- 13 hours ago
The TDN is proud to announce the launch of its latest podcast, TDN Business Hour. Hosted by Najja Thompson, Executive Director of the New York Thoroughbred Breeders, the show serves as a resource for industry stakeholders by examining the fiscal and operational complexities of the racing world. This month's episode explores the international macroeconomic factors currently shaping the market, from the ripple effects of global unrest and inflation to how international trade policies like tariffs and bonus depreciation, are impacting stakeholders.
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00:00Global markets are shifting, trade policy is tightening, and geopolitical tensions are no longer distant headlines.
00:07They're beginning to impact the business of thoroughbred racing.
00:10Welcome to the TDN Business Hour. I'm Najah Thompson.
00:14This podcast is dedicated to the business of thoroughbred racing, covering the financial, operational, and policy issues that shape our
00:22industry.
00:23In my day-to-day role, I serve as Executive Director of New York Thoroughbred Breeders, where I work closely
00:29with stakeholders across the sport on the issues that impact how our industry operates and grows.
00:34In collaboration with Thoroughbred Daily News, the TDN Business Hour delivers monthly conversations that take a deeper look at the
00:42forces driving decision-making across the sport,
00:45with insight for owners, breeders, trainers, and stakeholders invested in this future.
00:51This month, we'll examine how broader geopolitical tensions, including the war in Iran and global tariffs, are impacting the business
00:59of horse racing across the industry.
01:02Joining me today are Mark Taylor, Marshall Graham, Anthony Trimarchi, and Case Clay.
01:08Welcome to the first episode.
01:15Mark Taylor is President and CEO of TaylorMade Farm,
01:18a cornerstone of the Thoroughbred industry now operating in their 50th year.
01:22A perennial leading consigner on the global stage, TaylorMade is at the forefront of horse racing across sales, stallions, boarding,
01:29and breeding and racing partnerships.
01:32TaylorMade continues to play a defining role in the commercial Thoroughbred marketplace.
01:36Mark, thank you for joining us.
01:38Thanks for having me on. I'm looking forward to kicking off the TDN Business Hour.
01:43Yes, we appreciate you being here.
01:45And just to begin, what's your take on the current global conflicts across the world?
01:50And is there any upheaval that you see that is currently affecting the industry?
01:55I made some notes when this interview was first discussed,
02:02and it seems like I've changed my notes every day since then.
02:05So it's a very fluid situation.
02:08I mean, it's like almost hour by hour, day by day.
02:14So, you know, there's a lot of variables, and I'm not an economist, and I'm not, you know,
02:19there's probably people that study politics and all these things a lot more in depth than I do.
02:24But if when I think about what's going on, you know, the Middle East is obviously a real, I don't
02:34know,
02:34strong point for the horse business as far as investment.
02:38Qatar, Saudi, obviously the Emirates, Libya, there's tons of Middle Eastern investment going on.
02:48And that, you know, part of the world is definitely in disarray right now.
02:52So how that plays out, how that impacts the sales, you know, thankfully for us,
03:00you know, we've got digital sales every month, but we don't, the yearling market doesn't kick off for a while.
03:07So maybe we've got some runway to achieve some stability, but that remains to be seen.
03:13Then also you've got just the impact on the overall economy.
03:18I mean, the stock market's taking a hit, oil prices are going up.
03:23You know, interest rates are more, you know, kind of murky.
03:28What's going to happen with those?
03:29So all these things create uncertainty, which is a little unnerving.
03:37Certainly.
03:37Does it, for you, harken back to around 2008, 2009 from what we're seeing so far?
03:42And how did you navigate the space at that time?
03:46Well, you know, that seems like a lifetime ago now.
03:49There's been so many things that have happened since then.
03:53But with that particular, you know, economic crash and the Great Recession,
04:00what I recall about it is being really taken off guard.
04:04Like, you know, I didn't realize that what was the underpinnings of the economy were really problematic
04:11and that we were on the verge of this thing.
04:13So I remember ticking along.
04:15We had a great July sale.
04:17We had a great Saratoga.
04:20And then we got to, like, book one of September.
04:22And I think even the first day of September went really well.
04:26And then the big shock happened and the rest of the sale was kind of thrown into a downward spiral.
04:34So with this particular situation, I think we've got more advanced notice of kind of,
04:40hey, there's some problems brewing.
04:42It kind of reminds me of COVID a little bit.
04:45I hope it doesn't go like COVID did.
04:48But in the beginning, it was like, hey, did anybody hear about this virus that's going on?
04:53And it was kind of like not a big deal.
04:56And then it was like, oh, this will be over in three weeks.
04:59And then, you know, eventually it turned into this, you know, several-year whole global, you know,
05:08trial that we all had to go through.
05:10So, you know, I'm really hoping that it doesn't turn into that.
05:14But you just never know.
05:18Have you gotten any insider feedback from international buyers at this point or juncture in the year?
05:23I know it's kind of early, but.
05:26Not exactly.
05:27You know, this is such a new situation that I haven't had the opportunity to talk to a lot of
05:33people.
05:34But I will say this.
05:36I've had conversations with Philip Shelton, who runs our medallion racing program.
05:43And what he's seeing is we normally get active trying to buy nice fillies in Europe coming up in the
05:51next couple months.
05:51You know, we might shop the Breeze Up sales.
05:54We might.
05:55And then we're always on the lookout for nice maiden runners.
05:59They don't have to win.
06:00But that's how we bought Port of Fortuna was, you know, we're looking for horses that show some ability.
06:05And we pulled them into our medallion partnerships.
06:09You know, domestically, the people that are investing with us, they're still on board.
06:14We haven't gotten any feedback where anybody is pushing the pause button like, hey, count me out this year.
06:20Everybody still sees them on board.
06:22And even to an extent, we've had a few conversations where people are saying, you know, maybe we can buy
06:29nice horses more affordably.
06:32Because one of our biggest competitors in trying to buy those type of horses are Middle Eastern interests.
06:40So, you know, I think that some of our investors and our partners are kind of looking at it like,
06:46you know, we want nice horses.
06:47We're not backing off.
06:49Maybe we could find more value this year.
06:52So you never know.
06:52It can cut both ways in the business we're in, in the racing syndication business.
07:01Of course.
07:02And with the success of Medallion Racing, which you've mentioned with Philip Shelton, is your strategy, I guess, to wait
07:09and see?
07:10Or have you kept more fillies in Europe before traveling to America?
07:14And of course, with the rising cost of potentially shipping and moving horses across from east to west, are you
07:21navigating that space or kind of a wait and hold approach right now?
07:26So, I'll give you, I won't, you know, tell you like tons of details because it would take too long.
07:31But in general, when we buy, we have a yearling syndicate that we've been doing every year where we go
07:39buy yearlings at either Goffs or Tattersalls.
07:43So in that particular type of syndicate, we've got two-year-olds right now that were bought last year.
07:50What we normally do with those horses is we like starting them in Europe.
07:54We think that there's, it's just a great place to start horses.
07:58It's kinder on them.
07:59It's easier on them.
08:00These are grass horses.
08:01So they get to train on grass and get their early development on grass, which we think there's a lot
08:07of benefits to that.
08:08And then they're broken into a couple different categories.
08:13If they're serious superstars like a Port of Fortuna, then they're going to stay in Europe because we think if
08:20they can win group races there, it bolsters their residual value more than winning grass races in America.
08:28But if they're nice horses, but not elite superstars, then we typically bring those to America and we try to
08:37take advantage of the purse money here.
08:39And that was a category that Lush Lips was in.
08:44And fortunately for us, she did turn into a superstar.
08:47But Donika O'Brien helped us make that decision.
08:50We got her in America.
08:51He thought she would thrive here.
08:52And then Brendan Walsh did the rest.
08:54So my point to all that is we're going to execute that plan even if travel costs go up or
09:02whatever may happen on the horizon.
09:05We're still going to execute that part of our plan.
09:07And the tariffs are another issue that's in flux.
09:12And, you know, the tariffs are in play.
09:15We may have to pay those, but it's still worthwhile because if you can come over here and run at
09:19Kentucky Downs,
09:20you can run in graded stakes races that have half million dollar purses, the tariff is just a rounding error
09:27as opposed to staying in Europe and running for very small purses.
09:33That's a strong point that you make, that the quality horses will perform and be well worth any additional tariff
09:40that you may incur with bringing them across.
09:43Switching to a sales perspective, are you still seeing European peen hookers that buy in September and October and bring
09:50back to Europe going from east to west?
09:54Last year, you know, we don't know what this year is going to hold, but last year, I really am
10:01seeing more and more of an influx of European peen hookers coming over.
10:06I mean, just in droves, really.
10:08And they're all working the barns.
10:11They're curious about our stallions.
10:14They're trying to learn.
10:15There's some physical yearlings that they see.
10:18Like, I really like this horse, but tell me more about this horse, this stallion as a racehorse.
10:23Tell me more about they're trying to find something to give them confidence to buy some of these stallions that
10:30are totally unproven on grass and European racing, which I think is a beautiful thing.
10:37You know, if you go back to when Robert Sangster and John Magner and, you know, they had Northern Dancer,
10:44which emerged.
10:45But you never know when an American stallion is going to emerge and hit their radar screen.
10:50Like, not this time, kind of, he got out.
10:54They got outpriced by him.
10:56They couldn't afford most of the not this times.
10:58But the year, like, if you go back two or three years ago, they identified not this times just physically.
11:03Even before he had really exploded, those pinhookers thought that he's going to work.
11:08And he came up with a Royal Ascot winner and shareholder over there.
11:13So he's one horse, but there's a lot of these younger sires, excuse me, that the pinhookers are willing to
11:19take a chance on.
11:22So I see that continuing to be a strength, and they're going to be strong this year again.
11:27I also wanted to ask you, Mark, looking ahead, have you got any advice that you'd like to share to
11:33other industry participants and owners looking through the rest of the year as we navigate the current circumstances?
11:41I think you just have to be very flexible, and you have to realize this is a fluid situation.
11:49And you need to lean on your advisors who are keeping an eye on the market.
11:53I think the biggest thing for American buyers is, do they have the confidence to plow money in, given the
12:01uncertainty that's out there?
12:03Now, you know, luckily, we have bonus depreciation still in place.
12:08There's, you know, any time that the economy is being impacted, there's going to be winners and losers.
12:15So, you know, there's some people whose businesses are going to take a hit if the economy really gets impacted,
12:23but there's going to be certain sectors that are going to be winners, right?
12:27And, you know, we don't know about oil prices, but there's a lot of people in the oil and gas
12:32business that buy yearlings, that buy two-year-olds, that invest in horses.
12:36You know, there's a scenario out there where they could be having, you know, a windfall, not that that's a
12:43good thing or they're cheering from it, but because of what's going on with oil prices, those kind of things.
12:49So I think it depends on your business.
12:50It depends on your cash flow, and it depends on your confidence level, because whenever there's a weakness in the
12:57market, it does create opportunities for other people to step in.
13:02And if you take the very top end of our market, that's where the strength has been historically.
13:09You know, if you're going to see the market go south, usually quality holds its value better than anything else.
13:17And a lot of those people that play in that space are billionaires, right?
13:22I mean, so they're a little recession-proof.
13:25They're invincible to some of these other fluctuations that we're seeing.
13:29But for everybody else that's below that level, I think you've got to keep an eye on it.
13:34There could be opportunity to get better horses at more value.
13:38There could be a situation where, you know, let's just say that this war goes on and is still dragging
13:47into the summer.
13:48You know, it's going to impact, you know, a sale like September that has a lot of international participation.
13:54It may not impact a place like Saratoga quite as much.
13:58That's much more domestic.
14:00Now, I'm not saying they don't have international money being spent, but it is more the backbone of it is
14:06domestic spending.
14:07So I think that every participant needs to be watching this closely, lean on their advisors, and try to have
14:14contacts with people that have more intel than they do.
14:18Because in our organization, we've got a big group of salespeople.
14:22You know, individually, they all have contacts that are working in the Middle East that are like Philip is in
14:28Ireland today.
14:28So he sent me a picture from him out, you know, watching horses train in Ireland this morning.
14:35So he's getting the feel of what are those people thinking.
14:39I'm really hoping the European pin hookers can have a good year, that they don't get really negatively impacted.
14:45Because if they have a bad year, they're going to be coming in with less bullets to fire over in
14:51America.
14:53But I do think there's been fewer horses imported in the last, say, 18 months because of the tariffs.
15:03People going and buying fillies that just broke their maiden or won a nice race in Europe and coming over.
15:10Those transactions are done privately.
15:12So they're not readily available like, oh, Keelan September book one was down 10%.
15:18You can't judge these private transactions.
15:20But my gut tells me in talking to a lot of other agents and then watching the entry box of
15:26how many Europeans are showing up.
15:28You've had a slowing of that.
15:31But I think that's temporary.
15:32I think there's so much money being given away in America for grass racing.
15:38You're going to see people continually going over there and trying to find those top class horses to bring over
15:47and run for big purses in America.
15:50Definitely.
15:50We remain very bullish on the industry and appreciate your insights, Mark.
15:54And I know it's the 50th year operating for TaylorMade Farm.
15:57Will there be a party later this year?
15:59Well, you know, at TaylorMade, we don't throw ourselves a lot of parties.
16:05It's usually like, you know, we're doing a lot of trying to figure out how we can get better.
16:11That comes from my brother, Duncan, is, you know, don't maybe we need to get better at that, celebrating a
16:18little bit more.
16:19But we're always just trying to improve and, you know, figure out this is a tough business for breeders.
16:25It's a tough business for racehorse owners.
16:28And, you know, we always have to be very empathetic to what they're going through.
16:35Right.
16:35So, you know, even though the sales have been incredible for us the last couple of years, you know, last
16:41year's yearly market was just fantastic.
16:43We also realize that some of our customers, you know, they might have six or seven mayors.
16:48Maybe a couple of them didn't pass veterinary exams.
16:51A couple of them weren't great individuals.
16:53And they're not doing as great as everybody else.
16:58So we're looking for ways to be creative, help our customers more and do our part to keep the full
17:06crop up, because we need these breeders to find success, have great experiences.
17:12You know, a lot of times people are talking about in our industry, oh, we've got to make the race
17:16day experience better, which I 100 percent agree with that.
17:20But we also have to make breeding horses fun.
17:23Right.
17:24We've got to make it a great experience like you're you're creating this very special animal that can go on
17:30and do great things.
17:31What are all the ways exposing them to our farms, getting them around central Kentucky?
17:35I mean, it really is it's a beautiful thing to breed to breed a thoroughbred and to be listed as
17:41the breeder and to see if you can accomplish great things.
17:44So those are that's what we're focused on right now is 50th year.
17:49We think there's a new horizon out there of a lot of new potential customers in the breeding and racing
17:55sector of the business.
17:56So we're just we're excited to celebrate our brand, celebrate our team, what we've been able to accomplish, but then
18:02double down and try to get better for the next 50 years.
18:07Definitely. Thank you, Mark. And I really appreciate your time joining us at the TDN Business Hour.
18:12I hope you guys are doing this. I think it's a great platform and I wish you best of luck.
18:17Marshall Graham is an economics professor, accomplished horse player and co-founder of 10 Strike Racing,
18:22bringing a unique combination of academic expertise and hands on industry experience.
18:29Marshall, thank you for joining us today.
18:31Thanks for having me on.
18:33I wanted to start with some of your perspective as an economist, as a professor and thinking about the downstream
18:40effects of the global instability and trade policy
18:43and how that might affect the industry right now and in the future.
18:48OK, great. Yeah, I mean, there's a lot going on in the world.
18:51You know, it's I don't I would say there are probably more concerns directly in the thoroughbred industry than indirectly
18:59with the global instability,
19:01the tariffs, the higher prices of oil.
19:03But there are certainly some impacts as well that are worth at least talking about.
19:08Has that affected 10 Strike Racing or how you're operating on the breeding or ownership side of the game?
19:14Not really. I mean, you know, again, we've seen oil prices go up, which which can manifest itself in increased
19:22transportation costs.
19:23But I mean, otherwise, I mean, the the changes in the the transportation costs are fairly noisy anyway.
19:30So, I mean, that's sort of one of the big things played out in the industry.
19:34The other thing and this is this has been broader in the making is the the increase in labor costs.
19:41Right. With the tightening of immigration standards has certainly affected training costs.
19:46I know that the trainers feel that. But as far as the global instability from the, you know, the conflict
19:52with with Iran,
19:53I mean, that directly affects things like the Dubai World Cup and international races.
19:59But I don't know that that has much of a spillover effect domestically on the industry, you know,
20:04with the exception of of the the volatility creates in energy costs.
20:09You did briefly mention about the global tariffs and some of the changes we've seen from last year into this
20:15year from President Trump and his administration.
20:18Can you lay into some more specific mentions of how that has affected the game just from your perspective as
20:25an economist and perhaps on the ownership side?
20:28And then maybe even as a horse player with the overall global instability going forward?
20:33Yeah, I mean, I don't the tariffs. My concern with the tariffs is is how it causes capital to be
20:40allocated inefficiently.
20:41So so there are price effects as a result of the tax on foreign goods and what it does with
20:48with domestic goods and overall prices.
20:50But I think that, you know, the bigger thing from the economist standpoint is is how it redistributes capital.
20:56So I don't think it has a broad effect. It certainly is very limited effects on the sales of thoroughbreds
21:03internationally.
21:03It doesn't seem to be a tariff. You know, it doesn't seem to be tariff related on live sale of
21:08racehorses.
21:09So, you know, how it affects some, you know, transportation costs, energy costs, other inputs in the production production ag
21:20costs is a different story.
21:22But, you know, I think I think I think I think there's noise in that whether there's tariffs or no
21:27tariffs as far as 10 strike racing or from a wagering standpoint, I don't think it really affects either.
21:33I think there are a lot more concerns in the market itself. Right.
21:38I mean, if we think about things that are affecting horse players, we can think about the 90 percent expense
21:43cap for professional gamblers.
21:45I think that has a broad effect on gambling.
21:48I don't think we know what's going to happen with it.
21:51There are some rumblings that the expense cap may be dispensed of by the end of year.
21:56It may be next year.
21:57So as someone who's declared as a professional gambler for the last 15 years, I'm still playing.
22:03I'm nervous about it and may curtail my play if I don't see things changing in future months.
22:10But this this can have a big effect on horse players and handle, especially from the, you know, these committed,
22:18serious players who've been doing this for for decades and who filed a schedule C as professional players for a
22:23decade.
22:24I know that we made major strides when we eliminated W2Gs when holdings 10 years ago.
22:32But this is this is a factor for those of us that have declared professionally when we can only expense
22:3790 percent of our when we can only take 90 percent right off 90 percent of our losses and expenses.
22:43That's that's a that's a huge problem.
22:46Definitely. As you mentioned, there's a lot more work to be done on that.
22:49And briefly, can you go over any advice that you'd give to fellow owners in the current environment with everything
22:56going on in the world from your perspective?
22:59Yeah, I don't know that that much would change.
23:01I think what's again, we've talked a lot about what's going on globally.
23:05And I think the global what's going on globally is a lot of noise.
23:11Obviously, I don't think it's good for the industry, but I think it's much less has much less an effect
23:16of the industry than what's going on domestically.
23:18So as a breeder and as a New York breeder, I think a lot about, you know, what is the
23:23future of racing entail?
23:25And I think when we allocate capital and we breed horses, we're making a fairly long commitment to racing.
23:32Now, owners, people buying yearlings and two year olds, they've received this accelerated depreciation.
23:38They can they can ride off a horse right away. And that's having profound effects on the yearling and two
23:43year old markets.
23:44Right. We've seen, you know, record sales as people buying yearlings and two year olds can immediately expense them.
23:51And they're taking them as write offs and they're buying more horses and they're bidding up horses.
23:56And this has been great for breeders and it's been good for the industry.
23:59But their commitment, you know, might be fairly short term.
24:03I mean, you own a racehorse, you race it for a few years, you can walk away.
24:05When you breed a horse, you're committed long term. And so I'm you know, I'm concerned about where racing might
24:10be.
24:11Now, I love to see the commitment we've made in the state of New York with New Belmont Park.
24:15State of Maryland has made a commitment. Kentucky and Arkansas seem strong.
24:19But there's a lot of concern nationally as far as racing.
24:24It seems like every year goes by and we lose racetracks and there seems to be more and more that
24:29might be falling by the wayside.
24:31And then there's Heisa, the affordability of Heisa right now.
24:36It's it's it's it's a large percentage. Heisa is the cost of Heisa is a large percentage of persons.
24:42And and so while I do think Heisa is important and provides us federal credibility,
24:48I do think there are real concerns about how expensive it is for the industry.
24:52And if it causes a lot of tracks, smaller tracks to close, that hurts breeders like me.
24:58And then, you know, we have May 22nd, the drop dead date for the Lasix decision by Heisa.
25:05And if Heisa eliminates Lasix from all races, that's going to have a dramatic effect on those of us racing
25:11horses.
25:11I don't know that a lot of people realize that, but it's it's it's a fairly big decision to come.
25:17And what I'm for the status quo, I like the removal of Lasix from graded stakes races.
25:24I think it's good for potentially good for the breed.
25:27But I think removing Lasix from everyday racing is problematic because the solutions are either prohibitively expensive or barbaric.
25:36And so, you know, I'm hopeful that there will be no change on that.
25:39So so to me, most of my concerns are domestic.
25:44And I think short term things are very positive, but we really need long term investment in our game.
25:49And as a long term investor, as someone who owns two stallions in New York and a stallion in Arkansas,
25:55as someone who owns 20 broodmares, I'm committed to this game long term.
25:59And, you know, breeders are forced to make these decisions five years for five years down the road.
26:04And so that, you know, how how our game evolves and how we adjust to the changing markets is is
26:13of interest to me.
26:15Yes. I'm glad you mentioned that, Marshall. And hearkening back to some of our domestic issues.
26:19Do you think the purse price, I guess, purse structures across the country, have they matched with the inflation over
26:28the years?
26:28Or do you think we're still behind in certain jurisdictions, New York versus California versus Florida,
26:34compared to how inflation has gone overall in the game for owners and breeders such as yourself?
26:39I mean, I think purses are good. I mean, I may be I may be against consensus, but I hear
26:48a lot of owners complain about purses.
26:49But I think that that especially if you look back to where we were 10 to 15 years ago, I
26:54think purses are strong.
26:56Obviously, the game's come a lot become a lot more expensive.
26:59Just the cost of feed and hay and then the labor costs have gone up dramatically, especially operating in New
27:07York.
27:07But but I think purses I think purses are strong and and as long as they remain strong in the
27:15future and as long as we have options for our horses.
27:18I mean, if if the game contracts and there are just few tracks remaining, then that's a different then that's
27:27a different sport.
27:27And that's that's a problem when when there's all these concerns about we need more breeding, we need more.
27:34We need a larger full crop. And if there's real uncertainty about tracks in the future, you know, I see
27:40I see conflicting, you know, conflicting messaging.
27:45Have you or your partnership groups purchased brood mirrors from Europe or look to exploring that route and racing back
27:51here domestically in the U.S.
27:53And flip side, have you thought about racing any of your ownerships in the U.S. over across seas?
28:00We have not. I mean, most of our objectives are winning races at Oakland Park, winning races at Saratoga.
28:07And and our focus has been almost exclusively dirt racing when Oakland Park is one of your agendas.
28:14You're interested in dirt racing. So we have not done so.
28:17And I'm trying to breed a good dirt route horse.
28:19I'm very much American in my focus, but I do know people who participate in racing overseas, who have brood
28:27mares overseas, who race in France.
28:30And, you know, I know that, you know, I know that that they enjoy that and they're different aspects of
28:35the game.
28:36But our focus has been exclusively domestic.
28:39We have not we have not traded horses internationally.
28:43We have sold some that have have have have been taken abroad, right, a racing in South Korea or or
28:51in Latin America.
28:53But but as far as as far as we've been involved, we're exclusively involved domestically.
28:58Definitely. It sounds like your overall thoughts today are projecting a kind of a wait and see approach in terms
29:04of the global conflict.
29:05But certainly industry wide being focused on domestic issues and making sure that we're continuing to improve our racing product
29:12right here in the United States.
29:14Yeah, absolutely. Look, the short in short, the short term, I'm very bullish on racing.
29:19It's a long term where it's much more cloudy and much more uncertain.
29:23And of course, we need the long term commitment from from breeders, from from owners, from the racetrack.
29:30And as a horse player, like I want the product to be viable longer term.
29:36And so that's the key. I think the international conflict, it's a lot of noise.
29:41It's certainly impacting Dubai. I mean, we there are I mean, they're racing in Dubai next weekend and there are
29:47a couple of American horses going.
29:50But, you know, outside of disruptions in energy costs and in some racing that's going disruptions and racing that's going
29:57on, it's it's it's having a smaller effect on the U.S. market.
30:01Definitely. Well, I appreciate the time, Marshall. Thank you for joining us today.
30:05Great. Thanks for having me on.
30:06Anthony Trimarchi is a managing director at J.P. Morgan Private Bank and managing partner of Four Corners Racing.
30:13With a background in private wealth management and active involvement in thoroughbred ownership, Trimarchi brings a dual perspective on capital
30:20strategy, investment structuring and the intersection of traditional finance with the business of horse racing.
30:27Anthony, thank you for joining us today.
30:29You're welcome. So great to be here. Thank you.
30:32Definitely. And as a New York breeder and a New York owner, I'm appreciative of you joining us for this
30:37discussion as well.
30:38Yeah, right back at you.
30:41To begin, I'll just start off. What trends are you seeing among horse owners in response to current economic conditions?
30:48Sure. So, you know, maybe let me just tell you a little bit about myself.
30:53You know, so you mentioned I'm the managing partner of Four Corners Racing. That's my racing LLC.
30:58I'm mostly a claiming owner. I've got 20 horses in training right now with two or three partners, primarily in
31:05New York, Kentucky, Arkansas and Pennsylvania.
31:07Also a New York breeder. I've got seven mares in New York and have a piece of two stallions.
31:13You know, so in terms of trends, you know, there's a lot of economic pressures out there in the world.
31:19And those pressures tend to shape racing decisions, business decisions.
31:24And I think the thing that everyone's talking about these days is geopolitics, which, you know, over time is not
31:31always a huge market moving event.
31:34But certain industries and certain individuals can be really directly impacted.
31:38And so that's something I've been thinking a lot about.
31:41You know, as I think about my day job combined with my passion, which is a thoroughbred business, whenever geopolitical
31:49events pop up around the world, you tend to see the dollar go higher.
31:52You also tend to see interest rates go higher in the U.S.
31:56And that's happened over the last couple of weeks.
31:58So, you know, big move in the two year U.S. Treasury rate this week.
32:03And that's in response to potential inflationary pressures and interest rates and inflation matter a lot to the horse business.
32:10Right. I'm a domestic breeder.
32:13I'm not a commercial breeder.
32:14I don't have a global business, but I know a lot of breeders use credit to bridge expenses to the
32:20sales.
32:21And of course, all of us as owners and breeders care a lot about expenses and inflation pushes up the
32:26cost of doing business.
32:28You know, I think a lot about expense structure because I'm active across a couple of different states.
32:34But if you if you think about the purse side, you know, North American purses are up a lot over
32:39the last 20 years.
32:40But actually, inflation adjusted, I think they're probably down 30 or so percent.
32:44So if if if inflation adjusted purses are lower and inflationary expenses are going higher, that's a big concern for
32:51all of us in the industry.
32:53Anthony, following up, what planning strategies can you believe help owners during this period of instability?
33:00You know, one thing I forgot to mention when we were talking about, you know, economic pressures of sentiment, right?
33:07Sentiment's a big driver of this business, too.
33:09And when inflation's up and rates are up and there's headlines, sometimes people get spooked.
33:14I think about that as a breeder where I'm selling mares.
33:17You know, I might not always get the price I think I should for a yearling.
33:21But a strategy that's helped me a lot is actually breeding in New York, where even if I sell at
33:26a price that is a net loss for me as a breeder,
33:29I've got the future cash flow of the breeder's bonus without expenses against it.
33:33To me, that's incredibly attractive about the New York program.
33:36As a stallion owner, I have the stallion bonus, too.
33:39So I think that's an important strategy.
33:41And then as someone who operates in New York, Kentucky, Arkansas, Pennsylvania, I can think about where, you know,
33:48where are the different purse opportunities and what are the expenses like?
33:51You know, some of those states have pretty good purses, but they all have different expense structures.
33:55And if we were in a situation where inflation was really spiking and expenses were going up, you know,
34:01I would have to think about where the, you know, where's the income opportunities?
34:06I think that's about it.
34:08You know, I'm not a commercial breeder, but I think there's probably a challenge for the commercial breeders when it
34:12comes to financing expenses waiting for sale as well.
34:17Certainly.
34:17And I'll switch over to your day job at a firm such as J.P. Morgan Private Bank.
34:21How can you help potential owners and participants in our industry help to navigate the current situation?
34:28Sure.
34:28I think in business and in thoroughbred business, diversification and tax efficiency are really important.
34:35None of us have a crystal ball.
34:37I'm not in the business of trying to predict what's going to happen in the markets next, nor am I
34:41going to be able to predict what happens on the track.
34:43So I think it's smart to have diversification.
34:46I walk through my business a little bit.
34:47I've got claiming horses.
34:49I've got mares.
34:50I've got stallions.
34:51I made a strategic decision to avoid buying at auction.
34:54I'd rather sell to auction.
34:56I think I have patience as an advantage as opposed to a huge purse like some of the owners I
35:01compete against.
35:02So I think diversification is important, certainly in the investment business.
35:06That's the only way to handle uncertainty.
35:08And after the last six years of current events, I don't think anything is unexpected anymore.
35:15So diversification is a big, big deal.
35:17And tax efficiency is really important, too.
35:19All the clients I work with are individuals.
35:21We all pay taxes.
35:24There's no free lunch on Wall Street, but I think paying attention to tax efficiency is actually one of them.
35:28And the same thing goes for our industry.
35:31I run an active business, which means I can take operating losses if I have them.
35:35I can take advantage of depreciation, bonus depreciation that came through the latest tax bill.
35:41And all of those small things make the net result of my business more profitable over time.
35:46And like I said, diversification and taxes are the key ways that I try to manage around it with thoroughbreds
35:53and in my career.
35:55Definitely. And as you mentioned, we didn't have bonus depreciation fully in 2020, probably the last time with COVID that
36:02we had such kind of upheaval.
36:03But you managed through that storm.
36:05And what lies ahead?
36:07Can you just talk about the continued benefits that you're seeing on your end that can help navigate others through
36:14this current moment, such as bonus depreciation and other methods?
36:18Yeah, I think this is very much true in my my career.
36:22Right. So I I'm a private banker and an investment advisor at J.P. Morgan.
36:28I've been a player on our team in Greenwich, Connecticut for about 16 years, recently started to lead the team.
36:34I'm the head of our investment investments at Advice in Connecticut.
36:38I've got about one hundred and twenty five colleagues.
36:39We oversee eighty five billion dollars out of this office in our business.
36:43Right. We manage money for clients, but almost all of our clients have a really strong accountant and attorney that
36:48we partner with.
36:49I think surrounding yourself with the right advisers and the right people in your life is really important and business
36:54is really important.
36:55And certainly in the horse business, I feel the same way.
36:58I'm fortunate to have really smart partners.
37:01I think you talked to one of them earlier today.
37:04I've also got a great CPA.
37:06I've got great bloodstock advice.
37:08I've got great trainers, vets.
37:11You know, I know what I don't know and I rely on the partners around me.
37:14And I think that's a pretty good approach when it comes to the intersection of all these different things.
37:19Right. I might be able to look at a balance sheet, but I probably can't look at a physical on
37:24a horse and tell you if it's good or bad or even if it's a boy or a girl.
37:28So I need to have somebody on my team that can do those things.
37:31And I think that's a pretty good approach in in the thoroughbred business, but also in life.
37:37And can you take us back to a moment with your first New York Bridge steaks winner, I believe, Seafoam
37:42and first one for Michelle Giangulo.
37:44One of your trainers and how that moment was in operating in the industry and reaching that success so early.
37:50It was unbelievable.
37:52I smile even thinking about it.
37:54His picture is on my wall at home.
37:56He's actually standing in Arkansas right now as a stallion.
37:59I'm excited to see his babies.
38:01But it was fantastic.
38:03It was my first win at Saratoga.
38:04Michelle's first win as a trainer at the spa in a stake.
38:08It's the kind of stuff you can't really make up.
38:10My mom was there.
38:11It was a really special time for me.
38:13It was a short field, but we weren't expecting to win.
38:15So it was pretty exciting.
38:16And it was about 11 days off the claim.
38:19So quite a wild ride that I didn't see coming.
38:24Definitely.
38:24I think it brings it all together with the great team that you had in place.
38:27And, of course, your experience and your backing financially to make sure that your partners were all on the course
38:33to set forth to continue on in the industry.
38:36Absolutely.
38:36Absolutely.
38:39Yeah, Naj, you know, something I want to talk about, too, is I mentioned the impact that certain individuals feel
38:46around inflation and things like that.
38:49You know, I'm not a person that relies on the racing business for my primary source of income, but I
38:53know a lot of people who do.
38:55And I think a lot about the backstretch.
38:57And I think something that's important to me and that I've been thinking about over the last couple of weeks
39:01with everything going on is in New York, we have a New York backstretch pension.
39:07I'm a trustee.
39:08There's been a pension for the backstretch workers in New York for 50 years, and it's funded by the owners
39:14via the purse account in partnership with Naira, who administers the purse account.
39:18But, you know, that has always made me feel really good and really proud to be involved in New York
39:23and also to be involved as a trustee.
39:26You know, there's a handful of owners like me who volunteer their time.
39:30There's a trainer's committee.
39:31We all volunteer a time to manage the pension, to manage all the things that we need to think about
39:36on behalf of the backstretch workers who work so hard for our sport and our equine athletes.
39:42And, you know, as an investment guy, I'm very proud to say we're actually a top performing U.S. pension
39:46over the last 10 years.
39:48We've outperformed 99 percent of the pension plans in the U.S. over that period.
39:53And I know we're really proud of our impact and what we can do for the people on the backside,
39:57because if inflation is higher and rates are higher, that means food and gasoline are more expensive.
40:02And I'm always trying to think about my whole team and the partners that need my help the most.
40:07And I think it's a really great thing about New York that probably everyone isn't aware of.
40:11So I was excited to to be able to talk about that a little bit today.
40:16Definitely.
40:16Thank you for your efforts, not only with the pension fund for the backstretch,
40:19but as well as your day job and your participation in breeding and ownership.
40:24Thank you for your time today and joining us, Anthony.
40:27You're very welcome.
40:28Coming from one of the most respected families in the sport, his father, Robert Clay, founded Three Chimneys.
40:34Case Clay has built a reputation as a bridge builder between the American and international markets.
40:39After working at Three Chimneys for almost 20 years in roles such as president and chief commercial officer,
40:45he founded Case Clay Thoroughbred Management.
40:47As a bloodstock agent and manager, he has been involved in several high-profile international horses,
40:53including Subsanador, Delica, and Puka.
40:57Case is also the racing manager for Watnan Racing.
41:00He joined us to talk about Watnan's decision to send Hit Show to the upcoming Dubai World Cup
41:05and to discuss how tariffs and other global events have affected him as a buyer.
41:10Case, thank you for joining us today.
41:12How have you been and how have you been doing?
41:14Good.
41:14How about yourself?
41:16Not too bad.
41:17Thank you for joining us for the TDN Business Hour.
41:20With our first question, I'll just ask, how was the decision to return to Dubai for Hit Show,
41:25who won the Dubai World Cup last year and is going there this year for this year's race?
41:30I see he's arrived on the grounds.
41:32How's he acclimated?
41:33And can you talk about the decision to return to defend his title?
41:37Yes, he's acclimated well.
41:39He's doing well over there.
41:40I saw a video of him today.
41:43We were very comfortable sending him, putting him on the plane to Dubai.
41:47First off, he's a classy horse.
41:49Shipping doesn't really faze him.
41:51It hasn't fazed him in the past.
41:54Mursant International, who handled it, they're so good at what they do and have a very high level of confidence
42:01in Mursant.
42:03And then with regards to the region infrastructure, not only in Dubai at large, but the Dubai Racing Club, it's
42:10world class.
42:11So we have great faith in their management and obviously great faith in Brad Cox's team operation, who's managing him
42:18while he's on the ground right now.
42:20Case, can you tell us about the travel and any difference there was between this year's journey versus last year?
42:26And of course, whether you'll be returning to Dubai yourself to see him run in the Dubai World Cup.
42:32Yes, from the horse's perspective and the logistics of that, it actually was the same as last year when he
42:40flew over, other than the environment in which he flew into this year.
42:44So that was very smooth, handled again by Dubai Racing Club and Mursant.
42:50And once he landed, got the video, he looks great.
42:55With regard to the human aspect of it, one thing we offered to Brad Cox in the event that either
43:05he or someone on his team didn't want to fly over, just didn't feel comfortable flying over, was Wath Nunn
43:12has a team in place already at Dubai.
43:14And the offer was, you know, the horse will be trained by you, obviously, they're essentially just would be saddling
43:21the horse, exercise riding the horse and taking your direction.
43:25But he had a conversation with his team and he has someone that flew over with the horse and is
43:33there taking care of him.
43:35So it's all looking good so far.
43:38As far as myself, I have I have a plane ticket and I haven't I haven't canceled it yet.
43:43Just monitoring it day to day and hopefully we'll be able to get over there and watch him run.
43:49Definitely. You purchase a lot of horses internationally, both privately and at the sales.
43:54Do you think the current global conflict has had any impact in terms of your planning throughout the rest of
43:59the year?
44:00And what made the war in Iran at the current moment have an impact for you business wise, if any?
44:06Well, I've spoken with my clients who shop for two year olds, two year old horses and training at this
44:12time of year.
44:13And the strategy remains the same for each of them.
44:17I just returned back from the OBS March sale and it appears that other owners have their their strategy is
44:24also remains the same because it was very difficult to buy horses down there.
44:30But I mean, really, fortunately, we exist in a beautiful sport with a dream that's global.
44:40People wanting to win the Kentucky Derby or the Golden Slipper, the Ark, win at Royal Ascot, the Saudi Cup,
44:47Dubai World Cup.
44:49So I think I think I think while disruptive events happen in the world, just like the world financial crisis
44:56in 08 to 12, 2012 to covid, when we were actually the only sport on TV, the dream continues.
45:05I mean, hopefully the war ends soon. I don't want to sugarcoat anything.
45:09I'm just saying that the industry tends to be very resilient due to the dream of winning one of these
45:14big races and disturbances can create opportunities as well.
45:20So always looking for a good horse.
45:23Certainly. In addition to the global conflict, tariffs have also led to economic concerns lately.
45:29President Trump enacted a new 10 percent global tariff following the Supreme Court striking down his initial tariffs.
45:36Have they had any effect on your business over the past year or any effect that you project going forward
45:41for yourself or your company?
45:43The tariffs in 2025 came into play a couple of times in conversations about whether to go for a horse
45:50in Europe or not.
45:51But we managed to get others bought.
45:54So it was a case by case basis last year.
45:57And I think it's going to probably remain a case by case basis again this year.
46:03The part that the part that makes it difficult to try and negotiate 10 percent down off a purchase price
46:10on a horse in Europe is there are buyers in Hong Kong and Australia that are wanting the same horse.
46:16So the European owners have demand from other countries as well.
46:21So it makes it a little bit a little bit difficult.
46:24But it's a case by case.
46:25We can get some bought if it's the right scenario.
46:29And then so, you know, looking at America and American owners, if we're able to buy fewer horses in Europe
46:38and we turn to America, it's also difficult to buy the American turf horses here because the prize money in
46:47certain various states are so good.
46:50So they they have an option of getting a one time payoff or they can have a lot of fun
46:55with their horse and get paid off multiple times by being successful in those races.
47:00So they're getting more difficult to buy here in the States, but it's not it's not impossible.
47:06Do you find with that situation that you're tending to keep more horses in Europe rather than bringing them to
47:11America right away or it just varies on a case by case basis?
47:15For my clients, we haven't kept any horses over there, but I have friends who are in similar positions as
47:23me and they have clients that have kept horses over in Europe for the time being.
47:28But for my clients, we haven't done that.
47:32What innovations do you think can reshape the business side of racing on both internationally and domestically here in the
47:38US?
47:40So I'm not I don't know if I'm the right person to be asking about innovations on the macro level,
47:46but we have seen we have seen some great innovations pop up over the last kind of six years, namely
47:56Corey Johnson with HHR and the work that the state legislators put in.
48:03And I'd be remiss not to mention David Osborne and Damon Thayer and Robert Stivers and our governor, Governor Beshear.
48:13But that's had a positive effect on on Kentucky for sure.
48:19Digital auctions has been a great innovator.
48:22It's provided something to owners in that they don't have to take a horse out of training to and sell
48:31the horse.
48:32So if it doesn't meet the reserve, they haven't missed any training.
48:34And it's just been a great service for for the owner.
48:39I'm seeing a pretty exciting innovation in the works that I have nothing to do with, but I'm watching it
48:46from afar, which is the thoroughbred Renaissance series offering hunter derbies to thoroughbreds, which if this if this thing takes
48:55off, then it could add more value to our retired racehorses, which is which in turn improves thoroughbred aftercare, which
49:04is so important.
49:05So I have my eye on that innovation, not one I came up with, but one I'm I'm quite interested
49:10in watching.
49:13Hopefully an innovation pops up.
49:15I mean, it's no secret that Florida and California are at a crossroads and, you know, but necessity is the
49:23mother of invention.
49:25And Florida and California are such an important part of our industry that I'm hoping I'm hoping that there's some
49:32innovation there that that that helps it.
49:35And working with state governments, a big, big part of that.
49:38And I know that I know Florida is doing that.
49:41So but competition is also innovating.
49:45So we have to stay engaged.
49:48Yes, no, I agree with all those points that you've raised, especially towards the aftercare and second careers that we
49:54can come out of innovation topics.
49:56Lastly, I'll ask you, what advice would you give to new owners entering the industry or, you know, interested individuals
50:03who want to get into the, you know, not only ownership side for purchasing horses in Europe or domestic advice
50:10that you may have for them?
50:12I would say number one is find someone you can trust that's also good at what he or she does.
50:18That's the main that's the main one.
50:21Then building off that, surround yourself with good people.
50:25Have fun with it.
50:27Take care of your horses and they'll take care of you.
50:32And don't give up before you get that feeling of your horse crossing the wire first, because it's it's it's
50:39it's indescribable and it's unbeatable.
50:41Do you have a favorite destination that you purchased horses from?
50:45I was a big fan of Delica without stall.
50:48And of course, you know, would you've gone substandard or is it like anywhere that you're eyeing your region on
50:53specifically or just overall through Europe in your research that you're finding to pursue a horse that you may purchase?
51:00Really, really anywhere.
51:03And I don't I don't necessarily think that there's a there's a favorite place.
51:08I do love I do like it was German German bread.
51:12I think they're very tough horses.
51:14And so I do.
51:15I do like German breads, but they really they come from anywhere.
51:20Substandard or we had the benefit of of seeing him race twice in America before purchasing him privately.
51:27So that was that was a positive.
51:29But but really, really anywhere.
51:32As far as going to the auctions, it's hard to beat Deauville.
51:38It's hard to beat the Easter sale or Magic Millions in Australia.
51:43So those are fun, fun places to go and shop for horses.
51:48Thank you for your time, Case.
51:50And certainly as your business grows and your participation in racing, we appreciate you joining us here today to talk
51:56about the world conflicts and how they're affecting racing, but not so much a downer on the industry.
52:02I think things are still on the positive upside.
52:04As you mentioned, we've got a lot of good momentum.
52:07So best of luck with hit show at the Dubai World Cup and going forward.
52:11Thank you so much.
52:12Thank you for joining us for the first episode of the TDN Business Hour.
52:15I'd like to thank our guests, Mark Taylor, Marshall Graham, Anthony Charmarkey and Case Clay.
52:22We hope you enjoyed the conversation and look forward to you joining us next month.
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