The role of Syndication in Horse Racing in the Fut

Syndication The Way to Go

I requested the follow from Barry Irwin of Team Valor of a hard copy of a speech given by himself in Paris last year on Syndication - As we can all learn I enjoyed his views and decided to share on ABC for any constructive comment - October 3 Monday, 2016.

MODERNIZING AMERICA’S RAISON D’ETRE FOR OWNERSHIP

When I moved from Los Angeles to Kentucky in 1969 to write for The Blood-Horse, one of my first friends was bloodstock agent David Greathouse. He could sell with the best of them.

A few decades later, while looking at a yearling at his family’s farm, David lamented a pivotal and historic change in the business of selling horses.

“We—meaning those promoting Thoroughbreds—made a big mistake when we began telling our customers they could make money racing horses,” David said. “Saddle-bred people, Dressage people, the show jumping crowd—none of them ever held out that carrot.”

So in the initial four decades following the Second World War, sellers of bloodstock in America touted racing horses as a money-making venture.

Expressions such as “he can earn himself out” and “return on investment” or “we can make a killing on this one” were in common usage by those selling horses to prospective buyers.

During the same time frame, expressions like these were rarely if ever heard by those racing in Great Britain or Europe.

In the UK and Europe, racing a horse had always been a sporting venture or a family enterprise. The hope of a buyer was to race a winner. Few if any bought a horse based strictly on the notion of “making a killing,” unless it referenced landing a gamble.

Both over here and at home, there were always those who got involved in ownership to be privy to inside information that might lead to winning a gamble. That probably still happens over here more than at home.

But as bloodstock became more valuable in America, the cashing of a bet became secondary to the appreciation of the equine asset and the earning of prize money.

As asset appreciation and prize money in the U. S. increased, so did the cost of horses and expenses to maintain them. Today in America, I would say the leading owners are in it for the money. The rest try to make money, but it is not easy to do.

All these years later, I still agree with David. Other competitive equine disciplines have never promoted participation based on a promise of financial riches. They are purely for sport. Of course for the professionals involved, they can earn a living by training and buying and selling, but for the end users, it is about the sport.

In America during the last decade, those putting on races complain of a horse shortage in an era of dwindling field size. I humbly submit to you that there is no shortage of horses—there is only a shortage of people willing to pay the expense of buying and racing horses, because it has become so costly and the chances of “breaking even” are more difficult than ever.

So the culture of owning a racehorse to make money continues to rear its ugly head as usual. Horses in America are still sold to a shrinking client base of end-users as investments.

Realistically buying a horse as a racing prospect is nothing more than sheer indulgence. In spite of what you may believe, Americans by and large are way too practical to cope with indulgence at such an lavish level.

Most owners realize deep down that the enterprise is a punt at best. In order to justify their indulgence, they fool themselves into believing that racehorse ownership is a business.

In the last three decades—and especially in the current time space—the landscape has begun to change dramatically with the rise of racing syndicates. Oddly enough In America—the land of capitalism—only the syndicates are selling participation based on the sport and lifestyle of racing—something their British and European counterparts have been doing all along.

In the late 1980s when I began to form racing partnerships, less than a handful of racing groups like mine existed, led by the syndicate pioneer Cot Campbell of Dogwood Stable.

Rather naively as my partner and I later learned, we promoted our partnerships as vehicles that had the potential to turn a profit. As luck would have it, some of our initial syndicates did in fact wind up as money-making ventures.

As the business matured, we soon came to realize that while our investors all told us they were interested in making money, when presented with a profit, nearly all of them turned down a profit unless an offer was outrageously priced.

By and by we discovered that the main reason our customers bought horses was not the prospect of earning a profit, but pride of ownership. The partners didn’t want to lose money, but making money was secondary to pride of ownership and fun.

In later years, I would explain to newcomers that even though they said they would sell their horse if a good offer was made, in fact they would spurn it. None of them believed me in the beginning, but they did later on.

Today it is the same old story: most newcomers still want to fool themselves into believing that they are making a traditional investment with a profit motive as the core of their decision. Only with the passage of time does reality finally set in.

Reality of a different type set in for my original Team Valor business partner, because he actually wanted to be in the horse business and not the entertainment business. The realization was too much for him to bear.

I, on the other hand, evolved over the past 30 years. I accepted and internalized the notion that I am the director of the cruise ship U. S. S. Team Valor International. I am the captain, the talent scout, the entertainment director and the cheerleader.

With the success of Team Valor, Dogwood Stable and some others, the growth of new partnerships has exploded.

At the core, I daresay that all of them have as their raison d’etre not “return on investment” but “bang for the buck,” meaning that investors realize they probably will not be investing in the traditional sense, but spending money for a good time, for involvement, for friendship and for pride of ownership.

That is the quadruple crown of value in an investor joining a racing partnership.

Investors first and foremost want to be proud of the horse they own and the stable in which they are participants.

Secondly, they want the opportunity to be involved in the career of the horse they own.

Third, they want to have as much fun as possible, especially at the races.

And finally, they want to make some new friends among like-minded individuals.

A friend of mine since the age of 12, a guy with whom I used to go racing as a young teenager, joined one of my syndicates with a horse that wound up running in Dubai this year.

When he and his wife returned home, he sent me an e-mail and wrote “You never told me that a big part of this was meeting so many interesting people that I could become friends with. That may be the best part of the whole deal.”

Let’s face it: there are not a lot of fans of racing compared to the major sports, so finding people that share one’s passion for racing is difficult. Racing syndicates provide this opportunity in spades.

The first time I learned that people place fun above money came when I canvassed a syndicate to see if they were interested in supplementing a horse to a big race in New York.

In response to my query, a recently divorced woman with no visible means of support and an obvious case of the post-marital blues told me “Let’s do it. Who cares about money? I want to have fun god damn it!”

So what are the core reasons that tie all of the various aspects together under one umbrella?

I have learned that there are two main reasons people get involved in racing at any level, whether it is working with horses, gambling on horses, owning horses or just simply being a fan of horse racing.

In 1973, the year Secretariat won the Triple Crown, two New York writers published a book entitled “Something Going.” In essence they contended that the reason most people involve themselves in racing is to have “something going.” To have some action.

That is one reason.

The other reason most people get involved is so at the end of a race—any race at any level at any track—they can utter this key phrase—Was I right, or was I right, or was I right? People want to be right. They want their opinions to be seen as being correct.

When it comes to racing syndicates, they provide action for action junkies and they provide plenty of opportunities for people to be right.

The sport of horseracing is much easier to promote than the business of horseracing to the general populace and to those that have always loved or enjoyed the game.

The main attraction of choosing a racing syndicate is that the initial investment and continuing upkeep expenses are a fraction of the cost of solitary ownership.

Newcomers, however, are intimidated by the complexities and financial commitment of racehorse ownership.

Syndicates have a much better chance to attract and involve newcomers and old hands alike because I have learned that these folks are more easily drawn to a group than a single individual like a bloodstock agent or a trainer.

If folks see that other people are involved they feel more comfortable. Some people like being part of a group. This is an advantage for syndicates.

The best way to attract new people is by success on the racetrack. There is a cliché that success breeds success. If you win races, people notice and they want to get in on the action.

But welcoming these people can be challenging. It is incumbent upon syndicate managers to design a gateway through which a newcomer feels welcome.

I have developed my own style, but it is one that is easily adaptable to other syndicates.

I rarely if ever advertize. I don’t cold call. I don’t have sales agents.

I rely on my website as my portal to the outside world.

I place everything I have to say to newcomers and everything they need to know about racehorse ownership on my website.

I invite them to be placed on our e-mail list to learn of new offerings.

I never offer a horse on my website.

I have a promise on my website to newcomers that once they reach out to Team Valor with their initial contact, they will get one response from me, after which they will never hear from us again unless they want to.

I don’t like being hustled or promoted by sales people so I don’t hustle or promote newcomers to my stable.

When I hear from a newcomer asking to be placed on the mailing list, I invite them to phone me for a quick 10 or 15-minute chat about how we operate and what they can expect. More than half of the newcomers wind up calling me.

I rely on communication and customer service as my stock in trade.

I have a small staff and everybody that works for me can write effectively, is well educated and has spent a lifetime with horses, both professionally and personally. We have horse people, not a sales or promotional force. And our customers respond to them because of their approachability, talent and background.

In terms of communication, we provide three on-line newsletters every week, written by me and a full-time, prize-winning Turf Writer.

In terms of customer service, we provide as much race day ease and accessibility as possible at the track.

When we first began our venture, the biggest roadblock to success came oddly enough from racetracks. They were not used to having to dole out perks and accommodate large groups of owners.

This situation has improved markedly, but there is still resistance from major racing venues, who give a higher priority to elite owners with a small group of racetrack attendees.

It is a constant battle to obtain adequate seating for our customers on big race days.

There is a definite built-in prejudice against racing syndicates.

It is nothing if not ironic that in a sport with shrinking attendance figures and diminishing bottom lines that racetracks still treat racing syndicates as second class citizens, when in fact racetracks should bend over backwards to cater to them.

In closing, I will say that other than having horses winning at the racetrack, the best way to promote one’s syndicate is to provide as positive and as fun an experience as possible at the racetrack, because most of our newcomers hear about us from referrals from existing partners.

Of course, it is always helpful to have good press and as many on-air appearances as possible. When being interviewed, it is imperative to be as open and transparent as possible and to let as much of your own personality shine through as possible.

One phenomenon that I have noticed with regularity over the years is that once a customer latches onto a trainer or racing syndicate, no matter how much bad luck they may encounter, that customer invariably sticks with that first choice. Even when a customer leaves, that customer eventually returns.

Some attraction occurs when a customer first makes contact with a trainer or a racing manager that is very appealing. So put your best foot forward as quickly as possible in hopes that your message or your personality can win the day.

Finally, try to be as honest and open as you can in your first contact with a new prospect. I always tell newbies up front that while we will try our hardest to make a profit with a new horse, once an owner writes that first check, they must be prepared to kiss that money good bye, because in all probability he is never going to see it again and he may even write more checks chasing that original one.

Then tell them that the real value, the real return on their investment will come from consuming the product they buy, because there is nothing more exciting than seeing your own horse come running through the stretch to the finishing post. That is the raison d’etre for modern American racing at the syndicate level of the sport.

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Excellent read, and makes a lot of sense from a marketing perspective. The same can probably be said for punting as well and this operators tend to forget.

It should be fun first and foremost at all levels but always with a chance of a life changing experience.

The costs are important too, both from an ownership and punting perspective which is why success has to bring rewards that are in line with the experience and in line with expectations.

Has anyone noticed how well Hyperpaint does with their horses the last few seasons?

Bob Brogan wrote: Has anyone noticed how well Hyperpaint does with their horses the last few seasons?

I might be wrong but didn't they start with Pat Lunn years ago?