September 1st every year marks a special date for Australian thoroughbred breeders, with the beginning of the new breeding season. The first day of spring brings excitement to all involved. Read more
International buyers are here to stay
What a vibrant thoroughbred trading period 2016 has been in AUS starting in January and still firing strongly in June. This time it was the broodmares and their recently weaned stock that were the currency and buyers have been jumping out of trees to take a leg or four. Read more
2016 Premier Yearling Sale
In 2016 the Inglis Premier Yearling Sale was another bumper year with 467 yearlings sold during session 1, recording $51,728,000 in gross sales, an increase of 15% in comparison to 2015. Additionally the average price obtained increased considerably on prior year sales jumping from $95,886 to $110,767 – that’s a solid 16% increase.
Snitzel proved to be the king of the sires topping the aggregate sales by selling 22 of 24 lots for a grand total of $3,947,500. This included the sales topping colt by Beauty World to a Chinese buyer for $700,000. That’s back to back for Snitzel at the Melbourne sales who also provided the top result in 2015. Other well performing sires included the likes of So You Think, Smart Missile, All Too Hard and Sebring who all cracked the $2,000,000 barrier for aggregate sales.
When comparing sires’ results on a straight multiple of service fee with three or more sold, Zoffany and Magnus both took the honors here with 10.63 and 10.0 times respectively. If we compare this to the Magic Millions earlier in the year, five horses cracked double digit returns as a multiple of service fee. These trailblazers included I Am Invincible (18.8), Delago Deluxe (15.4), Starspangledbanner (13.6), Love Conquers All (11.5) and Reliable Man (10.4).
In regards to the first year sires, Squamosa and Niagara both had impressive returns on their service fees with returns of a factor of 20 and 15 respectively. Dalakhani, Reliable Man and Delago Deluxe also showed strong results as first year sires with returns of six times their advertised service fee. In this instance no minimum amount of horses sold was taken into account.
Over the course of the sales 12% of the 532 lots put through the ring were passed in. Interestingly, first year sires accounted for approximately 9% (8) of the total horses passed in whilst the second year sires accounted for approximately 34% (22). It should be noted however that second year sires did provide a higher proportion of the total lots offered.
The big buyers this year were McEvoy Mitchell Racing Pty Ltd, China Horse Club Racing Pty Ltd, John Foote Bloodstock/Darren Weir Racing who all added over $1m of new bloodstock to their stables. The international buyers figured prominently with many horses being sold to the likes of Malaysia, South Africa, New Zealand, Hong Kong, Macau, Singapore, Ireland, the United Kingdom & China.
Blue Gum Farm were 2016’s biggest sellers, selling 27 of 30 through the ring for an impressive $4,710,000 aggregate. They comfortable eclipsed 2015’s biggest seller Eliza Park International who came in next with $3,055,000 in aggregate sales. Other strong results were secured by the likes of Supreme Thoroughbreds, Arrowfield Stud, Rosemont Stud and Swettenham Stud who obtained sales in excess of $2,000,000 for their efforts – certainly no mean feat.
A further breakdown of the Melbourne’s Premier Yearling Sale can be downloaded here.
C’MON AUSSIE C’MON
After celebrating Australia Day 2016, who would have predicted the following would have occurred so far this year:
- ASX 200 down 6.5%;
- AUD/USD down 5%;
- Median yearling prices for Magic Millions main session up 15%, gross up 25% and average up 15.5% with a 89.97% clearance rate;
- A filly runs sixth in the Magic Millions 2YO and her female owners rewarded with $325,000 in prizemoney;
- Odds for Essendon FC taking the wooden spoon plunge from $6.50 to $1.25.
PERSONALITY PROFILE by Graeme Kelly / Adam Tims
A childhood dream of working in the racing industry has become a reality for accountant Adam Tims. Today his company, Stable Financial, has a client list of major Australian and International bloodstock investors, and Adam also offers his time and expertise to help industry bodies such as TBV, Aushorse and TBA. Read more
2015 Federal Budget – Stable Financial Commentary
In every budget there are winners and losers, and last night the Federal Treasurer provided Australian breeders with some tax concession ammunition to think about. For breeding businesses, it is fair to say that they are on the winning side of Joe Hockey’s 2015 budget. However, for larger breeders with a turnover greater than $2M, they will have to wait until July 2016 to access some tax advantages. Read more
An independent insight into the business of breeding and racing
Magic Millions 2015
Magic Millions each year bears the task of “setting the scene,” for yearling sales in Australia and its 2015 performance was a success. The Combined sale aggregate was up 20% compared to last year, with the average up 22% (all sessions). Read more
Joint Announcement
The Chartered accounting firms of Stable Financial and Isca Consulting today announced a strategic alliance which will provide a one-stop shop in delivering professional services to the thoroughbred breeding and racing industry. Both firms are the recognized leader in their fields delivering essential professional support to thoroughbred businesses including breeders, owners and trainers. Read more
The legislation to repeal the Minerals Resource Rent Tax
Many of the small business related measures were repealed without amendment. These include:
- The company loss carry back rules
- The instant asset write off threshold of $6,500 under the simplified depreciation rules
- Accelerated deduction of $5,000 for motor vehicles
A rare breed
A niche specialisation is the secret of Adam Tims’ staying power.
Some guys have all the luck. Adam Tims CA runs a thriving accounting business servicing a glamorous industry that he’s been passionate about for most of his life. He loves what he does, and his clients do too. So how did this long-time fan of racing and thoroughbreds get his big break? “It was quite by chance,” he says. “I happened to be listening to the radio one Saturday morning when I heard an advertisement: ‘Attention all accountants with a passion for horse racing’. And my ears pricked up!”
Tims reached for the phone and spoke to sole practitioner Martin O’Connor FCA. “Martin was looking for a succession plan for his fi rm that specialised in the thoroughbred industry,” he recalls. “I couldn’t believe my luck.” Tims quickly came on board and then, a few years later, he and his partner Louise Morris CA bought O’Connor out and renamed the business Stable Financial.
High stakes industry
“We are a typical business services fi rm,” says Tims. “We offer tax, compliance, fi – nancial planning and business advice – but the real difference is our niche and target market. We mainly look after owners and breeders. A typical client would have 10-15 brood mares, be breeding those mares every year and then the normal business plan is to sell the foals when they are about 18 months old.”
For breeders, this means a sizeable investment is made up front and then a lag follows of about two and a half years. “The foal has to be conceived, carried by the mare, born and then reared before it can be sold,” explains Tims. “A horse typically only gets three or four minutes in the sales ring. So it’s a long, long build up for what could be a good result or a challenging one.”
Clearly this is an industry where you need a lot of capital and a lot of patience. “That’s why high net worth individuals are typically involved,” says Tims. “Often they have other businesses – successful businesses – that fund the horses.”
Given the highly speculative nature of the industry, Stable Financial encourages clients to apply proper business fundamentals to their investments. “The clients who come to meet us on at least a quarterly basis and take a strategic view, comparing actual versus performance budget and looking at cashfl ow projections, tend to do better than those who treat it as a hobby,” says Tims.
Finding a niche
Stable Financial is currently in a fi ne run of form, according to Tims. “We’re in a growth phase. The accounting side of the business has grown by 25 per cent in the six months to the end of December 2011, compared to the corresponding six months.”
So what’s the secret behind this success? “I think we’re very fortunate in having a niche,” says Tims. “Our accounting fi rm has a clear target market. I can go to Sydney at Easter for the horse sales and all of my existing and potential client base – nationally and internationally – is in the same place at the same time, all within a 2km radius. I’m worked off my feet meeting up with people. By focusing on one industry we’ve found that, once you’re in there and have done the hard yards, you get known.”
Stable Financial’s network also extends to other accounting fi rms, who seek specialist advice from Tims. “For example, the new ‘non-commercial losses’ $250,000 adjusted taxable income rule affected the industry a fair bit because it is an industry where there are often tax losses,” says Tims. “A lot of individuals involved in thoroughbreds might have adjusted taxable income of more than $250,000. We’ve been engaged to request a private ruling from the tax offi ce, at their discretion, in terms of the nature of the industry.”
Fashion and fillies
As anyone attending this month’s Sydney Spring Racing Carnival could tell you, the image of the racing industry has been spruced up recently. Tims welcomes the higher profi le the sport now enjoys thanks to “the fashion, partying and corporate entertaining” but he’s still a traditionalist at heart. “I’m sentimental and I still think that people come for the horses primarily. You can see the emotion in those moments where you might win a Melbourne Cup or breed the winner of the Golden Slipper. The actual races are still the real thrill.”
Article from Charter Magazine (download PDF)