Christopher Fildes on the business dealings at Newbury
Forget Cheltenham. That was just a warm-up. The big meeting next week is at Newbury, and it will have everything — fierce contests and driving finishes and bitter objections and stewards’ inquiries and prize-money running well into eight figures — everything, that is, except horses.
Trooping into Newbury Racecourse on Wednesday morning, its shareholders will find themselves invited to sack three directors: Nicholas Jones, Brian Stewart-Brown and Sir David Sieff, the chairman. All three are boardroom heavyweights and two of them are members of the Jockey Club, but the Guinness Peat Group wants them out and wants one of its own directors, Richard Todd, in. With more than a quarter of the shares in its own hand, GPG has requisitioned a general meeting and will put its resolutions to the vote. In this race the prize, in all but name, is control.
No one objects to the racing at Newbury. There are badly planned courses and badly run courses, but this is not one — the Queen Mother always liked it — and the most audible grumble before GPG’s had to do with the siting of the water-jump. The course itself was laid out a century ago to be handy for the training grounds at Lambourn and for the Great Western Railway. It still has its own station, just behind the paddock.
In those days Newbury was a market town. Nowadays it is Vodafone’s company town, at the tip of the fertile crescent, stretching towards Heathrow, where modern businesses prefer to set up shop. In this crescent, property values have sprouted, and no wonder. Considered as a greenfield site, the racecourse, if planning permission ever came with it, would be worth a fortune. Even the strip of land between the course and the railway, tucked away out of the racegoers’ view, is a hidden treasure.
Newbury’s board has a deal lined up with David Wilson Homes, which would build houses on this strip, on three sites which would add up to 40 acres and still leave room for a mid-sized hotel. Talks with the planners have been going on for 18 months, and the directors cautiously say that they expect permission to be granted. Money would have to be spent — on a bridge over the railway, for instance — to make the scheme work, but cash, in the end, would find its way back to the shareholders.
Its biggest shareholder, though, must have other ideas. Led by that wily New Zealand investor Sir Ron Brierley, GPG has been sitting patiently for years and is represented on Newbury’s board, but last year its patience ran out. It began to buy more shares and then launched a bid for the company. Offering £11 a share, and then topping this up, GPG found that only 5 per cent of the other shareholders accepted. The meeting on Wednesday is its next gambit. One of its resolutions would, in effect, block the Wilson deal.
So the whips will be out. Eric Penser and Lady Lloyd-Webber — Newbury directors and racing enthusiasts — between them have 22 per cent of the shares, but the others are widely scattered. Some will have come down by descent from the course’s original backers. All over the Berkshire downs this weekend, sporting families will be conducting frantic searches: ‘So where could Uncle Tom have put his share certificates? Have you looked in the chest in the gun-room?’
They will need to turn up and vote. If they did not choose to take GPG’s bid, they will certainly want to defeat GPG’s resolutions. They can see that control is the prize, and if that is what GPG wants, it must come back with a offer they cannot refuse. If GPG’s resolutions are carried, it will in effect take control of Newbury Racecourse without the trouble and expense of paying for it.
This week the board held out the prospect of a rosy future, free from the trouble and expense of fighting GPG off. Money would flow in — from broadcasting rights, from the Wilson deal — and perhaps, one of these days, there might be a dividend. No one can expect GPG to buy into this story. Perhaps its sights are set on some distant prospect of houses on the greenfield site. Or perhaps it hopes that a late entry will come under starter’s orders.
This could run in Andy Stewart’s colours. A keen enough racing man to have named his stockbroking firm, Cenkos Securities, after his horse, he has let it be known that he would be ready to talk about buying GPG’s Newbury shares. Further down the track might be the Jockey Club itself. Owning racecourses is what it now does, and it already has 14 of them (including Cheltenham and Aintree) so Newbury could make a 15th. The price is the snag, for it would be something like £40 million — quite a lot of money to raise, even by a whip-round in the Jockey Club rooms.
Whatever happens at Wednesday’s meeting, it should be a classic. Dig your uncle’s certificate out of the gun-room, come along to the course, vote against GPG’s resolutions and wait and see what happens next. This could all be more fun than a day at the races. You might even come out ahead.