Is Tinkler about to fall from the horse?

Is the horse racing empire of Nathan Tinkler crashing around him?

Reports yesterday suggested his employees haven't been paid superannuation benefits since November last year and this follows assertions the business is leaking $500,000 a week.

Speculation is also strong Tinkler recently tried to offload the business to a Qatari sheikh for $200 million, well short of the "around $300 million” he has ploughed into it over the past five years.

Just like the seemingly rushed attempt to sell, the Tinkler horse tale is one of speed over substance – ironic given most of his horses lack the former.

The first line on the Tinkler Group website says it all, "Established in 2007 by Nathan Tinkler, Patinack Farm is the largest Australian-owned thoroughbred racing and breeding operation with more than 1,200 horses, nine stallions and a brood mare band of the highest quality in the country” [emphasis added].

Claiming a market leading position in some Australian industries mightn't be that difficult. But horse racing is not one of them.

The sport of kings is dominated by the world's wealthy elite, from a Dubai Sheikh to an Irish legend and even the Queen of England. But these players took time, great expense and hard work to get their operations where they are today. Nathan Tinkler has tried to do it all in five years. And while there have been pockets of success, it is largely a flawed business.

Since its formation, Patinack has seen just five of its horses win at the highest level (group 1). To put that in context, Black Caviar won that many in one glorious autumn. Even a young two-year-old colt named Pierro won three in the month of April this year. That's not to say winning group ones is an easy task, far from it. But to spend upwards of $300 million, have 1,200 horses and produce five group 1 winners is a massive underachievement, particularly as those group ones are far from the most coveted. The five are the Railway Stakes, the Chipping Norton, the Champagne Stakes, the TJ Smith Classic and the Tattersall's Tiara. I hazard a guess that most people in Australia, outside avid racing followers, would never even have heard of these races (although the Railway is well known in Perth).

Warning signs have been popping up everywhere in recent years – from his stop-start entry into the Newcastle Knights, his clumsy exit from and re-entry to the A-League with the Newcastle Jets to his regular troubles with key players in his racing operation. Indeed, the amount of churn in his racing business, particularly in the first couple of years, has been phenomenal.

The list of trainers he has split with – some amicably, most not – includes Anthony Cummings, Tony Noonan, Mick Price, Patrick Payne, Gabrielle Englebrecht, Jason Coyle and NZ-based Roger James. Add to this the departures of inaugural managing director Roger Langley and stud manager Andrew Bowcock in 2008, and racing manager Mark Webbey in 2009 and you realise that stability hasn't really been at the forefront of Tinkler's strategy. It's little wonder his racing enterprise has received the moniker of Pat'n'sack.

And he has shown a propensity to treat people with short shrift, aside from millionaire pals like Gerry Harvey and John Singleton.

Anthony Cummings took Tinkler to court for unpaid training fees, while James, Coyle and Englebrecht also battled the mining magnate for months to receive money owed. Then there were the owners of a horse named Sidereus – which was purchased by Patinack Farm – who fought tooth and nail to receive $1.1 million payable upon the conclusion of the horse's racing career.

Outside the racing sphere there has been the extensions to financial deadlines in the case of the Newcastle Knights, the sensational sacking of the Newcastle Jets' two most high profile names on the eve of last season, the current court case with a disgruntled former CEO of one of his coal companies and the missing of an extended deadline for a $28.4 million payment to Blackwood Corporation.

While he's trying to sort out a $5 billion coal merger, the small players around him (read: Blackwood) are scrambling and, according to Fairfax, dozens of small companies up and down the east coast are chasing him for money owed. It's not a good look.

Consistent failure to pay on time is a management issue or symbolic of a cashflow problem. But with much of his wealth on paper and reports Gerry Harvey has loaned him $20 million ahead of the sale of 350 of his horses, liquidity questions are being asked. More to the point, keep this nasty habit up of not paying money owed anywhere near the agreed timeframe and surely the numbers lining up to do business with the rich lister will dissipate.

Contrast the Tinkler story with the most well-known of the Australian breeding operations – Woodlands Stud, created by the Ingham brothers (Bob and Jack). By the time of its sale in 2008 to Sheikh Mohammed bin Rashid Al Maktoum for $460 million it was the largest Australian-owned thoroughbred operation.

The Inghams got into the horse racing game back in the 60s, expanded strongly through the 80s and on the back of champions like Octagonal and Lonhro, continued to develop into one of the world's largest breeding and horse racing operations. By the time of the sale they had 1000 horses, 200 less than Tinkler today. In essence Tinkler has bought so heavily he has developed an operation with 20 per cent more horse flesh than the Inghams at the time of their sale, when it had been developing for the better of 50 years. Now he reportedly can't even sell the business for $200 million, which compares unfavourably to the $460 million the Inghams were able to attract.

Tinkler is quoted as saying back in 2008 that his team, "were trying to create another Woodlands here". The worrying thing however was that he acknowledged the problem at the time, saying he was trying to do in three years what they did in decades. Yet, he seemingly didn't see it as a major issue.

There is one horse in Tinkler's Patinack colours that could single-handedly turn the operation around: the supremely talented and aptly-named All Too Hard, a half brother to Black Caviar. If it fails to turn its talent into results in its crucial three-year-old year – it finished third on the weekend in a race a superstar really should have won – Tinkler's foray into racing might be over reasonably quickly.

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