By Cliff Williams, ContributorTHE MORE I monitor the divestment issue, the more surprised I become at some of what is emerging as we await the Government's decision or otherwise on which of the two Proposals for Lease, if either, will meet the criteria for consideration as a successful bid.
Although there is official insistence that no decision has yet been taken, rumours persist that this supposed "no decision" is in fact a decision that neither of the two bids under consideration met the criteria that the Government was expecting.
Whilst no timetable has been given for an announcement of whatever decision has been taken or not taken, the Sport of Kings continue to operate in limbo with the stakeholders wondering about the wisdom of their continuing interest.
Incidentally, something should probably have been said on Friday the 10th of December 2004 as the bid bonds expired once again and the investors may be called upon to extend them. This is the second time this will be happening and must be very frustrating for the potential investors.
POLITICAL MATTER
The issue has now become something of a political matter, as nearly all matters in Jamaica tend to be, and, believe it or not, there is a fairly powerful lobby, sympathetic to the ruling party, who feel that divestment is not necessary at all.
As things stand, it is being said that the operations of the promoting company is far from being as profitable, as its potential seems to suggest, despite the unquestioned competence of the management and staff, and there are certain things that have to be done to enhance its viability. The detractors of divestment seemingly think that there is a formula for success that has a great chance of succeeding.
Earlier this week, I overheard an interesting debate on a radio programme between owner Dr. Paul Wright, who is a potential investor with an interest in one of the Proposals for Lease and the president of the Jamaica Racehorse Trainers Association Mr. Vin Edwards.
UNCERTAIN TERMS
Dr. Wright, in his capacity as an interested party being a member of one of the groups bidding for the lease of the Caymanas plant, expressed the view in no uncertain terms that one of the problems facing the promotion of racing is that it is being run by persons who simply don't understand how to do it profitably and his group would have no difficulty making it far more viable given their level of expertise.
As a former Board member, Dr. Wright was at pains to point out that during the late 80s into the early 90s the turnover moved from $56 million to $4.0 billion annually, and, operating within the means of their cash flow were able to effect certain important improvements to the plant, especially the stable area.
Edwards, who seems to be fundamentally against divestment, is of the view that it is not necessary to lease the plant but viability could return if certain steps are taken. In any event, Edwards is dead set against giving the racetrack operation over to certain persons now involved in the bidding.
I am not absolutely sure what is the basis for Edwards' position but would like to see is his plans for modernisation of the racing plant and the profitable promotion of the horseracing as a business venture. Maybe I have heard it before but if that is so it certainly bears repetition and in any event Edwards has history on the side having sat before on what he deems to have been a successful Board.
The Government of Jamaica owns the business side of the racing industry and Edwards may very well be right in his view that it may not be necessary to lease or divest the plant to private investors at all given what the Government is capable of doing to allow the industry a good chance to achieve economic viability.
INCENTIVES
The fact of the matter is that Government has it in its power to give the promoting company whatever it needs to make it viable and this could include a range of incentives from capital development loan guarantees to Free Zone status with the necessary requisite tax regime on gross sales and an indefinite moratorium on revenue liabilities.
This, I am submitting purely from a speculative position, could be one of the bases on which a " no divestment" decision could have been made.
Based on the current economic environment and the prognostications for the next five years, it would seem to me that any group of private investors will need some of these same concessions to achieve profitability in any reasonable time.
If the due diligence exercise undertaken by the evaluators of the bids lead them to think that this is going to be the case, then it is entirely understandable why there is this seemingly interminable delay in the announcement of a decision.
