THE long-trumpeted privatisation of Caymanas Track Limited (CTL), the sole promoter of local horse racing in Jamaica and carriers of simulcast races mainly from the United States and England, is again being offered to local and overseas investors.

The Development Bank of Jamaica (DBJ) which is handling the divestment stated in a public advertisement placed in yesterday’s Jamaica Observer that the Government of Jamaica is “seeking investors with suitable financial and operational capacity to participate in the privatisation of Caymanas Track Limited (CTL).”

Checks reveal that the work of the Enterprise Team appointed by minister of finance Peter Phillips in 2013 and chaired by banker Keith Duncan has now completed, hence the public advertising for the start of official bidding. The Enterprise Team was charged by the finance minister to oversee the divestment process of CTL and to prepare the relevant documents including the prospectus of privatisation. The Business Observer understands that the prospectus was not “quite ready” hence its non-appearance on the bank’s www.dbankjm.com website when perused yesterday. The prospectus was said to be in the final stages of preparation and would be posted for public scrutiny within the next 24-48 hours.

The advertisement for the privatisation of CTL did not indicate whether the 198-acre Caymanas Park property, which houses stables for more than 1,000 horses and the nine-furlong racetrack, is included in the divestment of CTL or just the promoting aspect of the company’s operations. This issue is expected to become known when the prospectus is published.

CTL recorded total sales of approximately $4.4 billion in 2014 with the promotion of local races being approximately $2.4 billion or 55 per cent. The simulcasting of foreign races made up the difference.

Of that amount CTL returns 68 per cent of its earnings as dividends to bettors and 13 per cent goes to the payment of purses to owners, trainers, jockeys, grooms and breeders while nine per cent is maintained to cover the costs of putting on a raceday, including payments to raceday personnel inclusive of cashiers. Also included in the aforementioned nine per cent is a five and a half per cent payout as commission to off-track franchise holders for local races and a seven and a half per cent payment to off-track franchise holders for overseas races. Further, three and a half per cent is paid by the company as rights fee on overseas races carried by CTL.

CTL, in addition, pays the government a one per cent tax calculated on gross sales. The remaining amount of approximately five and a half per cent is retained by the company for the payment of salaries, utilities and capital investment.

The CTL payment breakdown

68 % — Payment of dividends to bettors

22% — of which 13% goes to payment of racing professionals (purses), and nine per cent for raceday expenses including OTB commissions.

3.5% — simulcast rights fees

1.0% — Government tax paid on total sales

5.5% — retained by CTL for payment to staff, utilities and any capital investment

Efforts by the government in 2006 to privatise the racetrack met with limited response. Only two local entities placed bids which were both rejected. Former chairman of CTL and president of the Thoroughbred Owners and Breeders Association, Howard Hamilton, led a team of investors at the time which proposed the construction of a new racing plant. That offer was also not accepted.

Hamilton takes the strong view that privatisation is inevitable at this time. “The racing industry cannot continue as it is doing now. There is need, urgent need for capital investment which cannot be provided by government. Piecemeal attempts to solve the problems are not enough and just delay the inevitable. The industry needs money to maintain its viability and that can only come with divestment.”

Hamilton’s positive sentiments on CTL’s divestment are not, however, shared by Vin Edwards, president of the Jamaica Racehorse Trainers’ Association. Edwards is of the view that divestment will not and cannot work for CTL.

“My position is very clear, I am against any divestment of CTL. Racing belongs to the stakeholders and should rightly be given to these stakeholders to run.

“In my many years in racing, I have seen the company divested and it has not worked, plus the promised consultations with the stakeholders in the industry and the Portmore Municipality have not taken place. There has to be consultation before any talk of privatisation,” a strident Edwards told the Business Observer.

The DBJ advertisement also stated in part that: “CTL possesses tremendous potential to be transformed into a racing, gaming, and entertainment entity providing unique entertainment options for a wide cross section of the Jamaican populace and the diaspora.”