Our part in the amendments to the South African Sales programme
SALES COMPANY MEDIATION PROCEDURE JANUARY – JULY 2017
The process was kept confidential throughout so as to protect the integrity of the sales programme during a period of discussion of change. Now, this website reports on David Allan’s activities and on his successful invitation to Dr Andreas Jacobs to lead the efforts.
The result to date is a significantly altered sales programme with goodwill and platforms for future liaison between sales companies.
Introduction and methodology
In 2015 and 2016, David Allan (DA) published articles discussing the sales programme in South Africa putting forward a programme to streamline the remarkably long list of sales that were spread over many months. Media included open correspondence with Cape Breeders, then a paper called THOROUGHBRED THOUGHTS (25th July 2016) which dealt with the sales, with inward looking aspects of the market and with the creation of the next generation of stakeholders whether staff, fans or investors.
DA’s motivation in writing publicly was to propose solutions that many stakeholders in SA breeding would not speak about openly. A number of them gave messages of appreciation to DA for raising the issues openly. At no point did DA favour one sales company over the other, having good working relationships with both.
Later, in a few of his Monday Columns for Turf Talk which have varied content, DA made mention of the sales programme with suggestions and recommendations. The proposition was a yearling sale programme (including unbroken 2 year olds) to consist of
1 x secondary Sale in the Cape in March
1 x major Sale in Joburg in April/May
National 2YO Sale
(thus advocating the removal of four other sales)
ReadytoRuns were secondary in this Agenda but brought into the debate.
DA’s platform is 30+ years a racehorse owner and breeder; a manager for racing and breeding – and stallions; a consultant and agent advising breeders and acting as vendor and buyer, also debating and framing sales company terms as a board member of an industry body.
Klawervlei Farm Sale (KFS) was not debated being a private function.
In South Africa, where AllanBloodlines has become established in all these activities over 15 years, he owns 15 broodmares and manages another 20+ for overseas professionals whom he has facilitated into South African breeding.
+ +By late 2016, after unsuccessful attempts by the sales companies to agree on rationalisation, the situation for mid-range breeders had become dire. Therefore, in December 2016, DA drafted a paper on the basis of which he wished to make an approach to both main sales companies.
His goal was to “get the right people in the room” and to mediate or broker a settlement. With the plan ready by Christmas 2016, DA decided to approach a powerful figure with an invitation to lead the effort.
He sent briefing papers to Dr Andreas Jacobs (AJ) of Gestut F’hrhof, Newsells Park Stud and Maine Chance Farms standing many stallions and trading with many sales companies at high quality levels. AJ is a driving force at the sales company BBAG. He is a leading investor in SA bloodstock, independently and in strategic partnerships, as well as a global bloodstock player and global industrialist.
Both AJ and DA contribute continuously to South Africa’s efforts in such areas as AHS-related exports, AJ at the higher level of influence and resource while DA is known “to have a South African flag on his hat” wherever he operates.
The speed with which AJ accepted the invitation to lead the project confirmed his belief in what was necessary. It also prefaced a great commitment of time and effort on his part.
From 4th January 2017 until mid July, AJ spearheaded the effort working with DA as they developed and implemented strategy continuously, much like a President and Chief of Staff (of one!).
The fundamental aim was “To assist those who have so far been unable to agree with each other to agree in such a way that neither side feels a winner or loser, but will be applauded by the industry for making positive moves”.
January to July 2017AJ held top level talks with CTS and approached those with influence over BSA. Personal schedules and other commitments rendered the initial target of a settlement by March impossible but by mid March, DA was able to approach BSA directors to set out the intended procedure and request a meeting with AJ, to which BSA agreed.
That meeting did not take place until early May but by then much detail had been discussed. A productive session resulted in both sides being willing to meet each other, a status that itself felt like a breakthrough. Although a conventional mediation procedure did not develop, AJ and DA adapted so as to see the process through.
The meeting between the parties took place in mid July in Johannesburg on a date for which both AJ and DA flew from Europe for a day, and CTS representatives travelled from the Cape.
What happened?After that meeting, much of what had been tabled in early January and beforehand had been achieved.
The targeted yearling/2YO Sales Programme was nearly achieved, but “missed” by one sale too many. Whilst there is now to be only one sale in Joburg in April as advocated, there are still to be two sales in the Cape in the February-April period (excluding KFS).
The two “pairs” of sales “door-stepping” each other no longer exist. In Jouburg, one of the pair has gone completely. In Cape Town area, the two sales are two nearly two months apart.
It is true that the proximity in date (not location) of the CTS Sale in April and the National Yearling Sale has caused comment.
The mediators’ position was that such a Cape Sale should be 6 weeks before the Nationals.
With a single sale in the Cape (between CPYS and NYS), that surely would have been approached. But the two alternative methods of achieving a single sale Feb-April did not work out.
It is not to disclose here the full extent of the detailed negotiations. There was much debate and due consideration.
There are three fewer sales than before, not four fewer, in the programme for 2018.
One of the attempted solutions is worth noting here. The mediators, anticipating that in one location or the other there might be difficulty in achieving “one sale only”, had set out a blueprint for a jointly held single sale. The merits were discussed by both sales companies, one being willing to discuss for the Cape and the other, eventually, not. If not achieving such a radical new format at the first attempt, the mediators felt that there is scope for the future.
There is now precedent and platform for future cooperation between the sales companies, just as sales companies overseas fit in with each other in their mutual interest and in consultation with market-place stakeholders.
In addition to the dates as announced, the following has transpired during the process:
- No ‘doorstep’ sales within a few days of each other in the same place.
- CTS will hold its currently scheduled Ready to Run Sale (in the Cape). BSA will not itself hold an RtoR Sale.
- The two Mare Sales were not part of the agenda.
- The Sales companies spoke to each other in detail through the mediators and face to face, without rancour or breakdown.
- The importance of mid-range breeders and the impacts of the programme on them has been emphasised. So has the cost of selling (being multiples of the costs to vendors at all European sales). BSA was already in the act of making reductions. CTS has introduced a reduced cost section in its 3-part sale. Good steps.
- CTS and TBA have decided to hold regular liaison meetings.
- The Sales companies have agreed that boycotting is not acceptable.
The results were arrived at in a cordial manner. The market awaits the experience of 2018. Significant steps have been taken and there is now precedent for further liaison in the future. The mediators thank both sales companies for their lengthy correspondences, for their consideration of the many issues and for their accommodation of the process, described by AJ to DA at the end as ‘Our Seven Months Mission’.
Whether such activity will be called upon again remains to be seen. DA is extremely grateful for the leadership and commitment provided by Dr Jacobs.