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Welcome To Rortsville - Breeding & Bloodstock - Racehorse TALK

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Offline The Inquisitor

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O.P. « 2009-Jan-12, 10:30 AM »
The sale where money changes pockets rather than hands

John Schell - SMH
January 12, 2009

WELCOME to "Rortsville", better known as the Magic Millions sale. An extravaganza where million-dollar babies make headlines. But does money really change hands?
"This is a good walking colt," screams the auctioneer as a juvenile enters the ring.
Good walker. Please. Aren't thoroughbreds supposed to run?
At $2 million for the sale-topping Encosta De Lago colt you'd want a really fast horse. Or would you?
"This colt has a real stallion's pedigree," is another catchcry. "You've bought yourself a nice colt there."
Over the past five days, 885 yearlings were catalogued for sale at the Gold Coast.
Gai Waterhouse will train the $2m colt as well as a $1m Redoute's Choice colt. A $1.2m Redoute's Choice-Kapchat colt will go to the stables of David Hayes while he will also train a $1.1m colt by the same super stallion.
Those high prices look great in the sale statistics. They bump up the average and tell us what a success it's been despite the global economic crisis.
Great things happen at Rortsville.
And just who will race the $2m baby that is a brother to champion Sydneysider Racing To Win? Surely not worldwide breeding giant Coolmore Stud, which offered the colt for sale?
Of course it will. The Coolmore crew indicated it would keep part of the colt to race then breed with him. The remaining shares, however many, will be on-sold at the inflated sale price of $2m.
Take a look at the $1m Redoute's Choice-Strawberry Girl colt. Another with "a stallion's pedigree".
He was sold on account of Strawberry Hill Stud. That is the stud of advertising boss John Singleton, who is a part-owner of Magic Millions.
Singo has always been a great supporter of his own sale. Sells plenty of horses but buys plenty back. Don't be surprised if this one graces the track under the ownership of John Singleton and friends. He could even win next year's Magic Millions Classic sporting Singo's silks.
What about Hayes's $1.2m purchase. What a lovely looking colt he was. Well worth the money. What money?
The horse, offered by Widden Stud, was purchased as a weanling for around $620,000 by Peter Devitt and Les Gordon. After Hayes was announced as its trainer, who do you think he said he would prepare it for? Peter Devitt and Les Gordon. Yet another buy back.
There's nothing illegal or wrong with buying a horse back that you've offered for sale. But to most people the practice may seem to be aimed at obtaining the greatest benefit while remaining inside the law - Rortsville. Just be open about it.

(Finally, the truth about the Magic Millions!)

Offline Bundy

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« 2009-Jan-12, 11:07 AM Reply #1 »
The concept is not a new one....Dapto dogs for example were doing it years ago....not sure if they still do.....selling a pup via their auction got you into their big race.....if someone wanted (and did) to inflate the value of a pup for possible future advertising the owners would buy it back for a ridiculous sum.

Many, many owners bought their own pups back simply to get into the race....they had to be sold via the auction to get there.

MM looks no different....'cept the prices :p

Offline BillandTony

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« 2009-Jan-12, 11:10 AM Reply #2 »
Has been going on for years, but few dare speak of it for fear of pissing off the people who matter.

Offline Authorized

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« 2009-Jan-12, 12:21 PM Reply #3 »
 8-) John Schell

Offline Antitab#

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« 2009-Jan-12, 01:17 PM Reply #4 »
As usual old, incompetant Bart Sinclair couldnt see through the hype and wrote an article this morning glowing in the results of the Magic Millions.

Offline Hamish Crayfish

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« 2009-Jan-12, 05:55 PM Reply #5 »
I guess the syndicators have a ball and get handy extra margins out of it.

Offline InJapan5

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« 2009-Jan-13, 03:21 AM Reply #6 »
Brave man   emthup

Offline Kato

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« 2009-Jan-13, 06:42 AM Reply #7 »
Saw the article in the paper yesterday & I have to say how refreshing it is to read an honest assessment of an over hyped auction

Good to know there's at least one legitimate journo   emthup


Offline Jeunes

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« 2009-Jan-13, 07:20 AM Reply #8 »
I thought there were laws to prevent this sort of crap. The underbidder or successful bidders are being rorted so it amounts to fraud.

It used to happen in the real estate all the time when people used to make fake bids on behalf of owners and agents knowing where the reserve was. Some state gov't had to ensure new laws were brought in to reduce this kind of rorts.   

Offline gallopers

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« 2009-Jan-13, 08:09 AM Reply #9 »
surely they are entitled to bid and buy back thier own horse.

maybee they should announce if an owner is bidding, but that could get messy as the owners sister or friend could then bid and buy.

whats the answer if an owner wants to run in the MM and the horse has to go through the sale.

?

Offline BurntToast

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« 2009-Jan-13, 08:42 AM Reply #10 »
The simple answer gallopers is that they don't get to go through the sales and run in the MM if the owner/breeder wants to keep them.

It has been outlawed in most states in real estate - all bidders must now register before the auction starts etc., but obviously horse auctions don't fit under that legislation.

I guess everyone can bypass the sales and just let all the breeders piss in their pockets and buy their own horses back, that'll be good for the industry ;)

Offline gallopers

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« 2009-Jan-13, 09:36 AM Reply #11 »
BT,
     i dont think its that simple mate. If you breed a horse and decide you would like to run it through the MM and are prepared to buy it back to qualify for thier races, surely thats ok.
Its up to the individual to set a price they think a horse is worth and bid to that price.
I doubt there would be a person buying at the MM that didnt know breeders sometimes buy back thier own horses to qualify for the MM races.
Its not like some secret.  :noteworthy:

Offline Jeunes

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« 2009-Jan-13, 09:46 AM Reply #12 »
The problem is not the breeders buying their own horses. If I I was bidding on a horse and I was competing against the breeder /  owner who was artificially putting up the price with their bidding, then if they drop out, I would be paying an inflated price. Thus the question is it fraud as the auctioneers usually don't care if they are getting a percentage of the sale price.

The other question is that the sale convenors usually only choose a certain number of yearlings to be sold at the sales depending on the sale. Thus some genuine breeders / vendors are then being deprived of selling their horses due to this practice of buybacks.

Call me naive as I don't know too much regarding the breeding industry but how the vendors explain buybacks on the profit / loss side unless it is a tax rort as well with creative accounting.  
 

 :wub:

Offline gallopers

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« 2009-Jan-13, 09:53 AM Reply #13 »
The problem is not the breeders buying their own horses. If I I was bidding on a horse and I was competing against the breeder /  owner who was artificially putting up the price with their bidding, then if they drop out, I would be paying an inflated price. Thus the question is it fraud as the auctioneers usually don't care if they are getting a percentage of the sale price.

The other question is that the sale convenors usually only choose a certain number of yearlings to be sold at the sales depending on the sale. Thus some genuine breeders / vendors are then being deprived of selling their horses due to this practice of buybacks.

Call me naive as I don't know too much regarding the breeding industry but how the vendors explain buybacks on the profit / loss side unless it is a tax rort as well with creative accounting.  
 

 :wub:
if you do your homework and value a horse at $100,000 just bid to that amount regardless of the breeder or another vendor bidding.


Offline MagiC~*

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« 2009-Jan-13, 10:07 AM Reply #14 »
I think a solution maybe for breeders wanting to get their horses qualified for the MM would be to pay a fee and not send their horses throught the sale at all.


Offline gallopers

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« 2009-Jan-13, 10:16 AM Reply #15 »
MC,
          some will sell if the horse reaches a certain amount.
eg, take it to the sales and buy it back if it doesnt reach $100,000 or let it go if it cracks it.

Offline MagiC~*

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« 2009-Jan-13, 10:26 AM Reply #16 »
In that case if it doesn't make the reserve, then pay the FEE to get it into the millions, but don't inflate the bidding by bidding on your own horse  :what:

If you did that when auctioning your own house you would be sent to jail  ;)

Offline BurntToast

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« 2009-Jan-13, 10:33 AM Reply #17 »
If you could pay a nomination fee to get in the race and bypass the sales, it would just be like any other race... I guess the question is could the MM sales survive without the buy back, i.e. if you could just pay a nomination fee instead of actually go through the sales, would the sales suffer significantly?

There are a few different issues here though - the big end of town, these $2m buy backs etc. aren't being bought back so they are elligible to race in the MM, they are being bought back to prop up the value of the sire... the stud gets lots of publicity, ensures their stallions average price is nice and high (which I'm sure is used in future advertising too), and they keep the horse (where they can then syndicate it out at that inflated price if it looks like it's no good)... all for the price of the sales commission... which they probably get a kick back on too, because the MM sales are also getting lots of nice publicity, higher averages and clearance rates etc. too.

It's only the high publicity sales where it's a problem... I wouldn't imagine you'd see breeders buying their broodmares back in the broodmare sale or anything.

Offline Jeunes

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« 2009-Jan-13, 10:38 AM Reply #18 »
if you do your homework and value a horse at $100,000 just bid to that amount regardless of the breeder or another vendor bidding.
[/quote]

Gallopers,

My point is let's say you have a limit of 100k so you get the horse at 100k because others drop out. Then you find out you could have got it at 60k if there were no phantom bids from the breeder, would you be happy at paying another 40k. That is why there are reserves on horses which is supposed to help the vendor. All the buybacks do is artificially boost the prices and it helps the vendors in the long run especially when charging stud fees.

No one has a issue with buybacks if it was advertised but the problem is when you through agents such as trainers. When you read the tele etc in Sydney and see how Gai has bought a $2m yearling, no one could see that she was buying on the behalf of the vendor. Now you are saying many people should be aware of this but most people are not especially the new players.

Offline BillandTony

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« 2009-Jan-13, 11:15 AM Reply #19 »
Think you are spot on with most of what you say here BT. 8-)

Offline Authorized

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« 2009-Jan-13, 10:57 PM Reply #20 »
How could you police a regulation on horse auctions ?

Its all very well to have restrictions on a house auction with people registering before hand, but most studs or breeders would register themsleves to buy at a horse auction where hundreds of horses are going through a ring with the possible intention to buy some other horseo ther than their own.

How would you know who is bidding on a horse and how could you stop them ?

Offline Hillbilly

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« 2009-Jan-15, 09:10 PM Reply #21 »
You've obviously never been to a Japanese wholesale car auction Matt. If every registered bidder has a hand held terminal they can easily track what's going on. From there it's a matter of having the proper regulations in place.

Offline el zoro

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« 2009-Jan-16, 09:58 AM Reply #22 »
Spot on with the auctioneers. They don't need them at all. The commission alleged paid to them would be a ridiculous figure(multiple millions$ for a weeks work, wish I could get that for yibberer, yibberer. :p).
Who wants to hear Elmer Fudd wannabes anyway? :wub:

It's all adds to smoke & mirrors to rip the legitimate breeders. Surely in this day & age, bidders would be able to have a hand held device to bid with. The problem with this sort of system it would make the sale transparent/real.
Auctioneers serve no purpose than to keep a level of smoke,mirrors,rorting.  emthdown

Offline vadim

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« 2009-Jan-16, 10:52 AM Reply #23 »
This is an interesting debate and will probably open the eyes of the ill-informed and/or those just entering the game whom might think that all is rosie in the sales ring and indeed the breeding game.

I have personally suffered through the inappropriate actions of stud owners, prominent buyers (trainers, syndicators) whom have no conscience when it comes to the almighty dollar.

When you have a nice horse for sale ie. x-rays acceptable, good family and type then you know you are going to be offered all sorts of incentives to sell.

For example. leading syndicator wants 5% of the sale price through the ring from the vendor and then on sells for a profit (I not against syndicates making honest and declared profits but is the 5% ever declared).

The "prominent buyer" through the stud owner offers you a price prior to the sale which you seriously have to consider when your reserve might be something less. It must go through the sale to qualify for the series of races so you might end up paying a inflated commission to the sales company if in fact it goes for the agreed sale price.

You decline the offer on this basis as the stud owner has assured you there have been numerous inspections and the yearling will get the price anyway.

The stud owner advises you to drop the reserve and ensure that the sale is definitely effected and guess what it sells for exactly the reserve and a lot less than offered in the first place.

And it doesn't stop there - the new owners include the stud owner amongst others.

Fun and games and it's no wonder that some keen racing personnel fell totall disillusioned with the breeding game.


 >:(


Offline dubbledee

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« 2009-Jan-16, 02:34 PM Reply #24 »
Is it right that horses passed in are not eligible to run in the sales-linked events?


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