Horse racing is an ancient sport with its origins dating back to about 4500 BC among the nomadic tribesmen of Central Asia who raced horses since early domestication. Since then, horse racing has flourished as the sport of kings. The sport also has a long history in South Africa and is recorded as far back as 1795 – when British rule first came to the Cape. Horse racing was aptly dubbed âthe sport of kingsâ due to the extensive costs involved in buying and maintaining horses. Until now. Fractional ownership of horses has opened up the world of horse racing to virtually anyone as ownership is determined by the amount they can afford on a monthly basis. With the sport offering both potential winnings and immense entertainment, fractional ownership of racehorses and the resultant democratisation of the sport may well be the saving grace of horse racing in the country. – Nadya Swart
Crowdfunding the Sport of Kings
By Oscar Foulkes*
Before and after pictures donât get much more dramatic than those of racecourses. When racing was the only game in town, it was standing room only. Now? Well, letâs just say that racecourse attendance with Covid restrictions isnât significantly different than without. And racingâs Jurassic digital platforms werenât ready for delivering the experience â or, more importantly, selling bets â online. Racing was more walk than Zoom.
But, for those of us in the sport, the flame burns as bright as ever. It is a multi-dimensional experience that delivers the highest highs ⌠and occasionally also the lowest lows.Â
Racing in South Africa came very close to being extinguished last year when Phumelela came crashing down. We are all enormously grateful to MOD (or is that SuperMOD?) for saving the day.
The regulatory processes that will finally see 4Racing taking over key assets, and ultimately becoming the racing operator, seem to have been slower than Neil Andrewsâ hot tips on a Tuesday at the Vaal. Slow it may have been, but there are steady hands on the reins, and a volume of brainpower that would not be out of place at a TED conference.
Positive changes will come. The racing product will improve. However, it will take time before all of this translates into greater cash flows to be shared throughout the value chain.Â
Cape Racing had the benefit of being a legal entity separate to Phumelela. It was able to implement a bunch of visible short-term fixes late in 2020, knowing of course that this was just the beginning. Racingâs recovery is going to be work-in-progress for some time.
To the list of âfixesâ Iâd like to add fractional racehorse ownership. Itâs not going to immediately remedy the big problems, but it has the potential of getting feet onto racecourses. The rationale is simple: a horse in a syndicate is guaranteed to have more people watching than another owned by just one person.
I know from personal experience that owning a small share of a horse doesnât diminish the excitement when it wins. All thatâs divided is the cost of owning that horse.Â
It costs roughly R15Â 000 per month for a horseâs training fees, veterinary bills and transport. Not many people have that amount spare for even one horse, let alone a dozen or more. But many more people can spare R750 per month from their entertainment budget. Thatâs a 5% share of a horse.
Since 2018, Iâve been operating a few syndicates in which people have as little as a 1% share. Their ownership is determined by the amount they can afford on a monthly basis. The people in these syndicates â for the most part â are regular folk. They wouldnât normally be in the running to own racehorses, but by virtue of being able to own a smaller share they can get into the winnerâs circle-type pictures where one would normally find only the very wealthy.Â
Who would have thought that the lead rein held by smiling owners could be this democratic?Â
I should add a caveat. There are layers of complexity to this sport â and especially the equines on which itâs based â that require an element of education. I see this as a big part of syndicate management. Part of my role is to share a lifetime of knowledge and experience gained by virtue of having been close to everything that happens to racehorses as they progress from stud farm to racecourse.
Racingâs feel-good story of the past year is that of the unbeaten Kommetdieding, owned by Ashwin Reynolds and trained by the father and daughter team of Harold Crawford and Michelle Rix. Without intending to disparage anyone, this is the quintessential small guys vs big guys story. He was bought for just R55Â 000; offers for many millions have been declined. Itâs not impossible to imagine a scenario in which Kommetdieding is instead owned by a syndicate of 10, 20 or 30 people. What would that do to the support of racing?
In racing, there isnât necessarily a direct correlation between money invested in athletes and the big prizes. Your horse competes on equal terms with those owned by the wealthiest of owners.
Somewhere in the depths of YouTube is a video of Prof Brian Kantor talking about the economics of racing. To paraphrase, he said that in racing we âhave to pay for the horseâ. Fractional ownership is a way of crowdfunding that expense.
There is another angle to âthe horseâ, though. Having the horse at the centre of the sport is part of our competitive advantage. Itâs the magic on which our passion is based. One doesnât have to own the horse to feel that excitement, but it does help.
Similarly, while it helps to win big races, being first across the line in a Maiden Plate is also exciting. Racehorse ownership is not a financial investment. All we ever promise is entertainment, which the Normandy Racing syndicates have been able to deliver. The only non-winner weâve raced was sold to Mauritius when he was on the point of winning.
Make no mistake, Iâd very much like to win the Met, or LâOrmarins Queenâs Plate, or Vodacom Durban July, but delivering the racehorse ownership experience on the basis of winning a Maiden Plate is not an also-ran option. A win is a win.
For a sport lover, owning racehorses is a bit like owning the football team. Itâs not just the time taken to run the race, there are the months of anticipation and preparation, the twists and turns, ups and downs. Fractional owners share in that journey as if they are the sole owner.
Of course, there are many precedents from around the world. Large-scale syndication is a feature of the booming Australian racing industry. The 2020 Kentucky Derby winner, Authentic, has over 5300 people in his ownership structure.
It may be the Sport of Kings, but you donât have to be a king to participate, and racing is all the better for it.
- Oscar Foulkesâ family has been breeding racehorses near Ashton for over 150 years. His parents established Normandy Stud in 1971, breeding many top racehorses over the past five decades. Normandy Racing was initially supplied with unsold horses from the stud.
Read Also:
