on the premises. The Berlin racecourse project was in the Eastern Cape near Bisho. Regarding social responsibility, the Racing Association was involved in various charity projects but the Charity Mile had been the most successful thus far. The Racing Association did not send invitations to any of the 300 women who took part in activities on Women’s Day. The entity had been approached by these women and it accommodated their requests to make use of its facilities. The Racing Association emphasized that any political group could approach the entity and it would be glad to accommodate them in any way possible.

Mr Suka asked whether the Racing Association received any funding from national or provincial government. The Committee should look into the laws which governed horseracing. Areas in the Transkei region had been neglected although it had talented jockeys. He asked for a document on the structure of the Racing Association and for documentation on its clients.

Mr McKenzie asked for the name of the organization which represented owners outside Racing Association. He noted that Racing Association wished there was one body overseeing horse racing in the country but he heard Mr Weinstein speaking about Racing South Africa and asked if it was not the body which controlled racing overall.

Mr Weinstein replied that Racing South Africa was formed to care for horses and was not involved in horse racing. He mentioned that the Racing Association did fund annual bush racing in the Eastern Cape. The Racing Association did not receive ay funding from government and government was approached to reduce taxes when the entity was formed.

The Chairperson wanted to know about all existing horse racing entities in the country and noted that there was no common law governing these entities. He said that there were serious ‘syndicates’ in all sports who prevented some South Africans to be part of the sports. He asked what it meant to have a cheap horse. He asked if the Racing Association explored more cost effective ways of building racecourses and how it responded to climate change while expending. He stressed that at times the constitution of various entities might contradict the national constitution which promoted a non-sexist and non-racial society and therefore asked for the constitution of Racing Association.

Mr Suka asked if Racing Association had any children washing, feeding or caring for horses (child labour).

Mr Lee asked about the age of the jockeys.

The Chairperson asked which government gave SASCOC permission to be part of the board. He asked whether Racing Association paid rates and taxes and asked to see the conditions of compliance to tax concession. He asked how horse polo was managed.

Mr Peter Naidoo, the Marketing Director of Racing Association, replied that horse polo was an independent Olympic sport and did not fall under the Racing Association. 

The Chairperson asked for the challenges in the racing industry.

Mr Weinstein said that the body which controlled the rules of horse racing was the National Horse Racing Authority which was an autonomous body.

The Chairperson asked to whom was the National Horse Racing Authority accounting.

Mr Naidoo replied that it was not accounting to anyone. The Veterinary Council was responsible for the movement of horses and implemented strict rules in this regard.

The Chairperson asked who was responsible for giving out colours.

Mr Weinstein responded that coulours were given by the National Horse Racing Authority. Each owner picked the colours for their horse race and the colours were worn by the jockey during the race. The “syndicate” that was spoken about in the presentation did not have bad connotations. It consisted of group of people who owned a horse. The issue of a “cheap horse” did not mainly refer to the price of buying a horse, but the maintenance needed in caring for a race horse. It cost approximately R7 000 a month to keep a racehorse in training.

The Chairperson asked how much the Racing Association shared in the JSE.

Mr Weinstein replied that the Racing Association had approximately R700 million shares on the JSE. He said that owners could not get hold of the money in the JSE; owners were making payments while the shareholders were benefitting from the payments. Women were actively involved in all spheres of horseracing. Some were in administration, while others were jockeys and involved in training. There were no children jockeys and the age for being a jockey started at age 16 to 17. The Racing Association had strict regulations in place to prevent child labour. Trainers who were found guilty would be stripped of their licences. SASCOC was appointed to see that the 35% shares of Phumelela was not sold. It was there to protect those shares and to ensure that it stayed in racing.

The Chairperson gave a message that SASCOC had nothing to do with the Trust. According to the Act which governed SASCOC, it was responsible for high performance and organising of events and led the teams to such events. The Racing Association faced a challenge to ensure horseracing continued and it was important for new members to join as they were the ones responsible for funding.

The Chairperson said that the Committee had interacted with the Racing Association eight years ago. He acknowledged that more interaction was needed, especially in dealing with all the underlying challenges. The Committee was going to ask the researcher to research all the issues related to horse racing. The National Department of Sport was responsible for horse racing because it was a sport in the country. The Chairperson expressed his appreciation for the Racing Association’s presentation and described it as an eye opener.

Meeting was adjourned.