Orville Clarke, Gleaner Writer
Joseph A. Matalon, chairman of Caymanas Track Limited (CTL), announced steps to cut losses at the cash-strapped promoting company, including the slashing of purses.
Speaking at a press conference on Tuesday in the North Lounge at CTL to announce changes at the island's only racetrack, Matalon outlined the genesis and recent history of its financial woes, beginning with a $110-million increase in purses in 2009 (representing a 24 per cent increase) and a 30 per cent increase in appearance fees, despite operating losses of $41.7 million in 2008.
"This increase in purses virtually sealed the fate of Caymanas Track Limited and subjected the company to a downward financial spiral," noted Matalon.
"During the period 2010 to 2011 gross profit declined to $515 million or 9.7 per cent of sales, operating losses increased to $96 million and cash resources available to the company went into overdraft.
"The situation worsened in the financial year ending 2012 as gross profit declined to $366 million or 8.5 per cent of sales and operating losses of $149 million. Gross profit contribution to overheads had declined by $161 million from $527 million in 2009 to to $366 million in 2012, while overheads increased by $50 million in the same period or an adverse impact on operations of $211 million. Breakeven in 2012 would have required a 41 per cent increase (i.e $1.7 billion) in actual sales of $4.3 billion," explained Matalon.
Continuing, he said when the new board took office last year, the organisation was inadequately staffed.
"There was no acting general manager, no financial controller, no marketing director, no HR manager and no internal auditor.
"The entity was subjected to an investigation into its operations by the Public Accountability Inspectorate Division of the Ministry of Finance and the Public Service."Most of the operational misdemeanours identified in the report have now been corrected. There was a major exit of staff from the organisation. As a consequence of the PAAC Audit and the hasty retreat of staff, the new board requested of the Ministry of Finance that a forensic audit of the operation of the company under the previous management be carried out to ensure that the current board not be held responsible for activities which took place under the previous board and management.
"The present financial structure which offers a gross profit of 8.1 per cent is inadequate to cover operational expenses and will result in continued losses ...,"
Given this gloomy picture, Matalon said the board of CTL has decided to purse the following initiatives to avert the crisis and restore stability to the operations of CTL.
They include: (a) a reduction in purses of 4.8 per cent for each race (resulting in savings of $74 million over the next 12 months, but no cuts in appearance fees;
(b) breeder's bonus will be suspended for an estimated period of one year;
(c) All events with a purse in excess of $3 million have been arbitrarily cut and any sponsorship derived for each such race will be shared between CTL operations and these reduced purses;
(d) established stable rules in accordance with the 'Exercise Period and Stable Area Rules and Regulations' will be enforced, as a significant number of trainers are non-compliant.
(e) maintenance of barns, etc. to be carried out by the trainers themselves.
Matalon disclosed that these issues were presented to the stakeholders (owners, trainers, jockeys, grooms) at a meeting on Monday morning and received mixed reactions.
"There is some scope for renegotiation. However, the total package is expected to be maintained in the interest of keeping Caymanas open. The alternative is to close down Caymanas Park until it is divested," he declared.