Re:Gold Circle - LETTER OF INTENT

Yes, and so we should blame ourselves.


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OTA,

I would add the following to the 3 problems identified:

1) Conflicts of interests;
2) An operator take-out policy and an industry taxation framework that is misaligned to the economic realities of the business of horseracing today; and
3) Operators and regulators that have employed too many friends, families and fools at the expense on the horseracing industry.
There is no denying that HWB and WSB have built exceptional businesses, given their humble beginnings while the horseracing operators handed over their product and customer base to the bookmaking industry over the past 3 decades. Many of us on this platform could come up with an endless list of reasons why we redirected our business to take our bets (fixed odds and tote bets) with bookmakers. I don’t buy into the notion that the punters have contributed to the demise of operators by not placing their tote bets with operators. If you don’t understand your consumer, you don’t deserve to be in business.

You are 100% on point when you say: “These are business decisions being taken.” HWB is making a business decision and I don’t believe for a second that it’s devoid of a profit motive. HWB’s sponsorships and branding deals have given them more mileage than any other business involved in horseracing. Its business. 10/10 to the HWB marketing team.
The question that remains unanswered is whether their SPONSORSHIP results in a level of influence (or does it result in negative or positive control) over those that are being sponsored? Where money is involved, you’d be naïve to think not!

In my opinion, what the horseracing industry (the operators and regulators) should be solving for from a sustainability perspective cannot be achieved by giving control to a bookmaking firm. The former parties are 100% reliant and dependent on horseracing while a bookmaking firm that claims its revenues and profits from horseracing are not material and entirely available for gifting to an operator seems like an implausible business rationale for becoming and operator.

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Racing these days doesn't have all it's eggs in one basket.
The soccer 6,10,13 pools are doing well.
There never was Soccer bets from the Tote in the past.
So how much is the takeout from the soccer 6 and others.
Then there's the sale of pictures to overseas.
How much revenue and in what currency is the payment for the above received.
Also this never existed in the days of Sea Cottage, Politician etc.
Surely Racing in the days gone by never relied on gate takings and on course wining and dining to survive.

More revenue streams but much, much higher fixed overheads I would guess...

Deal almost complete by Hollywoodbets and GMB Investments to purchase Gold Circle.

www.sportingpost.co.za/horse-racing/kzn-...ncing-for-a-new-age/

While KZN racing operator Gold Circle is celebrating another successful Champions Season, which is set to reach a climax at Hollywoodbets Greyville on Sunday, the racing operator declared has declared in a letter to its members that it is under dire financial pressure and is forecasting a R100 million loss for the 2023/24 financial year.

But there is some light at the end of the tunnel in terms of a deal on the table to acquire the company.

The white knights are leading South African betting operator Hollywoodbets and horseracing’s 21st-century leading man, Cape Racing Chairman Greg Bortz.

Hollywoodbets, already a massive supporter of racing in KZN, has made an offer to acquire 100% of Gold Circle, which proposal has been accepted by the board. This offer is subject to the approval of Gold Circle’s members, the Competition Commission, and the KZN Gaming Board.

However, the ultimate conclusion of this transaction will take time – something Gold Circle does not have.

It seems that Bortz has stepped up to bridge the gap between the immediate cash needs and the ultimate sale of the company to Hollywoodbets.

He steps up with some life-giving cash flow through his investment firm GMB Investments (Pty) Ltd, which has made a proposal to loan Gold Circle R100 million to bridge them through the sale process to Hollywoodbets. The offer of this loan has been accepted by the board, and documentation is being drawn up.

Recently also appointed CEO of JSE listed Grand Parade Investments – a company of which he is a majority owner – Bortz could well ultimately complete the personal ‘holy trinity’ with the successful conclusion of the underlying transactions.

The passionate racing man also has an option to acquire 20% of Gold Circle from Hollywoodbets.

We would expect the popular and energetic entrepreneur to exercise the option, and it is incorporated in the proposal that he will take up the post of chairman of the company following the closure of the proposed deal.


In a letter to members on Tuesday 25 July, Gold Circle Chairperson Sadha Naidoo said that the most recent management financial statements presented to the Board of Directors estimate that the company will incur losses amounting to R65 million in the current financial year ended 31 July 2023, increasing to R100 million for the year ahead.

This projection has increased significantly from the last report to members mainly due to the failure by the KZN provincial fiscus to pay the 3% bookmakers’ tax contribution to the company in terms of current KZN tax legislation. The matter is under litigation.

Cashflow in the year ahead is at a critically low level, and even with the inclusion of the ‘Ring-Fenced’ funds available from the Clairwood sale, the Company only has financial reserves that will sustain the present business for an approximate period of 18 months.

So all is not lost, and the sea change and massive differences already made in terms of a similarly structured transaction in the Western Cape suggest that KZN racing will be grabbing the opportunity of an injection of new blood, and much needed cash and business acumen to balance the ship, and set for course for a rejuvenation of the sport in the racing-mad province.

The sooner Botz takes over the better.

Nairac and his weak Board should step aside as they have let Gold Circle deteriorate to this level!!!

Hopefully this weekends big day will be the Last Dance for some.
I’m sure we will hear the familiar tunes of how wonderful, fantastic, brilliant things are and that’s what racing’s all about.
The band on the titanic.🤔

Hearing a long way to go in this

Bob Brogan wrote:

Hearing a long way to go in this

Xxxxxxxxxcxxcxxxxxxxcxxxxxxxxx

Bob

Will the same apply for an answer as to where the proceeds of Soccer 6, 10, 13 etc go to.
What is the takeout on the Soccer pools, they average over 10 bar a week without any stakes to pay, race meeting, etc.
Also for the sale of pictures to other countries.

Waiting with fingers crossed.
Nb.
Comments welcome from the "we saved racing in SA (Cape) clan also.

@mikesack

The takeout on Soccer bets on the tote is 33%.

If that doesn't make your eyes water, nothing will

mikesack wrote:

Bob Brogan wrote:

Hearing a long way to go in this

Xxxxxxxxxcxxcxxxxxxxcxxxxxxxxx

Bob

Will the same apply for an answer as to where the proceeds of Soccer 6, 10, 13 etc go to.
What is the takeout on the Soccer pools, they average over 10 bar a week without any stakes to pay, race meeting, etc.
Also for the sale of pictures to other countries.

Waiting with fingers crossed.
Nb.
Comments welcome from the "we saved racing in SA (Cape) clan also.

Not sure why you are quoting me in this?