Hobby Horses

8 minute read
Ishaan Tharoor

For William Lo, investing in a thoroughbred racehorse is comparable to buying a vintage Bordeaux. An executive for a Hong Kong–based chain of fashionable clothing stores, Lo has been dabbling in both assets for the better part of a decade, and he samples the nose of his wines with the same enthusiasm he reserves for cheering on his charger as it storms a nose ahead. But he knows there’s one big difference: “At least with wine,” says Lo, “there’s a good chance of getting your money back.”

Racehorse owners, on the other hand, face long-shot odds. Only a fraction of horses purchased, trained and stabled win prize money consistently; many never compete at all. But that isn’t stopping thousands of investors around the world from trying to grab a piece of the next Seabiscuit. If horse racing was once the sport of kings, now it at least encompasses earls, minor nobles, and maybe even a squire or two.

That’s because thoroughbred ownership has become easier for ordinary investors due to the proliferation of risk-sharing joint ventures called syndicates. The proposition is simple: syndicates allow up to 50 people to pool their money and collectively purchase, maintain and race thoroughbreds, and to share in the winnings. In the U.K., the British Horseracing Authority hopes such schemes will expand the sport’s middle-class base. A few hundred pounds can give enthusiasts an insider’s privileges, landing them not only a stake in a horse, but also access to the paddock, pre-race chats with trainers and jockeys, and the chance to gloat in the winner’s circle. Ed Marley, a syndicate member and managing director of a television production company in Liverpool, describes ascending the owner’s stand at his hometown track as “one of the most exhilarating moments I’ve ever had.”

In Australia, where many of the world’s top racing horses are sired, syndicate schemes allowing investors to put up as little as $5,400 are growing in popularity. Australian organizations such as Dynamic Syndications act as a kind of online matchmaking service, helping to put would-be ownership groups together with promising thoroughbreds through a website that features photos and video clips of horses, detailed reports on their medical fitness, and results from time trials and races. “Our website is like a mini-TV station,” says Dynamic Syndications managing director Dean Watt. “If you could put a smell through the Internet we would do it.” Right now, though, few would want to be that close to an Australian horse. An epidemic of equine influenza has hit some 5,000 stables and breeding farms in New South Wales and Queensland, resulting in numerous race cancellations and costing the industry an estimated $1 billion.

Australia’s flu outbreak is just one of many ways owners can lose. Sure, there are examples of ordinary Joes who got lucky and pocketed a small fortune. One of the best known is the story of Funny Cide, an undistinguished gelding purchased for $75,000 by 10 middle-class New Yorkers. Funny Cide went on to win two of the three U.S. Triple Crown races in 2003, amassing more than $2 million in prize money. But the horse was a fluke. James Oldring, industry marketing manager with the British Horseracing Authority, advises against “any false expectations or hopes” and estimates that average returns rarely exceed 25% of total investments. Syndicate members say they don’t do it for the money. They invest because they have a passion for horses and want to be more deeply involved with friends and family in the spectacle of thoroughbred racing. “It’s amazing how quickly the bond develops between a group of grown adults whose only common interest is that they own a piece of horse flesh,” says Harriet Rochester, a former British racing official who runs a syndicate.

In wealthy Hong Kong, ownership isn’t so much about bonding with new friends as it is about lording it over the old ones. Race days are festive events where local tycoons, movie stars and pop singers are always in attendance, in the perpetually packed stands and in the owners’ boxes. The Hong Kong Jockey Club, which controls all aspects of thoroughbred racing in Hong Kong from handling the betting to running the tracks to housing the horses, is a pillar of society. So much money flows through its coffers — last year’s turnover was more than $13 billion — that taxes and betting duties paid by the Jockey Club make up about 8% of Hong Kong’s total annual tax revenue.

While thoroughbred ownership in Australia and the U.K. is increasingly within reach of commoners, the Hong Kong racing scene is dominated by the rich and connected. Those who want a piece of the action must first be a member of the Jockey Club — joining fees start at $30,000. Membership qualifies you to enter a Byzantine annual lottery in which members compete for roughly 300 spots that give them the right to purchase a horse and have it stabled in the Jockey Club’s ritzy training facilities. This is how Lo, the Hong Kong fashion executive, became an owner. One of Lo’s friends had been trying for years to land a horse, but repeatedly drew blanks in the lottery until linking up with Lo and two others. In 2001, they won ownership rights and went in search of their champion.

They decided on a 2-year-old gelding from New Zealand that cost $65,000 — a bargain in Hong Kong, where horses often go for four times as much. The punters named him Garden Party, but he was no party animal. For a year, Lo and his partners fronted the cash, close to $30,000, to stable Garden Party and pay his livery and training fees. But on the eve of the horse’s first race, medical scans revealed he had a nonlethal cancer. He couldn’t race in Hong Kong. Dismayed, Lo and his partners shipped Garden Party home to New Zealand.

Their total investment of more than $130,000 was a total loss, but at least Lo was in good company. David Price, a horse trader based in Hong Kong, reckons that at least a quarter of the thoroughbreds brought into the city turn out to be financial black holes. He believes owners should pat themselves on the back if they’re able to recoup a horse’s livery fees through prize money. Snagging a champion horse requires lots of luck. “All the things in a [winning] horse — courage, constitution, the will to win — are things you can’t see,” says Peter Horwitz, president of the Thoroughbred Racehorse Owners’ Association of New South Wales in Australia.

This is why many prospective owners turn to experts like Price, whose company buys up young horses and puts them through their paces before deeming them fit for market. Four years ago, Price brought in from Australia Hong Kong’s most famous steed: Silent Witness, who won 17 races and racked up $8 million in winnings — and who would have kept on earning after his retirement earlier this year through stud fees, if only he hadn’t been gelded. Unfortunately, Silent Witness’s trainers didn’t see much value in his bloodline at the outset of his racing career.

While the unpredictability of a horse’s racing form and the oft-inscrutable methods used to gauge it can befuddle dilettantes, good fortune can smile on the persistent. In 2003, following the Garden Party disappointment, Lo and his partners from various corners of Hong Kong’s professional world — manufacturing, movies and modeling — located another 2-year-old gelding named Pocket Money in Ireland through a trainer’s connections. They bought him and shipped him to Hong Kong. After two seasons with little consistent success racing the horse at various distances and in differing weight classes, they switched to another trainer, who guessed Pocket Money was best suited to the 1,400-m run at Hong Kong’s Shatin track. In the three races that Pocket Money has run so far this year, he has finished first twice and second once. Lo is pleased, not least because Pocket Money’s $260,000 in winnings is the biggest haul for any Hong Kong horse thus far in the 2007-08 season. With owners entitled to a 70% cut, his successes have more than paid back the various costs Lo and his partners incurred in six years of horse ownership. “We’re enjoying it,” says Lo serenely.

But the profit is far from his greatest satisfaction, he says. That comes from the monthly visits he makes to the stables with his 5-year-old son to visit Pocket Money. Sometimes, the horse is sad and his son puzzles over the sprinter’s mood. But the day after a Pocket Money victory, there are smiles all around. “You can see it on the horse’s face,” says Lo. “You know that he’s proud.” And that’s a look any horse owner would say is priceless.

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