How can such prices be justified? It is a question that Arabian owners ask each other every day. Part of the answer lies in the tax advantages inherent in each transaction—"We're farming the tax code," confides one large breeder—and part of it in the Greater Fool Theory, as uttered by Obi-Wan Kenobi in Star Wars: "Who is the greater fool? The fool or the fool who follows him?"
The greatest fool of all is probably Uncle Sam, whose loophole-filled tax code allows Arabians, like milk cows, to be depreciated for their full value in three to five years, depending on their age. The expense of keeping Arabians can be written off dollar for dollar, and any profit from their resale is taxed, not as income, but as a capital gain, provided one has owned a horse for at least two years. Furthermore, each Arabian mare amounts to a production machine that is capable of giving birth to as many as five foals in the years it takes to depreciate her. "For unlike any other investment of its kind...gold, fine art, real estate, diamonds or stocks," reads the press release from Star World of Arabians, an offshoot of Lasma, "...The Arabian horse is a living creature that can reproduce in its own image...return affection and turn a profit." Let's see Merrill Lynch match that. Actually, the Wells Fargo Bank is willing to try. "Consult with our Arabian horse specialist..." reads Wells Fargo's ad in Arabian Horse World, a four-color monthly epic of Arabian profiteering that sometimes runs 600 pages per issue; it is the largest monthly magazine in the world. "The power, the grace, the beauty of your own Arabian horse is within your reach...with a Wells Fargo Home Equity Loan...."
"You can make money with Arabians, but you can't do it foolishly," cautions the beneficent Dr. LaCroix. "A $100,000 to $500,000 investment is minimum if one has any expectation of succeeding without luck."
One of the ways your Arabian investment can appreciate dramatically is if the little beauty garners a few horse-show blue ribbons, a fact of life that has led to some grooming excesses that have a lot of people—and horses—turning blue in the face. Boy George should doll himself up as nice as some of these Arabs. Before a show the grooming procedure might begin with a bath in Flex protein and balsam shampoo and conditioner. The mane and tail—especially white ones—are then dyed to remove unsightly bathroom stains. The hooves are scrubbed with S.O.S. to remove that nasty ground-in dirt, followed by a brisk once-over with sandpaper and steel wool and a coat of Absorbine Super Shine. Baby oil is rubbed over the diminutive muzzle to darken and shine it; Vaseline is applied to the mane to keep the hair just so. And finally, the entire body is sprayed with Grand Champion to give it that all-over glow. Tail not being carried elegantly? A dab of ginger where the sun never shines will cure that, and note how it puts some sparkle into those large, expressive eyes. And speaking of eyes, how about a little Maybelline to bring out the mystery of the East?
It gets worse. Back in the old days, when Arabians bedded down in Bedouin tents, a good steed was expected to be docile and friendly when it was not under saddle. The Bedouins considered nervousness in their horses a sign that danger was approaching. Not so in modern times, at least not in the eyes of the judges who hand out the ribbons at Arabian shows. If a horse is not on the very edge of exploding out of its halter, it is considered to be a deadhead. Consequently, handlers have been known to use everything from cocaine to fire extinguishers to enliven their charges before putting them into a ring. Once there, the handler dances about, cracking a whip like a lion tamer, yanking on the little darling's chain until every hair on its shiny coat is standing on end. Small wonder the Arabian has the reputation of being high-strung. "I'd rather clean stalls than show horses," says Linda Schultz, an Arabian breeder from Brownwood, Texas.
Her sentiment is shared by Arabian fanciers the world over. "The painting of horses? The grooming? I hate it," says Peter Scheerder, an Arabian breeder from Holland who attended the 1985 Scottsdale sales. " America started this thing, but now it is coming over to Europe. It's very sad."
Shellye Hayden, a breeder from Mansfield, Texas, was so enraged by what she saw happening around the big Arabian shows that in 1984 she started her own "natural" Arabian show in Burleson, Texas, to rave reviews. "Everybody knows drugs are used," Hayden says. "Everybody knows that ginger is used. The pressure on these trainers to win is so great that they'll try anything. We've heard of some who stand their horses in water before a show and [use electrical current to] shock them, or shake bags at them, or cover their stalls and whip them on the knees so that the marks won't show. In our show the horses are quiet. They are happy. They aren't lunging and biting and jerking. Arabians aren't like that. That's man-made. Whips are not allowed in our ring. There's a time and a place for a whip, but to use one just to make a horse flare its nostrils—well, that just isn't right. What's behind it? Greed. Investors who aren't horse people, who are in it for the money and wouldn't know if their horses are being treated right or not. All we're trying to do is save the horses."
Allah must be asleep in the heavens if he has let someone who has shocked a horse while it is standing in water live to see another dawn. But these are desperate acts by desperate people. "I believe that only three percent of Arabian breeders actually make money," says Christy Gibson, who trained the mare Heritage Desiree of Dynasty fame for the 1975 U.S. National Halter Championship. "The rest of us—hopefully we get other things out of it besides money. Whether you're a big breeder or a little breeder, 80 percent of your foals are going to be average or less than average. And average Arabians do not sell. It's finally gotten to the point where the supply has exceeded the demand. Arabians, except the very best ones, are no longer rare, and the Arabian industry has done a bad job developing secondary markets."
In fact, about 80% of Arabians sell for $5,000 or less. Some a lot less. "People can buy sound Arabians right now for $500," says Schultz. "The market is flat at the bottom."
Which is the good news to folks who want to enjoy the horse, not as an investment, but as a horse. "Maybe 10 percent of Arabians sell for good prices," says Miami real-estate developer and Arabian enthusiast Alec Courtelis, who has spearheaded a drive to make Arabian pari-mutuel racing a viable secondary market. "The other 90 percent are still great athletes. Racing is not just good for the Arabian industry, it is necessary for it to survive. The two-dollar bettor is a whole new source of income."