IT’s been a turbulent year for thoroughbred bloodstock vendors in South Africa. That ours is presently a true buyers’ market was distinctly shown in the results posted by the Cape Thoroughbred Sales Company (CTS) at their April Yearling Sale recently.
As things happen in the world of instant social interaction, the sales results have been interpreted in a number of ways, ranging from a general satisfaction among buyers to mild shock and worry from vendors to reality checks to predictions of doom and gloom, especially concerning the future of CTS as an independent bloodstock sales company.
In this exclusive eye-to-eye with Turf Talk’s Charl Pretorius, CTS Chairman Chris van Niekerk asks the racing community to look objectively at all the facts before reaching their conclusions. He predicts that the market will continue to favour buyers for just a while, but that business may well swing back in favour of vendors as soon as January 2019.
Van Niekerk, in his familiar calm, measured manner, urges the South African racing and breeding industry – bloodstock vendors in particular – to bite the bullet with something akin to staunch perseverance. It’s time for “Vasbyt”, he suggests. Let’s keep our collective eye on the ball because things will improve markedly, sooner than later.
As a founder member, Van Niekerk speaks with great pride of CTS and firmly denies that the company is “on its last legs”.
“We heard these rumours before the Cape Premier Sale in January but they were not based on anything but nasty sentiments after the Steinhoff debacle. The sale went well, all our vendors were paid.”
He points out that CTS had achieved a great deal in its seven years of trading and serving the industry and says: “You must remember that CTS was established in 2011 because of the unhappiness with BloodStock SA, the way their sales were conducted, the quality of their events and their management problems.
“At the time there was a need for someone to step in, it happened naturally because competition was needed in the market. If there was no room for a competitor CTS would not have started. From the side of vendors, there was a call for something new. That is how the first big Premier Yearling Sale in the city centre at the Cape Convention Centre came about.
“The sale, back then, was unique in the world. It was staged in an unbelievable place. Prices were very good, especially beneficial for the vendors who sold their stock and survived, they made good profits.”
Most importantly, Van Niekerk argues, the fact that CTS entered the market as an innovative rival sales company to Bloodstock SA made the TBA sit up and take notice. “BSA needed to improve their own operation as a result of pressure from CTS and they’ve done that admirably. The most important result of our rivalry is that they have raised their game. Their improvement has been good for the industry.”
We’re probably nowhere nearer the merging of the two companies (or the forming of a new entity) today than we were a year, or two, or five ago, but Van Niekerk believes this is still a future possibility and says: “Let’s face it, the South African horseracing market is small market. If one looks at it in depth, there is probably only room for one racing operator. Similarly, we could have one bloodstock sales company, though both can do good business with continued, focused cooperation.
“We’ve structured our sales program at CTS for only three sales a year – the Premier Yearling Sale, the April Sale and the Ready to Run Sale in November, all with the kind of turnovers many businesses would love to have. And remember that CTS own 50% of Kuda Insurance, a very good company in its own right. We’ll welcome additional new shareholders.”
Van Niekerk notes that he personally tried for a period of time to get CTS and BSA together. “People may not know this, but a single company is not new from my point of view. I’ve always been in favour of one sales company and I tried to achieve this but for a variety of reasons it never happened. We negotiated the issue for over 18 months but we couldn’t pull it through.”
Have recent sales results brought CTS closer to thinking about a merger again?
“No,” Van Niekerk says. “My sentiments have not changed and let me be clear, whether the bloodstock market is buoyant or depressed like it is now, nothing has changed for me. I remain in favour of one sales company.
“If analysts are now saying that we are being forced to combine with BSA as a result of a few below-par sales results, they are wrong. I don’t see it that way at all. A combining of forces should happen regardless of what we’ve seen in recent market results. At the least, we should have greater cooperation between our two companies.”
CTS took the first steps to be co-operative in everyone’s interest, Van Niekerk asserts. They dropped the CTS April Premium Sale in Johannesburg as well as the Ready To Run Sale last held at Randjesfontein at the end of 2016. They then combined the old CTS March sale with the old April sale into a new April Yearling Sale, the one staged last week.
“We took this initiative long before the Steinhoff issues came to light, not as a result of those issues. We streamlined our operation in the interest of the industry and moved out of competition with BSA on the Highveld.
“Purely from a CTS perspective we eliminated the additional costs of selling horses in Johannesburg. At the last April sale, for example, we drained the big pool at Emperors Palace and we put a deck over it, then a big marquee tent. This was done at a huge expense to us.
“We cancelled our Johannesburg Ready To Run Sale for cost issues, and because Mick Goss had scaled down his operation at Summerhill Stud. He took the breeze-up gallops back to his farm at Mooi River and we supported him there.”
The racing community in South Africa should take note of one vital aspect, Van Niekerk contends. This year, 2018, is an “abnormal” year in the history of South African bloodstock sales.
He offers: “Let’s look at the hard facts. Over the last year racing unexpectedly lost its two biggest buyers, Markus Jooste of Mayfair Speculators and the late Adriaan van Vuuren. Between them, they were responsible for nearly R50-million worth of horse sales in a single year, every year for a long time. They are now gone.
“First, horses owned by Van Vuuren were added to the market and shares were sold off. The Mayfair horses followed and deals were being struck and runners are still being sold, on a daily basis. For several months we’ve seen cash being spent away from the big company sales and it is still happening. Mayfair on its own released well over 200 horses into the market recently, maybe over 300, I am not sure. That’s the equivalent of an extra sale altogether. We’ve never had as many horses for sale at once, in the last 10 years!
“I chat to the buyers, the big ones and the smaller ones and I look at my own situation. Many of us were involved in various partnerships with Mayfair and we’ve had to buy back and sell off on a big scale, which has impacted significantly on our budgets available to support the official sales. Everyone has had to cut back.
“We saw the first indications of this scenario at the Premier Sale in January and further evidence of budget constraints at the BSA Sale in March and our own April Sale. I said after the CTS sale in January and will say it again now, ‘We will only know how good the CTS January sale was after we’ve seen the results of next week’s National Yearling Sale.
“My personal belief is that BSA will have a good Select Session on Tuesday, but that the next two days will be very tough for vendors, it will be a buyers’ environment too.
“Look on the positive side. If you’re a small buyer or a small trainer with just a few horses, now is the time to buy. You won’t find a better time again. Trainers who complain that they can’t get horses, surely can acquire them now, there can’t be any excuses.”
However tough things seem to be right now, the SA breeding and racing industries can look forward to brighter times, and they may not be too far off.
Van Niekerk believes that we are closer to import and export protocol agreements than we’ve ever been.
“Getting back into the European Union (EU) depends on an audit to be performed here later this year, probably in September, but South Africa could be back in business by December, exporting horses directly to Europe.
“In the meantime, we are having direct talks with the likes of Hong Kong, Australia and Korea. Hong Kong buyers are particularly keen to do business with us. The Hong Kong Jockey Club attended our Premier Sale in January for the first time ever and they are coming to the National Sale too.”
“Just imagine what will happen to the 2019 January Sale if we get our protocol issues in order by December. We will have a big breakthrough, we’ll have an influx of international buyers and our vendors will be smiling again.
“We will also see some of our smaller vendors enjoy a change of fortune because places like Korea and China have a big demand for horses at the lower scale, like the ones not sold at last week’ April Yearling Sale. Sales are bound to increase across the board.”
Van Niekerk, Lee Scribante, Mike de Kock and Adrian Todd last year established SA Equine Health & Protocols (SAEHP), a non-profit company formed as the implementation arm of the Import/Export task team with the sole focus on enabling long-term sustainable equine exports, on driving the many years of negotiations and efforts over the line.
“We have used the profits of CTS to fund SAEHP and we’ve had generous donations to help us, people have stepped up to the plate to pay for pre-audits and also for risk assessments which was done by Aushorse. We’ve employed dedicated staff consisting of veterinarians and administrators to ensure we reach our ultimate goal of resumption of direct trade with the EU. Funds will also be needed when that goal has been reached so that we can take care of what will be the all-important function of ongoing maintenance in regards to surveillance zones, movement of horses and so on.”
That he’s been left to bear the public profile of racing and shouldered with steadying the boat following the departure of Markus Jooste is not something Chris Van Niekerk will lay claim to. But he’s the one person in racing even fierce opponents of the so-called Jooste regime have respected because he demands it. He’s the industry’s gentleman, a man that’s easy to like, and one who listens attentively before he responds.
“The hardest thing to deal with has been the prevailing negativity. I look at the positive in everything and working in this negative atmosphere alongside my business interests outside of racing has been frustrating.”
Personally, Van Niekerk remains fully committed to the industry and he’s excited about his own racing prospects. “There’s a thrill in going to a sale and buying horses, especially when Sean (Tarry, trainer), finds us the bargain buys.” He is also over the moon with the good early start of his former Durban July winner Pomodoro at stud. “He upgrades his mares and his foals are racing early, which we didn’t expect.”
A seasoned and hugely successful business veteran, he notes: “What we’re seeing in racing now is absolutely typical of what I’ve seen a dozen times or more in my business career. We have dealt with issues like this in the past, we’ve helped businesses through bad cycles. It’s not new to me, and it will be done successfully again.
“The good thing about times like these is that they make you look at your business with a critical eye, how you do things. You come out stronger on the other side.”
Van Niekerk has a few thoughts in closing. He asks for a positive approach from the industry, joint efforts and says: “Now is not the time for panic. It’s a time for Vasbyt!”