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Horsing Around

Published 10 years ago
By Forbes Africa

Igugu is the horse that stole the hearts of many and cost those who failed to believe.  An Australian filly sired by an Epsom Derby winner, Galileo, Igugu has sent waves through the racing industry and was named “Horse of the Year”. Igugu was bred by Kia Ora Stud and bought at a yearling sale for $65,000 by Livestock Traders in 2009. It was then sold to Andre Macdonald—a former electrician and now principal officer at Lido Electrical’s East Rand branch, in South Africa—from the Summerhill draft in 2009 at the Ready-To-Run Sale for $127,530. Macdonald had gone to the sale with the secret intention of buying both of Galileo’s fillies in order to up his chances of owning a champion, only to be outbid for the first horse by South Africa’s top trainer Mike de Kock at $255,060. Luck was on his side when the second horse turned out to be the champion.

Macdonald’s love of horses began when his family moved to the northern suburbs of Johannesburg at a time when horse riding was popular with children. His daughter took an interest and joined a stable. He then bought a horse each so they could ride together on their property. His daughter grew up, got married and Macdonald sold the horses.

“Before I knew it a friend of mine said they had a horse for sale and asked ‘do you want to buy it?’ I said ‘I don’t want to buy it but I’ll think about it.’ Twelve o’clock that night they phoned me and said ‘your horse is standing in the stables.’ But I didn’t say no, I said ‘okay I’ll take it.’ It was the biggest mistake I probably made,” Macdonald recalls. Sitting with a dud, Macdonald then got serious.

Igugu is now co-owned by the Macdonalds and Sheikh Mohamed bin Kalifa Al Maktoum—who also co-owns the 2010 Vodacom Durban July (the July) winner. The royal family clearly has a love for the sport. Years ago, in the United States, Sheikh Mohammed bin Rashid Al Maktoum is reported to have bid $10 million for a horse at a yearling sale. Sheikh Mohamed bin Kalifa Al Maktoum‘s share came about when he took interest in Igugu and went into talks with Mick Goss, CEO of Summerhill Stud, about acquiring his 25% stake. Not one to be satisfied with a minority share, the sale was in jeopardy unless the Macdonalds, who owned 75%, sold 25% shares to Sheikh Mohamed bin Kalifa Al Maktoum to ensure an equal partnership.  Macdonald says this is something he would only have done for Goss.

It’s common practice in the industry to have more than one owner of a horse. As much as this can be seen as spreading the winnings, having more than one investor means spreading the risk as well as the costs. These costs include training fees, farrier fees, veterinary care, insurance, race entry fees, jockey fees, ownership registration fees and transport.

For most this is a business after. For Macdonald, it’s a sport.

And as with any business, there is money to be made and Igugu has made more than her fair share for her owners.  She’s a Triple Tiara Princess, winner of the 2011 Vodacom Durban July as well as the 2012 J&B Met (the Met). She is only the second horse to have ever won both the July and the Met. The only other horse to have done so is Pocket Power, who also holds the record for winning the July three times. The prize money for the July and Met alone were $361,600 and $301,330 respectively.

The industry is big and money is no problem for those looking to be a part of the thrill. There are seven sales that take place every year and they work the same as any auction. Potential buyers get a catalogue beforehand and the bidding wars begin. The aggregate price at the Emperors Palace National Yearling Sale held in April was $10,576,311; it was $564,713 at the Milkwood Stud Sale in May and $922,184 at the Cape Mare & Weanling Sale in the same month.

Macdonald laughs as he remembers how he first tried to pick horses at sales. Not knowing what he was doing, he’d shadow the trainers while they checked out the horses.

“If he wants to turn his head left, I turn my head left and if he goes right, I go right.”

You must remember that these buyers take risks on untested horses. De Kock does not shy away from the fact that this is a risky business and is all about luck. He admits that picking up a horse at a sale is not an exact science but reiterates Macdonald’s advice of having a professional around to help.

If it’s so risky, why get into it?

“There is a 1% chance of a horse being a champion from a sale but that’s the intrigue. It’s a sport that becomes a part of your life,” he says with a hint of excitement in his voice.

For de Kock, it all started with two years of military training at an equestrian center and then moved on to work for a number of trainers. In 1988, the trainer de Kock worked for died and since he already had a good working relationship with the owners and staff, he took over the late trainer’s string. He is now the top trainer in the country and is also an owner. Having won the July four times, he’s three wins short of the record for trainers.

Training a race horse takes a hell of a lot of patience says the expert. Purchases would occur when the horse is around 18 months old. If you buy one from a Ready-to-Run Sale it can be ready to race by 24 months, provided it suffers no injury or illness. The monthly cots will average somewhere between R7,000 ($840) and R8,000 ($960), but the rewards for a great runner are tremendous. The industry consists of owners, trainers, breeders, racing operators, insurers, transporters and blood stock agents. Racing operator, Golden Circle, stages both the Vodacom Durban July and the J&B Met. The company has numerous operations and reports an annual turnover of more than $216.8 million. Racing operator Phumelela’s glory comes from staging the Triple Crown and the Triple Tiara. The Triple Tiara’s spoils are $783,151, including the bonus for the horse that wins all three legs. The Triple Tiara—won last year by Igugu—has a combined prize of $270,911, not including the $120,366 bonus.

With this amount of money on the line, it’s no wonder these fine creatures are insured.  The way that the insurance works, is that the horse’s value is established by looking at its track record, breeding and other attributes.  If the horse is a filly, its value will be higher as it can be used for breeding. An unknown horse that’s just been bought at a sale will be insured at the fall of hammer price. As the horse develops a track record and its value increases, so will its insured amount.

The international scene is also a potential money maker for the lucky few. The Dubai Carnival in January has nine events, with $27.25 million to be won.  Unfortunately, the export protocol needs reform. Australia requires 60 days quarantine in the African Sickness Free Zone in Cape Town, South Africa, followed by another 60 days in Europe. Dubai involves 21 days of quarantine in Johannesburg, 90 days in Mauritius, 30 days in Europe and two weeks in Dubai. This means that a horse competing internationally not only has to forgo most of the South African season but it also loses training time and so will run at a disadvantage against other horses on the track.

This is all due to the fear of the African Horse Sickness (AHS). Paranoia, de Kock calls it. He claims that this is the one thing holding the industry back from being a major export industry that creates jobs and adds to government revenue. What we need, he says, is to get more aggressive and let the trading partners know that this is not a major threat. The fact that South African horses competing internationally are doing so well, is a testament to how strong the industry is.

Igugu is geared to start her international career in Dubai. As for her chances for this year’s July?

“Some people don’t win the Met or the July. I was lucky enough to win both. I don’t know when that will ever happen again,” says a realistic Macdonald. He feels that his horse has already done more for him than he could have asked for.

Horse racing has a tradition of being elitist and de Kock says that the image that the sport portrays, along with that of a lack of transparency, is another one of one of the industry’s problems. Syndication, however, is one way to get around this as it makes the sport accessible to more people but de Kock says that it is up to people to educate themselves and the industry to demonstrate the available opportunities. Nonetheless, de Kock is, as he puts it, “bullish” about the future of the South African horse racing industry and expects an explosion if it were to get it right.

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Related Topics: #Business, #Champagne, #Durban, #Galileo, #Horse Racing, #Igugu, #July 2012.