Saturday 15 October 2016

Tales from the Sales: All Too Often the Cards are Stacked against the Owner. Caveat emptor.

October is such a busy month for trainers, their agents and owners, particularly if they are involved in both Flat and National Hunt. The yearling sales have been through their crescendo in the UK with Tattersalls’ Book 1, involving horses with multi-million pound price tags; Champions’ Day at Ascot is on today (and we’re hoping for another superb run from Karl Burke’s brilliant filly, Quiet Reflection) and the first Cheltenham meeting is only a week away. Much to look forward to, as an owner, as long as your horse is fit, well and full of promise.

However, there will be quite a number of horses for whom plans are on hold because they are anything but “fit, well and full of promise”. We all know that even getting a horse to the track in one piece can be a huge challenge, and I often think that in itself often counts as a win. But there is one aspect of owning that gives me a huge amount of concern: where you buy a horse at a sale and then find it has a serious problem that could and should have been disclosed.

Because Owners for Owners has been buying both Flat and NH horses over the Summer and this Autumn, I’ve had my nose well and truly into the sales catalogues of Goffs, Tattersalls, Arqana and Osarus. I am not sure how many people bother ploughing through the voluminous Conditions of Sale, which run to 24 pages in the one that I have in front of me at the moment – Goffs’, and they are a similar length in most other catalogues – but because of my interest in procurement and contracts from my consulting days I am interested in how they are framed and who they are actually protecting. It was always one of my simple views of commercial life that you should be very wary of accepting or signing someone else’s contract because by and large, if they have produced it, it is primarily protecting them and not you. The Conditions of Sale are stated as being of relevance to “all potential vendors and purchasers”, so you would like to think that the contractual terms are balanced and even-handed, protecting both sides equally.

So it came as a huge surprise to see one particular clause in the Goffs catalogue (but also in the Tattersalls one) under the heading of: Lots Returnable, 12.2(e). Basically Section 12 lays out the grounds for returning a horse that you have bought to the sales house, and thence to the vendor. If you buy a horse that is a wind-sucker, weaver, box-walker, wobbler etc., then you can return it. As the buyer you would normally know about these conditions in advance as they are announced by the auctioneer ahead of the horse going through the ring. But Section 12.2(e) deals with wind:

(The lot is returnable if the horse) “has been tubed or otherwise operated on for unsoundness in wind…”

which is absolutely right and proper, as no-one wants to buy a horse whose wind is shot. Unfortunately though there is an important set of qualifiers in parentheses:

“… (Operations to treat the displacement of the soft palate, including the operations tie-forward, cautery of the soft palate, trimming of the soft palate and myectomy are not operations for the correction of an unsoundness in wind within the meaning of this condition.)”

I find this clause absolutely unbelievable, and intend to seek clarification from both the BHA and the ROA on it. In effect it means that if you were a vendor you could operate on the horse to correct what could well be a serious wind problem, then put the horse through the sale where it would be difficult to detect some of these operations, and when the unsuspecting buyer finds out about it, there is absolutely no redress whatsoever.

It may be apocryphal, but apparently there are vets in Ireland who will even perform a minor laser procedure on a horse’s wind box so that it neutralises the sound of bad wind. The operation only succeeds in keeping the horse quiet for a few weeks, but this is enough for the animal to go through the sales.

While preparing this blog I queried this with a well-known vet and he went even further. Apparently you can’t put a horse through the sales if it has bute or Lasix in the system, and that would be detected if there were a blood test. Apparently this doesn’t apply to cortisone, so any vendor can medicate a horse, maybe with serious tendon pain, and even though cortisone could be detected it won’t be declared to the prospective purchaser.

I have a horrible feeling that these are only some of the more public examples of the ways in which the owner is being taken for a ride (if that’s the phrase to use) by the bloodstock industry, sales houses and agents. This is a hugely controversial area, and one that I will come back to again on the blog.

I am always interested to hear your views so please do leave a comment. If you can't see the comment box at the bottom of this post then navigate to the post using the right hand navigation or click here > and scroll to the bottom of the page. Look forward to hearing your views. Thanks very much for sharing them.

Saturday 1 October 2016

Trainer Effectiveness – Assessing Success AND Sustainability. The Need for Stronger Business Skills

There have been some very interesting developments on the National Hunt training scene in Ireland over the last couple of weeks: one sad and one perplexing.

A mid-tier Irish trainer, Colm Murphy, who had sent out a number of excellent winners not least Brave Inca to win the Champion Hurdle, has decided to call it a day primarily because of a contraction in his owner pool and not being able to succeed commercially. This is the sad case study, because it shows just how difficult it can be for trainers with excellent horseman skills to build a sustainable and successful operation.

The other case study is the announcement by Gigginstown that they are taking 60 horses away from Willie Mullins. Bearing in mind that we’re talking here about the current champion trainer and champion owner, this is a big story. Apparently Mullins had made a decision to increase training fees for the first time in quite a number of years, and Gigginstown refused to accept the increase. Doubtless there are a number of layers to that particular negotiation, and it may well not be quite as simple as it appears on the surface. The lucky trainers to receive these horses include Gordon Elliott, Noel Meade, Mouse Morris, Henry de Bromhead and the rapidly emerging NH (and for that matter, Flat) trainer Joseph O’Brien.

I’m sure I’ll revisit the Mullins story once it has settled down a bit, but the two case studies together prompted some thinking about the appropriate mix of skills needed for trainers to succeed, both on the racecourse and as a sustainable business. Our sport definitely does not lack the skills of being a horseman and, indeed, the vast majority of licensed trainers are highly competent, dedicated and immersed in that aspect of their business. The big issue is in the whole cluster of skills to do with being a successful business person, in terms of both possessing them in the first place and applying them in a diligent, ongoing manner. Alas, many trainers are only strong in the skills of being a horseman and either do not appreciate, or do not know how to address, the gaps in their business acumen. I’ve made an attempt to bring that to life in the diagram below with its ten factors: five to do with horsemanship and five with being a business professional.

Typical Profile of Mid-Tier Trainers: Business skills fail to complement training skills
1.  Training racehorses to win high profile races
2.  Keeping racehorses healthy, mentally and physically
3.  Attracting and retaining high-quality stable staff
4.  Investing in and improving the training facilities
5.  Timely sourcing of new horses with real potential
6.  Investing in and improving owner facilities and staff accommodation
7.  Ensuring that the business has strong cash flow and is profitable
8.  Attracting and retaining sufficient number of owners
9.  Having a marketing and communications plan to do this
10. Adopting a business model that drives and sustains ongoing success

When many young trainers start off I doubt whether they fully appreciate what being a high performing, highly competent trainer really involves. Training is provided as part of obtaining a licence, but despite its best intentions it is regarded as more of a chore and a means to an end than something that goes right to the heart of being successful and sustainable as a business. Alas, when the gaps in competence become self-evident it is very easy for the whole operation – such as that of Colm Murphy – to be incapable of revival. Equally, really successful businesses such as that of Willie Mullins need to ensure that they don’t take owners for granted and that they develop the right type of long-term partnership and collaborative endeavour to guarantee success at the highest level.

Conventional businesses learnt a long time ago that their senior managers need ongoing training, development and coaching to groom them for broader responsibilities. It is highly likely that racehorse trainers also need appropriate interventions to raise their competence and skill base so that they can genuinely succeed. This really matters because without successful trainers you cannot have successful owners. The two need each other …. as both Mullins and Gigginstown may realise over the next couple of years.

I am always interested to hear your views so please do leave a comment. If you can't see the comment box at the bottom of this post then navigate to the post using the right hand navigation or click here > and scroll to the bottom of the page. Look forward to hearing your views. Thanks very much for sharing them.