The CRE bid…
A consortium of investors called Caymanas Racing and Entertainment Ltd (CRE) plan to pump $700 million in capital for horse racing with as much as $2 billion to expand the gaming, entertainment and restaurant aspect at Caymanas Track Limited (CTL), according to the bidders.
“We are planning a multi-faceted entertainment centre where racing becomes one dimension of four. So we were able to convince local and overseas partners who are interested in the total package,” stated Richard Lake, one of the largest investors in the consortium, in an interview with the Jamaica Observer yesterday.
“CRE will be capitalised at $700 million and this amount is to be used exclusively for racing and its improvements.” Other stakeholders that came to the meeting included Dr Graham Brown as chairman of CRE, Michael Bernard, Richard Azan and Adam Epstein.
This consortium of racing lovers aims to win the track from the Government in order to put it on a sustainable path that benefits stakeholders. CRE is one of two entities vying to win the divestment bid of CTL. The second bid is from listed company, Supreme Ventures Ltd.
Dr Brown indicated that the CRE bid incorporates a number of entities and stakeholders in horse racing across the island. It will additionally offer a stake in the venture to CTL workers with eventual plans to list the venture on the Jamaica Stock Exchange.
“The persons listed [as directors] have very common interests and are bonded by a unity of purpose and we depend on each other,” stated Brown. CRE was formed in 2013 for the purpose of operating Caymanas Park. I
ts directors include Brown, Bernard, Gassan Azan, Lake, Benton Woodbine and Greg Bell.
The $700 million in capital will be apportioned with $120 million from Sizzling Slots (Gassan Azan and Epstein), $120 million from Richard Lake/Lakeland Farms, $100 million from B3 Developments (Bell) and $75 million from Portmore Marina Development.
The remaining amount would come from various race horse owners at $140 million, Bookmakers at $105 million and CTL workers at $40 million. Bernard indicated that the CRE team represents the most inclusive and financially viable option for the modernisation and expansion of the current facility.
“I would be totally weary of any individual or stakeholder having too large a stake because of their level of interest and control,” stated Bernard, who alluded to SVL’s large market share in the gaming industry. “An individual or entity monopolising the ownership of Caymanas Park, we have an issue with that.”
Azan recalled CTL’s ownership history with reference to an episode of “disastrous” private ownership in which the “track was run into the ground”. “Now the situation that we will have here is an involvement of stakeholders at different levels,” Azan said. “Horse racing is more of an industry than a business.
If everybody doesn’t participate properly then it cannot work properly. It’s something that we have looked at carefully and this is why we chose this way to go.
The company plans to implement new initiatives including increased race days, increasing the number of horses, telephone betting, overseas betting, improving local Off Track Betting, improving marketing, while upgrading the plant and jackpot bets. Collectively these initiatives have the potential of increasing turnover by 90 per cent within five years, stated the bid document.
But critics might question the ability to achieve these objectives in the given timeline. “I have great knowledge of the sport and the breeds and my biggest asset would be the investment on the financial side and my love of the sport,” stated Epstein, about plans to include up to hundreds of slot machines in the facility.
CRE projects that the race track will be profitable within two years and by year five would be earning in excess of $400 million per annum before taxes. This excludes the increase in other income which will be derived from such opportunities as slots, property fees, food and beverage and facility rentals
. “It’s not rocket science…It’s a highly bankable venture,” stated Bernard at the Jamaica Observer, about the key aspect of the racing plan to increase its usage from two race days to every day.
“We would move from 12 hours to 168 hours [of operations a week]. So our revenues are relatively conservative and the reduction in costs are also relatively conservative.”
In May, Government formally advertised its intention to accept bids for the privatisation of the complex.
CTL recorded sales of roughly $4.4 billion in 2014 with the promotion of local races at some $2.4 billion or 55 per cent with simulcasting foreign races accounting for the difference.
Generally punters get 68 per cent of the revenues as payouts while about 13 per cent goes to purse payments to owners, trainers, jockeys, grooms and breeders; nine per cent is maintained to cover operational costs including Off Track Betting commissions.
The remaining 10 per cent gets split between CTL administrative costs, simulcast fees and taxes.