Racing in death throes as MOD rides to the rescue with R100m

Phumelela, the biggest racing operator, simultaneously opted for business rescue and had its shares suspended on the JSE.

Racing hit “rock bottom” last week, said Charles Savage, a racehorse owner tasked by Slack with helping to co-ordinate a recovery for a R3 billion industry that employs up to 100,000 people.

Savage, a Johannesburg fintech entrepreneur, heads up a “restructuring task team” (RTT) appointed by Mary Oppenheimer Daughters (MOD) – Slack’s family enterprise with her four daughters – to liaise with Phumelela’s business rescue practitioner and other stakeholders to find ways to resuscitate the company and seek out possible new operational models for racing.

“Racing was already in decline, but Covid-19 [and the suspension of all racing during lockdown] was the straw that broke the camel’s back,” said Savage on Monday. “Phumelela’s demise did not come overnight and there have been long-standing problems.”

Speaking during a Biznews webinar, Savage added that the current crisis offered racing an opportunity to restructure and renew itself – a far better opportunity than was the case five years ago when now disgraced businessman Markus Jooste was dominating the game in South Africa.

Business rescue practitioner John Evans, in effective control of Phumelela, has 30 days to present a plan to the creditors – on whose behalf he will work.

The RTT estimates it might take a further month or two to fine-tune the eventual rescue plan and the MOD R100 million is calculated to tide things over for six months.

It is believed the business rescue has a good chance of success, given Phumelela’s large asset base, which includes some racecourses and training centres, scores of gambling licences and international broadcast rights.

The collapse of Phumelela, saddled with debt of R323 million and a recent six-month financial loss of R115 million, threatened to bring down the entire racing edifice as the two smaller operators, Gold Circle and Kenilworth Racing, could not survive on their own.

Last week’s decision by government to spurn pleas to restart racing with no racetrack crowds was a further crushing – almost fatal – blow.

One member of the five-man RTT, trainer Mike de Kock, warned last week of the looming mass euthanasia of racehorses if solutions to the industry’s problems were not found quickly.

De Kock commented on Monday that the No 1 priority in saving racing was a return to racecourse action “as soon as possible” – to restart revenue streams, protect tens of thousands of jobs and allow the business rescue process to succeed.

Negotiations with government for a restart were being conducted by the National Horseracing Authority, the games rules and policing body.

De Kock emphasised that Slack had made her money intervention purely out of love for racing and her concern for the welfare of workers and animals. He pointed that she was already heavily involved in the industry as a breeder and owner without making any profit.

RRT member Brian Riley said meetings with business rescue practitioner Evans had already been set up to plot a way forward.

“All options are on the table,” said Riley in answer to a question about a possible new operating structure for the sport countrywide.

He revealed that government was being kept up to date with developments and the RTT hoped to engage it in formulating a new “transformational” setup.

Negotiations to transfer management of the Tellytrack racing channel on DStv from Phumelela to Gold Circle were well advanced, but had not been concluded by Monday.

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