The Hidden Gamble In Racing

The most spectacular form of gambling in racing today is partnership in a Thoroughbred breeding syndicate. Whereas once upon a time—in the very long ago, before income taxes and the $100,000 weekly stakes race—a wealthy man gambled on a horse's nose, today he must figure that what he can't get back in purses he must retrieve on the success of his horse's ability at the stud.

With the recent sale by Ralph Lowe of three-quarters interest in Gallant Man for $1 million—and the announcement last week of syndication plans for Ballymoss in England and Porterhouse in Kentucky—public attention has been directed toward a facet of racing's business little understood by the layman even after the widely publicized sale of Nashua to a syndicate for the then record price of $1,251,200 three years ago.

"There is no more mystery about syndication of a horse than the syndication of an issue of bonds by Morgan Stanley for the American Telephone and Telegraph Co." is the way one syndicate participant puts it.

"A fine stallion costs more than one man wants to risk, and the risk is very great because the horse may not be fertile—and if he is, his offspring may be no good as race horses. So he takes in a number of partners to share the risk, and each one takes one or more shares. This means that the owner of each share may send one of his mares to be bred to the stallion each year for free. Or he can sell or exchange his breeding season (a season is the horseman's, definition of each individual mating of a stallion to a broodmare) for a season to another stallion. Or, instead, he may sell his share in the stallion any time he wants to—and often does, at a handsome profit."

The modern inflated value of stud fees has created a situation whereby participation in a syndicate is often the only way for a man to breed to a potentially top stallion, and now leading privately owned studs (such as Bull Lea, Native Dancer, Tim Tarn, Bold Ruler, Mahmoud, Citation, Khaled and Swaps) are the exception rather than the rule. Among those stallions owned by syndicates, in addition to Nashua and Gallant Man, are Polynesian, Traffic Judge, Determine, Olympia, Bolero, Roman, Ambiorix, Alibhai, My Babu, Prince-quillo, Heliopolis and, of course, the most successful sire of the past few years, the legendary Nasrullah, sire of both Nashua and Bold Ruler. Another champion, Tom Fool (sire of Tim Tarn) is in the process of being syndicated for 1960 by Greentree Stable which, while retaining 15 shares for their own use, is asking $50,000 each for another 20 shares.

Although it was not known officially as syndication years ago, the practice of owning a stud horse in partnership is hardly new. Conscientious breeders—cautiously mindful of not oversaturating their own stock with too much of one blood strain—have always traded seasons with their neighbors. But when the potential desirability of one stallion over another became increasingly apparent, even the most prosperous U.S. breeders began to find the market too hot for one man's resources. The first instance may have been in 1926 when the late Arthur B. Hancock Sr. went abroad to buy Sir Gallahad III. Finding the asking price of $125,000 too much to swing by himself he enlisted the aid of three friends to form what later developed into a profitable partnership. A decade later Hancock formed a syndicate in eight shares to buy Blenheim II for $240,000.

Today's syndicates are usually made up of 32 shares, and the formation of one requires merely: 1) a good horse; 2) a number of people willing to risk a lot of money in a slow-to-pay-off-if-ever investment; and 3) a supersalesman who can quickly and efficiently round up the horse, the people and the money. There are today only three such outstanding salesmen, and all three, Leslie Combs II, A. B. (Bull) Hancock and Lou Doherty, operate breeding farms within 20 miles of each other in the Bluegrass country of Kentucky. Each of the three has a reliable clientele, a sharp and critical eye for a potential stud horse and the know-how to manage a syndicate with all the smoothness of a cruise director taking a landing party of schoolteachers ashore in Havana. "There is nothing very complicated about the mechanics of forming a syndicate," says Leslie Combs, who won out in the sealed-bid contest for Nashua in 1955 and who (with John W. Hanes) topped even that exploit by negotiating the Gallant Man deal the other day. "Everyone in the horse business usually knows which horses will be retired to stud privately and which are in the open market for syndication. And, acting on the theory that no sensible owner-breeder wants to put all his eggs in one basket by sending too many of his mares to one stallion [few modern breeders, in fact, care to risk breeding more than one quarter of their mares to any stallion, no matter how great his potential], I have a pretty good idea of who might like to breed to a certain horse—if that horse's services could be made available."

SPEED DESIRABLE

"But let's get specific. In Gallant Man's case I knew an awful lot of people who would want to breed to him no matter where he was retired to stud. And I liked him myself, largely because of his speed. Disregarding any shortcomings he may have, I always like a horse with real speed, speed that he can turn on anywhere in a race. Gallant Man has this sort of speed. So my next step is to approach Mr. Lowe. You don't ask people to go in on a syndicate until you are pretty sure you have the horse; in other words, when I start negotiating with an owner, both he and I understand that I personally assume the financial responsibilities should we make a deal. Thus, in Nashua's case only three of us put up the money in the bidding, then we broke it down into shares later on. In Gallant Man's case, when Mr. Lowe said he wanted one million for three-quarters interest [making his total value of $1,333,333 higher even than the purchase of Nashua], Mr. Hanes and I bought him on our own, with plenty of assurance that it wouldn't take us long to sell shares. It didn't, either: just a day and a half to raise the money, and if some people hadn't been away on vacation I could have done it over the phone in less than an hour."

The fabulous price of $41,666.67 for one share of Gallant Man represents a risk that few horsemen can afford, and yet, from an investment standpoint, it may well be a better deal than an attempt to buy just one season to him at an annual cost of $10,000. For the buyer in any syndicate has a number of attractive and favorable factors working for him. He can use this desirable blood strain to supplement the strains provided by his own stallions; he can plan his breeding program with the knowledge that as long as the stallion is capable of fulfilling his stud duties the syndicate member is on the free list and, most important, he has the option of trading, selling or getting out entirely if he wants.