The Fasig-Tipton yearling sale in Saratoga Springs, New York, was once the premier Thoroughbred auction in the United States and arguably in the world. Man o’ War is its most famous graduate. However, during World War II, in 1943, the federal government restricted rail transportation and Kentucky breeders sold their yearlings at a Fasig-Tipton sale held in a tent on the grounds at Keeneland in Lexington, Kentucky. This fortuitous foothold allowed Keeneland to start its own auction company. Keeneland eventually supplanted Fasig-Tipton as the premier venue to sell Thoroughbreds and it has not relinquished that unofficial title. Factually, based on several performance criteria, Keeneland can legitimately claim to be uno numero.

Now, that claim is being challenged by a new sheriff in town, a high roller of immense proportions.

In 2008, Fasig-Tipton was sold to Dubai-based Synergy Investments. This company is headed by a close associate of Sheikh Mohammed bin Rashid Al Maktoum, the Prime Minister and Vice President of the United Arab Emirates and the Ruler of Dubai. Sheikh Mohammed of Darley Stud is one of the two leading Thoroughbred owners and breeders in the world, along with the John Magnier-owned Coolmore empire headquartered in County Tipperary Ireland. Sheikh Mohammed has spent astronomical sums for racing and breeding stock that have been purchased at public auction and privately. His ownership of farms spans several continents.

Executives of Synergy Investments have been quite open and adamant that Synergy will return the Fasig-Tipton Saratoga sale of select yearlings to its place as the foremost auction of its kind. Synergy has commenced to expand and remodel the auction facilities, is aggressively  promoting the sale, particularly to international buyers, and is recruiting higher quality yearlings.

Opening night at the 2009 Saratoga Selected Yearlings sale in August was more crowded than I have ever seen it and the environment was electric with Sheikh Mohammed himself in the crowd. In spite of the economic malaise that has driven down prices at Thoroughbred sales around the globe, the Saratoga auction’s gross revenue, average price and median price were up over 2008 by 45.6%, 11.1%, and 9.9%, respectively. The revenues and average figures were the second highest in the Saratoga sale’s storied history and the median was a record. The percentage of yearlings not sold fell from 25.6% in 2008 to 22%. Hall of Fame trainer D. Wayne Lukas commented that the overall quality at this year’s sales was the best he has seen at Saratoga.

John Ferguson, Sheikh Mohammed’s bloodstock agent, bought 12 yearlings that constituted 22.6% of the auction’s gross and included four of the sale’s five seven-figure yearlings. (Ferguson was also the leading buyer at Fasig-Tipton’s July 2009 select yearling auction in Lexington.) In addition, buyers closely aligned with Sheikh Mohammed, such as his brother Sheikh Hamdan, made significant purchases. International connections bought yearlings that accounted for 43.1% of the gross revenues, up from 20% in 2008. This may be indicative of how strongly Sheikh Mohammed will support Fasig-Tipton and of how well the company’s muscular sales and marketing strategy is working.

As corroboration of Fasig-Tipton’s already growing cachet, Forbes magazine’s special issue (October 19, 2009) on “The Richest People in America” cites the 2009 Fasig-Tipton Selected Yearling Sale (rather than a Keeneland sale) as a barometer of what Forbes calls “The Price of Ultraluxury.”  Forbes wrote:  “Our price index of luxury goods rose [since 2008] 1% versus a 1.5% drop in inflation.  Here are the items that have the largest percentage changes.”  Under “Biggest Percentage Increases,” were four items, including the aforementioned Fasig Tipton sale:  “With roots back to 1917, this auction had total proceeds soar 46% to $52 million.  That is the second highest in its history, behind the $62 million posted in 2001.”

The powers that be at Keeneland privately have to be looking at these developments with trepidation. Sheikh Mohammed, the best customer that Keeneland has ever had, is now part of a contingent that has openly declared its goal to have the Fasig-Tipton Saratoga Selected Yearling sale displace Keeneland as the leading venue to sell the most fashionable bloodstock. Fasig-Tipton in Lexington, long a second banana to Keeneland, will undoubtedly join the fray.

Keeneland’s dilemma: How does its management and sales force handle the nascent onslaught by a deep-deep-deep pocketed competitor that also happens to be its most important buyer ever? When the Keeneland people go out to recruit yearling sellers they will, as sales reps, have to persuade these sellers that Keeneland is a better choice than Fasig-Tipton. Keeneland may not explicitly comment negatively on Fasig-Tipton, at least not initially, but at some point it will have to do so when it tells sellers of the pros and cons of Keeneland vis-à-vis Fasig-Tipton. That is fundamental to personal selling 101.

A duopoly—a market dominated by two major players—can be as dog-eat-dog as any. Keeneland vs. Fasig-Tipton has the potential to be the Coca-Cola vs. Pepsi of Thoroughbred auction sales. When Fasig-Tipton begins to increase its market share of the most regarded yearlings, competition will naturally escalate accordingly.

Sheik Mohammed (and his friends and associates) will no doubt continue to patronize Keeneland for top-class yearlings. But he will also do a lot of business at Fasig-Tipton, and this should have a domino effect as shown by the dramatic increase in buying by international interests at the 2009 Saratoga select yearling sale. Fasig-Tipton has already begun to establish the reputation as being the “Sheikh’s sale.” This name recognition is a powerful magnet for global yearling sellers and buyers.

The winners in the upcoming Keeneland/Fasig-Tipton battle royal will be yearling sellers and buyers, who always benefit from strong competition for their business. Long-time loyalty to Keeneland or Fasig-Tipton will matter not, as sellers gravitate to where they can do the best business.

The folks at Keeneland are in close to a catch-22 situation in that they can’t win for losing. Businesses cater mightily to their best customers and forcefully battle their competitors. This is the prototype unless the best customer and the leading competitor happen to be one and the same. Keeneland and Fasig-Tipton may declare their intent for “cordial competition” but the devil will be in the details.

A day will come, sooner rather than later, when both groups covet an impeccably bred yearling with upper-seven-figures potential…and the gloves will come off.

Over the next several years, look for Keeneland’s market position to weaken and Fasig-Tipton’s to strengthen.  Then the two auction houses will settle in near parity like Christie’s and Sotheby’s in the fine art business. 

Copyright © 2009 Horse Racing Business


The men on the inaugural Horse Racing Business “Power Dozen” for 2009 were selected because they have had a significant positive and/or negative effect on the horse racing industry in the United States. Some have been an influence over a long period of time while others have left their mark recently. The list represents the racing industry at all levels, from the racetrack to breeding and sales and support services.  A profile of each man depicts why he was chosen for this year’s list.

Peter M. Carlino, Wyomissing, PA.

Mr. Carlino is Chairman and Chief Executive Officer of Penn National Gaming, Inc., which owns the most racetracks of any U. S. company except for the bankrupt Magna Entertainment Corporation.   Penn National Gaming is traded on Nasdaq.  It owns twelve casinos, six racetracks, off-track betting facilities, and two advance deposit wagering subsidiaries. Its operations span fourteen states and Ontario.  The company’s racetracks encompass Thoroughbred and harness racing, plus one greyhound track. Four of the racetracks are racinos, combining horse racing with slot machines. Mr. Carlino is a graduate of Pennsylvania State University.

Robert N. Clay, Midway, KY.

Mr. Clay is the founder of Three Chimneys farm, which he operates with his wife Blythe. Their son Case is the President. Mr. Clay’s farm was home to Triple Crown winner Seattle Slew and currently stands Kentucky Derby and Preakness winners Smarty Jones and Big Brown, plus Barbaro’s sire Dynaformer.  His service to the racing industry includes leadership positions with the American Horse Council, the National Thoroughbred Racing Association, the Thoroughbred Owners and Breeders Association, Breeders’ Cup, the Keeneland Association, and the Kentucky Thoroughbred Association. Mr. Clay, a member of The Jockey Club, is a former trustee of The Blood-Horse magazine and past president of the Thoroughbred Club of America.  He is a member of the board of directors of PNC in Pittsburgh, Pennsylvania.  Mr. Clay is a graduate of the College of William and Mary.

Steven Crist, New York, NY.

Mr. Crist is Chairman and Publisher of the Daily Racing Form. More than any other person, he is the voice of racing to the most loyal fans who support the sport by putting up the money to fuel it. As the main force behind the Daily Racing Form and, the author of such books as Betting on Myself and Exotic Betting, and a blogger, Mr. Crist is the go-to guy for handicappers.  He is a bold risk taker, both as a businessperson and a bettor.  Mr. Crist is a graduate of Harvard.

Richard L. Duchossois, Barrington Hills, IL.

Mr. Duchossois is the founder of Duchossois Industries in Elmhurst, Illinois, which owns or has stakes in diversified businesses. He owns approximately 24% of the common stock of Churchill Downs, Inc., a Nasdaq-listed company with four racetracks, off-track-betting locations, slots facilities, and an advance deposit wagering subsidiary. He sits on the Churchill Downs, Inc. 13-member board of directors with his son, Craig J., and with the President and Chief Operating Officer of Duchossois Industries, Inc., Robert L. Fealy. Mr. Duchossois was Chairman and owner of Arlington Park racetrack when it was acquired by Churchill Downs, Inc. He has been honored by the racing industry with an Eclipse Award of Merit and was a recipient of the American Jockey Club’s Gold Medal. Other recognition includes a Special Sovereign Award from the Jockey Club of Canada and receipt of the Lord Derby Award in Great Britain. Mr. Duchossois owns Hill ‘N Dale Farm in Illinois, which has produced many winners of note. He is a member of the Jockey Club. Mr. Duchossois attended Washington & Lee University, but dropped out to fight in World War II.

William S. Farish III, Versailles, KY.

Mr. Farish and his family own Lane’s End Farm with locations in Kentucky and Texas. Lane’s End has been the leading stud farm in the United States ten times, including in 2008, and its stallion roster reads like a Who’s Who.   Mr. Farish hails from Houston, Texas, and has a background in oil and stock brokerage.  He is a Steward and Vice Chairman of the Jockey Club and the President and a director of Keeneland Trustees, Inc., the owner of the Keeneland Association.  The Keeneland Association operates Keeneland racetrack in Lexington, Kentucky, runs the world’s biggest and most prestigious Thoroughbred auction, and is half owner of  Turfway Park racetrack near Cincinnati, Ohio.  Mr. Farish previously served as Chairman of Churchill Downs Inc. and as a director and Chairman of the Executive Committee of the Breeders’ Cup.  He was President George W. Bush’s Ambassador to the Court of St. James for three years, including during the difficult period immediately following the September 11, 2001 attack on the World Trade Center in New York.  He attended the University of Virginia.

Michael Ivarone, Garden City, NY.

Mr. Iavarone founded International Equine Acquisitions Holdings (IEAH) in 2003. He is President and a director of IEAH and has brought many newcomers into Thoroughbred racing as investors. IEAH has posted a truly remarkable record. In 2008, IEAH had only 243 starters but won 58 races, for a 24% rate, and led all owners with $10.7 in purse earnings.  Twenty five of the wins came in stakes races and eleven were Grade 1 victories. The Grade 1 wins were with eight different horses. IEAH’s Big Brown won the Kentucky Derby and the Preakness and was named champion 3-year-old. Its Benny the Bull won the Group 1 Dubai Golden Shaheen and was voted champion sprinter. IEAH is building the Ruffian Equine Medical Center at Belmont Park. Mr. Ivarone is a graduate of St. Joseph’s College in New York.

Jeffrey P. Jacobs, Cleveland, OH.

Mr. Jacobs, whose family was prominent in shopping center development and once owned the Cleveland Indians Major League Baseball franchise, fully or partly owns and controls four racetracks.  He is the Chairman and largest shareholder of MTR Gaming Group.  Its properties are Mountaineer Casino and Racetrack in Chester, West Virginia, Presque Isle Downs in Erie, Pennsylvania, Scioto Downs in Columbus, Ohio, and a telephone and online wagering company.   In addition, Mr. Jacobs is the owner and Chief Executive Officer of Colonial Downs in New Kent, Virginia. He is Chairman and CEO of Jacobs Entertainment, Inc., a developer, owner, and operator of gaming and pari-mutuel wagering facilities throughout the United States. He is also Chairman and CEO of Black Hawk Gaming, Inc.  He earned an MBA from Ohio State University.

John Magnier, Fethard, County Tipperary, Ireland.

Mr. Magnier, a high-rolling entrepreneur in racing and other ventures, is arguably the world’s foremost expert in the art and science of stallion selection. His interests have included the famous Manchester United soccer franchise, restaurants, and resorts.  Mr. Magnier began the Coolmore Stud in Ireland in partnership with his father-in-law, the renowned trainer Vincent O’Brien, and the late soccer-pool heir and Thoroughbred mover and shaker Robert Sangster. Since then, he has taken sole ownership and expanded Coolmore’s reach to three continents. Mr. Magnier’s Ashford Stud is one of the premier stallion stations in the United States. His many high-price purchases at the U. S. yearling sales and 2-year-old-in-training sales have been a major factor in maintaining a strong bloodstock market. In 2006, Mr. Magnier and his partners paid $16 million for a 2-year-old colt, The Green Monkey, at public auction, which is the highest price ever for a horse sold through an auction. The urbane Mr. Magnier is sometimes referred to as a “farmer in pinstripes.”

Mohammed bin Rashid Al-Maktoum, Dubai, United Arab Emirates.

Sheikh Mohammed is the Vice President and Prime Minister of the United Arab Emirates, Ruler of Dubai, and owner of Godolphin racing and Darley Studs with locations in Lexington, Kentucky, and five countries besides the United States. Darley is a namesake of one of the three foundation sires of all Thoroughbred racehorses, the Darley Arabian. Sheikh Mohammed’s stallions are among the best and his horses have won most of the outstanding races around the world. His junior wife, Princess Haya bint Al-Hussein, owns Raven’s Pass, who won the 2008 Breeders’ Cup Classic, and the Sheikh’s Midshipman won the 2008 Breeders’ Cup Juvenile.  In 2008, Synergy Investments, Inc., with close ties to Sheikh Mohammed, purchased the Fasig-Tipton auction company. Like John Magnier, the Sheikh’s many purchases have supported the auction business at Fasig-Tipton, Keeneland, and elsewhere. The Sheikh sponsors the world’s richest race, the Dubai World Cup.  He has expressed his affection for racehorses in his poem “To the Equestrienne.”

Ogden Mills Phipps, Palm Beach, FL.

Mr. Phipps’ father, Ogden Phipps, and his grandmother, Mrs. Henry Carnegie Phipps, raced some of the great horses of all time, including Bold Ruler, Buckpasser, and Personal Ensign. His late sister, Cynthia, was also a successful owner. Mr. Phipps and his family breed and race their own stock and have broodmares with some of the finest bloodlines and racing records. The Phipps stallion Seeking the Gold has left his mark as a sire. Mr. Phipps is the Chairman of the Jockey Club and a trustee for the Breeders’ Cup, the National Thoroughbred Racing Association ,and the New York Racing Association.  Throughout the years, Mr. Phipps has been a leader in important racing initiatives and he has been a stalwart of the sport through thick and thin.  In recognition of his efforts, he was awarded the Eclipse Award of Merit.  Mr. Phipps is a graduate of Yale.

Frank Stronach, Aurora, Ontario.

Mr. Stronach is a prolific entrepreneur. In the 1950s, he immigrated from his native Austria, virtually penniless, to Canada and founded and built a business empire. He is the Chairman of Magna International, an auto parts firm, and MI Developments, a real estate enterprise. In 1998, Mr. Stronach created Magna Entertainment Corporation for the purpose of acquiring and operating racetracks. The company recently filed for bankruptcy and this failure is having the most influence on racing in the United States of any event in several years. Mr. Stonach owns Adena Springs Farm in Paris, Kentucky, and Williston, Florida. He earned an Eclipse Award as both the outstanding breeder and the top owner for 2008, which is the second time he has achieved this double; Adena Springs was North America’s leading breeder by earnings in 2008 for the sixth consecutive year. The farm stands such classic winners as Awesome Again, Touch Gold, and Ghostzapper.

David Williams, Burkesville, KY.

Mr. Williams is President of the Senate in the Kentucky Legislature. He is not directly involved in the horse business, but he has influenced the horse racing industry in a momentous way by adamantly opposing legislation that would allow Kentucky voters to decide for themselves whether to permit slot machines at the Commonwealth’s racetracks. This impasse threatens the breeding industry in the state with the most prominent Thoroughbred stallions, imperils Kentucky racetracks and the overall quality of racing, and thereby contributes to the further weakening of the Commonwealth of Kentucky’s most important industry.  Mr. Williams is a graduate of the University of Kentucky and the University of Louisville School of Law.

A Baker’s Dozen: Power Player in Perpetuity

Andrew Beyer, Washington, DC.

Mr. Beyer is a retired racing columnist for the Washington Post. His name will live on as long as there is handicapping on Thoroughbred horse racing. His influence is evident when someone reads or talks about a horse’s “Beyer,” the speed figure developed by Mr. Beyer and scrutinized by handicappers reading the Daily Racing Form past performances. Mr. Beyer attended Harvard.

The May 9, 2009 Horse Racing Business will profile the “Power Dozen” women in horse racing.

Copyright © 2009 Horse Racing Business