EDITORIAL - Fly the gate on Caymanas Track Ltd
It is more than five months since Horace Dalley, a minister in the finance ministry, made the umpteenth declaration of the Jamaican Government's intention to get out of the horse racing business.
Marketing the sport and operating the island's sole racetrack, which the Government does through its company, Caymanas Track Limited (CTL), "is not part of the core business of Government," Mr Dalley, correctly, told industry officials at his so-called summit of stakeholders last August.
But despite the tone of urgency in Mr Dalley's call at the time for potential deep-pocketed buyers to come forward, we have seen little evidence of a serious effort at divestment on the part of the administration. That is despite the announcement of one group, headed by racehorse owner Michael Bernard, of the creation of a vehicle to bid for the business. His group could raise $750 million for an offer and already has in place investment banking support, Mr Bernard said.
The lack of obvious follow-up energy on the part of the administration is surprising on several fronts.
First, as serious as the acquisition intention of Mr Bernard's group is, and as willing as the Government might be to sell if it received such an offer, it is unlikely that an unsolicited bid would pass the procurement regulators in this circumstance.
The horse racing business in Jamaica is an emotional matter. The previous short-circuited efforts by the Government to sell CTL left among the protagonists wounds that are still raw, even several years on. Transparent competitive bidding for government assets is usually better. In this case, it is the only way.
But more important, the Government just can't afford CTL. In the last two fiscal years, for instance, the company lost nearly J$250 million. It will lose more in the financial year now coming to an end.
Moreover, the company is bankrupt. In past financial years, its liabilities exceeded its assets by nearly J$400 million. The company is kept afloat by the goodwill of taxpayers and creditors, the latter often beyond their will.
SITUATION LIKELY TO WORSEN
Indeed, it is on good authority that the payment of prize money for races is often delayed because of the company's cash-flow problems. Further, CTL can ill-afford to upgrade its plant and facilities so as to attract more business.
If the current situation is bad for CTL, it is likely, in the absence of an injection of private capital, to get worse soon. The Government is negotiating an economic support deal with the International Monetary Fund (IMF), which is insisting on a smaller fiscal deficit and a larger primary surplus to help contain Jamaica's crisis of debt. The Government's limited capacity to subsidise its loss-making firms will worsen.
Indeed, in deference to the IMF's fiscal demands, the Government has undertaken to privatise state firms. It has already established enterprise teams for the divestment of entities such as Clarendon Alumina Production and the Port Authority of Jamaica.
Caymanas Park, however, remains, in so far as we can discern, in the stalls. It's time to fly the gate - without the false starts of the past.
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