Friday, July 31, 2009

Going out on a Limb...

Thought I would step out on the proverbial limb and name some horses I saw at the recent Fasig-Tipton sale that I believe will become racehorses. Of course if you ask the sellers, consignors and sales personal they’ll all turn into racehorses (Stakes winners at that). But the reality is a little different. Too be clear this is not an endorsement against any horse I do not list, as I saw only a percentage of them, this is simply me putting what little reputation I do have out by declaring in writing some of the horses I think will be runners.

In no particular order:

Hip: 169

Bay Colt out of Bernardini / Lyphard’s Delta, a late foal, foaled the 6th of May probably attributed to his slightly smaller stature. But other than that he certainly looked the part of a race horse, sharp eye, smooth (and I mean smooth) mover, nice knees, I would be surprised if this horse doesn’t win some big races, apparently others had the same thought as he sold for $350,000.

Hip: 313

Chestnut Colt out of Posse / Cash Flow, this is Cash Flow’s first foal, her dam Capestele a Black Type mare, has had 15 foals with 14 to race all of them have been winners. He was very well balanced, a good mover with perfect knees, and a big chest; in fact his chest may have been too big as his front hooves when he walked were a little too far apart as they came down. One last very distinguishing note about him his attitude, this horse had a “TUDE,” during the entire showing he was working hard trying to bite his handler while looking at me as if to say “what the hell do you want, get out of here.” I asked the handler if he was difficult to handle, he turned his head to look away and no, no, he’s nice, over by the barn however my wife heard another handler mumble, “nasty that’s what HE is.” I think if the right trainer could get him to focus that nasty attitude toward the track he’d be a nice allowance horse (or even more) that could win his share of races. Apparently no one else agreed with me on this one as his reserve was not met.

Hip: 128

Bay Colt out of A.P. Warrior / Girl Gone Crazy, this is a big good looking Colt. His body is perfectly put together, very nice mover, very smooth, very balanced, he possesses what my friend Bob Feld described as a “Racy Look” this horse looks like he can run. Wouldn’t surprise me to see this horse in some higher level stakes races in a year or two, he sold for $85,000 to Divine Assetts.

Hip: 395

Dark Bay/Brown Colt out of Medaglia D'oro / Honeycomb Gus, a January foal he’s had plenty of time to grow, and he has. He’s a bull of a horse, perfect balance, perfect legs, huge barrel chest, long thick neck, sharp eye. He’s named Standing O and for good reason, he deserves a standing ovation just by the way he looks. I can see him winning stakes races and going on to a successful stud career. Apparently others had a similar assessment as he sold for $250,000.

Four examples of horses I saw and liked, I’m walking out on that limb of the public eye and am looking forward to seeing what these horses can do. As such I invite any comments and questions regarding these horses and any others at the sale.

Friday, July 17, 2009

Free Racehorses at Fasig-Tipton…Come get one…

(Editors note: this is a re-written article I posted some time back however due to the amount of people I encountered that did not know of this important tax incentive, and with Fasig-Tipton this weekend I felt it merited a re-print)

No, I’m not kidding. Section 179 of the Economic Stimulus Package allows for under certain parameters free racehorses. The IRS explains the stimulus package as follows:

The first incentive is the expensing allowance under Section 179, which allows horse owners who purchase horses or other business property and put it in service in 2009 to expense up to $250,000. A limit is in place such that if the total property purchased in the year exceeds $800,000, the expense allowance goes down a dollar for each dollar spent over $800,000.

The next continued incentive brings back the 50% first-year “bonus depreciation” for horses and most other depreciated property purchased and used in 2009. This incentive applies to horses and any other property with a useful life of 20 years or less. To take advantage of this depreciation the property must be “new,” meaning that its original use started with the owner taking the depreciation. “Original use” means the first purpose to which the property is put. Assume that in 2008, a horse business pays $500,000 for a colt to be used for racing and $50,000 for other depreciable property, bringing total purchases to $550,000. The young colt had never been raced or used for any other purpose before the purchase. The business would be able to expense $250,000 as a Section 179 deduction, deduct another $150,000 of bonus depreciation (50% of the remaining balance), and take regular depreciation on the $150,000 balance. As always speak with your tax professional, and if they have any questions the IRS is very willing to help.

This bill equates to a tremendous tax write off and benefit to Thoroughbred racing, which is why I’m trying so hard to get the word out about it. The benefit of this legislation to a sale like Fasig-Tipton could be magnanimous. In tough economic times when individuals tend to hold on to their funds tightly, the impact of knowing that they could take such tax breaks could immensely affect the bottom line at Fasig.

Thursday, July 9, 2009

Terry Finley: West Point Thoroughbreds

Terry Finley is the founder and President of West Point Thoroughbreds, Inc. A graduate of West Point, Finley is a former Army Captain and Airborne Ranger who holds an MSBA from Boston University. He has been involved in the Thoroughbred industry for more than 25 years, gaining hands-on experience working with thoroughbreds as a teenager and starting racing partnerships in 1991.

OOF: Too say the least you’ve lead a very interesting life, what first attracted you as a teenager to Thoroughbred racing?

TF: I’ve always had a sense about horses. I used to go to the races with my father and I worked at race tracks and farms. I’ve always been very comfortable and confident around horses.

OOF: I read that your first foray into racing partnerships was with a Sergeant under your command, from that you built West Point Thoroughbreds, quite a jump, what were the steps and processes along the way that made it possible?

TF: When my wife and I returned from Germany we settled in New Jersey. There was a sergeant from Louisville who always talked about the races; he was a big Pat Day fan. He rekindled my love of the races, the smell the look of the horses and I decided to get back into the game. My wife and I claimed a five thousand dollar horse from Philadelphia Park which was my first foray into ownership. We then put together a business plan and started working on attracting partners.

OOF: How did you first start attracting partners?

TF: Advertising, we put an ad in the Philadelphia Park form, classifieds, all over the place. At one point we printed up flyers and put them on windshields of the cars at Philadelphia Park until security saw us and made us take the flyers off every car.

OOF: You advertise a great deal more than other partnerships, in fact you’ve even had an ad on my blog through ad sense, how has the amount of advertising you do made a difference in your business?

TF: Well, we had to separate ourselves there were very well established partnerships, Dogwood, Team Valor, who in their right mind would want to go with West Point. At that time we didn’t have the bankroll to get the good horses. I didn’t come from the thoroughbred business, their was no family involvement. I had no business experience how else do you attract attention you go to you’re bootstraps; you get good horses and take care of you’re clients.

OOF: Your ad (Sherm’s Call) where a guy is relaying via the phone the horse winning a race is the best Thoroughbred related ad ever, how has it impacted your business?

TF: People know it, we played it too much in the beginning, if you think about it the number of images we see, we developed an ad people know and remember very accurately how it feels.

OOF: Is their any particular type of individuals or group of individuals that you target with your advertising?

TF: Not really, it would be easy if you were selling a Maserati you would have demographics, sales figures, it would be a different model. We have a range of clients from a billionaire to someone with a 60K income who saved up because it was their dream to be a part of a big horse. It was that school teacher in the winners circle when we beat Rags to Riches. We focus on customer service, buying quality horses, and taking care of business.

OOF: Has the economy affected your advertising philosophy, and if so how?

TF: To a great extent no, no real drop off in actual dollars has occurred. We’ve had some clients shift some money around and some big investors who’ve help us weather the storm. But we’ve had three good years which put us in a good position. An investor doesn’t care if your company has done well in the past they want to win.

OOF: When looking to purchase a horse are there any specific characteristics that you look for, such as their balance, a look in their eye, pedigree, etc…?

TF: Depends on the horse, we like to buy at the two year old in training sales. In the past four years we’ve had five grade one winners, I don’t think there’s too many who could say that. What has helped is our ever improving institutional knowledge. If you look at a horse in a 1/8 or a 1/4 mile workout some guys are really more strenuous than others. The speed at this distance is not really that big of an indicator of what the horse can do. We group the horses by consignor. Some don’t gallop out because their not in condition to do so; some don’t do “Zingers” (speed work) for different reasons. Once these factors are known we can compare and contrast not just their time but all factors. If you look statistically at how poor we as buyers are when big money is paid at auctions it doesn’t work out (Editors note: Green Monkey). We are there ten days before the auction watching horses being pushed beyond belief. I tell everyone year after year the ones left standing are the real deal. They get sharper every year and we must know the tendencies of these sellers. If a horse is over weight from one seller they were hurt and couldn’t continue training. Yet another consignor all their horses are overweight, you have to be able to discern the difference. They keep getting smarter so I tell my people we have to keep getting smarter too.

OOF: Do you put a higher value and or emphasis colts or fillies, or does it matter?

TF: Some what, I see people year after get messed up with that, they have to do it on the track. Pedigree is important but we’re not going to get stopped by that, the sales companies filter out the lower level horses. Their so expensive to sell consignor won’t sell the lower level horses due to their reputation. It’s a very good process, consignor sell good horses, sales company appraise the horses and determine it they should be in the Fasig-Tipton, or another lower sale.

OOF: Do you find there is a larger partnership market for colts or fillies, or once again does it matter?

TF: I don’t think that really matters, more and more to people it doesn’t matter, I mean a good filly has a residual value but there’s no dream of the Derby.

OOF: One last question where do you see the future of West Point Thoroughbreds?

TF: I guarantee I’ll never do anything else; this is the first thing I think about in the morning, and the last thing I think about before I fall asleep. My wife runs the administration side; we have ten employees which makes us from an infrastructure side the biggest partner company. We know we’re in show business, nobody needs a horse on their investment portfolio there’s other investments they could make we understand that. We work hard to get good horses, to provide quality service and take care of our clients. It’s a privilege to own and be around the horses.

Monday, July 6, 2009

The little gray horse that COULD:

The first time we saw him my wife and I were having a cup of coffee together and watching replays on HRTV. It was about 7:30 on a crisp January morning (this was when HRTV still showed racing in the morning and not infomercials) when we saw a gray gelding being led on to the track “look at those stockings” my wife said. I looked to see that each of his legs had black stocking which ran from his hooves to virtually the entire length of his legs. This however was not his most distinguishing feature, on his face he had a blaze that can only be described as a white cross, which gave him an angelic apperance.

When the race began he broke well then promptly went to the back of the pack, in fact about five to six lengths behind the pack. I remember chuckling and as I walked out the door on my way to work saying something to the effect of oh well, he may not run well but he looks good. A couple of minutes later my wife called me with intense excitement in her voice “he won, he won,” “what” I blurted out “who won” “that gray horse with the black stockings he won,” “wow” I said “that’s amazing considering how far back he was.”

We began watching the horse whenever his races were televised and always admired how he came from the back of the pack to finish well. Over the nearly two years we watched him he was claimed four or five times seemingly each time moving on to bigger and better things. That was until his last claim, when a new trainer claimed him and everything seemed to change. Instead of charging hard in the stretch, instead of almost always coming in the money, he seemed to languish finishing 7th and 8th time after time. After watching somewhere around a half dozen of these races I contacted the trainer and was told he had “retired” him and sent him to a farm in Florida.

So it was quite a surprise when about a year and a half later I received a notice from a long forgotten virtual stable listing stating he had worked out. Worked out I thought, isn’t he retired, I called my wife and we talked about why he would be coming back. About a week later we watched his first race in over eighteen months with great anticipation. We watched him stretch out his legs, we watched him turn his head and stare at the crowd as he rounded the far turn, we watched him run.

It was then an idea came to me, my wife loves this horse and she does have a birthday coming up, the next day I contacted the trainer, David Markgraf. Dave is a very amiable guy and in my humble opinion a good trainer, he told me the horse had been sold to him and since he was completely sound he thought he would run him. I talked Dave into selling me ten percent of the horse, ten percent I reasoned would be a nice birthday present, yet if he didn’t run well wouldn’t break us either.

His first race with us as partial owners he ran third, not bad, his next race second, hey this is fun, his third race he finished seventh, oh well I thought there’s always next time, he came back with a second and a third. Slated to run on July 5th, my wife and I huddled by the computer to watch the replay and see how he did. We watched him line up in the gate number seven of nine horses, we watched as the gate opened him come out in ninth place, watched as he rounded out of the first turn in ninth place, watched him in seventh place as they entered the far turn, watched him in fifth place coming out of the far turn, watched him stare at the crowd, and then, we watched him win. My wife was screaming and encouraging him so loudly she was barely able to speak.

I give Dave a lot of credit for taking a chance on a horse no one else wanted to, for letting me buy ten percent to give my wife what she described as her best birthday present ever, and for most importantly allowing my wife to see her name in Equibase listed as a winning owner.

The little horse’s name is “Passed Over” and as my wife is fond of saying; he’s not passed over any more.

Thursday, July 2, 2009

Want to “turn” Thoroughbred racing around…look to NASCAR

I walked into a store recently and saw hanging on a rack by the checkout counter a four inch by four inch piece of painted metal. The cardboard top which attached to the plastic wrapping that held the piece of metal read “Real NASCAR Sheet Metal, from a Real NASCAR.” The price for this small coke can flimsily piece of metal was $20.00, I asked the clerk when it became my time to pay if they sold very many of those and he replied “we can’t keep em in stock.”

That piece of metal, that little piece of painted aluminum, really struck a cord with me. My thoughts began to ponder why was it that while Thoroughbred racing is facing a crossroads of historic levels, NASCAR is selling pieces of metal as fast as they get to the store. The thought of how NASCAR got to where it’s at and could it translate to Thoroughbred racing began to consume me, as such I’ve spent many hours studying their market model and it’s potential translation.

Twenty years ago NASCAR racing was considered the poor cousin of Indy racing and essentially an outlet for “rednecks” (not my term, and no offense meant) to watch “souped” up cars go in circles around a track, now it’s the number two sport in America.

Here are some numbers which may catch your attention: according to “Kotler…Defining Marketing and the Marketing Process” NASCAR races are seen in 150 countries and in 23 languages by 75 million people, the average fan spends nearly $700 per year on NASCAR related items, about 240,000 people attend the Daytona 500, and over 250 big-name sponsors pay more then 1-billion per year for sponsorships and promotions, let me say that again – 1-Billion dollars a year - not bad for something once considered to be a sport for “rednecks” (again not my term).

Comparing TV ratings from the Breeders Cup and the Daytona 500 we find that according to BloodHorse magazine last years Breeders Cup event garnered a rating of .7 where ratings for this years Dayton 500 according to speed forum had a comparatively whopping ratings share of 10.2, and guess what folks TV ratings equate to corporate dollars.

So how did NASCAR do it how did they go from a preverbal bad joke to the number two sport, they did it through marketing (here’s where the TA DA sound should be) they reinvented themselves and sold that product to a now enamored public.

The first thing they did was sell the excitement, the speed, the sounds, the sights. Then they sold the drivers, they took their helmets off and had essentially glamour shots made of them, the effect was instead of looking like dirty astronauts they looked glamorous and cool (which also helps explain why almost half of NASCAR fans are female). They then sold the corporations and the media; well actually at this point the corporations and the media sold themselves, essentially getting into bidding wars to advertise and or broadcast their product.

Ok I know what you’re thinking, car racing and horse racing are completely different. Cars stick around, horses come and go, how can we ever sell this sport the way they sold that sport. Simple they didn’t sell Chevys, they didn’t sell Fords, they sold a sport. Sure there was some brand loyalty especially among the die hard fans, but that wasn’t what they sold, they sold excitement.

There is nothing more exciting then a stretch dual to the wire, anyone who says they would rather watch four hours of cars going in a circle compared to two minutes of intense fighting to the wire doesn’t understand Thoroughbred racing. The excitement of watching a horse purchased for $9,500 come out of no where to win the Kentucky Derby compared to watching cars drive in circles for four hours is like comparing a flash of lightening to watching paint dry.

The people of America want excitement, they crave it and in a downed economic time they need it. Ed Myers of River Downs once told me that the excitement of Thoroughbred racing was so addictive it was like “liquid heroin.” We have the product, we have the niche, if the people knew about what we have to offer they would crave it, we just have to tell them about it.