Cliff WilliamsTHE OFFER of wagering on horseracing events held outside of Jamaica through simulcast is perhaps a classic example of the importation of a product and service through out-sourcing, a strategy employed successfully by the major bookmakers since the early '60.
This is what Caymanas Track Limited (CTL), the sole promoters of live racing in the island, has been utilising effectively to sustain viability for the last decade or so.
Gross income from this source was estimated at approximately 60 per cent of total when I last looked at the figures during 2005.
Such a scenario may lead to questions concerning the viability of the promotion of the local product. However, in looking at the returns from simulcast wagering, it has to be taken into account that it is a six-day-a-week operation and averages about 12 operational hours per day, for a flat fee paid to the suppliers of the product, thus eliminating the expenses and logistical challenges of live promotion.
Still, one would expect the promotion of the live product to provide the majority of the income for the promoting company as there was a time when simulcast was not available.
SIMULCAST REVENUE
What this means is that if one extracts the simulcast revenue from the total gross earning, the promotion company could no longer be considered a viable financial entity.
The point being made here is very important.
The proliferation of numbers games and lotteries in tandem with a racing product deteriorating in quality due to anemic investment in breeding and ownership of bloodstock is beginning to take devastating toll on the industry.
This therefore means the operation of the racetrack as a satisfactory profitable invest-ment for the new business interests is going to present certain unique challenges given the initial capital outlay it demands.
As I understand it, the divestment negotiations between the Government and the preferred bidder are going apace. In fact, the principals of Caymanas Entertainment Limited (CEL), the company involved in the process headed by Richard Azan, are quite optimistic about the likely outcome of the deliberations.
Incidentally, this would mean what was published elsewhere may very well be wide off the mark in terms of certain of the figures quoted therein, as well as the current state of the negotiations.
DIVESTMENT
In the opinion of the CEL principals, the Government is serious about divestment and it will happen at some point. Given the likelihood of this taking place, the question I am now concerned with is this: How is viability of the racetrack operations going to be achieved in reasonable time and at what cost?
Two major challenges will face the new investors immediately. Firstly, addressing the modernisation of the infrastructure and secondly, the improvement in the quality and quantity of the equine population available for racing. These two factors will account for the bulk of the new investment, given the cost of construction, as well as the
plan to import about 200 thoroughbreds at the appropriate time.
Certain questions are being raised about this importation of bloodstock, but I am informed that Panama resorted to this approach and has done it successfully.
Whatever happens from here on, the return to viability of the local racing industry in terms of its breeding industry and operation as a commercial entity, is going to be a major challenge.
This, however, will not be insurmountable as the expertise is available and it would appear that as a capital venture, it is likely to attract the requisite support.
