Daniel Kübler, co-owner of Kübler Racing, suggests that investing in bloodstock can be both exciting and rewarding.
The glamour and excitement of thoroughbred flat racing is more often associated with the thrill of trying to pick winners and a glass or two of bubbly than it is with actually turning profit.
However, thoroughbred racing is a serious business and the sector is similar in scale to the UK’s airline industry and this is what presents opportunities for those interested in turning in the occasional flutter into a potentially profitable investment stream, whilst at the same time having an amazing amount of fun being part of the UK’s second most popular spectator sport.
The most obvious return on investment to the outsider is the prize money won by the top horses and the main races, such as the The Derby, King George and the International Stakes at York have prizes of over £1million. Many of the most prestigious races are worth at least six figures to the winners, yet, as with any sport there is an intangible element to winning that is worth more than financial gain — the shear achievement is often the biggest reward.
The decision to invest in a racehorse is both emotional as well as financial, and the benefits of ownership extend beyond the immediate joy at conquering rivals and taking home the prize. Fellow owners and competitors are an interesting and diverse group, and a day at the races or time spent visiting your horse in training opens the doors to an incredible network of individuals.
Once you have taken the decision to invest you will be faced with various challenges of devising a racing campaign for your horse, whether this is working out who are your main rivals in the next race or which race to enter next, are all absorbing elements of flat racing and help ease the stresses of work. The opportunity to spend time with your horse, often in the most stunning of countryside settings, offers a fantastic break from the 9-5 routine.
The allure of winning the top prizes means people are willing to invest substantial amounts in acquiring the bloodstock that can compete in these races and there are three main ways a racehorse owner can acquire bloodstock to race, breed it, purchase untried horse as foals and yearlings and finally purchase horses that have already raced.
Each market presents the prospective bloodstock investor with opportunities to turn a profit or perhaps in return for a bit of fun make their hobby a bit more cost effective.
At this point it is worth explaining the life cycle of a thoroughbred and some of the terminology used.
Mares are able to produce one foal annually and as horses race in their age groups early in their career it’s preferable the horse is born as close to 1 January as possible, to give it the advantage of physical maturity early in their racing career.
They are foals until they are a year old, at which point they are referred to as yearlings, before becoming two-year-olds at the start of the following year.
Flat horses can start racing in the March of their second year, although many won’t be ready until towards the end of their second year, or even until they are three-year-olds.
Although horses race into their teens, the very cream of the colts retire and most above average fillies retire to stud aged just four or five. A top stallion has far greater earning potential at stud than winning further races, for example perennial champion sire Galileo covers mares at a cost of £500,000 per mare and will cover 200 mares a year.
Breeding racehorses is a challenge that requires careful analysis of pedigree, as well as the physical traits of the potential parents. A well-run stud farm will endeavour to manage the nature element as far as is possible, to ensure the best development of young horses and hope that mother nature is generous when dishing out the luck.
The benefit of breeding is that you can breed a horse that you wouldn’t afford to buy at a public auction, but the downside is that you can also breed a horse that one would never want to buy at public auction.
The yearling auctions are the main market for owners seeking of a top class racehorse. Many of the big players in the sport have a strategy of breeding and purchasing stock at the yearling sales.
Many top breeders produce horses for this market, however some prefer to sell their stock as foals and shorten their time to market. This allows a group of investors known as ‘pinhookers’ to purchase foals which are re-offered as yearlings.
Good skill, judgement and a little bit of luck can lead to excellent returns for this group of investors, but there is no such thing as a safe bet with bloodstock investments — they are high risk, high reward, but a well-managed pinhooking syndicate is the least volatile option.
Horses in training is a very different market place, with the top end of this market largely conducted privately. The allure of the top races both here and abroad makes young horses that have shown potential in their early career particularly valuable. There is however a robust trade for racehorses at a lower level, particularly to go and race abroad due to the high quality of British racing that is largely conducted at public auction.
The market for horses in training is strengthened by breeders looking for stock that they can breed the next generation from, given that one stallion can cover 200 hundred mares a year in the northern hemisphere and another 200 or so in the southern hemisphere, making stallion prospects extremely rare and expensive horses.
Far more mares are required to make up the breeding pool and fillies with good race records and or good pedigrees are nice brood mare prospects and there is more depth to the market and so the cycle starts again.
Owning racehorses is not a guaranteed path to riches. Whilst breeding and trading young stock can be treated as an investment vehicle that even qualifies for EIS relief, owning racehorses to run is a gamble, so whilst profits can be achieved, it is best treat it as a less serious investment that can turn a profit and if you’re really lucky a substantial one, but it will guarantee you an interesting, exciting and absorbing experience.
About the authors
Daniel and Claire Kübler are an ambitious couple looking to expand their training operation. Together they are developing a stunning new facility in the heart of Upper Lambourn located at the foot of excellent Jockey Club gallops. The move is already paying dividends — they started from their new base in November 2918 with a winner and have continued to produce the winners at a 20% strike rate since.
They have primarily worked with young stock, either buying yearlings or working together with owner-breeders to develop their racing stock. Their approach is based on high quality horsemanship, given their significant experiences with some of the world’s leading trainers, studs and bloodstock agents, blended with modern analytical and scientific thinking.
Claire is a Cambridge natural sciences graduate and qualified as an accountant with Price Waterhouse Coopers. Daniel holds a degree in Agricultural and Equine Business Management. They constantly research and look for the marginal gains required to compete at the highest level.
They work closely together with their experienced stable team of horsemen and women who have extensive knowledge and are constantly developing their skills. Together, they have been shortlisted for the Lycett’s Team Champion Award, which recognises outstanding management practices in racing yards.
They have sourced stakes-level horses and sold several profitably abroad in their career from modest budgets at the sales and are looking for further opportunities to find the next big horse that will highlight their talents on a bigger stage. They want to work together with enthusiastic owners to deliver exciting and interesting experiences both on the track and following the development of newly acquired horses.
For more information visit www.kublerracing.com