Wiseman Khuzwayo
Phumelela Gaming and Leisure was in talks with the Nelson Mandela Bay municipality in the Eastern Cape to sell the Arlington racecourse for R50 million for a housing development, the JSE-listed firm confirmed on Friday.
Rian du Plessis, the chief executive of Africa’s biggest horse-racing and tote betting company, said a party representing Phumelela had made the initial move but he said he did not know how far the negotiations had gone.
A party familiar with the negotiations who wanted to remain anonymous because he was not authorised to speak to the media said the price of R50m was exorbitant.
He accused Phumelela of flying a kite by announcing in a local newspaper that it was in talks with the municipality when in fact this was not so. This was meant to put pressure on the Nelson Mandela Bay municipality and to put Phumelela in pole position.
If the sale goes ahead, this will be the third racecourse to be disposed of by Phumelela since its corporatisation in 1998. The others were Gosforth Park and Newmarket in Gauteng.
Kupido Baron, a spokesman for the Nelson Mandela Bay municipality, said its department of human settlements needed a council resolution to give it a mandate to negotiate with Phumelela. This had not been obtained.
However, he said the municipality had already bought a piece of the racecourse in the area of Walmer for a housing development.
Arlington has in the past been the subject of a dispute between Phumelela and Phindi Kema, the first black woman thoroughbred horse breeder, and her company, Africa Race Group (ARG).
This stemmed from June 2011, when Phumelela offered to sell the racecourse to ARG for R50m but demanded that Arlington be operated under its totalisator licence.
It further demanded financial guarantees within 30 days and refused to provide ARG with an occupation date.
Kema then objected to a planned merger that would result in Phumelela administering Gold Circle’s Western Cape operations and therefore give it betting operations in eight provinces.
Gold Circle also operates in KwaZulu-Natal and this would give the two companies a complete monopoly on betting licences and racing operations in South Africa.
Kema’s objections were upheld by the Competition Commission but the merger was approved by the Competition Tribunal. Kema was not invited to intervene.
Following her successful application to the Competition Appeal Court, a landmark ruling was given that she could be a party to the appeal against the merger.
Thuli Madonsela, the public protector, is also investigating Kema’s allegations of malpractice and improper conduct by the Gauteng government for entering into an agreement with the National Horseracing Authority by transferring racecourse assets from local council ownership into the hands of Phumelela a private company, as well as giving exclusive licensing rights to the company without any transparent public or parliamentary process.
Phumelela is part of a consortium that is bidding for the exclusive right to organise and conduct mutual or tote betting on horse races in Greece for a period of 20 years.
In the 2012 annual report, Du Plessis said domestic overall results masked the continued decline in domestic horseracing volumes. Totalisator net betting income on horse racing reflected a 1 percent increase from 2011 to R486m and on other sports a 42 percent increase to R89m.
International operations are now responsible for 64 percent of group profit before tax, up from 39 percent a year earlier.