Bridging The Gap: De Burgh’s Global View

[Wandering Eyes]

If you’re still in any way doubting just how global the Thoroughbred business really is, take a look at Hubie de Burgh’s calendar thus far in 2019.

After a week on the Gold Coast of Australia buying yearlings for local syndicators Darby Racing, the Irish-based agent jetted over to New Zealand for the Karaka yearling sales buying for Sheikh Hamdan and Darby Racing, and then on to Sydney for Inglis’s Classic yearling sale. In between, there were stock inspections in the Hunter Valley. A week after returning home to Ireland with sales receipts for 19 yearlings, and with the internal clocks barely having had time to reset, de Burgh had bounced over to England to check in on some clients. That’s where I at last connected with him by phone, over a crackling connection as he raced between stud farms in the back country.

“You have to have a global mindset to financially survive,” de Burgh reasoned. “I personally spent five months of last year away from my office and already six weeks of this year in Australia. The result of this meant that between Will Johnson and myself, my company de Burgh Equine brokered deals in 13 different countries around the world in 2018. It is very noticeable that in the last 10 years there have been a number of breeders and bloodstock entities investing and trading in all the major markets in the northern and southern hemispheres at the same time.”

If de Burgh was at all worn out from his travels, it didn’t show through the enthusiasm in his voice. It wouldn’t have hurt either that overnight Time To Reign (Aus) (Time For War {Aus}), a colt he had purchased as a yearling with Darby Racing, had won the G2 Silver Slipper S. in Australia, stamping himself a leading contender for the G1 Golden Slipper on Mar. 23. De Burgh was reflecting on Time To Reign’s money-making potential, both in the purses he’d now be aiming for and the way his stud fee had likely shot into the stratosphere in a matter of minutes.

“The Silver Slipper was a $250,000 race, and we’re going for a $3.5-million race in a month, the Golden Slipper,” de Burgh said of the half-brother to Darby Racing’s 2017 Slipper winner She Will Reign (Aus) (Manhattan Rain {Aus}).

De Burgh said the Australian Thoroughbred business is as healthy as ever, and made no bones about the fact that he thinks it’s the country’s outstanding prizemoney structure that fuels it all.

“When you’re racing in Sydney or Melbourne, a standard race on a Saturday is A$125,000 minimum,” he said. “But even if they don’t quite make it in the city and you move them out to the country, they’re still racing for A$30,000 out there. You can put your hand on your heart in Australia and look a guy in the eye and say, ‘give me some money to go in on a horse because you have a chance of getting it back again.'”

Genuine love of the sport runs deep Down Under, but it is likely these prizemoney levels are what fuel so many every day Aussies to take a small share of a racehorse. Syndicators in Australia are capped at spending $500,000 including costs on any one horse, and that in turn has made spending in the middle market quite competitive.

“Darby Racing has to work under the syndication rules, so they’re only allowed to buy horses up to a certain value, and that includes all the costs,” de Burgh said. “So that’s why we’re cut off at about A$400,000. But even if we [could spend more], it was very hard to compete against the likes of China Horse Club, Henry Field, the Maktoums, James Harron and some of these consortiums with American investment at the top level. We’re more comfortable when we’re trying to buy colts in the $200,000 to $350,000 bracket.”

De Burgh described syndication as “the lifeblood of Australia.”

“It’s really interesting because I’ve now worked with Darby Racing for three years, so I’ve seen it from the grassroots and how many people follow them on Facebook and social media, and where they get their client base from,” he said. “What’s really interesting is that I went out last year for their open day and they had 600 people there just to see the horses. Parts of a lot of those horses were sold on that day, but the fact that up to 600 people turned up was quite incredible. And it wasn’t held in Sydney, it was held an hour outside of Sydney.”

Darby Racing’s profile was no doubt boosted by its rags to riches Golden Slipper winner She Will Reign, but de Burgh stressed the importance of the network the company has built up on social media.

“Darby Racing buys a horse in the sales ring, and the moment it’s bought, within 30 seconds of signing the buyers’ contract, they have that out on their website,” the agent said. “You will watch people hitting it, seeing what they’ve just bought. Registration of interest is shown within a minute of them actually buying the horse. That’s because they’ve built such a big social network structure, and anyone doing that has to start from scratch. They’re working with their trainers and the trainers will often take a percentage of the horse as well. Everyone is working together in Australia. They get good credit from the sales companies. You get to the racetrack and the racing clubs are giving you tickets. Everyone is working together to get the product into the fast lane.”

While the top races in Europe are generally decided by a handful of superpowers, the prizes are generally spread much further in Australia.

“In Australia, you can watch a group race with 10 runners and they’re probably owned by 10 different people, and seven of those are syndicators,” de Burgh said. “A lot of the good horses in the last three or four years have been owned by syndicates. The charm of Australian racing is that a guy can walk in and put A$2,000 in and own 1% of a horse. For example, we bought She Will Reign for $20,000 as a yearling. Those people who invested in her put in A$2,500 each. She won over A$3-million in prizemoney and then we sold her to Japan for considerable millions. Those guys’ original A$20,000 purchased picked them up millions between the prizemoney and what she was sold for.”

De Burgh explained that the monopoly of owners in Britain is exacerbated by the fact that many promising young horses are purchased privately and change silks early in their careers. Smaller owners in Britain are much more motivated to trade their horses on because they’re less likely to recoup their costs through purses. In Australia, de Burgh noted, it’s much harder to seal private deals; small owners would rather hang on to their horses, enjoy the ride and scoop up some big prizemoney pots. “In Europe you can have a smaller owner with a horse that suddenly wins his maiden or a listed-race really impressively,” de Burgh said. “He’s either sold to Hong Kong or to one of the big entities, because the prizemoney is so bad. So they trade on. A lot of the time in Australia, when there are 20 guys in a horse, they hang on to it, because if someone is offering A$1,000,000 and you divide that by 20, that’s A$50,000. That probably doesn’t change anyone’s lifestyle, and they haven’t had to put much money into it and they’re getting a lot of fun from it. So a lot of the time they don’t sell them down there–they keep racing. We’re seeing that in trying to buy horses in Australia to go to Hong Kong. We’re ringing them to offer them what we think the horse is worth, and we’re finding out they’ve been offered double that. At home, the smaller guy’s horse will pretty much always sell.”

One place in Europe that it isn’t easy to find a bargain is at the top of the public sales markets, where competition for the best stock is becoming more and more fierce. De Burgh said this trend is becoming especially pronounced as breeders begin to offer fewer and fewer of their top mares and fillies for sale.

“The problem is no one wants to sell their nice young mares anymore, and so the market is getting full of these 10-year-old mares that have already been exposed,” he said. “If we have an order to go and buy a really big mare, we can’t get one, because they’re all in the hands of keepers and everyone is after the same horses. It’s been like that for 20 years, but now it’s getting more noticeable. Even some of the people we used to buy off, when you could walk in and buy a couple nice fillies, even they’re keeping them now because they can’t replace them either. There is no supply because it’s so limited.”

Another trend that is becoming more pronounced in Europe is the rising fashionability of speed sires. It allows for an interesting juxtaposition with Australia, which has hinged its reputation on sprinters for years. De Burgh reflected that there is nothing wrong with Europeans producing sprinters, but doing so at the expense of preserving the continent’s middle-distance and staying lines is dangerous because whereas those types of horses are routinely sold to race on in Australia, America and Hong Kong, there is little overseas market for precocious European sprinters.

“A lot of the owners that are coming in now want a quick return on investment,” de Burgh said. “So everybody is trying to breed a sharp horse that will come out the first couple months and race at Royal Ascot if it’s good enough. The problem then is that a lot of these horses that are five-furlong sprinters, where do you sell them on to afterwards? America has their own sprinters, they don’t need them. Australia are world-class with their sprinters. So what do you do with them? The Middle Eastern countries aren’t looking for five-furlong horses. We’re breeding a horse that is a quick-fix solution in the early part of its career, where in Australia you look at the horses and they look fast, they look like Usain Bolts, they look like speed, speed, speed–but there are a lot of races for them. No one in Australia wants back-end 2-year-olds, but their quick-fix solution to that is they just go to Europe and buy a 10-furlong horse as a 3- or 4-year-old.

“On the other hand, when Australians give the Derby horse a chance, they do get rewarded, like with Dundeel for example. He’s absolutely flying at the moment. So if some guys in Australia would take a chance and start to stand some of these horses, and they started winning a lot of races, I’m sure people would come back and buy them. We go to New Zealand to buy Savabeels; they’re later maturing, but they’re very, very good mile to 10-furlong horses. When we were in New Zealand this year we bought a Savabeel for Darby and one for Sheikh Hamdan.”

De Burgh said that as long as Europeans continue to breed top-class milers, they will have the product that overseas buyers are looking for. He praised the entities that are keeping these branches alive.

“Australia wants the stayers and America will take the mile to 10-furlong horses, so we’ve got to stay strong in Europe breeding these kinds of horses, because we’re such an export market, and we’re the first place everyone comes to buy horses. This is going to become even more noticeable as the U.S., one of the biggest and most important markets in the world, seems to be laying on more and more turf races.

“Thank goodness for John Magnier and the Maktoums, Prince Khalid and others, because they will put horses to stud that are 10-furlong horses. Someone has to do it,” he said. “You look at Europe now and you have a lot of really good milers. You do have the likes of Kodiac and Dark Angel who are really popular because they’ll be out early winning a lot of the good 2-year-old races, but you also have some really good milers coming through. As long as people are breeding to get a mile, it’s not just going to be cheap speed. Cheap speed is the problem. You have in Europe horses like Lope de Vega, who I think is a very good stallion; you’re not using him to get mile and a half horses, you’re using him to get mile to 10-furlong horses. It comes back to again, thank goodness for people like the Maktoums, Prince Khalid Abdullah, Coolmore; they’re actually keeping these horses in Europe. If they were selling overseas all the time we wouldn’t be world leaders at breeding turf horses.”

De Burgh pointed out a few sires he likes at the moment that he considers value for their fee.

“Exceed and Excel is just a proper, Group 1-producing stallion and he’s now turning into a very good broodmare sire. I’d love to have fillies and colts by him,” he said.

“Zoffany started off so well, and then he got a much higher grade of mare and the produce of those are just coming onto the track now. There’s every reason to think he could bounce back and get a whole bunch of group winners and the next thing he’s back up on top again. He had seven stakes-winning 2-year-olds last year. Fashion is a very fickle thing in our business, and I’ve seen stallions go in and out of favour three times in a year.

“Cracksman, I just think was a very good racehorse, and he’s standing at a fraction of the price of his father [£25,000],” he added. “He’s a nice horse who trained on and at that sort of money I think he’s worth taking a chance with.”

In America, de Burgh is high on Kantharos, who made a fast start in Florida before moving to Hill ‘n’ Dale in 2017. His first Kentucky-bred progeny are yearlings this year.

“Kantharos, he got a lot of winners early on and then came up to stand at one of the best stallion-producing farms in America, Hill ‘n’ Dale,” de Burgh said. “He’s getting a much better quality mare, and I think he’ll never be that price [$15,000] again.”

In a business where intercontinental ties are rapidly increasing, it is important, de Burgh advocates, to operate with a global mindset not only for the good of one’s business, but for the greater good of the industry.

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