A few years ago, before the great boom in the thouroughbred market, the head of a horse-sales firm offered a simple economic lesson about his business.
"Buying well-bred young horses is a lot like drilling for oil," said John Finney, president of the Fasig-Tipton Co. "Any one investment can go bust. But if you drilled all the oil wells in Texas, or if you bought all the high-priced yearlings in a sale, you'd make money. The winners will more than make up for the losers."
This explanation raised an obvious question: Why didn't somebody try to buy up all the well-bred young horses?
Now one man is trying to do just that "Robert Sangster is making a determined effort," Finney said recently, "to corner the world market on good stallions."
In the early 1970s, Sangster was a typical affluent horse owner: a mere hobbiest. He was amassing his fortune running the family business, Vernons Pools Ltd., which conducts the soccer pools that are a national mania in England. His recreation was operating a small horse farm, even though he lost money on it every year.
Now Sangster routinely spends as much as $10 million a year buying horses. He has syndicated two of the six most expensive stallions in history. hHe spends his life jetting from his home -- a castle on the Isle of Man -- to his far-flung horse operations in England, Ireland, France, Australia and the United States. And even with this close supervision, he cannot begin to estimate how many thoroughbreds he owns.
Sangster first began to think about making a serious venture into the horse business when he met Vincent O'Brien, whose Irish Countrymen think he is the greatest trainer in the world.
Sangster is even more extravagant in his assessment. "Vincent O'Brien is the best judge of a horse in this century," he said on a one-day visit to Hialeah this week."When I got to meet and know him well, I knew I had the opportunity to capitalize on a genius. If I had instead met Cezanne or Dufy and could have got them to do paintings for me, I would have done that." d
With O'Brien's guidance, Sangster conceived of a bold assault on the bloodstock industry.There was, he perceived, a worldwide demand for stallions with first-class pedigrees. And yet nobody had a worldwide operation to sell these stallions. Only one man, Nelson Bunker Hunt, had a racing stable of truly international scope.
Sangster decided to step into the void and become the world's principal purveyor of high-class stallions. To get them, he would buy every high-class yearling that he could. He would drill all the oil wells, and hope to hit a few gushers.
In 1974, Sangster put so much money into expensive yearlings at the Keeneland and Saratoga sales that he startled a community which is ordinarily blase about freespending multimillionaries.
"He tried to buy any horse that had the requisite physical qualities and the pedigree to make a stallion" Finey said. "He might not have as much money as Bunker Hunt, but Robert was just as prepared to turn it loose."
As he was spending his millions, Sangster always appeared to be cool and confident, the very embodiment of British reserve. But he admitted, "I used not to sleep at night four years ago, wondering whether the concept would work and come true. We invested $9 or $10 million in each of two years before we sold even one horse and started to balance the books. It's like playing the futures market: you have to sweat it out."
But after the first crop of horses he bought had become 3-year-olds Sangster could stop sweating. One of them, The Minstrel, won the Epsom Derby, earned recognition as the best horse on the continent, and was syndicated for $9 million. Another colt, Alleged, captured the Prix de l'Arc de Triomphe and was syndicated for $13 million.
Of course, any man can look brilliant when he buys a horse who becomes a success. The genius of Sangster's operation is what he does with horses who don't have much ability.
Three years ago Sangster spent $500,000 for a yearling colt named Link, who suffered from lack of talent and an array of physical problems. In his first two seasons he managed to win only one minor race in Ireland.
Other owners might have given up on him, but Sangster likes to move his horses around the globe as if they were chess pieces. He decided to give Link another chance in a new invironment and sent him to Hialeah this winter. Here Link has won a couple of minor allowance races, but those victories, plus his regal pedigree, have made him a decent stallion prospect. This week Sangster sold a half-interest in him for $500,000, recoupling his investment.
Sangster usually can make money or at least cut his losses on horses far less gifted than Link. If a colt cannot run at all. Sangster will retire him before he ever races, knowing that his pedigree will still be in demand somewhere.
Sangster may sell him to south America, New Zealand, Tasmania or some country where the blood of Northern Dancer or Hoist the Flag is highly prized -- even if it happens to come in a horse with no racing ability.
"With inflation," he said, "we can usually sell them for what they orginally cost."
Inflation, of course, has created and fueled a boom in the thoroughbred market. Investors around the world have been scrambling to buy commodities as hedges against inflation, and thoughbreds have been one of the most popular. In 1975, the average yearling at Keeneland and Saratoga cost $47,000; last summer, the figure was $133,000.
Sangster had the good fortune (or, perhaps, the good judgement, the enter the bloodstock business at almost precisely the time that this boom was beginning. Just as a bull stock market creates a lot of boy wonders who are hailed as geniuses, so has the bullish horse market helped create one in Sangster.
When stock market rallies inevitably falter the boy wonders disappear quickly. What will happen if the horse market stops booming? Will that wreck Sangster's operation?
Sangster sipped a glass of champagne in the Hialeah clubhouse and mulled over the question.
"No," he finally answered, "I have no worries. This is not like other commodity markets. Even in world depressions top horses have held their value better than any other commodity. People are always going to want the best stallions. We provide them, and so they will have to come to us."