For many of the wealthy thoroughbred owners and racing enthusiasts, the Cup Carnival is a great chance to socialise, have a flutter and, in some cases, do a bit of business.
But for some racegoers, Cup time is much more important than that. Rich List members including Nathan Tinkler, Gerry Harvey, Lloyd Williams and Arab billionaire Sheikh Mohammed bin Rashid Al Maktoum have ploughed hundreds of millions of dollars into their racing empires and will be keen to see a return.
But when the races are run and won, regardless of the amount of prize-money these entrepreneurs win over the next week, they're still likely to be asking the question horse owners have asked themselves for centuries – can you actually make money from horse racing?
In recent years, the Australian racing industry has watched with interest the arrival of two wealthy men, intent on proving that racing is more than a four-legged lottery: young electrician-turned-mining-baron Nathan Tinkler and Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum.
Since late 2007, Tinkler, whose fortune is put at around $350 million, has spent around $200 million on thoroughbreds and infrastructure such as breeding and training properties, with the flagship being Patinack Farm in the Hunter Valley.
The Sheik, who is worth about $13 billion, according to Forbes, and owns the Darley global thoroughbred breeding empire, has raced horses in Australia for decades. But in 2008 he dramatically increased his local interests by buying Woodlands Stud from the Ingham family for a whopping $500 million. The purchase gave them racing and training facilities around the country.
The two men's strategies are different and yet similar. While Tinkler is building trying to build and empire from the ground up, the Sheik has bought an established business with a long history of success. In the end though, the goals are the same: buy and breed horses, race them, hope that the best male horses turn into great stallions and repeat the process. There are two primary forms of income: prize money and stallion fees, paid by breeders who want their mares to be "covered" by the best stallions.
So has the strategy worked? Not yet.
According to reports of Darley’s most recent financial accounts, the Australian operation lost almost $250 million in calendar 2008 and entities associated with the Sheik have loaned Darley more than $800 million. However, $193 million of the $246 million loss was associated with writedowns in the value of bloodstock, so things are perhaps not as bad as they appear. The operating loss on racing and breeding was put at about $14 million.
Tinkler has also had his troubles. While he has had some early success on the racetrack, including a number of group one victories during the autumn, Patinak Farm has had a number of issues off the track. In October, Tinkler parted ways with his two head trainers and his racing manager, adding another few names to a growing list of former staff. On the surface, at least, it appears Tinkler is hungry for results.
Of course, it is unfair to judge the success of these wealthy investors over such a short time frame – it took the Ingham family 60 years of hard work and investment to build Woodlands Stud into a $500 million business. Still, the stories of Sheik Mohammed and Nathan Tinkler prove that in racing, at least, money cannot buy instant success.
All that said, if you’re looking for a tip in the Melbourne Cup, it might pay to consult my quick wealthy owners form guide:
Owner: Lloyd Williams
Racing is Lloyd Williams’ great passion these days and it’s one he can afford to indulge with a fortune of $900 million. He could have up to four horses running in the big race, but his strongest chance is 2007 winner Efficient, who will start as one of the hot favourites. Great horse and a canny owner, who has won the race on three occasions. Stick with him.
Owner: Sheikh Mohammed bin Rashid Al Maktoum
The Sheik also owns the Godolphin racing stables, which has been targeting the Melbourne Cup for a few years. Their best chance looks to be Kirklees, who was a favourite in the Caulfield Cup but ran a disappointing race. I’m predicting another tough year for the Sheik.
Owner: Dato Tan Nim Chan
Malaysian businessman Dato Tan Nim Chan has been a long-time supporter of legendary trainer Bart Cummings, and has won the Cup four times, with Think Big (1974 and 1975), Saintly (in 1996) and Viewed (last year). Viewed won the Caulfield Cup in brilliant fashion and will be very hard to beat with Dato and Bart’s experience.
Owner: Ramzan Kadyrov
We’re not exactly sure about the size of the fortune of Ramzan Kadyrov, the President of Chechnya and a former Chechen rebel, but he can’t be short of a penny if he can afford to buy top horseflesh. Mourilyan will be having his first start in Australia in the Cup, so bet with caution.
So, who’s going to win? The Melbourne Cup is always a tough betting race, but it’s very hard to go past Williams’ horse, Efficient, who looks likely to fight the race out with last year’s winner, Viewed. In fact, it could be the perfect smart money quinella. Good luck!