Here is an interesting version of the Turffontein lights issue........an approximately R45 million exercise which - to put it in context - swallowed up about 6 months' of Phumelela's attributable profits.
"The South African horse racing industry may be shrinking, but it’s still pretty big business. These days the biggest stud in the paddock is Phumelela, a listed company, with a large BEE shareholding, that took over much of the horse racing industry from a number of the old turf clubs, having acquired all their assets, including the race courses and training facilities.
It would also seem, from the following story, that Phumelela has taken over more than a bit of the arrogance once associated with the Jockey Club of old (today that elite club has become the National Horseracing Association).
In due course Phumelela sold off some of the race courses it had acquired, including Newmarket in Alberton – which sale, in particular, led to no end of muttering, as it left the industry without a race course that could operate at night, Newmarket being the only one equipped with floodlights.
The value of night racing, you see, is that South African races are broadcast to foreign parts, especially the US, and if you want US punters to be betting on your horses you’d best not be racing when they’re still in lalaland.
So, following objections from some horse owners, Phumelela decided to use the proceeds of the Newmarket sale to fund floodlights at Turffontein, and in February 2007 Gauteng’s Department of Agriculture and Environmental Affairs (now Department of Agriculture and Rural Development,) granted Phumelela the right to conduct night racing at Turffontein.
Allowing for “the erection of light masts and lamps for the illumination of Turffontein race course”, it went on to say that “this activity must commence within a period of two years from the date of issue [... otherwise] the authorisation lapses and a new application for environmental authorisation must be made”. Prior to commencement of night racing, Phumelela also had to erect a 3m-high acoustic wall on the eastern side of the track, between the race course and the stables, as well as an acoustic screen above the pre-fabricated wall separating the course from the homes of the surrounding neighbourhood.
A number of people were unhappy with the environmental approval, and local residents, afraid that night racing would disturb their quality of life, appealed against it. What happened next depends on who you talk to.
Noseweek’s sources say that Phumelela sent an individual letter to each resident, threatening legal proceedings in the event of the company suffering any damages as a result of the objection. As Turffontein, once mainly Portuguese and working class Afrikaner in flavour, is now predominantly black and poor, residents don’t exactly have the resources to take on a public company – so Phumelela’s threat quickly put a stop to any objections from the local community. Phumelela CEO David Attenborough described the situation in somewhat friendlier terms, asserting that the company had “engaged local residents outside the official EIA process in order to address their concerns... no undue pressure was applied to anyone”.
But horse owners and trainers were also unhappy. Some 600 horses are stabled at the Turffontein course, and, with the stables very close to the track, night racing would surely disturb their horsey sleep. So owners and trainers also appealed, and Phumelela did a bit of work on them too, using its status as landlord and threats of eviction as leverage. (Once again, Phumelela denies that any undue pressure was applied).
Eventually only one trainer, Ormond Ferraris (who doesn’t stable his horses at Turffontein), kept the appeal going. So, when the National Horseracing Association supported the application for night racing – two of its doctors bizarrely stating that night racing would not have a significant impact on the stabled horses – the matter became a mere formality. On 10 March 2008 the appeal was dismissed by the MEC.
Nevertheless, despite all their hard work in squashing objections, Phumelela wasn’t doing much to actually get night racing up and running. Even though the MEC had (contra the usual terms in such matters) expressly given Phumelela permission to carry on with its plans while the appeal process took its course, Phumelela still did very little.
On 30 September 2008, the Racing Association (indirectly a 35% shareholder of Phumelela) issued a press statement, saying that the estimated cost of the floodlights had gone up from R35m to R50m, and that “the installation of floodlights for night racing at Turffontein has been put on hold due to spiralling costs. [...We] take the view that to implement night racing at such an exorbitant cost does not make business sense”.
On 2 October 2008 Phumelela published a statement that went further: “Night racing at Turffontein has been shelved... the decision to put the project on hold is due to the vastly increased costs of installing the lights resulting from a delay caused by a trainer’s objection to night racing at Turffontein, and thereafter further delays resulting from the liquidation of the contracted mast supplier.”
Despite this, a mere four months later, in February 2009 – on the very day of expiry of the two-year authorisation period – a very different press release rolled out from the Racing Association: “Night racing at Turffontein is still on the cards. [...] Phumelela installed a demonstration lighting mast, which was inspected by Phumelela management and members of the RA board.”
A few days later Phumelela issued another statement: “The Phumelela board confirmed that every effort should be made to introduce night racing at Turffontein ... a temporary replica of the lighting mast was erected at Turffontein infield and, after inspecting the mast, the Racing Association has given the green light to the new design.”
Then, in March 2009, Phumelela announced that the plan was definitely going ahead. At that point advocate and horse-owner Brett Maselle objected, pointing out that Phumelela was out of time. Even if a temporary mast had been erected, he argued, that was not what had been authorised. Maselle therefore lodged a formal complaint and Gauteng head of Agriculture and Rural Development, Dr ST Cornelius, agreed.
On 29 June 2009 Cornelius wrote: “The Department has investigated your complaint and the investigation undertaken on the site by the officials ... revealed that the environmental authorisation issued to Mr Neville Harbott of Phumelela [...] on 26 February 2007 had indeed expired.”
So: case closed. Phumelela would have to put in a new application if it wanted its floodlights.
But the Phumelelans had by now acquired the stubborness of a donkey. On 16 July 2009 they issued another statement: “In order to quash various rumours, Phumelela would like to assure horse-racing fans that the installation of floodlights at Turffontein is underway and that the project is on schedule.”
Horse-owner/advocate Brett Maselle was astounded, and immediately set up a meeting between himself, trainer Ormond Ferraris, and the Gauteng government. And, on 28 July 2009, the authorities assured Maselle and Ferraris that, though Phumelela had asked for a review of the decision that the authorisation period had expired, no new decision had yet been taken. In response, Maselle emailed Phumelela to report on the meeting, and demanded that Phumelela set the record straight, failing which he would report the company to the JSE. Phumelela replied in their usual way, threatening Maselle with a damages claim flowing from his “defamatory statements”.
Undeterred, Maselle contacted the JSE – but the JSE claimed to have an assurance from Phumelela that the Gauteng government had, on 15 July 2009, confirmed authorisation to proceed with the floodlights. In other words: some two weeks before the Gauteng government assured Maselle and Ferraris that no decision had been taken, they had already given Phumelela the go-ahead.
Maselle asked for a copy of the email recording that decision, but Phumelela was being stroppy and the Gauteng authorities claimed that they had not kept a copy. Eventually, however, certain documents surfaced.
For starters, a 9 July 2009 letter from Phumelela to the Gauteng government claimed that the decision that activity had not commenced in time was “incorrect and possibly taken without due consideration of the relevant information”. It claimed that a contractor had begun digging holes for floodlights in August 2008, but that because “the mast supplier went into temporary liquidation it was decided to temporarily cover these holes, as they posed a danger to horses training at the facility, while alternative masts were sought”.
A few days later Phumelela had written again, enclosing an invoice from Prosound for the supply and erection of trial masts. The letter claimed that “although this invoice is dated 27 March 2009, the activity took place on the 25, 26 and 27 February 2009 [...] furthermore, as can be seen from the photograph, there are a number of people who were present at this trial who can attest to the date on which this activity was carried out”.
Then the missing email from the Gauteng government also surfaced. On 15 July 2009, Noma Sekhotha, Deputy Director: Environmental Compliance Monitoring, had indeed written to Neville Harbott of Phumelela and confirmed that her department accepted that work had started within the set period.
Maselle went back to Dr Cornelius who had issued the decision that the authorisation had lapsed. Cornelius replied as follows: “The department is of the view that Phumelela .. commenced with the development before the Environmental Authorisation issued by the Department lapsed.”
Yes readers, what you’re hearing is the distinctive sound of a serious U-turn. All of a sudden the Gauteng government were declaring that the authorisation remained valid, because, within the period, in August 2008, some holes had been dug and quickly covered over. Strange – because Ormond Ferraris, who spends much of his time at Turffontein, can’t remember any such activity. Strange, because in September and October 2008 the Racing Association and Phumelela had declared, most emphatically, that the whole plan was being scrapped.
Strange, too, because the contractor which had allegedly dug the holes was, in August 2008, in liquidation – in April 2008 Phumelela’s then CEO, Jim Tenant bemoaned to Moneyweb that the contractor, Zoi Fall Protection (Pty) Ltd, had been liquidated.
It’s very likely that the only company digging a hole in August 2008 was Phumelela – and it was digging a hole for itself.
The Gauteng government also seemed to be suggesting that the authorisation remained valid because Phumelela claimed that on the last three days of the two-year term, someone supplied trial masts (and issued an invoice a month later), and because this event was captured on camera.
Maselle had quite a job getting hold of these photos, but luckily advocates know all about the Promotion of Access to Information Act. When the pics finally appeared, they suggested another story going on in the background. For they showed that a very familiar face was present at the mast demonstration – Greg Blank. Now Blank isn’t on either the Phumelela or the Racing Association boards, or part of Phumelela’s management structure – but some are claiming that Blank is associated with Tawny, the very powerful racing syndicate that was allegedly putting serious pressure on the Racing Association to get night racing going at Turffontein.
The final result was that, since early this year, wide-awake punters in foreign climes have been able to place their bets on races being held at night at the historic Turffontein race course.
As for those stipulated walls and screens to protect the interests of the stabled horses and the residents – these, of course, never appeared. When Maselle started asking questions he discovered that Dr Cornelius had amended the conditions of the authorisation: gone were those irksome (and no doubt expensive) requirements of an acoustic wall and an acoustic screen, to be replaced with cheaper and much less effective alternatives. Sod the horses and sod the residents.
Dr Cornelius did not return noseweek’s calls, and Phumelela answered by way of a rather curt email that avoided the main issues. In it CEO Attenborough put the blame for the delay on trainer Ormond Ferraris, saying that “the appeal process disrupted the process”.
As regards the trial masts going up on the last day, he simply said: “We do not understand what is suspicious about being invoiced after the erection of the trial mast.” On the issue of Greg Blank’s presence, he claimed that “the Racing Association was invited to assess the overall aesthetics of the mast and the Association invited a number of owners to attend, of which Greg Blank was one”.
And the change of conditions on the evironmental authorisation? Said Attenborough: “Phumelela was unable to source the Heraklith panels, as the manufacturer in South Africa had closed down, and it was therefore necessary that this condition be amended.”
Shortly before going to press, Maselle told us that the residents of Glenavon Road near Turffontein have been so badly affected by the floodlights that they are forming a residents’ association, and that they have asked him to help them bring an application against Phumelela. One resident told noseweek that the flood lights are so bright that he no longer needs to switch on his home lights".
And here's a recent excerpt from Alec Hogg's podcast with Phumelela CEO Riaan Du Plessis dealing with the same issue :
ALEC HOGG: Just on the local front - you've put up illumination, as you call it in your results, of the Turffontein Race Track - how has that been working out?
RIAAN DU PLESSIS: Night racing has gone down really well and it is one of our objectives to attract corporate South Africa back to the racecourse. It does present a nice corporate entertaining opportunity during the week. The lighting per se cost us a lot of money, but then we did make a commitment to the horseracing industry when we sold Newmarket that we would give them night racing again at Turffontein...
ALEC HOGG: That's R45m which is almost or in fact it's more than the attributable profit for the six months...
RIAAN DU PLESSIS: Yes, it's a sizeable number, but it's a commitment that we made and we like to believe that we stick to commitments.
ALEC HOGG: But are you seeing that the revenues are coming through - in other words is betting turnover at night racing than if you'd just held in the day?
RIAAN DU PLESSIS: No - we wouldn't look for payback on betting turnover. We would look for turnover on on-course attendance and really re-introducing the sport of horseracing to the large corporates. I may have said to you some six months ago that we have this huge initiative to get horseracing to its rightful share of the corporate marketing wallet and the sponsorship wallet. In total between ourselves and Gold Circle, we get a paltry R20m to R30m from the corporate marketing spend per annum and, bearing in mind that we're the fourth largest sport in the country and if you compare what is spent by large corporates and the television broadcasting companies on sports such as soccer, rugby and cricket, there's a huge opportunity for us to generate additional revenues and it's a question of repositioning the sport as a sport and not as just a product on which we all want to bet on.
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