Tattersalls still in the hunt as bloodstock business bounces back

Having been hit hard in the wake of the financial crisis, the Irish bloodstock business is recovering. The general economy’s revival is partly driving this, but national hunt racing’s enduring appeal – particularly in this country – also plays a big part.

Edmond Mahony says the success of Irish-bred and Irish-trained horses at key festival meetings such as Cheltenham, Punchestown and Aintree underpins that interest.

"I can never remember a time when national hunt racing was as popular as it is now," says Mahony, chairman and chief executive of Tattersalls, one of the world's biggest and oldest thoroughbred auctioneers. "You have got a lot of wealthy people that enjoy national hunt racing and want to be a part of it."

They include Ryanair chief executive Michael O'Leary, who owns Gigginstown House Stud; former investment banker Rich Ricci, who is a leading owner with leading jumps trainer Willie Mullins; Graham Wylie, co-founder of the Sage Group; Trevor Hemmings, owner of Preston North End and pub chain Trust Inns; and financier JP McManus.

Those owners and their agents and trainers will converge on Tattersalls Ireland’s sales ring in Fairyhouse, Co Meath over three days in the last week of this month for the company’s annual Derby Sale, the main showcase for this country’s national hunt stock.

The sale has produced the winners of eight of this century’s 15 Cheltenham Gold Cups, the sport’s blue riband. They included three-time victor Best Mate, 2014 champion Lord Windermere and Gigginstown’s 2006 winner, War of Attrition. Dawn Run was an early graduate.

Others have won Grand Nationals – among them the Irish-trained trio of Silver Birch, Hedgehunter and Monty’s Pass – champion hurdles and other top prizes.

In two weeks’ time, buyers will scrutinise the Tattersalls catalogue and the horses themselves in the hope of spotting one that could ultimately emulate those feats. At this point, the 500 animals that will pass through the ring are all potential Gold Cup winners.

But breeders are producing fewer national-hunt bred foals than at the industry's peak eight years ago, when the entire crop between Ireland and Britain was 14,000. That figure has fallen to about 10,000. Across all six of its sales, Tattersalls Ireland catalogued 3,703 horses last year, compared with 7,177 in 2007.

“It has stabilised where it is now,” Mahony says. “Prior to 2007, a lot of people came into the breeding business thinking it was an easy market to get into, but they found out that it was a lot harder than they thought. That problem has been largely corrected now, and the supply-and-demand ratio is about right.”

Getting those two forces to sync is more important than the actual number of horses sold in the Tattersalls ring. The core bloodstock business makes its money from a 7.5 per cent commission charged on all sales. As long as the horses command good prices, its financial future is secure.

Mahony is also not just responsible for the Irish operation. He is the chairman and chief executive of the entire group, which is based in Newmarket in southeast England. Last year, it had a total turnover of €387 million.

The business tends to reflect what is happening in the broader economy. Racehorses are a luxury, so demand hinges on disposable income.

Nothing illustrates this more sharply than Tattersalls Ireland’s own returns over the second half of the last decade. In 2006, the Derby sale turned over €15 million, while the company sold €62 million worth of stock over the year as a whole.

In 2007, the Derby sale turnover hit €15.7 million but returns for the year as a whole dipped to €57 million, as revenues from sales from August on were down on 2006. Overall, the company sold fewer horses in 2007, 3,339 as opposed to 3,605. That was the year Ireland began to tilt towards recession.

The business hit its trough in 2009, recording an overall turnover of just €18.3 million, while returns from the Derby Sale were just €6 million, less than 40 per cent of their peak.

Recovery came slowly and while the business has not returned to the gallop of 2006 and early 2007, it has at least been going at a stiff canter.

Between 2012 and 2014, overall turnover grew from €25.7 million to €43 million while, at the Derby Sale alone, it rose from €9.4 million to €14.7 million. Last year, 28 of the horses sold went for more than €100,000.

The core bloodstock business has doubled since 2010. Tattersalls’ current financial year will end on June 30th, and Mahony reckons it is on course to make €500,000 profit; it broke even last year.

This reflects three things: the economy’s recovery, the sport’s popularity and the balance of supply and demand. It is always possible that any one of these factors could turn but right now there is a more potent threat to the Irish national hunt breeding industry in the shape of its French rival.

Highest level

French-breds have always had a place in the sport, but their success – and resultant popularity with owners – is growing rapidly at the moment. Four of Willie Mullins’s record-breaking eight winners at this year’s Cheltenham Festival were French-bred. Significantly, all were novices, indicating that they could be competing and winning at the highest level for some time to come.

Three of them, Un de Sceaux, Don Poli and Vautour, are between them considered live contenders for more or less every prestigious steeplechase in next year’s calendar, while a fourth, Douvan, is widely expected to be a leading novice chaser.

Rich Ricci owns Vautour and Douvan, while Gigginstown owns Don Poli. The other winner for O’Leary’s operation at the meeting was also French-bred. As these owners spend millions on buying horses and keeping them in training, they will go to whatever source is delivering the results.

Mahony says it is "undeniable" that France is producing large numbers of top-flight national hunt horses.

“As a sales company, it’s a threat in many ways, but it is also an opportunity; as breeders go to France to source stock, so we sell quite a few French horses at the Derby Sale.”

On the implications for the industry as a whole, he suggests it is something that organisations such as the Irish Thoroughbred Breeders’ Association should tackle.

He argues that the French racing programme plays a central role in the country’s success in producing high quality stock. France has a defined series of races for fillies and mares in which the best horses compete against each other. This means that the best animals can be identified and bred from accordingly.

“They can identify their good mares and they can identify them because they have a good programme,” Mahony says. “That’s something that needs addressing here. In Ireland we have mares’ races but we do not have a defined programme. If you look at flat racing in Ireland and England, there is a defined fillies’ programme, but in national hunt racing you do not have that.We’re too caught up with geldings competing for the big prizes.”

He says the sport’s authorities in both Ireland and England have added mares’ races, including one which was added to the Cheltenham festival in 2008. Tellingly, it is a French-bred mare, the Willie Mullins-trained Quevega, that has won six of its eight runnings.

Nonetheless, O’Mahony argues that the races do not have the same prestige and, as a result, owners want to buy geldings to compete in the higher-profile races, which are generally open to both genders, but which are effectively dominated by male racehorses.

“You don’t have that problem on the flat,” he says.

That pattern is unlikely to change at this Derby Sale. Although it is specifically a national hunt sale, it is ironically called after the country’s premier flat race, simply because the two occur during the same week.

Michael Osborne, the Kildare man whose work as a stud manager and administrator left its mark on world racing, came up with the name. This year is its 40th anniversary.

So what will be on show for anyone who goes along?

“They are going to see probably 500 of the best three- and four-year-old potential national hunt horses that can be mustered within the UK and Ireland – and hopefully some fireworks as people are bidding for them,” Mahony says.

He is very optimistic that this year’s sale will beat the €14.7 million turnover total it hit in 2014. For Tattersalls, this means it can expect commission of more than €1.1 million over the three days of the sale. It charges 7.5 per cent.

Pedigree

Tattersalls does not simply take the first 500 horses that turn up and try to sell them for €14 million. The catalogue is whittled down from an initial group of about 2,000 that the breeders themselves put forward as viable candidates.

“We would start canvassing the breeders and the vendors around the end of the year to find out what they have to sell,” Mahony says. “We have five or six inspectors and they will visit the farms and select 500 lots. They will handpick them on the basis of pedigree and conformation [the horse’s physical build]. They will match those two things and that’s how you get your 500 best horses.”

While all this is going on, Mahony’s staff will set about luring owners and trainers. They travel to all the big meetings to press home the message to potential buyers. They will also go further afield and have travelled to the US several times in the last few years to attract more customers. The group has offices in 14 countries.

Auctioneering is in Mahony's blood. His father, Denis, was a founder of Keane Mahony Smith and was one of the first auctioneers in the Ballsbridge Sales Company, which operated out of the RDS and held the first Derby Sale. Horses are also very much part of his background.

He grew up in Co Meath and his mother was “keen on horses”, something she passed on to her son, who still rides, enjoys hunting and follows racing, along with most other sports. He began working for Tattersalls in 1982 and has been chairman for 22 years.

As chairman, he still takes the podium for the auctions themselves. For the most part he remembers prices rather than horses.

“I’d love to say that I sold Dawn Run, but I definitely did not,” he says. Some of those that stand out are flat, rather than national hunt, horses.

He sold Unite as a yearling, who went on to win the Oaks (the fillies’ “version” of the Derby) and the Irish equivalent in 1987.

In December 2013, at Tattersalls in Newmarket, he sold another Oaks winner, Dancing Rain. This time she had won the race – in 2011 – and was in foal to the unbeaten champion, Frankel. She fetched four million guineas or about €5.7 million at current exchange rates. Dubai’s Sheikh Mohammed bought both horses.

The odds are surely against any horse hitting those heights when they pass through Tattersalls sales ring this month. However, Mahony is still expecting sparks to fly. CV Name: Edmond Mahony

Postition: Chairman and chief executive, Tattersalls

Why is he in the news? Tattersalls Ireland is back in profit and gearing up for its premier auction of national hunt horses, the Derby Sale, on the 24th, 25th and 26th of this month. Family: married with two children.

Something that won’t surprise: He is a keen horseman and Master of the Louth Foxhounds.

Something that may surprise: He has won the amateur championship at the Royal Windsor Horseshow and the heavyweight hunter championat the Royal Dublin Show.