THE Racing Association has used a portion of its cash reserves to assist Phumelela in keeping racing going after the lockdown. They gave also put executive appointments on hold.
HERE is the Racing Association’s acting Chairman Brian Riley’s letter to members, circulated yesterday.
The current lockdown has caused considerable disruption to the income streams of horse racing operators, to the extent that our operator, Phumelela, can no longer afford to honour the existing stakes agreement. Whilst the RA does not accept nor condone a reduction in stakes payments, we have to be realistic and work with Phumelela to achieve the best possible outcome for our members.
We can confirm that subject to the government lifting the current “lockdown”, racing will recommence on 1st of May. Due to its lack of income, Phumelela can only offer 40% of the amounts contracted to the Stakes agreement for the month of May. Thereafter the stakes to be paid by Phumelela for June would depend entirely upon the income received in May. The stakes for July would depend upon the income received in June. An income to stakes formula for the remainder of the season will be agreed between Phumelela and the RA by the end of this week.
Given this dramatic reduction and the uncertainty of stakes payable, specifically for the next three months, the RA Board has agreed to a maximum contribution over the 3-month period, 1st May 2020 to 31st July 2020, of R13.1 Million.
With respect to the RA contribution in May our approach is to attempt to return all regions to approximately 60% of the stakes they were due to race for in May, had there been no reduction in stakes. We are thereby supplementing the stakes by around 20% for the month of May, and by a yet unknown percentage for June and July. The stakes have been reallocated per the attached stakes schedule and will be weighted in favour of minor races for the time being.
The arrangement has been agreed to on the basis that the RA strongly deems the unpaid stakes per the current agreement be a liability. In addition, any new monies received for sponsorship on races for the next three months will be allocated in full to the races sponsored for the benefit of owners over and above the scheduled stakes. On that note any would be sponsors should read the additional two attachments, one for feature races and the second for smaller races. A bidding process for all races will be applied although packaging options are available. All offers will be considered.
Contact details are provided should you wish to get involved. If you do the racing community in its time of need will remember that support for a long time.
Over the space of the next couple of months we will need to negotiate a new stakes agreement for the new season.
The Racing Association has some cash reserves but they are insufficient to render this kind of support for an extended period. With such uncertainty, and to conserve cash, the Board has decided to put on hold the replacement process for both the CEO and the Chairman for the time being. In addition we have suspended directors’ fees until 31st July 2020.
We would like to extend our sincere gratitude to the trainers, grooms and supporting staff and businesses who have kept our horses fed and fit during this unprecedented lockdown.
We trust we will be allowed to race as planned and whilst the content of this communication is not ideal we hope it creates some clarity on what we will be racing for come the 1st of May.