Archive for June, 2008

Consignors and buyers attending Fasig-Tipton yearling sales in Lexington, Ky., and Saratoga Springs, N.Y., in July and August may be a little disappointed if they are looking for a sudden transformation of the 110-year-old Thoroughbred auction company under the new ownership of Dubai-based Synergy Investments.

The sale, announced in April, closed May 30. Synergy is headed by Abdulla al Habbai, an associate of Sheikh Mohammed al Maktoum of Dubai’s ruling family and the owner of the worldwide Darley racing and breeding operation.

“The upcoming sales will be extremely similar to 2007 and the years prior to that,” said Boyd Browning, Fasig-Tipton’s chief operating officer. “It might seem a little boring right now. Everyone wants to know what we are going to do differently. There is a sense of raised expectations in the market place, and that’s a positive thing. We’re really revved up, but we’re not there yet.”

In fact, Browning said he’s had just one meeting with a representative of Synergy in London the week after the deal closed. There have been no personnel changes, and none are anticipated in the near future. Budgets for recruiting and marketing remain what they were prior to the sale. Fasig-Tipton had been owned by a group of Thoroughbred industry breeders led by John Hettinger.

 “The marching orders (from the initial meeting) are to develop ideas,” Browning continued. “We don’t have a ‘formalized plan’ yet. We’ll do a review of the company, what we can do better and what types of things can we be involved with that can help the industry overall and the sales industry. We’re in the brainstorming stage now. We hope to have more definitive ideas in 60 to 90 days.”

Browning said he’s been pleasantly surprised by an outpouring of ideas from people in the industry.

“I’ve got a folder full of emails with suggestions,” he said. “Some people have their own personal agenda, but many others have some very creative ideas. We’ve got an opportunity to think outside the box and get people engaged.”

A survey of more than 30 Fasig-Tipton consignors and buyers by the Paulick Report found widespread  though not unanimous enthusiasm for the new ownership and what it can bring to the auction marketplace and the Thoroughbred industry.

Asked to rate the sale of Fasig-Tipton on a scale of 1-to-10, with one being extremely bad news and 10 extremely good news, respondents answered with an average of 8.1. The median rating was 9. Only two respondents answered with a rating below 5.

Comments on the sale were virtually unanimous in support of increased competition being good for any industry, including Thoroughbred auctions. Currently, Keeneland enjoys roughly an 80% to 20% market share lead over Fasig-Tipton in the $1-billion annual Thoroughbred auction market. There have been repeated rumors over the years that Keeneland would buy out Fasig-Tipton, but that never happened, perhaps to the regret of Keeneland’s  current board and management team. At the time the sale to Synergy was announced, Keeneland president Nick Nicholson issued a terse statement that said only: "The purchase opens a new chapter for an historic, well-established company in the Thoroughbred auction business."

Respondents to the Paulick Report survey  were assured their comments would remain anonymous unless they specifically gave approval to be named. All but one chose to remain anonymous.

“I hope the sale inspires Keeneland to treat their customers better,” said one bloodstock agent.

“The sale (to Synergy) is good for the industry and good for Fasig-Tipton, provided there is no hidden agenda,” a major buyer and consignor commented. “Being this is the second-largest sale company, it’s going to put Keeneland on its toes. They both need to be more customer centric, and more customer service oriented. They should do some of the things to attract and retain customers. Keeneland has been arrogant. They’ve had a monopoly virtually. If Fasig-Tipton steps it up a level or two, I think it will only improve Keeneland’s customer service focus. Good competition is good for the industry.”

“Keeneland is a company that doesn’t treat its consignors that well,” said a major Kentucky breeder. “So it will be interesting to see how they respond to the increased competition. They have operated like some pre-Teddy Roosevelt high-handed monopoly. The question will be: Does Keeneland have the talent and ability, the corporate mentality, to compete in the real world.  American capitalism does not allow sacred cows to stand alone in fields by themselves eating all the hay.”

“What excites me most,” said a Kentucky horseman, “is that it’s my understanding that Sheikh Mohammed wants to see things done to promote and grow our industry. One only needs to take a look at a before and after picture of Dubai to see he knows how to make things happen.

“This will probably make Keeneland step up and get active as well. I have never seen a time where the status quo was less acceptable in our industry. It is time for people to get with the program!”

While Sheikh Mohammed has not officially been linked with Synergy Investments, nearly everyone polled suggested that he was at least partially behind the purchase. His chief bloodstock agent, John Ferguson, negotiated the purchase on Synergy’s behalf.

“(Sheikh Mohammed) is definitely involved,” one horseman said. “There is no question about that.”

Said another: “I see no downside that would cause any worries (unless one is a shareholder in Keeneland). The positives are that this group, apparently and hopefully, will be applying the same intensity and energy into the commercial arena as they have applied to stallion management and marketing. Further, I imagine they will probably be recruiting new buyers and participants to become involved through 1) their Middle Eastern contacts and 2) incentives and encouragement to all purchasers (particularly trainers and other end users via hospitality and purchase incentives).”

One consignor said he does not believe Sheikh Mohammed has any intent to hurt Keeneland. “He simply wants to improve the economic state of affairs within the North American side of our industry,” he said. “He has a ton of money invested here and our prosperity is important to him. “My understanding is that he plans to use this purchase as a platform to launch innovative approaches to attract new buyers.”

Another breeder cited the new structure of Fasig-Tipton’s ownership as a plus. “The purchase takes Fasig out of a business model that is predominantly aimed at cost control and providing profits to distribute to a small handful of shareholders. This establishes a new business model that will have increased focus on customer appreciation and service, with capitalization to develop many new customer friendly initiatives. It has the potential to be a competitive threat to Keeneland, and increase competition almost always benefits the consumer. It should also lead to initiatives that bring more high-end clients to the sales and into the business. Basically, the possibilities are mostly limited by the imagination of the individuals in charge of designing and implementing.”

“Nothing but good can come from this sale,” said another consignor. “F/T has always been the ‘Avis’ of the equine sales companies where they ‘try harder,’ and the ‘product’ they produce is with less capital than their competitor. Keeneland does an excellent job; however, healthy competition is always good. F/T now has the capital to compete head to head with their competition, which should make a win/win for everyone.”

“What excites me,” said another, “is the injection of large amounts of cash, if necessary, in a contracting breeding/racing environment. ‘Doing it right,’ regardless of cost, will take precedent over profit.”

Another breeder said the sale has “enormous potential. It can be very significant or a non event. The potential to revitalize racing and selling is immense if the commitment is there. I have no worries about this sale unless they under deliver on the expectations the industry has for the new company. Unlimited funding, not just market driven. What an opportunity.”

Some were more guarded in their comments, listing potential negatives.

“Possible downsides include unknown effects, if any, of having one faction seeking to dominate the American horse scene,” said one consignor. “I’m not too worried, because I think the American breeding, racing, and sales scene is too broad and multi-faceted, and enough competition will always exist for one group to dominate enough to cause serious negative effects. (The situation is unlike that of the Jockey Club which negatively affects the industry because it is a monopoly without competition.)”

“Main concerns would be major changes in strategic direction and/or management,” said another.

“It might not be the best thing for so much of the industry to be under the control of one entity,” said one bloodstock agent. “That said, they put up the money so more power to ‘em. If the Arabs let it be known that they will support their sale and no longer buy at Keeneland, then it could have a significant impact on where consignors send their horses. If nothing else, I hope the sale makes Keeneland more user-friendly.”

“I am concerned that the ultimate goal may be domination in the market place,” a consignor said.

Said another: “I have been told (which means nothing, as we know), that the group behind Synergy are not fans of how things are done at Keeneland. So I’m guessing that this is a beginning process to eventually have more power than Keeneland does in the sales world."

“Nothing about it excites me,” said breeder Garrett Redmond. “My worry is: If it is profitable and profits are shipped to Dubai, more of our patrimony is exported to an OPEC member. That cartel is already taxing us into depression and poverty.

“There is one way it might help sellers,” Redmond added, “but I know it will not be done. With the huge capital at its disposal, FT could pay sellers on the day following the sale instead of the waiting period there is now. That alone would be a huge blow against Keeneland; the kind of competition we need to take Keeneland down a few pegs.”

Several horsemen contacted by the Paulick Report brought up the feud between Sheikh Mohammed’s Darley operation and the Coolmore camp led by John Magnier and the team that includes Demi O’Byrne and Paul Shanahan.

“Coolmore bought and sold a lot of horses with Fasig-Tipton, and there is the fact that Sheikh Mohammed doesn’t buy Coolmore horses or Coolmore-bred horses,” said one breeder. “I’m not sure how that is going to play. Would Coolmore have the same kind of relationship with Fasig-Tipton that they’ve had before? That’s still to be panned out.”

Browning addressed the question directly. “We’ve tried to be proactive with Coolmore and Darley. Both camps have been important customers of Fasig-Tipton and the overall industry. We’ve had a longstanding relationship with Coolmore, especially with Demi and Paul, and we’ve tried to make every effort to encourage them and assure them that we want to continue those relationships. It’s important for the industry.

“Competition is good and good for all of us,” Browning continued. “We want a competitive environment where we have both sides on the same horse. We want them both to be completely comfortable buying and selling horses at Fasig-Tipton. We are striving to do that. I can’t say that it’s going to be a success or failure.”

For now, Browning is hoping the industry has some patience as new plans are formulated.

“Rome wasn’t built in a day,” he said. “This transaction closed May 30. Our perspective is to make the game better and the sales better on a long-term basis. We want to do the right thing consistently and for the long term. It’s not very glamorous or exciting, but we are more interested in where we’ll be in five years, not five months.”

By Ray Paulick

Copyright ©2008, The Paulick Report

Two years ago, Deep Impact, a two-time Horse of the Year in Japan, traveled to Paris to take on the world’s best grass runners in the Prix de l’Arc de Triomphe. Thousands of Japanese fans followed the horse to France and bet with such confidence that Deep Impact was the odds-on favorite to win what is arguably Europe’s most prestigious race.

The son of Sunday Silence could do no better than third, however, a stinging loss that paled in comparison to the news that followed  days later, when results of a post-race test showed the presence of the prohibited therapeutic medication Ipratropium, which Deep Impact was allowed to take during training in Japan to treat lung congestion. He had subsequently been treated with the drug in France prior to the Arc.

In a country where honor is in abundance, trainer Yasuo Ikee took the fall. He said he thought he was following the withdrawal time guidelines, but accepted full blame and responsibility for the error. There was no appeal. Ikee apologized to French authorities and to Japanese racing fans. He said he would do everything in his power to never make a similar mistake in the future.

A little over a month later, when Deep Impact scored an overpowering victory back home in the Japan Cup, Ikee was nearly moved to tears during a post-race press conference when asked about his experience in France. He continued to apologize for the medication positive, saying that it was by far the lowest point of his professional career. The Japan Cup win lightened the burden he felt over the Arc defeat and the humiliation of the post-race disqualification, but it was clear he continued to carry a large amount of shame and embarrassment over the incident.

I thought of Yasuo Ikee this past week when American racing’s bad boy, Rick Dutrow, reacted like a petulant child when asked about a positive test by one of his horses racing at Churchill Downs the day before he saddled Big Brown to win the Kentucky Derby. “It’s not my fault, though it’s my responsibility,” he was quoted as saying in a press conference that turned bizarre. Dutrow plans to appeal his 15-day suspension, not because he feels the ruling will be overturned but because the system allows him to delay any suspension through the appeals process, and he wants to put off any punishment as long as possible so he can be with his horses.

How admirable.

Worse, however, Dutrow said, in effect, “Clenbuterol? It’s no big deal.” He not only refused to accept blame for the positive test, he then started suggesting other past and current trainers were bigger cheaters than he was.  

The New York Post’s headline said it best: Big Brown Trainer Mouths Off Again.

If timing is everything, the news of Dutrow’s bad test couldn’t have come at a worse time for IEAH Stable, the majority owner of Big Brown. Only a few days earlier, the outfit pledged to race its horses drug free beginning Oct. 1. Until then, I guess, it’s “Katy, bar the door!”

Dutrow’s clenbuterol positive wasn’t the only time medication was in the news this week. Steve Asmussen, this year’s leading trainer by money and wins and the conditioner of reigning Horse of the Year Curlin, was notified of a positive test for Lidocaine in one of his horses racing in Texas last month. His hearing is scheduled for July 18.

Asmussen has numerous medication violations during his career and served a six-month suspension in late 2006-early 2007 for a mepivacaine positive. Unlike Dutrow,  he was smart enough to allow his attorney do the talking for him, and stuck to training horses. Asmussen’s lead attorney is Maggi Moss, last year’s leading Thoroughbred owner in the U.S. by wins.

Consider this: the trainers of the 2007 Horse of the Year, the 2008 Kentucky Derby winner and the 2008 Kentucky Oaks winner (Larry Jones) are all facing positive drug tests for horses in their care. Anyone who thinks racing doesn’t have a problem is in serious denial.

Finally, in what could turn out to be the most significant medication story of the week, Monmouth Park’s leading trainer, Bruce Levine, had a surprise visitor on Tuesday when a veterinarian working for the New Jersey Racing Commission took “out-of-competition” blood samples  from each of the 41 horses in his barn. The commission will run tests for the blood-doping agent erythropoietin, better known as EPO.

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By Ray Paulick

Copyright ©2008, The Paulick Report

The Paulick Report has obtained a copy of rulings involving trainer Steve Asmussen that are in the database of the Association of Racing Commissioners International, dating from December 1990 through May 2008. There are a total of 74 rulings in the RCI report, which may not include violations in some states that are not members of the RCI or do not report rulings to the organization.

A similar RCI report on trainer Rick Dutrow shows 72 rulings. Each trainer is in the news because of recent medication violations reported in the last 48 hours, Dutrow for a clenbuterol positive in Kentucky and Asmussen for a lidocaine positive in Texas. The Paulick Report has a separate article on the uses of these two medications.

The two men are high-profile trainers by virtue of their association with the two leading horses currently in training in the United States: Dutrow trains Kentucky Derby winner Big Brown and Asmussen trains 2007 Horse of the Year Curlin, whose majority owner, Jess Jackson, recently spoke at a Congressional hearing on a variety of subjects, including the problem with drugs in horse racing.

By Ray Paulick