The following appeared on racingweb:
PHUMELELA Gaming & Leisure Chief Executive Rian du Plessis (photo) is hoping that the company’s negotiations with bookmakers will help to channel significant chunks of betting turnover, lost after the legalisation of the ‘Open Bet’, back to racing.
In a Moneyweb Market Watch Special Report flighted on SAFM on Monday evening, Du Plessis told Moneyweb’s Hilton Tarrant that Phumelela would be involving all racing’s stakeholders, including the gambling boards, in “reasonable dialogue” to address this pressing issue.
In the wake of Phumelela’s latest financial results, Du Plessis highlighted a number of positive developments for racing.
Here is a transcript of the interview, with the podcast below:
HILTON TARRANT: Phumelela chief executive, Rian du Plessis, in studio. Riaan, results to the end of July, July 31 2010, incidentally, the exact same day that the Durban July ran this year. Revenue up 6%, headline earnings per share dipping though by 16% to just under 79 cents/share. How is trading going out there? Still challenging?
RIAN DU PLESSIS: Still challenging. We had a challenging August but September has been better and we launched a new bet type on Friday. We’ve had four race meetings, a double-header on Saturday and I must say, if the signs are that this bet type… this is what the bet type is going to do, then most encouraging.
HILTON TARRANT: In terms of that new bet type, is this where you’re looking to move in the future, in order to counter the competition that exists from the fixed odds bookmakers?
RIAN DU PLESSIS: Well, the All To Come bet is really a bit of convenience for our punters that we haven’t been able to offer before. If I can give you the example, if a punter was to break-away at lunchtime and wanted to come and place his bets, if he punted on the exotics, that’s fine, he could get his bets on. But if he favoured, say, a horse to win race 3 and one to run a place in race 5 and one to maybe win in race 8 and typically wanted to take his winnings in race 3 and put it on race 5 and vice versa on race 8, he’s unable to do so unless he was physically there. Now obviously I’m not referring to internet and telephone punters but I’m talking about 80% of our punters, which are the people who bet in the totes. What the All To Come bet now offers is the opportunity for them to back any win or place in any six races on the day, which is really convenient.
HILTON TARRANT: Rian, how are you working to counter the open bet, the problems associated with that or the competition associated with that?
RIAN DU PLESSIS: Well the open bet is legal, they won their case and it’s hurting us, it’s hurting the sport. We’ve entered a dialogue with the bookmakers and to be quite honest, if we can’t get the turnover that’s happening on the open bet back into the sport in the form of betting, we need to find another way. Media rights comes to mind, we charge a very, very minimal R4000 per month for somebody to use Tellytrack and place their bets on that. Tellytrack costs us considerably more to produce and distribute. So, the international trend, by the way, is that media rights in the horseracing industry are worth a hell of a lot more than they have been in the past. So, that’s one of the avenues but we will encourage and have opened a reasonable dialogue with the bookmakers at national level and we’re also involving the gambling boards, who are stakeholders in our business as much as our shareholders and our horsemen are.
HILTON TARRANT: Rian, aside from the open bet, are you seeing increased competition from bookmakers, not only for horseracing betting but also for sports betting, given that we’re seeing some fairly large foreign entrants finally entering the market.
RIAN DU PLESSIS: Yes, as you may know, we own control of Betting World in partnership with Gold Circle. Betting World has a significant fixed odds business and sports betting for bookmakers, especially in-running betting is growing and growing very strongly. So, it’s something that we will be pursuing quite actively going forward.
HILTON TARRANT: How did the soccer world cup impact you?
RIAN DU PLESSIS: Betting World did well. Betting World is positioned slightly more up-market than our typical tote outlet and their retail outlets are located more in areas where you would find tourists. So, Betting World did really well, did nice turnover and good profits. Profits north of R3m on the event alone. So, Betting World did well, the tote took some pain. Simply because we compete for the leisure rand, our minimum bet is R6 and the ticket prices were quite high. So, if somebody had been spending R500 - R1000 on buying soccer tickets, it’s quite a few bets that they wouldn’t be able to place them.
HILTON TARRANT: I guess your Soccer 6 also did incredibly well during that period?
RIAN DU PLESSIS: Yes and looking at recent trading, we’re now achieving mid-week pools of more than R1m on Soccer 6 and we hold high hopes for that bet.
HILTON TARRANT: Just to go back to Betting World, that operation, you are expanding fairly aggressively in terms of locations. Do you think you will reach a ceiling in that business or is there enough scope to keep growing the outlets?
RIAN DU PLESSIS: Yes but bear in mind that we’re growing off a small base. Betting World has 42 outlets at the moment and we’re looking to open a further 18, almost 50% up in this financial year but even 60 outlets could not possibly serve this market properly. In the UK and there people have more disposable income or used to have, if I may say that, there’s about 10 000 bookmakers, retail outlets. So, at the moment between ourselves, Gold Circle and the bookmakers, I wonder if we have 600 in total in this country.
HILTON TARRANT: Rian, looking at racing, there’s a lot been said about the image of racing and the work being done to build on that image to improve that image, to make racing exciting again, to get new crowds to the racecourses. What is being done behind the scenes?
RIAN DU PLESSIS: Well, we’re working very hard in attracting new sponsors and giving more value to our existing sponsors. Not so long ago, in fact two weekends ago, we had the Emerald Cup at the Vaal, where we had record attendances and turnover well up on last year, well up on budget. So, thank you very much to the Emerald Group. We’ve had a six-year relationship with them and it works very well for us and it seemingly working well for them. Also, we are working well with Sansui, this year will be their second year and they are putting a very attractive competition together. If you buy a Sansui product you qualify for a draw and can ultimately win R1m. However, if you are on course on the day, the R1m becomes R2m. So, watch this space. An event of that nature is not built over night, it’s the second year that Sansui and the JD Group are involved with us but we hold high hopes for the future. We think that we can build a fantastic event for Johannesburg.
HILTON TARRANT: And of course your night racing at Turffontein still part of those plans?
RIAN DU PLESSIS: Yes, between ourselves and Gold Circle at Greyville, we’re now running almost every Thursday night. There is a possibility that there may be a demand for night racing, a stronger demand on Tuesday night, in which case we will look at it. The programme is working well, it’s working well for the punters. So, night racing is here to stay and to be built on.
HILTON TARRANT: Rian, are you looking at any more course sales, given what you’ve done in the past?
RIAAN DU PLESSIS: Course sales is a highly emotive and emotional issue but we will engage with our stakeholders being the horsemen, the jockeys, the trainers etcetera and where it makes sense, we will explore what’s in the best interests of the game in the long term and do the sensible thing.
HILTON TARRANT: The international side of your business, despite that loss of the Racing UK contract, you did actually claw back quite a bit of what you had lost. What other international deals have been signed in terms of your broadcast product from South Africa?
RIAN DU PLESSIS: Well, our biggest customer internationally at the moment is Tabcorp in Australia. They last year, well, a couple of months ago, opened a second racing channel and we’ve seen turnover levels on our product up year on year some 300%. So, Tabcorp is now our biggest customer. Second biggest is Italy, that wasn’t a customer a year ago. So we think that our product has high appeal in this time zone, particularly in Europe, where for the winter months we race between one to two hours earlier than everybody else does. So, it offers betting product of good quality, 364 days a year. Then we also have the further east we go, the more attractive. I think when it gets to Australia it’s quite late at night, so there it starts becoming too late for big punting, although we’ve seen good success on our product but we’ve recently had Macau take, in addition to what was the case previously, Singapore took our product and Malaysia. We’ve recently added Macau and we’re looking to add further of the international team websites as well.
HILTON TARRANT: Phumelela chief executive, Rian du Plessis. The dividend held at 43 cents / share, putting it on a yield of 7%.
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