Not many owners pick a winner

If you fancy a big winner's cheque, think again, says Dominic Prince. A few racehorses hit the jackpot but most are an expensive hobby

FED UP with falling stock markets, rock-bottom savings rates and pessimistic predictions about property prices? Maybe its time to turn your back on conventional investments and put your money on a racehorse.

No, not the favourite in this week’s Grand National. We’re talking about a much riskier investment: that of actually buying a racehorse. It's so risky, in fact, that you should mentally write off any money you put in right from the off.
That said a lucky few have really made racehorse ownership pay – sometimes without knowing anything about the sport itself.

When Peter Robinson, a stockbroker joined a group of friends in buying a horse, they hit the jackpot right away. Patrick Cooper, a bloodstock agent and an old friend of Robinson’s, purchased a horse called Torgau for a mere £13,650. On Cooper’s recommendation, the filly was sent to Giles Bravery, a trainer in Newmarket, where fees are about £1,000 per month. Or, as Robinson puts it, "about the same cost as educating a child."

Torgau was successful beyond Robinson's wildest imaginings. By the end of her two-year-old season, she had amassed more than £70,000 in prize money - easily off-setting the training fees.

But better was to come. Out of the blue, an American owner showed an interest and a horse bought for £13,650 18 months earlier, was sold for £300,000, having won £70,000 along the way. The American purchaser was just as lucky. He kept Torgau for 18 months then sold her on for £600,000. She is now at stud in America.

Robinson promptly reinvested £10,000 of the proceeds in another filly, naming her after his daughter Phoebe. On her second run, at Newbury, she showed so much promise that she too was snapped up by an American for £55,000.

This time the proceeds were invested in a horse named Cowboy - and he has
turned out to be just that "I've spent a year just writing out cheques and he hasn’t even had a run yet," says Robinson. "To be fair, I was warned that he was a backward, gangly horse who would be late to mature. I’m still very optimistic though."

So what advice does he have for potential investors?

“ Get someone you trust to train the horse and somebody independent to buy it for you, both ideally from a recommendation,” he says.

Cooper is also sanguine. “You’ll probably lose all your money, but at least you’ll enjoy losing it whereas, if you lose it on the stock market, it’s and an absolute misery,” he says. However he cannot resist mentioning a foal he bought for £1,575 that was sold three years later for £100,000.
Another enthusiastic owner lucky enough to make money through racehorse ownership is Piers Pottinger. His company, Chime Communications, may have announced losses of more than £40m recently, but some of his racehorses have shown a very nice return.

Pottinger is the first to admit that he has been extremely lucky. "You have to go into this prepared to write off everything you invest," he says. "My attitude from the beginning has been that, if you own shares in a company, you get a share certificate and a cup of coffee with a lot of boring people at the annual general meeting. If you own a racehorse, you go racing and have a glass of champagne with some interesting people and you have a huge amount of fun."

Pottinger now owns four horses outright and has shares in a further eight. Geos, trained by Nicky Henderson, a top National Hunt trainer, cost £40,000 and has won more than £270.000 in prize money. Pottinger owns 20 per cent.

He says: "The key to success is the person who buys the horse. There’s a real art in buying a horse and you should always get an agent to buy for you. They know the market and they know how much you should pay. And don't put all your eggs in one basket. Spread the risk."

As luck would have it Pottinger was also a member of a syndicate called Kennet Valley Thoroughbreds, for which Charlie Gordon Watson, a bloodstock agent, purchased a horse called Firebreak.

The horse which cost £27,000, went into training with Ian Balding and promptly won £80,000 in its first season on the flat. At which point Sheikh Mohamed’s Godolphin stable made the shareholders an offer they could not refuse: £525,000, to be precise.

Each share in Firebreak (which included training fees) cost £4,000 and returned £34,000 a year later. This, says Nick Robinson, who manages the syndicate, is “not at all bad”.
Somewhat oddly, he adds that, to stand any chance of breaking even, "you need to spend a minimum of £30,000 on a horse.”

So is there a secret? Gordon Watson, who spends about £10m each year on clients' behalf, says: "You can look for all the physical attributes, you can look up breeding, you can watch how the horse moves - but you can't tell what goes on in his head." In other words if he doesn't want to win, he won't. Gordon Watson was also responsible for getting Sir Alex Ferguson into racing - and with truly spectacular results. For an initial outlay of £120,000, the Manchester United manager bought half of last year's wonder horse, Rock of Gibraltar.

The horse has now been retired to the Coolmore stud. If Ferguson sells his half-share now, the estimated £20m return would be tax- free. Because the stud is in Ireland, the £60,000 netted per mating is also tax-free. The Rock is due to cover more than 100 mares this season - worth £6m-plus to his lucky owners.

But, before you get out your cheque-book, remember this. Many racehorses never see a racetrack. Most of those that do never win a race, let alone one worth shouting about.

One more thing. The horse that wins Saturdays Grand National will pick up a handy £348,000 in prize money is unlikely ever to win again. If (as is virtually certain) he’s male, he'll be a gelding: stallions make lousy steeplechasers. So, when his racing days are over, stud fees are a racing impossibility.