Horse Connection

Andrea Reynes

?Why invest in a showjumper?

“It’s a passion,” says George D’Ambrosio, who sells international-level jumpers with his wife, Olympic equestrian, Nona Garson.

“Like the Hope Diamond, a horse is unique,” says John Madden, investment agent and husband of jumping success Beezie Madden. “If I have a red Ferrari, it’s not unique. However, with a horse, unlike the diamond, which can eventually be just a pile of powder – the excitement and the thrill are phenomenal. For the client, it’s about being involved in a moment of time.”

A showjumper syndicate investment is a group of usually six to ten people who purchase shares in the potential of a high-stakes jumper. They each earn a percentage when the horse wins a class. Through syndication, a valuable horse becomes more affordable and the amount of financial risk is reduced for each member.

Madden says that often the best chance for making money is finding and developing a young prospect. It’s an investment in potential. More rarely, there’s an undervalued ‘diamond in the rough’ prospect that could be brought along with the right training. The horse also has to be able to cope with the rigors of being a top-level showjumper, with different diets and a lot of traveling. “It’s an investment,” he says, “based on hope.”

Investing in a showjumper is for people who love animals and a challenge, continues Madden. “They are people who want to be part of a successful endeavor. It’s for the super high risk taker.”

A showjumper at the highest levels navigates a timed intensive course of jumps up to 1.60 meters and a width of 1.20. He needs the flexibility of a Prix St. George dressage horse for such challenges as coming out of tight turns and regaining momentum over wide oxers, and moving from a short to extended canter through a series of one or no stride jumps. Such athletic, accordion-like agility and speed can fetch a price of up to $6 million or more at the highest competition.

There is market frenzy to the jumper horse sales business. Madden tells of a horse he bought that went from a price of $15,000 to $150,000 in one day at a horse show.

He had asked a dealer about a horse priced at $15K. A half hour later he came back and was told the horse was sold. He went to the new buyer, and found the horse had been resold for $50,000. Madden found the horse again, brought him to his stable for $150,000. In two years, the horse, which had advanced through training and successful showing, sold for $1.5 million.

Grand prix rider and equine sales agent Darren Graziano, owner of D.G. Venture Farm in Holmes, N.Y., says he found trained older horses in Europe (where horses and training are less expensive) at $50,000, and in a couple of months, the owner had seen a 10 to 15 percent return. It is becoming difficult to find a high quality bargain European jumper because of the decline of the dollar, he says, and now purchases more horses in the United States.

Richard Spooner, Grand Prix “master of faster,” as he’s been dubbed, says he buys a horse with the intention of it becoming a top level international horse, such as his famous grey, Robinson.

Spooner says people need to have fun with it, and not be too preoccupied about losing money. But investors putting a fortune into the horse need to be aware of all the dimensions that purchase involves.

Spooner explains that a syndicate forms when one or more people set up an LLC (limited liability corporation) to purchase shares of a horse, through a lawyer and investment firm. While an LLC business is designed to show a profit, the loss is tax deductible, an advantage over an unincorporated owner. If a horse gets loose and injures someone, members of the LLC are protected. Damages resulting from the horse are recovered through the business, not the owner’s individual assets.

The investment client begins by discussing the future business with the agent and investment firm: What is the group looking for? What are the realistic expenses?

Some investors purchase small percentages in a large number of syndicates, reducing the cost of liability and increasing market return.

Spooner estimates an average of $60,000 annually for basic operating expenses such as board, training, shoeing and vet care. Showing and traveling can run an additional $60,000 to $100,000 a year.

The agent should go over the client’s budget to ensure the purchase is a comfortable allocation of money for the owner, and establish that the client understands the risk before starting. It’s important to know that horses can go lame, get sick, or die.

By limiting the number of clients to no more than 15, conflict potential is reduced and logistics like calling investors after every win stay manageable.

Ron Krise, a jumper investor for thirty years, says the choice of an honest agent with sound horse knowledge is important for the relationship’s integrity. The agent sells the horse to the investor and makes decisions about purchasing, training, shows, management, and the team that will care for the horse. Krise, who was President Clinton’s former financial advisor and an Olympic board member from 1990-97, advises the investor to beware of dealings where a horse is priced for more than its value. Such practices, he says, may happen with a trainer looking to pocket increased profit through inflated commissions.

For dedicated players in the business, Krise says, “If it’s about making money, an investor is better off in the stock market.” The experience, for him, is founded on a “passion for horses.” “It’s a lot of fun,” he says.

Krise went on to say, “I have great horses. Horses are athletes, they have good times and they have bad times, but we’re (he and wife Alyce) in it for the long haul.”

Showjumping is affected by world economics, but isn’t quite as subject to the same degree of economic fluctuation as other investments like real estate, according to D’Ambrosio, who also manages a well known annual warmblood auction with Garson. He forecasts that the growth of showjumping won’t change. “It’s the Sport of Kings.”

When showjumping expenses can run $6,000 to $8,000 a month, fewer people may participate in the sport. But a sufficient number of people involved in showjumping generally have enough wealth to ensure the evolution of the sport’s dynamic flavor. “The people with big money will always have big money,” D’Ambrosio says.

A colorful lifestyle awaits the investor who gets involved with the jumper investment. Some buyers enjoy going to a European auction with the trainer to find a horse. And some investors choose to follow the horse’s progress by watching training sessions or on the show circuit. But investors can participate as little or as much as they like.

Those who are active in the horse’s progress at shows enter a high-end social atmosphere. Clientele demographics tend to be affluent and well educated. There’s an opportunity to associate with people having similar likes and appreciation.

Madden’s description of an “elegant, gracious and regal” environment for the active ringside investor includes gourmet cuisine, boutiques for custom boots and apparel, private jets, equine art, a ladies hat finery contest, and many things horse. Madden says the audience is also quieter than some broad-based sports like the NFL.

Spooner elaborates on investing in the horse passion aspect: “Horses are an investment in your happiness.” Buyers have shown they derive enjoyment from the attachment to the horse beyond financial gain. The “Half Moon Bay” LLC group had an opportunity to sell the famous Grand Prix jumper Robinson. They refused, deciding that the pleasure of having such a fine horse was worth it all.

Hal and Kathy Kaimine of Tewksbury, NJ, were offered $2.5 million for their jumper Rythmical. They discussed the offer with Nona Garson, posing the question: “But how will we replace him?” They decided to keep him.

D’Ambrosio speaks of the Kaimine’s as “among the best backers in the industry. They aren’t in it to make money. The Kaimine’s are supportive and behind the trainer. Investing in a showjumper can be a multi-dimensional experience, and they understand it from a financial and human experience. They travel all over the world to watch their horses progress in the show ring and they truly love their horses.”