Cliff Williams
IN RECENT columns, I have been looking at some of the challenges the new investors will have to overcome successfully to achieve the stated objective of delivering a modern plant and a racing product of quality that can begin to yield the requisite profits in the stipulated time.
The more thought I give to this matter it is the more the magnitude of the task hits home. From a financial standpoint, the high level of initial massive capital outlay to modernise the racing plant raises certain questions about the wisdom of this type of venture when viewed against the background of available investment options worldwide.
I have spoken to two persons involved in the financial sector and they are of the view, after looking at the numbers, that they can think of a thousand and one less risky ways of investing this amount of funds successfully.
One does not have to be an investment broker or understand high finance to know that this is undoubtedly true, but it is the likes of the new investors in the promotion of live racing that gives the world the great companies producing indispensable goods and services profitably.
GUARANTEED PROFIT
There can be no question though that the overwhelming majority of investors, especially the risk averse, will not see this venture as viable despite its predictable cash-flow and virtually guaranteed profit margins.
Fellow columnist and long-standing major investor, Howard Hamilton, in his article of last week, expressed the view, and was most insistent, that it was not the wisest decision by the new investors to plan modernisation of the existing plant when the better option would be to establish new facilities elsewhere.
I believe Mr. Hamilton is speaking from a position of having brought in consultants to conduct a comparative feasibility study on the two courses of action hence his conclusion that setting up new facilities is the way to proceed.
Without seeing the proposed figures for the establishment of new facilities, an intelligent guess is that rehabilitation and modernisation of the existing plant must have economic advantages far outweighing building from the ground up.
I may be wrong but to abandon the assets on the existing site simply cannot, by any stretch of the imagination, be more expensive so this is why I tend to disagree with Mr. Hamilton's proposal.
Still, I take the point that with Caymanas hemmed in on all sides by housing developments and, given the challenges posed by this scenario, establishing new facilities elsewhere would be ideal.
UNIQUE INDUSTRY
Vin Edwards, president of the Jamaica Racehorse Trainers Association, has had a lot to say about the proposed divestment of the racing plant in terms of the future role of the professionals and other stakeholders in the expected new paradigm, but there is something he said which I find somewhat interesting.
Edwards thinks that the local racing industry is unique in that it has more of a socio-economic value and it will be extremely difficult to operate successfully as a business by private investors. Could this possibly be so?
I think it is important to examine this position with a view to making a determination as to why this is so, if it is indeed the case.
The answer to this question lies in making an objective assessment of the performance of the promoting company over the last five years or so in terms of actual returns and potential for future growth.
Obviously, the business plan of the new investors would have taken into account the position of both Hamilton and Edwards at the stage of the feasibility evaluation, but I think that a closer examination of the these positions is in order.
