'The best advertising is getting winners': How has the syndication landscape changed?

Cover image courtesy of Magic Millions

In part two of our series, our six syndicators return to shine a light on what's changed and what has stayed the same in their syndication models in an effort to remain successful. From retaining owners to facing some of the industry's greatest challenges, they dissect what helps them to stand out from the crowd.

1. Is it getting harder or easier to build long-term owner bases?

Joe O’Neill, Prime Thoroughbreds: “I think we have got a lot of loyal clients that have been with us a long time, and we've picked up a lot of new clients in the last couple of years. There's a lot of New South Wales-based clients who want to race in Victoria now.”

Jason Abrahams, Champion Thoroughbreds: “Our long-term owners are still with us and they very much enjoy it, but finding new owners isn’t easy, given the amount of competition there is. We don’t do any marketing per se, so we aren’t in front of potential owners unless they watch the racing and our colours are in front of them. The best advertising is getting winners. We spent a lot on advertising when we first started, and you can do all of that and the phone doesn’t ring, so we put that to the side and focused on getting winners.”

Wylie Dalziel, Dalziel Racing: “I think, if you’re honest with people from the start and don’t sell them false dreams, you’ll have a better, longer lasting database of owners than if you get desperate with selling your shares. You need to tell owners the reality of it all. I have always done that the whole way through, and I have a pretty good loyal database of owners that have respected that from the start.”

David Ellis CNZM (BAFNZ), Te Akau Racing: “I think it is getting easier. We have a client base that we have built up over a lifetime, and we are very lucky to have so many loyal clients that have had so much success with us. We have had over 100 Group 1 wins, which is a great advertisement of our brand.”

Nathan Bennett, Bennett Racing: “It's going pretty well at the moment.”

Jamie Walter, Proven Thoroughbreds: “These days, syndication is such a busy, crowded space, so a lot of owners like to shop around across syndicators, states, and stables. Like everyone, I like to foster loyalty, because the game is as much about relationships as it is about the horses.”

2. What does the industry need to do better to keep owners engaged long-term?

O’Neill: “I think we need a national racing program that needs to be better balanced. Every state and territory deserves its time in the sun. I feel like the Western Australian carnival has lost some of its gloss recently, so we need all states to have the chance to highlight their industry, both to locals and to interstate visitors. That's not happening right now. Some of the carnivals are too spread out and it's impacting other states. We are a national industry, and everyone deserves to have the chance to showcase the industry in their state.”

Abrahams: “I think the owner experience is key to the whole process and we can do as much as we can. You would probably like to see racecourses do a little more for the ownership experience. Some tracks do it better than others with ticketing and putting on food in the owners’ area, but there can be a bit of a disconnect at times. People put a lot of money into ownership, so when they do get to the races, you want them to have a great experience and feel special.

“I think that that experience has diminished over the years, particularly with occupational health and safety - you can't really get too close to your horse any more. There’s a lot of things tracks could do to improve that experience.”

Dalziel: “I think the fun factor is there for everyone once they get involved. There’s plenty of functions and raceday activities. The prizemoney probably needs to continue to increase because the costs continue to increase. As much as I sell it for fun and as a good time, I do have investors who go into it to try and make money. You have got to try and get them a return. If you can get them a return and a couple of wins in the city, they will reinvest.”

Ellis: “In New Zealand, we have to continue to ensure we have good race tracks to race on. That is the biggest thing to focus on in this country.”

Bennett: “There are a couple of things that could happen. Firstly, opening the mounting yards up to owners would be good. Secondly, I think we need to focus on prize money funding schemes that aren’t wholly reliant on punting. We need to come up with another plan there. Maybe there could be an Australian-wide pool where you pay in $10,000 when you purchase a yearling, and then you are eligible to receive prize money from that pool when you race. If you are spending $200,000 on a yearling, another $10,000 on top isn’t much of a stretch. I would definitely pay that fee to be in a prize pool like that.”

Walter: “I see a growing issue with rehoming horses post-racing that aren’t suitable for ridden pursuits. I don’t think we can simply put them all in a paddock and say we will not put any of them down, there has to be a consideration for the quality of life of the animal and the way we spend welfare resources. We are in an era where welfare has become an extremely sensitive issue that we are constantly trying to improve, and the system must be examined holistically.”

3. How has your buying strategy changed in the last 3–5 years?

O’Neill: “It hasn't changed a lot, we are still looking for value. I am looking to buy all fillies this year in that $75,000 to $150,000 range, and I'll probably buy a dozen yearlings; eight for Victoria, two for Tasmania, and two for New South Wales.”

Abrahams: “We are doing a lot more pedigree research pre-sale. We used to look at every horse and then make a short list, but these days we do our pedigree homework in advance, so when we get to the sales, we don’t have to look at as many. We can spend more of our time focused on the horses whose pedigrees appeal to us and that we are more likely to be able to buy. We don’t need to look at a bunch of horses we are never going to buy - the reality is, there’s no point in us looking at the million dollar colts, or horses from a farm with a low percentage strike rate, or something that just doesn’t suit our client base.”

Dalziel: “I go into all of the horses myself as well, and that has always been my model. Previously I would go and buy 15 horses then try to syndicate them, but now I will try to get people on board before I buy anything. Having more committed investors makes it more viable.”

Ellis: “It hasn't really - what has worked for us for so long continues to work. We like to buy athletic fillies and colts that will race at two, and go on and be better at three and four.”

Bennett: “I don’t think it has changed too much, but we have got a little more money to spend now than five years ago. All of our procedures have stayed the same though.”

Walter: “About eight or so years ago, I was having a conversation with the late Steven Brem - who was a brilliant guy and a great judge of a horse - and I said, ‘I’m getting winners but not good enough winners’. And he said to me, ‘the answer is simple; you need to spend more money and buy more horses’, and I have followed that since.”

4. How would you describe the market heading into Magic Millions? Are you likely to buy more or less than other years?

O’Neill: “I'll probably buy four this year, which is a couple less than normal. I'm concerned about the industry in New South Wales at the moment, there's a lot of friction in a lot of different areas. That needs to be sorted out before I can commit more horses to the state.”

Abrahams: “It’s hard to tell at this stage. Some years, we get there thinking we will buy one or two, and we come away with six, and some years we go trying to buy six and come home with one. We are doing a lot more work with trainers now - we look for commonalities between their shortlists and ours. If there’s crossover, we will try to target those horses.

“It also just depends on how the sale goes. Every sale is a sliding door moment - with every lot, you either get the result you want or you’re a long way away. I think the market in the top quartile will still be very strong, but I think there'll be plenty of opportunities below that for purchasing some nice horses.”

Dalziel: “I know we are only a week out at this stage, but it all depends on my client base and how they are feeling this year, which isn’t certain yet. We usually try to buy about a dozen at Magics, and I don’t see that dramatically changing.”

Ellis: “We will be looking at buying around the same number.”

Bennett: “We will try and buy more this year, but last year we came to buy 10 and ended up with six. The year before, we wanted 12 and we ended up buying only eight. I suppose I should go in wanting to buy 15, and we might end up with 10.”

Walter: “I never like to go to a sale with a preordained strategy. If you accept the notion that it’s primarily about price and value, then if something is value, I look at buying it. I never like to say ‘that’s it, can’t spend any more’.”

5. How important are vet findings now compared to five years ago, and what's changed?

O’Neill: “They are still 100% important. If my vet Greg Nash says we should avoid a yearling for any reason, then we trust his judgement, and I take his advice 100%. It might have cost us a couple of good horses over the years, but it has also saved our clients a fortune.”

Abrahams: “I think the vets themselves have become better at analysing what's going to stop a horse and what's not. I think their ratings are a little bit more lenient than what they used to be, particularly on radiographs. Generally at a sale like Magic Millions, vendors don’t bother bringing horses with a poor scope or high risk x-rays. So while we still do the vet checks, we find they don’t tend to be a major issue, and if there is, the vets can often show you a pathway through it.

“Two years ago we bought a Too Darn Hot filly (Voltage Lass) for $50,000 knowing she needed surgery and would likely miss her 2-year-old season. We gave her the time and care, and now she has three starts for two wins and a second. Those are in the bush, but the owners are still having a lot of fun and we have already almost gotten the whole purchase price back, and she’s still got the rest of her career ahead of her. Those sorts of things can work in your favour if you keep an open mind.”

Dalziel: “Things can change in the six to 12 months after a sale. We definitely still do all of the checks, you have to do that before you dive in and buy a horse.”

Ellis: “I use my own judgement when assessing horses. We are lucky to have Dr Doug Black, who has done all of my vet work since 1986, and he’s a very, very good judge of a yearling. We have worked together for so long that we work exceptionally well together, we know what we want to buy.”

Bennett: “There hasn’t been a lot of change for us. We trust our vets and if they wouldn’t buy the horse themselves, then they will tell us and it will come off our list. Sometimes, you get disappointed when a nice horse comes off your list, but if your vet wouldn’t touch it, then you have to let it go.”

Walter: “It’s a little bit more transparent these days, which is good. Hundreds of people have said this before me, but radiographs and scopes are a moment in time. Conformation is pretty permanent, but imaging can be quite fluid. If something is a Grade Four on scope or a moderate to high risk on x-ray, then that’s too many negatives to take home, but otherwise it’s about how the whole picture fits together.”

6. What separates the syndicators who will still be here in 10 years from those who won’t?

O’Neill: “At the end of the day, it is all about results and getting your owners value for their dollar. If someone buys a $500,000 yearling and it wins $500,000 on the track, they are still $300,000 behind. You have to buy value and you have to produce results.”

Abrahams: “You've got to keep getting results and you've got to keep getting winners, but the biggest risk factor, not only for syndicators but trainers as well, is overpaying for horses. If you overpay on a horse that’s not going to get you to stakes races and you struggle to sell all the shares in it, that’s a real financial burden on syndicators and trainers every year. You have to be in tune with your client base to survive, you need to be buying something you know you can sell.”

Dalziel: “The main thing is you have to be honest with your ownership database on the reality of horse racing. You don’t go into it to make money, but you still want to see some results. If you go and buy 20 horses that are all duds, people are going to try elsewhere. You need to have results with each batch of horses you buy every year.”

Ellis: “Getting repeat success on the track is the most important thing for a syndicator’s longevity.”

Bennett: “You have to keep getting a good level of success, and you have to keep getting more successful. You can’t spend more money and achieve the same or lesser results.”

Walter: “The fundamental one is keeping your head above water financially in a game that’s all about taking huge risks. Aligning yourself with the right people and being extremely mindful of the ownership experience goes a long way as well.”

7. If you had a million dollars to buy one yearling, what stallion(s) would you target, and would you buy a colt or a filly?

O’Neill: “I would want to get a filly and I'd be looking at sires like I Am Invincible, Zoustar, So You Think. If you can get a nice Vinnie filly, it's gold. They're good racehorses - his fillies are often better than his colts - and they are great broodmares. If you want to buy a nice filly from those stallions, you need to spend a bit.”

Abrahams: “I think that stallions and the sex of their offspring can be a bit interrelated. I would probably be looking for an I Am Invincible filly, I think he’s going to be a great broodmare sire and he has been a bit of an upgrader of pedigrees. If you are paying that sort of money for a nice Vinnie filly, she’s going to be a great sort and they tend to improve as they get older. If they get black-type, they are going to be very well sought after as broodmares when they get to stud.”

Dalziel: “I would want a filly and I would target The Autumn Sun. Our best filly to date has been Autumn Angel, she won the Oaks and she looked like she was going to be a superstar, but unfortunately she was injured and had to be retired. We have five of them that are 2-year-olds and 3-year-olds, and there’s a couple showing some really good promise.”

Ellis: “If I am spending that much money, it has to have the profile to do well at stud, if it also shows the ability on the track. I bought Sword Of State for $600,000 at this sale, so I don’t necessarily need to spend seven figures to find a stallion prospect.”

Bennett: “It would be a Zoustar colt. We have had 40% stakes winners to runners with him.”

Walter: “I would prefer to split it four ways and buy four yearlings for roughly $250,000 each! But if I could only buy one, it would be a filly, because presumably for seven figures, you are buying a good family. Any of the top four or five proven stallions will do as the sire - the likes of I Am Invincible, Snitzel, Zoustar.”