Lending Influence - By Dan Liebman

re: Lending Influence - By Dan Liebman

Casey B — Wed, 17 Feb 2010 14:35:07 GMT

Dear Dan,

Do you read the magazine that you edit? The banks obviously do. Pages 626-627 of the most recent 2/13/10 issue lists VLT troubles in New York, a leading owner in-debut to creditors (including trainers and veterinarians) and a trainer filing suit to recoup expenses. Turn the page and you find one of the nation’s leading owners ejected from a racetrack and the SLOTS (not ‘horse racing’) vote progressing in Maryland.

I am a small scale breeder in Pennsylvania that wonders how long before the investors and state government officials realize that the ROI per slot machine far outweighs the ROI per horse on the backside of each track. Unfortunately, I see a future with four US tracks available only by simulcast, one “triple (or should we call it ‘single’) crown” race and a breeder’s cup televised from Dubai.

As every exercise rider, hayman and blacksmith on the backside will tell you, “I am done extending credit – it is KILLING me.” The banks are now wisely following suit. What our industry needs is not more Ahmed Zayat’s – a pipe dream of unfulfilled promises that starts huge and ends in an embarrassing flutter of dollar figures that the general public views as a waste – but a solid, ‘wear-it-on-your-hat,’ rivalry that strikes a cord on a very human level.

We are standing at the very pinnacle of this rivalry with Rachel vs. Zenyatta. We are talking - Eagles vs. Cowboys, Jimmy Johnson vs. Tony Stewart and we must learn from these other sporting industries. Fans want to wear their allegiance on their sleeves…or hat. AND as horses attract young, female enthusiasts, WE NEED THEM TO WEAR OUR HAT! Not Ahmed Zayat. NFL and NASCAR realize that fans don’t have “Art Rooney” and “Joe Gibbs” on their hat, they have the yellow and maroon or teal and pink that a young, female horse fan can relate to. What I see is every pony-clubber with a Rachel or Zenyatta helmet cover, parents following suit and track stands, TV ratings and polling windows catching the wave.

Then we’ll talk to the banks…

re: Lending Influence - By Dan Liebman

Adele Maxon — Fri, 12 Feb 2010 19:54:52 GMT

AMEN!! KELLSBORO & GREG J.!

re: Lending Influence - By Dan Liebman

BELLWETHER — Fri, 12 Feb 2010 08:28:14 GMT

"CRYING OVER HIS HORSE"...Dan U GOT THIS ONE RITE FER SURE...

re: Lending Influence - By Dan Liebman

Fifththirdsecondandone — Fri, 12 Feb 2010 03:00:59 GMT

I hope Mr. Zayat is able to survive. We neeeeeeed him buying

bloodstock this spring and fall.

re: Lending Influence - By Dan Liebman

Concerned Owner — Thu, 11 Feb 2010 18:33:44 GMT

How dare you condone this man's reckless dealings. He is a prime example of why the bank's have pulled back from lending money. When you sign that note - you promise to pay. It is a two way contract - the bank loans you the money and you are expected to pay it back. I guarantee you that the bank did everything in it's power to work this out and does not want the horses back - but has not choice at this point. Why do they have no other choice? Well given the fact that Mr. Zayat took the money from Thorn Song and never paid down the loan with the insurance check (which I am sure he borrowed money to purchase Thorn Song from Fifth Third)they now have no trust in him to do the right thing so they need a "third party" that they can trust. In additon, now a days with all the other parties out there that are not getting paid (vet's, feed companies, stud fees, agents fees, etc.)when the horse does go to auction, the bank's lien is subordinate to all other liens - so they don't get anywhere near the sales price (which we all know is much less now than in the past).

That is my take on the situation.

re: Lending Influence - By Dan Liebman

sceptre — Thu, 11 Feb 2010 18:03:48 GMT

For all of those that cried "insurance fraud" this should be a lesson not to offer "uneducated" opinions so freely-so endemic to blogs of this kind. Despite what so many of you believe (but have little first-hand experience), it is not that uncommon for ins. companys to pay mortality claims while the horse is still alive (it's all about the "fine print" in the policy). Please, just don't voice your opinions about anything unless you truly believe that you have sufficient knowledge. Too many who read these blogs may know even less than you, and tend to believe your misinformed musings. The thoroughbred industry appears woefully subject to supposed experts spewing their unfounded opinions and theories. Just another nail in the horses' coffin, and reason enough to question our ability to properly manage their safety. I'm sick of hearing how certain were these trainers of their horses' soundness-prior to breakdown. Those who question them generally know even less, and all is then wiped under the table. Time for a reality check, and a good portion of humility...My hat's off to the knowledgable scientists that saved Thorn Song. This industry needs to acknowledge and fund more research in these areas. Let's all try to become more expert in what may be available diagnostically and therapeutically, so that more may be prevented from injury, or saved.

re: Lending Influence - By Dan Liebman

Bill O'Gorman — Thu, 11 Feb 2010 17:48:20 GMT

Wooster - It's not unknown for an insurance company to pay out on an almost hopeless horse and take it over themselves in the hope of salvaging something. If that's what happened here then they'll likely sell him to you!

re: Lending Influence - By Dan Liebman

Zookeeper — Thu, 11 Feb 2010 17:16:05 GMT

A few months ago I learned an important lesson: don't pass judgment until you know ALL the facts. Insurance fraud was NOT committed in this instance. I'm not an admirer of Mr. Zayat but it is a shame that so many people accused him of a felony before they even knew the circumstances regarding Thorn Song. (Bless his heart, hope he makes a full recovery.) As far as Mr. Zayat's business acumen, AGAIN we don't know ALL the facts... As a retired business woman, I do know one thing: if your liabilities total more than your assets, you are in BIG trouble and nobody should rejoice at the troubles of another, whether we like that person or not.

re: Lending Influence - By Dan Liebman

Brian Russell — Thu, 11 Feb 2010 14:25:26 GMT

I am not defending Zayat on the overall situation but am I the only one that read the Thorn Song articles? His condition was such that he would have been put down under normal circumstances but the vet in Califonia wanted to try some experimental procedures on him and the insurance company agreed. The paid Zayat and they own Thorn Song. Should he be saved to be a stallion, it will benefit the insurance company, not Zayat. The only potential fraud was Zayat not listing Fifth-Third as "loss payee" on the policy which his loan agreements almost surely required.

re: Lending Influence - By Dan Liebman

Beretverde — Thu, 11 Feb 2010 13:31:20 GMT

The industry which is a business, needs good businessmen. Zayat is a bad businessman, who blew it. We don't need bad businessmen-plain and simple. Nice guys with a passion doesn't necessarily cut it.

re: Lending Influence - By Dan Liebman

Bill O'Gorman — Thu, 11 Feb 2010 09:39:56 GMT

And another thing - if agents were to be paid their % on the value after 2 years as well that would slow things down a bit.

When you're going slower the bumps in the road don't hurt the suspension as much.

re: Lending Influence - By Dan Liebman

Bill O'Gorman — Thu, 11 Feb 2010 09:33:16 GMT

Of course if whoever sanctioned the loan was going to get his bonus based on how much it was worth after 2 years.....

re: Lending Influence - By Dan Liebman

Wooster — Thu, 11 Feb 2010 02:10:25 GMT

As others here have asked-where is the photo of Thorn Song?

The complaints about 'crucifying Zayat' are silly, as the man has committed insurance fraud BY HIS OWN ADMISSION.

If the horse is alive.

I've never known an insurance company to pay before it sees, well, basically a definite deceased, but I work in situations that deal with humans.

Having read accounts from others regarding insurance on animals, it's no different.

So. Either Zayat has committed an insurance fraud, which is a felony, or he is lying about Thorn Song.

And, he's being defended, AGAIN, by BloodHorse.

re: Lending Influence - By Dan Liebman

Steve Zorn — Wed, 10 Feb 2010 22:57:03 GMT

I'm an indirect beneficiary of Zayat's free-spending ways; since he appeared on the scene, I've worked the Keeneland September sales for bloodstock agents who picked out a number of his moire successful horses. I got paid by them; they're still waiting for Zayat to pay them all he owes.

I want to like people like Zayat; having visible, news media-friendly owners certainly helps the game, as Jerry Moss, Mike Iavarone and Jess Jackson have show. We may not like everything these folks do, but they do get us the media coverage. But the huge debt financing of Zayat's horses strikes me as completely unreasonable. I operate on a much, much smaller scale, running some racing partnerships in New York, and I don't even accept credit card payments from my partners, because I want to be sure they understand that racing is not a business you go into for the money. It's fun, exciting, and the most thrilling sport I know. But it's NOT an investment (except perhaps with a business model like Coolmore's). If you want to buy horses for racing, you should be paying with your own money (obviously, breeders and pinhookers are in a different business, one for which working capital, acquired on credit, is essential).

re: Lending Influence - By Dan Liebman

SCH — Wed, 10 Feb 2010 20:11:58 GMT

Dan, your naivety is troubling for a person that has your position at our industry's most widely circulated weekly publication.

re: Lending Influence - By Dan Liebman

Bill O'Gorman — Wed, 10 Feb 2010 19:21:31 GMT

Seems more of a silly bank story than anything else - why lend someone an umbrella in hurricane country.

I bet there are plenty of trainers and studs with owners "into them" for a lot more than the list that was published in this case!

re: Lending Influence - By Dan Liebman

Noelle D — Wed, 10 Feb 2010 19:18:28 GMT

It takes more than passion and a huge line of credit to be a responsible owner - but these ARE the only qualifications you ascribe to Mr. Zayat. Whatever has happened to Thorn Song, the comparisons to J.T. Lundy seem apt.

If, as you say, Mr. Zayat HAD the money, but CHOSE to borrow (as others do), then he should be well positioned to pay his debts, as any honorable man should.

Where IS Thorn Song?

re: Lending Influence - By Dan Liebman

Mark — Wed, 10 Feb 2010 17:02:29 GMT

I have a dream too. I want to pursue my dream of becoming a leading owner and breeder; of standing stallions; and of selling desirable bloodstock at auction. All I need is 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 wiht banks to get me $35-Million. If it does not work however; I will need to file Chapter 11 for my LLC. Thanks Dan.

re: Lending Influence - By Dan Liebman

eeebayou — Wed, 10 Feb 2010 16:57:02 GMT

Let's see, a feel good story about Mr. Zayat gives Bloodhorse advertisers listed on the BK filing a glimmer of hope. Horse racing needs owners like Last Mango Racing Stable, Jerry Moss, and Cot Campbell--how can you include Zayat on this list!!

re: Lending Influence - By Dan Liebman

Rachel — Wed, 10 Feb 2010 16:42:13 GMT

Cgriff, exactly, it's exactly smelling like Alydar....

Where IS this hard working horse?

re: Lending Influence - By Dan Liebman

swaps — Wed, 10 Feb 2010 16:36:45 GMT

When a Zayat overpays for a horse big time the breeders and auction companies crow about how great the game is. But when this happens over and over the artificially hyped price structure for the "sport" gets so out of whack it needs slots to save the "business".

Anyone who has read Joe Bagan's Lucas at Auction knows that successful trainer had overall operating losses for his wealthy clients but he bailed them out overall with some successful syndications such as Capote.

In Bagan's study of 289 purchased by Lucas, only 23 earned their costs when training expenses were factored in.

Certainly Fifth Third knows these statistics.

Bagan's book lists some interesting consignor analyses related to Lucas purchases of their offerings.

Northridge Farm sold to Lucas $2.8 million worth of horses that won back $890,000 (during the time frame of this study).

Phil and Norman Owens got $1.9 million for Lucas bought horses that won $38,053.

Pegasus Stud got $925,000 for Lucas bought horses that won $8,645.

Shadowlawn Farm received $2.5 million for horses that won $2 million.

Walmac International got $1.9 million and the horses they sold to Lucas won $818,000.

Some of these horses had additional residual value from stallion syndications, breeding fees and foal sales and also resales of the horses themselves.

These were examples from the top six consignors to Lucas.

Then there was Fred Seitz selling Open Mind for $150,000 and it won $724,000.

Hilary Boone sold Mt. Livermore for $150,000 and it won $624,000 plus the residual breeding revenue.

Too often new owners are encouraged to look at the big money a Mt. Livermore or a Seattle Slew or a Lil E'Tee can make (sold for $1,100, then resold twice more before he won the Grade 1 Kentucky Derby sponsored by Yum Brands).

Zayat apparently wasn't getting the big syndicate deals and enough sales revenue to offset operating and capital costs.

Racing is now a business, not a sport.

Otherwise there would be no auctions and breeders would breed to race - and they would sure keep their costs down.

Otherwise Liebmann is very correct. The business needs owners like Zayat.

re: Lending Influence - By Dan Liebman

Cgriff — Wed, 10 Feb 2010 14:23:45 GMT

Mr. Leibman,

And your article has to be taken in context of when it was written. Timing is everything. But my question for you is: Would you write this exact piece now in light of the new facts?

If the answer is yes - then you are an apologist for a tainted network within the industry.

If you answer no - then it is the responsibility of the B-H to use it's great reporting staff to investigate and uncover the truth.

That's what journalism is all about, Charlie Brown.

re: Lending Influence - By Dan Liebman

Cgriff — Wed, 10 Feb 2010 14:20:02 GMT

Dan: You said "The cries of "crucify him, crucify him" surprise me. Zayat obviously has some circumstances to deal with but the 'assumption' of insurance fraud given the circumstances are unfounded."

Obviously - the facts of the case are just beginning to trickle out. But you cannot get around the gray elephant - or in this case gray horse - in the room. The situation with Thorn Song and his whereabouts just plain stinks of something rotten in the state of Zayat.

The fact that a mortality claim (which meant death claim last time I looked at life insurance) was filed and paid, the horse was never listed in the Jockey Club as dead and no one seems to be able to produce a current picture of an "equine habius corpus" - living or not - is just not adding up.

It has a vague taint of JT Lundy and Alydar's mysterious injury/death attached to a large insurance payout to offset burgeoning bills.

I believe First Third would not be going to court without a solid legal hand. And everything I've read from Zayat since this broke has been smoke/mirrors/spin.

This is the LAST type of situation that racing needs to be going public at this point. If Zayat is culpable in all this - he is the worst type of representative for the industry. If he's not - the facts and a court will prove him out.

But whither Thorn Song?

re: Lending Influence - By Dan Liebman

arthur hancock — Wed, 10 Feb 2010 13:50:05 GMT

When an industry here in Kentucky cries and screams that it is going to go broke unless it gets slots, how can anyone blame the bankers for getting nervous? Who would want to lend it money? For every action there is a reaction and one reaps what one sows. The industry should be screaming about breeding a stallion to 200 mares and causing a glut and oversupply. Supply and demand is the oldest law of economics.

re: Lending Influence - By Dan Liebman

Somethingroyal — Wed, 10 Feb 2010 13:47:26 GMT

I believe there is a saying..if you can't afford it, DON'T BUY IT!! Greed pure and simple is ruining horse racing. The horse is doing what it is bred to do and humans are distroying it's very foundation.