JackSprat

Can the Auckland Trotting Club survive?

43 posts in this topic

The question has to be asked if the Auckland Trotting Club can survive in the wake of the mammoth losses incurred in the property development venture?

There's also the "elephant in the room" of the pending court cases that could double the losses again!

Will they end up having to sell Alexandra Park and move out of Auckland altogether?

Where are the property development guru's now that they brought onto the board to oversee this disaster?

How the hell did the recently departed CEO win awards for her "brilliant management" of the development?

Who in their right mind would bring the guy that designed the CTV building in Christchurch onto the project team?

Are the current stakemoney levels just an "ego trip" for the board given that the club could be insolvent within 12 months?

Is it time for a Cambridge based contingency plan should the ATC be forced to sell up and move out of Auckland?

Is taking pot shots at Garrick Knight for reporting the truth the best the ATC board has got to avoid admitting incompetence?

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They might get to keep Auckland  at what expense puk ? How can some on the board with there past experience with money or investments be able to make these decisions noticed  bruce Carter has been quite I know he has been thrown under the bus he needs to take control  and be a leader thank good kuemu didn't join these amateurs  unlike puk 

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very unconvincing by Rod Croon, acting CEO and board member. Time for honesty and transparency (even if cliche)He said without taking a breath, He thinks G knight always negative in his reporting and they have enough reserves to pay the increased stakes so seemingly all well with the ATC . he has even found other  properties worth 20 million they could liquidate and even if the projected income of around 35mill turned into a loss  of sim proportion wouldnt be a problem. lets say the rhetoric heard so  far is scary at best and if the ATC was to float on the sharemarket it would be a massive effort to find any investor. Lets hope the Board calls fo outside help before its too late.

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No doubt its a messy situation and Financially very shaky.

Lets not forget its a Trotting club first and foremost and the ambitious yet risky development to future proof the racing side has had a massive set back.

But with interest rates low and a reasonable outcome of current issues including getting the apartments and retail completed all should not be lost.

But I feel it needs a new broom and the incoming CEO needs to act with the best Board and racing brains he can find.

Start with a clean sheet.[ and big debt ! ]

Cos the racing side needs attention ,costs in North are prohibitive and land values etc are encouraging current participants to move on and certainly not attracting young players in.

The high stakes are not gimmicks they are essential just to stay in the game.

Harness needs to work together....its staggering that Auckland /Cambridge have 5 [ I read somewhere ] back to back meetings next season again.

ATC racing facilities are good ....running them into the ground and lowering stakes as some suggest will just speed up decline which IMO has been evident for some time.

40 odd race meetings a year cannot justify the current profile....these other business interests needed to sustain racing.

Too many Auckland sports been troubled by internal politics / jealousy and non-collaboration.

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1 minute ago, tim vince said:

Ii have no wworries after going to the meeting Wed

 

Eternal optimist Tim , great win last night.

But you can't train all the horses racing at AP....you need someone to race against !

As fast as the South horses coming in the sellers and others are vacating....last two weeks ,without you and the horses from South there would be NO meeting !

Relax by the pool now !

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I was at the same meeting Tim and can’t agree with you. Will wait for the final wash up to see what the real cash loss is. Wouldn’t sell anything until then ( subject to continued bank support).

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That old saying attack is the best form of defence sprung to mind.

It looked unprofessional, mentioning Garrick Knight's journalism. 

But I spose good on Croon for fronting up on Trackside, but he probably only did on the proviso that he didn't get thrown any "hard" questions. 

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2 hours ago, Idolmite said:

Is there a link to the Garrick Knight story?

The true picture of the Auckland Trotting Club development

By Garrick Knight

It’s understood the Auckland Trotting Club is facing a minimum initial loss of $40 million on its urban/retail development.
That number is likely to blow out further depending on various factors including legal proceedings, sources have told this writer.
The development, which had sales of $300 million, was trumpeted as going to deliver a $30 million cash profit to the club.
This $70 million swing in fortunes has come as the development approaches three years beyond its original expected completion date.
It has been mired with delays owing to numerous construction issues.
The club terminated the contract of one of two construction companies, Canam, in July last year, replacing them with CMP Construction.
Canam and the ATC subsequently commenced legal proceedings against each other.
Club officials are holding a Special General Meeting next week where they will plead the case to members to sell off a parcel of land on Manukau Rd, owned by the club, currently occupied by Caltex and Burger King.
The hoped outcome would be to reduce an outstanding loan to Westpac from $40 million to $20 million.
Interest on the loan is currently around $2 million per year.
The past three years the club has posted net operating results of a $283,000 loss (2016), $69,000 profit (2017) and $500,000 profit (2018).
Factoring these into account, an annual $2 million interest payment to the bank, or even $1 million should the debt be halved by the sale of the Manukau Rd land, seems hard to service.
In spite of this catastrophe, the club has proceeded with stakes rises, albeit capping race numbers at 8 or 9 to offset the extra costs involved.
The light at the end of the tunnel is that the retail development at the base of the development complex is projected to return $2.5 million per year in rent to the club.

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Good article by Knight.  Factual and  not sensationalist which is not what I was expecting after listening to Croon on Trackside.                                                                                                             So the ATC made $500k profit last year and expect about $2.5 mil in rent income when project is completed.  That’s $3m.  But what income do they receive from  the property they intend to sell?   If it’s worth $20m they should be receiving $1 -1.5 mil per annum so expected income after completion about $1.5m.  Not a lot to service a $20m loan.  If the loss balloons out it won’t be a pretty picture no matter how it is spun

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My thoughts exactly. I'd imagine the lost income from the property they intend to sell would be similar to or even exceed the interest saving, so little if any net improvement in their position at all. And they'll end up getting screwed in the sale of the property seeing that it's common knowledge that they're in "fire sale" mode.

These pending court cases will pretty much determine whether they can survive or not. If they go south and the losses happen to double things will get interesting.

I hope those independent directors that were brought in to oversee this whole debacle have plenty of professional indemnity insurance!

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28 minutes ago, JackSprat said:

My thoughts exactly. I'd imagine the lost income from the property they intend to sell would be similar to or even exceed the interest saving, so little if any net improvement in their position at all. And they'll end up getting screwed in the sale of the property seeing that it's common knowledge that they're in "fire sale" mode.

These pending court cases will pretty much determine whether they can survive or not. If they go south and the losses happen to double things will get interesting.

I hope those independent directors that were brought in to oversee this whole debacle have plenty of professional indemnity insurance!

The previous CEO ( and I use that term loosely ) should be concerned too Jack. She was the one that reportedly "had a close eye" on things according to Hadley who was apparently happy with the way things were being handled.....:rolleyes:

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2 percent return on the 2 properties 4 sale.500k.if u have to sell u have to sell.we have all had to sell something in our lives.a house to buy a better house a car to buy another car or simply have to pay bank.not unusual.every big co mpany does it all the time.u have to do what you have to do.n9good litigating the past.do that later.get the development finished keep the bank happy. If you have skininthe game we have no choice. A lot of people with no skin in the game have all the answers.in dark times we have to support the board and these are dark times.ive seen people at the meetings who never come to the trots don't own a horse yet seem to want to blow up and play the blame game.do that later.lets get this development finished get the cash in and see where we stand

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3 minutes ago, tim vince said:

2 percent return on the 2 properties 4 sale.500k.if u have to sell u have to sell.we have all had to sell something in our lives.a house to buy a better house a car to buy another car or simply have to pay bank.not unusual.every big co mpany does it all the time.u have to do what you have to do.n9good litigating the past.do that later.get the development finished keep the bank happy. If you have skininthe game we have no choice. A lot of people with no skin in the game have all the answers.in dark times we have to support the board and these are dark times.ive seen people at the meetings who never come to the trots don't own a horse yet seem to want to blow up and play the blame game.do that later.lets get this development finished get the cash in and see where we stand

The way this is going Tim, there might not be any cash.....:rcf-shocked-5:

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23 minutes ago, Ohokaman said:

The previous CEO ( and I use that term loosely ) should be concerned too Jack. She was the one that reportedly "had a close eye" on things according to Hadley who was apparently happy with the way things were being handled.....:rolleyes:

   

They must have seen the disaster unfolding, but how do you manage something with so many factors out of your control.

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Racing cannot move out of Auckland - if Alexandra Park goes, then harness goes simple as that.    Well, that is how I see it.     Just picture - a new "facility is built somewhere in the sticks, so what use would the Pokies be or the TAB be, or the dining/conference facilities be.    Move to an area of next to no population and that would be curtains for the activities that presently prop up the club, and race night attendance     No use selling Pukekohe as the monies obtained would be needed to replace that facility (training tracks, barns etc.) so sfa probably left over to service present woes.     Some members will remember the "disaster"  when the club sold very valuable land to the government and to this day the land lies vacant and only used for parking at the showgrounds next door.     The club here were lucky the government allowed them use of the land until the new school was built.    Oh yes, the money "they" obtained from this earlier sale has been well & truly spent so again is of no use to the present dilemma.     Oh well, once again I will be said to be "negative" but anyone who says this first sort out the facts from the dreams.      The first priority (again in my opinion only) is that the board must ensure they get value for the large amount of monies that are being disbursed both as salaries and consultancy fees.,  

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1 hour ago, eljay said:

Racing cannot move out of Auckland - if Alexandra Park goes, then harness goes simple as that.    Well, that is how I see it.     Just picture - a new "facility is built somewhere in the sticks, so what use would the Pokies be or the TAB be, or the dining/conference facilities be.    Move to an area of next to no population and that would be curtains for the activities that presently prop up the club, and race night attendance     No use selling Pukekohe as the monies obtained would be needed to replace that facility (training tracks, barns etc.) so sfa probably left over to service present woes.     Some members will remember the "disaster"  when the club sold very valuable land to the government and to this day the land lies vacant and only used for parking at the showgrounds next door.     The club here were lucky the government allowed them use of the land until the new school was built.    Oh yes, the money "they" obtained from this earlier sale has been well & truly spent so again is of no use to the present dilemma.     Oh well, once again I will be said to be "negative" but anyone who says this first sort out the facts from the dreams.      The first priority (again in my opinion only) is that the board must ensure they get value for the large amount of monies that are being disbursed both as salaries and consultancy fees.,  

That "disaster" you speak of was over 20 years ago LJ and a pretty good deal at the time...something like $8-9m for land that was bringing in 20-30k in parking fees from memory. There was a need, we were told, for a new Secondary School and land that size was in short supply. The funds went on major renovations to Restaurants, Members and Sponsors areas, and the introduction of the Sports Bar area.

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$300 mill for $30 million return is woeful ( nothing for that escalation , bad steel , bad build ) - knowledgeable developments aim for 25% clear so arse covered .

Also, where are the developer right to renegotiate the purchase in the contracts - standard practice - when big movements in values and costs etc .The purchaser can walk if past a date as well . Bad contracts re apartments have left them double exposed .

Apartment owners have on sold their units for huge profits . 

 

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