Sport: Breeders, Place Your Bets

Bloodstock goes blue chip

The 115th meeting of horse racing's venerable summer camp at Saratoga Springs, N.Y., opened earlier this month as regular fans returned to their favorite spa. Once again hotels and restaurants are jammed with people who seem to have leaped straight out of New Yorker cartoons, and the jewel thieves who shadow the wealthy have put in their usual appearance. It would seem that nothing could disturb these genteel August rites.

But whoa! There is one thing. There has always been one thing: money. Even these curried folk can still be awed by the wagering of huge sums. And the bets have never been bigger. They are not made at the race track, however. Now the principal action is the enormous gambles of the Thoroughbred mating game.

The biggest news at Saratoga last week came when Industrialist Henryk de Kwiatkowski announced that his Belmont Stakes winner, Conquistador Cielo, had been syndicated to a group of breeders for $36.4 million, making him the most expensive horse in history. Meanwhile, all week long, a favored few took their reserved seats inside Humphrey S. Finney Pavilion and fascinated onlookers gathered before outdoor monitors to view the auctions of untried yearlings for stratospheric sums. In one wild bidding session, a world-record filly price of $2.1 million was paid for a daughter of The Minstrel. After four tense evenings, traders had ponied up $36.1 million for 204 colts and fillies.

Last month in Kentucky the annual Keeneland Summer Sales, the Academy Awards of equine auctions, did even better. There, 279 yearlings averaged $344,183 apiece, up 32% over last year. One lively colt, son of the extraordinary Nijinsky II, went for an alltime auction record of $4.25 million. Said Kentucky Horse Breeder William O'Neil: "Last year's prices were mind boggling, but this year's are about unbelievable."

But they are not quite inexplicable. Horse breeding, once the sport of kings and nobles, is now the delight of international moguls and financial princes. Well-heeled foreigners, particularly the Arabs, like lavish-spending Sheik Mohammed bin Rashid al Maktun (who bought the record-breaking filly at Saratoga), have brought piles of new money into the enterprise. In addition, Thoroughbreds are tax sheltered and relatively portable collectibles whose value has appreciated not only more than inflation but well beyond most other investments. The Dow Jones index rose a bare 7% in the past 20 years. Prices at sales like Keeneland's have skyrocketed by 2,600%. "From an investment point of view," says New York City Consultant Robert Fierro, "oil and gas are dead. Equipment leasing is dead. Real estate, especially in California, is dead. Thoroughbreds are right where oil was a few years ago." Explains Wayne E. Ries, a Baltimore syndicate manager: "You've got a very interesting situation with horses. Your asset is appreciating all the time. But for tax purposes you can depreciate it."