THINKING OF INVESTING IN STALLIONS?

The Irish Thoroughbred Industry is becoming more buoyant year after year, and
2006 is no exception. If you're looking for an ideal investment opportunity, then this might be exactly the answer. Irish Entrepreneur reveals.

Providing some 17,000 jobs and worth one billion-plus to the economy, the Irish bloodstock and racing industry has helped to put the stripes on the Celtic Tiger. Ireland is the third largest thoroughbred producer in the world, accounting for over 42 per cent of EU output. Bloodstock production now accounts for approximately 10% of all livestock production in Ireland and 4.4% of agricultural output.

This year the galloping success of the Celtic horse is being celebrated more than ever as the sport of kings is on course to hit an all-time popularity high at our racetracks. Racing attendances grew by almost 10, 000 for the first six months of 2006 and are now tipped to surpass the record 1. 43 million achieved in 2005. Last year, off-course betting hit a record €2.29 billion, including non-racing betting turnover.

Golden Era

IRELAND'S HORSE SELLERS

TATTERSALS IRELAND In 1766 Richard Tattersall founded the world's first bloodstock auction house. Today Tattersalls is an international firm offering 8,000 horses each year at 17 sales at Newmarket in Britain and at Fairyhouse in Ireland. In 1979 Tattersalls Limited took a 44% interest in the Ballsbridge International sales company Limited which then became Ballsbridge Tattersalls as a result of the merger. In 1985 Tattersalls Ltd. increased their holding and the operation became the wholly owned subsidiary - Tattersalls Ireland Limited. Derby Sale, The Most Premier Sale In The World In the Autumn of 1986 Tattersalls acquired the Old Fairyhouse Stud at Ratoath and the modern sales complex constructed on this property offered greater opportunities for expansion. The first sale at the complex was the September Yearling Sale in 1988, which included candidates for the inaugural Tattersalls Breeders Stakes of 1989. The company is world renowned for selling top class National Hunt horses in which it continues to lead the field, with the November National Hunt Sale being the most comprehensive venue for National Hunt breeding stock and the Derby Sale being the most premier sale in the world for National Hunt 3 and 4 year olds. GOFF'S BLOODSTOCK SALES Goffs is Ireland's premier bloodstock sales company and is the second largest in Europe with an annual turnover in excess of €100m. Established in 1866, Goffs is the source of many of the world's leading racehorses. Top class performers bought at Goffs in recent years include Alexander Goldrun, Phoenix Reach, Bandari, Scorpion and also two of 2005's most exciting two year olds in Septimus and Balthazaar's Gift. GORESBRIDGE HORSE SALES For thirty years now Goresbridge Horse Sales have been offering quality horses and ponies for sale by public auction at their complex which has recently been modernised to include a 60 x 30 meter indoor jumping arena, and two all-weather riding arenas. General facilities, such as car parking, veterinary area, etc have been updated to ensure comfort for all patrons. Situated on the banks of the picturesque River Barrow and under the shadow of beautiful Mount Leinster, Goresbridge is in the heart of Ireland's foremost breeding area.

Given the huge number of Irish Group 1 wins around the world in recent years, our scintillating successes at Cheltenham and Aintree and the growing attraction internationally of Irish bloodstock sales, The Racegoers Consultative Forum description of a golden era in the industry seems apt indeed. Horse Racing Ireland Chief Executive, Brian Kavanagh points out that racing is attracting a new audience through marketing campaigns focused on younger people, fashion and families; improved facilities at racecourses and, most of all, through the great achievements of our trainers, jockeys and horses.

Success In Breeding And Racing

There are a number of reasons for Ireland's unique success in breeding and racing thoroughbred horses. The limestone-enriched pastures of Ireland provide the nutrients, which are essential for strengthening the bones of young horses. The temperate Irish climate provides a unique environment that is ideal for the weaning and raising of the thoroughbred horse. Health and safety standards in the bloodstock industry in Ireland are among the highest in the world. Irish people enjoy an affinity with the horse that is matched nowhere else in the world. The horsemanship skills, which have been passed down through generations, are an integral part of life in Ireland. Finally, there are the positive fiscal measures that have helped to ensure that the best stallions and broodmare bands in the world are located in Ireland.

Leading Breeders

Ireland is currently the location of choice for some of the leading breeders in the world, including Coolmore, Juddmonte Farms, Darley Stud Management Co. Ltd., Shadwell Estate Co. Ltd., H.H. The Aga Khan Studs, Gainsborough Stud Management Co. Ltd., Moyglare Stud Farm Ltd., Airlie Stud, Orpendale, Ballymacoll Stud Farm Inc, Lodge Park Stud and Barronstown Stud.

Coolmore is the largest operator in the world. In 1975, John Magnier, in association with partners Robert Sangster, heir to the Vernon football pools fortune and Vincent O'Brien, Ireland's most successful trainer, purchased Coolmore Stud in Co. Tipperary. Conditions were favourable for the venture because in 1969 stud fees had been given tax-free status by Finance Minister Charles Haughey.

Magnier's Conviction

The Coolmore business plan was based on Magnier's conviction that the big pay-off in racing no longer lay in prize money, but "in the breeding barn". Since the best bloodstock was to be found in the United States, they would buy up the best yearlings there, bring them to Ireland, race them, and develop them into prize stallions at a tax-free profit.

The bloodline that Magnier selected was that of Northern Dancer, an 'explosively fast' stallion whose offspring were causing a sensation on US racetracks. But the partnership found it next to impossible to buy into his gene pool. 'The Americans always outbid us' Sangster was quoted in the New York Times. The solution they came up with was syndication: striking deals with rich US investors not only helped them raise bids, but also spread the risk.

Struck Gold

After an anxious two years, the partnership, 'struck gold.' Between them, The Minstrel, Alleged, Artaius and Be My Guest secured all 'the great races of Europe' including the English and Irish derbys and the Prix de L'Arc de Triomphe and the profit taking began. According to the Times article, Magnier picked up his share of a cool $9m when the Minstrel (bought for $200, 000 in 1975) was sold back to America for stud. But the real profits came from the stallions, like Alleged, says The New York Times. Before long, he was commanding some $80,000 for each mating, and covering a minimum of 40 mares a year. Profits were channelled into more top prospects.

By the 1980s, with a second generation of champions now storming through, Magnier was regarded as, 'having revolutionised the blood-stock industry.' He is said to be the most influential man in horseracing and breeding worldwide, even over Sheikh Mohammed bin Rashid Al Maktoum. While his fortune is in the realms of speculation, the Sunday Times Rich List 2005 placed him among the richest in both Britain and Ireland, estimating his financial worth at £520 million.

The Report on the Economic Value of the Horse Racing & Bloodstock Breeding Industry by Indecon International Economic Consultants in July, 2004 calculated 'on the most prudent basis,' that the racing, breeding and associated sectors employed over 16, 500 people. On international competition, the report found that incentives offered varied from jurisdiction to jurisdiction. "Our analysis shows that competition on basis of incentives is strong," it added. Indecon estimated stallion fee income at around €85 million per annum.

Stallion Fee Exemption

Tax cost of the stallion fee exemption was estimated at €3 million per annum. Gross tax contribution of the thoroughbred breeding sector was estimated at 37.5 million per annum. The recent Finance Act confirmed the Budget day announcement abolishing the stallion and greyhound tax exemptions from July 31, 2008. Discussions will take place with the industry and the EU Commission on a replacement scheme.

According to the Racegoers Consultative Forum, we are living through, a golden era in Irish racing. "In no other sport can we justifiably claim to be number one in the world," said their recent report to Arts, Sports and Tourism Minister John O'Donoghue.

Overseas interest in buying Irish thoroughbreds is huge, according to Mr. Joey Cullen, Marketing Executive, Irish Thorough Marketing, a division of Horse Racing Ireland established by the Government to promote Ireland as a premier source of thoroughbred horses. Whether one intends to purchase privately or at a public sale, ITM can provide all the impartial advice and assistance required when purchasing a thoroughbred horse. A number of new countries have in recent years joined the many established nationalities attending the sales here.

For The Price Of A Car!

Mr. Nick Nugent, Sales Director of Goffs Bloodstock Sales told Irish Entrepreneur that a good racing prospect could be purchased for the price of a new car. Potential buyers should seek expert help. Goffs threeday sale for yearlings from September 26-28 would have 320 fillies and 320 colts, with prices from €20,000 upwards. For graduates of this year's sale there will be two races in 2007, The Shelbourne Hotel Goffs Million races, one for colts and geldings, one for fillies, each race worth €1 million to the winner. So what better timing than now, to fork out a few shekels and invest like a trooper!