Owners are rebuked over Punchestown

Minister for Sport John O'Donoghue says he is "deeply disappointed" at the continuing controversy and bickering over control of Punchestown racecourse.

In a confidential letter sent on Tuesday to the owners of the venue, the Kildare Hunt Club (KHC), the Minister said that the hunt club appeared to be pursuing strategies which were not in the long-term interests of its members. He urged it to enter immediately into a new joint venture with the State authority, Horse Racing Ireland (HRI).

The 140-plus members of the hunt club will tonight vote at an extraordinary general meeting on proposals to sell part of Punchestown racecourse in a move which could generate up to €10 million. The backers of the motion believe that the money raised could be used to repay several million euro in debts owed to, among others, Horse Racing Ireland and the billionaire Getty family, which lent money to the racecourse as part of a controversial passports for investment scheme. Supporters of the plan believe that repayment of the debts to the Getty family and HRI would invalidate controversial leases over the Punchestown land and, in effect, give control back to the hunt club.

The club leadership is deeply unhappy at a number of governance arrangements introduced by a group which controlled the facility between 1997 and 2001. These included the transfer of 466 acres of land by lengthy lease from the KHC Punchestown Trust into the main Punchestown trading company known as Blackhall.

It is also dissatisfied with a loan deal agreed with GT Equinus Inc, a company owned by the Getty family, which provided nearly €4 million under the passports for investment scheme. This deal provided for GT Equinus to have representation on the board.

In 2001, when the course experienced financial difficulties, Horse Racing Ireland injected €1.65 million in loans and €2.4 million in grants in return for security on the leases of the land as well as board representation. It has offered to provide funding to repay the money owed to the Getty family company as part of a new joint venture arrangement with the hunt club.

However, senior members of the hunt club believe that the authority is seeking to take over the racecourse. They maintain that they would be happy to enter into talks with the authority on the management of Punchestown. However, the hunt club is adamant that the only acceptable new structure is for ownership of Punchestown to be vested in it.

Tensions between the hunt club and Horse Racing Ireland have increased in recent times.

Last week, in a letter to Mr O'Donoghue, club chairman Matt Dempsey said there were serious concerns that the authority would "seek to interfere, as clearly done before in internal KHC affairs, by bringing intolerable and unacceptable pressure to bear in an attempt to prevent approval of the proposals [ for the land sale] by the necessary two-thirds majority of the general membership".

Senior figures in the hunt club have also maintained that the racing authority has threatened to move key features of the annual Punchestown festival in the event of it not gaining control of the course.

In his letter to Mr Dempsey on Tuesday, Mr O'Donoghue said he was deeply disappointed that Punchestown remained mired in controversy "because of what appear to be very deep-seated differences with the KHC".

He added: "It is sad that when all other racecourses are producing ambitious development plans, Punchestown, which has more potential than most, seems to be constantly bickering over past events."

The authority had informed him that the State had provided €25 million to help develop Punchestown. By contrast, the club, apart from the land, had provided no further investment. He said the authority had maintained that its proposals for Punchestown were consistent with the principles of a joint venture as recommended in 2004 by the Dáil Public Accounts Committee.

"I am assured by HRI that they have no wish to take over Punchestown on behalf of the State and that their proposal to the KHC does not envisage any such eventuality . . .

"I believe that the partnership since 2002 between HRI and KHC has been good for racing, good for Punchestown and good for KHC. The KHC, on the other hand, appears to be pursuing strategies which do not seem to me to be in the long-term interests of its members," he wrote.

The main players

Kildare Hunt Club

Owners of Punchestown racecourse for more than a century. The current leadership is deeply unhappy with arrangements entered into by a group which controlled the course from 1997 to 2001. These included the transfer of 466 acres of land at the course from a holding trust to an operating company by long-term lease and a €4 million loan arrangement with the Getty family, which saw it receive representation on the board in return. The club wants to sell off surplus land to generate funding to repay the Getty family and money owed to Horse Racing Ireland. Supporters believe that this process would invalidate the leases on the land provided as security for loans and give effective control of the course back to the club.

Horse Racing Ireland

The State horse racing authority provided about €4 million in grants and loans to Punchestown when it got into financial difficulties several years ago. In return, leases on the land were pledged as security. The authority also received four seats on the board of the Punchestown operating company.

Horse Racing Ireland has offered financial help to pay off the Getty loan as part of a new joint venture arrangement. Kildare Hunt Club believes that the authority is seeking to take over control of Punchestown on behalf of the State. The Government believes that the authority is obliged to protect significant State investment in Punchestown.

GT Equinus

GT Equinus, owned by the billionaire Getty family, is suing Kildare Hunt Club and the Punchestown companies for €4.2 million (including interest) in relation to a loan it provided in 1998 for the development of the course under the controversial passports for investment scheme.

Terms of agreement included representation on Punchestown's operating company. Kildare Hunt Club has alleged that the terms were in breach of passports for investment scheme guidelines.

Minister for Sport John O'Donoghue told the club on Tuesday that the Department of Justice was satisfied that GT Equinus fully complied with the conditions of the scheme.

The Getty family descended from John Paul Getty, the US businessman who ran Getty Oil, a business he developed after inheriting a company from his father. He became the first billionaire in the US during the 1940s.