Ashforth’s Angles: Show us the sums for Kempton
Kempton: could be closed to build houses
PICTURE: Edward Whitaker (racingpost.com/photos) Show us the sums and plans for Kempton By David Ashforth 6:01PM 15 JAN 2017
THE planned closure of Kempton has generated enormous heat.
While Alastair Down has waxed lyrical about the dawn of a brave new world, Tom Kerr has waxed appalled by an act of vandalism.
To Ruby Walsh the Jockey Club's plans "make sense" while making Tom Scudamore "angry."
Nicky Henderson predicts that "National Hunt racing will be the big loser" while Jonjo O'Neill thinks "it could be the making of jump racing for the next generation."
Oliver Sherwood, in a measured response, said, "Show us the sums."
Paul Nicholls, while expressing "dread" at Kempton's closure, has said something similar.
We need the answers to key questions. In particular, to what extent are the Jockey Club's transformative investment plans dependent on Kempton's closure?
The Jockey Club intends to invest £500 million over ten years in "numerous projects nationwide" with the highest profile investments to upgrade Sandown, build a floodlit all-weather track at Newmarket and increase prize money.
Significantly, the Jockey Club states: "Any changes from current operations at Kempton Park are entirely conditional on a successful planning process" and the all-weather course at Newmarket will be built "should Kempton Park receive redevelopment approval."
Apart from the inevitable war over planning permission, there is the question of how much will be raised from Kempton's sale?
The proposal states: "If development is permitted, the Jockey Club will be looking to ensure it generates in excess of £100 million for investment."
Presumably this is a net figure after the costs incurred by the sale.
The agreement with Redrow plc, the developer, appears to be conditional on planning permission, in which case £100 million plus for a 3,000 home development on prime land seems a poor return.
It translates into just over £33,000 per home. If approaching £400 million of the £500 million planned investment is to come from sources other than the sale of Kempton, how vital is the sale?
It appears to be imperative not because the £100 million is essential but because without an end to all-weather racing at Kempton there can be no all-weather course at Newmarket while investment in Sandown would leave Kempton trailing behind.
The accounts for Jockey Club Racecourses (Holdings) Ltd provide limited information but raise questions about the strength of the foundations for a major investment programme.
In 2015 the Group made a post-tax profit of £7.4 million. Its net debt had risen to £105.6 million and last March, under a refinancing agreement with HSBC, the Group acquired a £90 million loan and £5 million credit facility.
Immediately, £88.3 million of the loan was used to repay existing debts. Repayments on the loan do not begin until the end of 2021 although almost £24 million of bonds issued by the Jockey Club in 2013 become redeemable in 2018.
That income was lent to racecourses in the form of interest-bearing loans.
The racing industry needs to be shown the business plan and financial projections that underpin the future envisaged by the Jockey Club. As Sherwood said, "Show us the sums."
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