Marsa racetrack privatisation will see consortium pay €1 million yearly

The deal is currently being discussed by parliament’s National Audit Office Accounts Committee and if approved will be the biggest sport investment Malta has ever seen

A private consortium will be expected to invest €18 million to revamp the Marsa race track and build an adjacent commercial complex as part of a privatisation deal
A private consortium will be expected to invest €18 million to revamp the Marsa race track and build an adjacent commercial complex as part of a privatisation deal

The consortium looking to obtain a 65-year concession on the Marsa racetrack and an adjacent plot of land will see the government receiving over €1 million a year under a proposed deal currently being discussed in parliament.

Back in 2017, the government signed a memorandum of understanding with the Marsa Race Track Limited consortium for the development of the Marsa horse racing facilities. The consortium is expected to invest some €18 million in the project.

The investors behind the project are Pio Valletta; Hugh Morshead, a director at Henley and Partners, the concessionaries of Malta’s passports scheme; a British national by the name of Kusam Sharma; an Irish national called Aldred Kenneth Alexander; building contractors F. Schembri Holdings owned by Frank Schembri and True to Type Ltd, a company registered in Ireland which is owned by a certain Tom Ryan.

Addressing parliament’s National Audit Office Accounts Committee, which will have to approve the land transfer, sports parliamentary secretary Clifton Grima, said that under the deal, the consortium would be paying the government close to €1 million a year.

Moreover, he said the consortium would also be making two additional €100,000 payments upon the signing of the agreement.  

The annual ground rent to be paid by the operator for the land housing the racetrack will amount to €100,000. A further €650,000 in ground rent will be due on the land on which a commercial complex is to be built, with €50,000 due in rent for a proposed 1,200-car parking facility. The obligation to pay rent on the carpark will come into force after three years.

The entire complex will have to be completed within four years.

Grima also said that government would be looking to establish an authority to regulate the sport. This new authority, he said, would receive a €100,000 annual allowance from the consortium, as well as a payment of €2,500 for every race meeting in order to cover the necessary expenses. Race meeting fees will increase by 3% from the second year.

Prize money awarded to horse racers will also be increasing by 10% in the first year of operations.

The parliamentary secretary said the authority would be representing the government but would also include members elected by horse owners. Residential units will not be permitted in the development.

An MOU was signed in March 2017 with the consortium promising to invest €18 million in the project
An MOU was signed in March 2017 with the consortium promising to invest €18 million in the project

READ MORE:  ‘No go zone’ Marsa racecourse to get €18 million facelift

Opposition questions consortium’s experience

Nationalist MP Mario de Marco asked what due diligence had been carried out and whether the members of the consortium had any experience operating similar facilities.

However, the chairman of the privatisation unit, Emmanuel Camilleri, said that a due diligence on the consortium had been carried out by the Malta Financial Services Authority but could not recall who the shareholders were.

He said that a certain Philip Mossman, who will have the role of project manager in the proposed operation and a Tom Ryan, who was one of the shareholders, both had a great deal of experience in similar horse racing operations.

This was confirmed by Valletta, who identified Ryan as the most important individual in the project. He could, however, not remember exactly who the shareholders in the consortium were.

“We have come here to discuss a 65-year lease to an operator for such an important project and I imagine that the details of who we will be giving it to are very important. I don’t expect to have to log on to the MFSA’s website myself to know who these people are,” de Marco insisted.

Nationalist MP and sports spokesperson Ryan Callus insisted that the fact that there was no obligation for prize money owed to racers to increase was a “handicap” in the contract.

Pio Valletta, one of the shareholders in the consortium, however said that prize money was not to be determined by the government but rather by the authority. He said the consortium already had an agreement with stables in Dubai to bring international races to Malta, adding that all stakeholders had an interest in prize money increasing, in order for the sport’s local standard to be raised.

He added that the fact that horse owners would be represented within the new authority meant prize money was guaranteed to increase, Valletta said.  

Pending issues with Malta Polo Club

De Marco also noted that the draft agreement stipulates that the consortium’s obligations as regards the Malta Polo Club were dependent on an agreement being reached with the club. He said that it made more sense for any agreement with the polo club to be signed before the concession agreement, and its terms reflected in the contract.

Jacques Farrugia, acting as legal counsel to the club, said that discussions were underway with the consortium over an agreement to be signed between the two parties. He said however that when talks were at a stage where only some minor issues remained to be ironed out, the club did not hear back from the consortium for over a year.

Then, in June 2018, he said that a totally new draft agreement had been sent to the polo club with an imposed “unrealistic deadline with a take it or leave it approach”.

He said that at that stage the polo club tried to negotiate, however there were issues the consortium was not willing to budge on. He criticised the privatisation unit for remaining silent, adding that the club had been forced to allow the consortium to dictate terms.  

Farrugia said the club could not accept the draft presented to it, insisting that the clauses were ambiguous and vague, and gave the consortium the right to eradicate the polo club whenever it wanted.

De Marco insisted that the club needed to be brought on board before the agreement was signed.

Lydia Abela, a consultant to the privatisation unit said however that the unit had spent years discussing the issue with the polo club. “It is unjust to say that the privatisation unit has been ignoring the polo club.”

Issues between the Marsa Polo Club and the privatisation unit and the private investors have not yet been ironed out
Issues between the Marsa Polo Club and the privatisation unit and the private investors have not yet been ironed out

She said the last meeting with the club had lasted 13 hours and that club members present at that meeting had agreed to conditions in the agreement. Abela said the members had informed the privatisation unit that they first needed the club’s members to approve the agreement before accepting it, adding however that a confirmation was never received.

“As a unit, we could not stop a project like this because till this very day they have not told us specifically what they do not agree with.”  

READ MORE: Marsa horse racing track memorandum of understanding published

Concluding, Callus said the Opposition had an issue with a clause in the agreement allowing the grantee to use the polo pitch for commercial purposes whenever it saw fit.

He also said it was not right for the agreement to include a provision allowing the consortium or the authority to establish other polo clubs, while also pointing out that it appeared as though the consortium was treating the Marsa Race Club very different to the way it was treating the Marsa Polo Club.

“It wouldn’t be the end of the world if the grantee gives the MPC a furnished club like it will be doing with the MRC,” Callus stressed.  

The committee was adjourned to give the two parties time to reach an agreement before parliament is adjourned for the summer.

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