Lending Influence - By Dan Liebman

(Originally published in the February 13, 2010 issue of The Blood-Horse magazine. Feel free to share your own thoughts and opinions at the bottom of the column.)  

Ahmed Zayat is a 47-year-old multi-millionaire who fell in love with horses during his youth in his native Egypt, where he competed in national show jumping events. The man followed horse racing with a passion, and when his business success afforded him the opportunity to enter the game, he did so.

He did so in 2005 with vim and vigor. He did so at the top, spending wildly for yearlings, hiring top trainers, and pursuing the richest prizes in the sport.

In fact, racing is the only sport in which you can simply show up and do what Zayat did. You can’t walk into the office of the commissioner of the National Football League, for example, and buy a team. But you can get credit at an auction and enter the racing game, at whatever level you wish to participate.

Though Zayat had the financial wherewithal, he did what many owners and breeders also do; he secured a line of credit with a lender, in this case Fifth Third Bank.

With the bank’s backing, Zayat pursued his dream of becoming a leading owner and breeder; of standing stallions; and of selling desirable bloodstock at auction. He succeeded in all areas.

Zayat Stables’ Pioneerof the Nile won last year’s Santa Anita Derby (gr. I) and ran second to Mine That Bird in the Kentucky Derby Presented by Yum! Brands (gr. I). He will stand his first season this year at Vinery. Zayat Stables’ Zensational won three consecutive grade I sprint stakes last summer in California. He will stand his first season this year at Hill ‘n’ Dale Farms.

Other grade I winners Thorn Song, Point Ashley, and Downthedustyroad have carried the stable’s blue and yellow-colored silks, as have such stakes winners as Soul Warrior, Eaton’s Gift, Massive Drama, High Again, E Z Warrior, Baroness Thatcher, Got the Last Laugh, Marcavelly, and Belgravia. Zayat Stables had earnings in 2008 of nearly $6.9 million and in 2009 of $6.3 million.

In 2006 Zayat went to $4.6 million at the Keeneland September sale to purchase Maimonides, a half-brother to Roman Ruler and El Corredor. At Fasig-Tipton Saratoga auction that year, he bought the sale topper, going to $1.6 million for the filly Mushka. Maimonides made just two starts before an injury cut short his career; he is standing in Florida. Mushka became a grade II winner for Zayat before he sold her at the 2008 Keeneland November sale for $2.4 million; she earned a grade I win by disqualification for her new owner.

Last year Zayat missed two payments to Fifth Third Bank, and it called in his entire loan portfolio of about $34 million in December. Fifth Third filed suit, seeking to name a receiver for Zayat’s stable, while he countersued, claiming the bank had agreed to renegotiate his loans but failed to do so. Before a hearing could be heard on the matter, however, Zayat Stables filed for Chapter 11 bankruptcy protection Feb. 3. Besides Fifth Third, other creditors include trainers, veterinarians, van companies, sales companies, a boarding farm, a sales agency, etc.

Under the terms of the agreement, it is within the rights of Fifth Third to call in the Zayat Stables’ loans. However, Ahmed Zayat is exactly the type of person the Thoroughbred industry needs, and his dealings illustrate the problem owners, breeders, and buyers are having securing funding.

Perhaps the single biggest problem facing the industry right now is that equine lenders have pulled back, many discontinuing loaning to Thoroughbred participants completely.

Bloodstock prices, like many other commodities in this recessionary time, have decreased, and lending institutions should adjust their thinking when loaning to owners, breeders, and bloodstock buyers. But this industry needs lenders willing to help it regain its footing.

Leaders of racetracks and sales companies; of the NTRA and Breeders’ Cup; of the American Horse Council and state breed organizations; and owners and breeders with strong relationships with banks should work together to gain access to funding for the industry.

We need the help of banks. And we need people like Ahmed Zayat. 

Recent Posts

More Blogs