The Arima Race Club published its financial statements for 2012 and the tale continues to be one of woe. For the second successive year, the Club recorded a loss. The accumulated has now exceeded more than 60 per cent of its equity base and unless a significant change is effected, the Club could become insolvent in less than ten years. Given the nature of the Club’s business, it is disappointing that even though the Club’s profits improved slightly, because of the increased number of racing days, the overall loss actually widened when compared to 2011. This is a very disturbing trend and the time must be now, for the Club to effect substantial change in its operations.
During fiscal 2012, there was an increased in the number of racing days from 40 to 45 and this resulted in a concomitant increase in the Club’s revenue. Unfortunately this increased revenue was offset by an almost equivalent reduction in commingling proceeds from the OTBAs. This area is the Club’s Achilles heel, and the Club must do more to stimulate this area. The financial numbers reveal a significant working capital deficiency at the Club, which deteriorated between 2011 and 2012. Based on the Club’s report, all of the stakes money paid by the Club is funded through a combination of the Betting Levy Board, entry fees paid by owners, nomination subscriptions and sponsors’ contributions. The Club makes no contribution to the purses paid to owners. Given this reality, the Club is primarily responsible for the maintenance of the plant and equipment and the administration of the day to day activities of the track. The Club revenue should be derived from its share of the betting turnover and other fees paid to it for use of the Club’s premises.
In examining these responsibilities, one of the first issues to be understood is why the Club, which runs a cash business for the most part, would have a growing trade creditor and prepayment asset. In particular, there are significant balances owed by the Off Track Betting Agencies and other debtors. There is absolutely no reason for this and management of the Club should move expeditiously to correct this situation since it is well known that the survival of the Club will depend as much on its access to liquidity as to its profitability. One of the other features of the Club’s finances is the huge mismatch between the Club’s paddock income and its paddock expenses. Paddock expenses are almost double the Club’s paddock income and no doubt has fueled the Club’s efforts to increase its income by raising paddock fees. If maintenance of the track, plant and general premises are also taken into consideration, the disparity is even more significant. A large component of these expenses is salaries and wages and one is left to wonder whether these are over-valued relative to the funds being spent on the physical plant.
The Club undoubtedly needs to look at the composition of this expenditure since, conversely, in its efforts to revive its fortunes, the Club, in its management report, has extolled its ability to manage its expenditures in general. While this is commendable, it is unfortunate one such area that the Club has focused on is maintenance of its plant and premises. Interestingly, none of the reduction came in the area of salaries and wages, the most substantial year on year reductions came in general maintenance. Given the current state of its facilities, the physical state of its plant and track is the one area in which the Club should be expending even larger sums of money. The financial challenges facing the Club are onerous but they can be traced back to the need for a sustained increase in betting turnover. The Club in their management report has acknowledged the benefits to the betting turnover of the changes made with respect to the new Rating System and the generation of much more competitive racing. Underlying this acknowledgement is the importance of competitive racing as reflected in larger racing fields on the fortunes. The rating system is however not the only ingredient for that outcome. The integrity of the sport must be restored, incentives to import either quality racing stock or quality breeding stock is also essential and there must be a proper framing of the races. These are three essential ingredients. The Club must recognise that its fortunes cannot be untied from the integrity of the sport.
At this point, the Betting Levy Board is essential to the survival of the sport. They fund the purses and also meet some of the other operational expenses of the Club.
The Betting Levy Board is however funded from the proceeds of gambling throughout Trinidad and Tobago. There is almost a symbiotic relationship between the existing of a local horse racing industry and the level of gambling on horse racing in a country. The BLB therefore, though essential, cannot lord their position over the Club. There needs to be a good working relationship between the Club and the BLB but it is not a master and servant relationship. The sooner the BLB recognises that reality, the better. Horse racing in this country remains at the cross-roads. A place the Club has resided it for many years, if not every year since centralisation. Successive political and Club administrations have come and gone without any improvement in its fortunes. A constant throughout this period has been the support of an admittedly dwindling group of punters and owners. This pool might be dwindling at a faster rate than the 10 years remaining for the Club before insolvency. Action is required now and it is required with a vision and a purpose. Let us hope that we are not saying the same things in one year’s time.