Phumelela struggles to sell race course

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19-08-2013
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Moneyweb
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Public Protector gets involved.

CAPE TOWN - JSE-listed racing and betting company Phumelela may find the sale of its Arlington Race Course in Port Elizabeth has become more difficult and drawn-out than it was before.

The company has proposed that the Nelson Mandela Metro buy the race-course and use the land for the development of affordable housing. Phumelela is in the process of building an all-weather track at Fairview, another Port Elizabeth race-track, making Arlington superfluous to its needs, it says.

It says it has received permission from the Racing Association, which represents racehorse owners and turf club members, to proceed with the sale.

However Public Protector Thuli Madonsela has written to Executive Mayor and acting Municipal Manager of Port Elizabeth and Nelson Mandela Metro respectively, advising them that her office is investigating ownership of the race-course. There is a ‘prima facie’ reason to believe the property may have been improperly transferred into the hands of the private sector in 1999, she said. The original complaint in this regard was laid by Phindi Kema, the CEO of Africa Race Group.

Kema was interested in buying the property herself, but maintains that the conditions laid down by Phumelela were so onerous that they made the deal unviable. It was after this that she discovered information, which she says, threw up the question of ownership.

Metro spokesman Roland Williams would not be drawn on whether the letter from the Protector had stopped the deal in its tracks. “They must do what they have to do,” he says. He was also guarded on whether the acquisition was being seriously considered by the Metro. “A proposal may have been received. We receive hundreds of proposals every day. Certainly Council has not pronounced upon any intention to purchase the Arlington Race Course. Your question is therefore moot.”

However another source within the metro said that the discussion around the possible acquisition of the race-course is “controversial” and added that any acquisition would have to follow a formal process once the council had approved the matter. “I can tell you that there are no formal processes underway that I am aware of; there is no Council approval and there is no budget for it.”

Phumelela is also keeping a low profile on the matter. Patrick Davis, group executive for racing, would only confirm that the sale proposal had been submitted.

The group is however keen to dispose of the land. Two consecutive years of losses on local horse racing has created a “strategic challenge” for the Group, CEO Riaan du Plessis wrote in the latest annual report.

The company has consistently maintained that the only way to ensure the viability of horse racing following the introduction of the national lottery and the legalisation of casinos and limited payout machines, is to invest in and upgrade infrastructure in line with race-goers needs. However it would also need to rationalise the available infrastructure.

To this end the company has sold Gosforth Park in Germiston, Newmarket in Alberton and the Bloemfontein Race Course, all to property developers.

The Public Protector has not said when the investigation will be complete. The initial deadline was the end of September.

By the time it's complete it’s likely that Arlington will be lying empty and disused, haunted by the ghosts of other people’s dreams.