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Tuesday
Dec042012

MONEY CAN'T BUY YOU LOVE

Nathan TinklerNathan Tinkler
(Photo : Herald Sun)

“The Tinkler story is a cautionary tale, and proof again that
money alone cannot buy racing or breeding success.”

There’s an old saying in South African racing: “You can’t beat Harry Oppenheimer in the boardroom on Mondays, but when you get to Turffontein on Saturday, the playing fields are level”, and when it comes to racing’s holy grails, money makes as little difference as it does in love. The history of the turf is full of stories of very rich men throwing independent fortunes in a quest to own “the game”, yet there is not a single instance where it worked consistently over a sustained period, as it’s been known to do in many other spheres of business. Those that have come closest; Lord Derby, the Aga Khan and Robert Sangster, have all had one thing in common, that is surrounding themselves with people of real talent, men of the richest intuitions and freaks in the understanding of horses. People who’ve made their businesses enshrouded by entourages of “yes men”, have taken the same model to the races and have known sporadic success, but real achievement has come only to those who’ve had a genius in their midst.

In the case of Lord Derby and the Aga, it was the Honourable George Lambton, and with Sangster, it was the man who led the list of racing’s top 100 celebrities, Vincent O’Brien, and his son-in-law John Magnier.

The thing is, unlike most other industries, with horses you are dealing with flesh and blood, and money has no understanding of what makes a racehorse tick. The latest casualty of a big money splurge is an Australian by the name of Nathan Tinkler, who just a few years back ranked the richest Australian under 40, his worth estimated at more than a billion Aus dollars. Here is his story, articulated by Richard Zacariah.

“Legendary horseman Robert Sangster died saying he knew about a quarter of what there was to know about the Thoroughbred business. His wariness of being a know-all was a part of his charm and underpinned long-term survival at the pointy end of this business. Yet no one could say Sangster was inhibited when it came to spending a dollar. He was bold, brave when others were timid, and confident horses would repay the debt.

Sangster would have been a wise counsel for Australia’s latest meteor in Thoroughbreds, one-time coal mining billionaire Nathan Tinkler. But would Tinkler, who has gambled A$300 million on building a racing and breeding empire in just four years, have listened? His frenetic four-year buying spree and tumultuous engaging and disengaging with staff and the bloodstock business at large would indicate not.

The Tinkler story is a cautionary tale, and proof again that money alone cannot buy racing or breeding success. And certainly not in the timeframe that Tinkler had in mind. A former electrician who worked down the mines and still just 37, Tinkler rode the coal mining boom, struck it lucky and in 2007 started investing in horses and farms in a rush to rub shoulders with the racing and breeding establishment. His new wealth made him capable of doing what he wanted, and accolades including “Australia’s richest man under 40” and “youngest billionaire” put him in the frame of mind that he was untouchable in any business he entered. However, with the downturn in China’s demand making coal prices below the cost of production, his wealth has halved, and his horse empire is under immediate threat of being liquidated.

Tinkler is not the first Australian coal baron to finance a horse empire and then feel the cold winds of a market downturn. There have been at least three mine-owning families over the past 150 years who have risen spectacularly in the horse game and then disappeared without trace. Now it remains to be seen if Nathan Tinkler can survive the onslaught, with observers saying it will be the coal business, not the horses, that eventually his fate. Mind you, Tinkler has 1,350 horses, huge numbers acquired in just four years as opposed to (for example) Sheikh Mohammed’s 1,000 in Australia, accumulated over 30 years of careful selection, and including the Ingham’s meticulously bred 400 strong broodmare band and resident champion stallions.

Tinkler’s major wealth lies in his 20% shareholding in a coal company worth currently around A$570 million, it is his borrowings of A$638 million that has the big fellow stepping around land mines that daily threaten to blow him up. Ironically, Tinkler probably owns the two best 3-year-olds in the country, the G1 Caulfield Guineas-winning colt and half-brother to Black Caviar, All Too Hard, as well as the G1 Flemington heroine Nechita. Worth $20 million in a package, the glamorous duo do not put a dent in his big spending or on-going costs.

On results seen by this writer, Tinkler’s Patinack Farm has spent A$77,500,000 (US$81,182,431) on 410 horses at Australian auctions since 2008, at an average price of A$190,000. In October on the Gold Coast, Patinack’s first real entry into the selling market, it sold 303 horses for a total A$4,105,000 at an average of A$13,500. In a further breakdown of this unreserved reduction sale, Patinack traded 203 mares for A$2.7 million at an average of A$14,500 and 100 racehorses for A$1.3 million at just $12,000 a head, a long way from the average purchase price of A$190,000.

While these figures do not match each horse’s purchase and sale price, they give one an idea of how difficult it is to recapture the market price when sold against a background of threatened liquidation. Now Tinkler, who has never denied his expenditure of A$300 million is in reduction mode, and despite the October sale of 303 horses, he still has a 1,350-strong team of all ages and sizes, including racing and breeding stock, 200 staff at two farms in the Hunter Valley and one in Cunungra south east Queensland and racing stables in Brisbane and Sydney costing a crippling A$500,000 a week.

It was so different when he began with the wind beneath his wings, the enthusiasm of a rich newcomer with all the best wishes of an industry looking for new blood. He was feted for a while and there seemed no end to China’s appetite for coking coal or his for horses. That moment has passed. As Tinkler ducks and weaves clinging to survival, I am sure if he had his time over again, he would do it so differently. There would be greater caution in the auction ring and accumulation not just for its own sake. Thoroughbred empires take a lot of building, as I am sure the Aga Khan or John Magnier would attest. They are not overnight successes, nor vehicles for a fast buck. However, the truth that is experience in this game is hard bought, there is no GPS for the unwary, nor as Tinkler is finding out, a parachute.

First noticed at Deauville in France in 2007, the Patinack buying cavalcade moved to the Gold Coast in March, 2008 where he unloaded A$18.5 million at Gerry Harvey’s Magic Millions, saving that sale from post-crash depression. In being the sale’s saviour, he made an important friend in Harvey, who continues to stake his existence with a recently reported A$20-million advance. Whether this “loan” is guaranteed by horseflesh or just Harvey’s faith in his survival, is conjecture. Harvey has cause to trust him. In the past five years, Harvey has been owed millions by Tinkler for horses bought, but all has ended well when the account has been paid and interest bills collected along the way. Gerry Harvey, who has 1,200 horses himself, and is one of our major owners and breeders, may well be Tinkler’s greatest supporter in the horse business, which is collectively holding its breath that its newest and biggest player survives.”

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