Bad timing. Alfonso Reyno 3rd assumed in September last year the presidency of Manila Jockey Club Inc. (MJC) when its share from horse racing revenues have lately been dropping.
The worst financials came in the first quarter of 2013, when the company reported a net loss of P24.828 million, probably the first in so many years, against net income of P7.008 million in the same period last year.
Before the year’s first-quarter loss, MJC’s net income in 2012 dropped 55.081 percent to
P12.730 million from P28.340 million in 2011. In 2010, the company reported net profit of P30.211 million.
Incidentally, MJC’s profitability is not attributable to club races alone, because the company also derived revenues from other sources such as real estate and rentals.
Club races, which refer to its share from bets on horse racing, contributed P280.868 million, or 48.025 percent of P584.831-million total revenues in 2012, down from P297.871 million, or 46.085 percent of P646.345 million total revenues in 2011 and P297.239 million, or 47.593 percent of P624.542-million total revenues in 2010.
PRCI’s worry too. Where have all the money gone? It is not only the Reynos, who must be asking the question in view of the losses of the two horse racing operators in the first quarter of 2013 and the slight drop in horse racing revenues.
The stockholders of Philippine Racing Club Inc. (PRCI), the other horse racing operator, are or have been in similar, if not worse, predicament.
In a financial filing for 2012, PRCI reported net income of P261.651 million on revenues of P891.889 million, of which P292.378 million came from club races.
Horse racing expenses, according to the same filing, amounted to P287.336 million, or 93.99 percent of PRCI’s total “cost of sales and services.”
The company also generated revenues of P585.175 million from real-estate sales and P14.336 million from rentals in 2012.
Net loss. Like Manila Jockey Club Inc., PRCI began the current year with a net loss that even increased 21.552 percent to P28.989 million in the first quarter from P23.849 million in the same period in 2012.
In contrast, PRCI, which operates a racetrack in Naic, Cavite, recorded net profit of P228.130 million on revenues of P316.869 million in 2011, recovering from its losing performance in the previous two years. It reported net loss of P33.942 million in 2011 and P42.646 million in 2010, resulting from revenues of P324.486 million and P321.675 million in 2010 and 2009.
From 2009 to 2011, PRCI did not have yet real-estate sales. Its biggest money maker was horse racing.
The financial statements audited by Punongbayan & Araullo showed that PRCI generated P301.778 million from club races, which is equivalent to 95.239 percent of P316.865 million total revenues in 2011; P309.712 million, or 95.447 percent of P324.486 million revenues and P305.781 million, or 95.059 percent of P321.675 million revenues.
P6.74-B bets on horses. In the absence of concrete numbers, let us do some computations because the amounts reported by MJC and PRCI do not tell the real story of horse race betting.
In one of its financial filings, PRCI said the revenues it reported represent its 8.5 percent share from total ticket sales. Computed, this would mean 8.5 percent of x equals P292.378 million, where x would amount to P3.440-billion ticket sales in 2012.
In the first quarter of 2013, PRCI’s club races revenues amounted to P292.378 million, which represents 8.5 percent of total ticket sales of P697.054 million.
MJC, on the other hand, derived revenues of P280.868 million from club races in 2012. If it has the same 8.5 percent share from ticket sales as PRCI has, then total revenues from its racetrack would amount to P3.304 billion.
In the first quarter of 2013, MJC’s club races’ revenues of P57.159 million from horse racing revenues would have come from P672.462-million total revenues.
Combined, horse racing aficionados bet a total of P6.744 billion in 2012 and P1.369 billion in the first quarter of 2013.
With this huge gambling money, how and why would PRCI and MJC lose?
The answer would be in the sharing of gamblers’ money, of which 8.5 percent goes to each of the two companies; 82 percent as gross dividends to holders of winning tickets; 8.5 percent to horse owners, jockeys and trainers and 1 percent to Philippine Racing Commission and the Gaming and Amusement Board.
In a footnote, PRCI said: “About 16 percent of the total wager funds goes to the government in the form of taxes such as value-added tax, documentary stamp tax and taxes on winnings and prizes.”