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  1. Luxury
January 31, 2025

Big things are happening in the wild world of yearling sales

Near record-breaking sums are being paid for the finest bloodstock by billionaires prepared to bet big

By Rory Ross

It is one of racing’s many idiosyncrasies that the price of bloodstock is still measured in guineas. A guinea is worth £1.05, or 21 shillings in old money. The 5p, or shilling, was traditionally the auctioneer’s 5 per cent commission. When a man with a hammer sells you something in guineas, he is politely saying, ‘Oi! Hands off my fee!’

Why this applies to racehorses and not to everything else that is sold at auction (eg cars and brown furniture) is a mystery, but then so many things about the bloodstock world defy coherent explanation.

Shock and awe

Take the yearling sales at Tattersalls in Newmarket. This is the world’s most prestigious bloodstock auction, held every October. It brings together all the biggest bloodstock agents and racehorse owners from around the world, as well as vets, trainers, consultants, pinhookers, pundits and a few absolute chancers who derive their livelihood from racing. When 4.4 million guineas were paid for an unraced and unridden yearling, the response was shock, awe and ‘bloody doors being blown off’. It was proof, some said, that the market had ‘gone bananas’.

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[See also: ‘Owners should look for fun – not financial gain’: the Hon Harry Herbert of Highclere Thoroughbred Racing offers advice to investors who fancy a flutter]

In the sale ring at Park Paddocks, the atmosphere had been the usual swirl of paranoia and megalomania until a beautiful bay filly prosaically referred to as Lot 68 was led in. A hush fell as a romantic cross-section of crowned, flat-capped and Panama-ed heads looked up. Auctioneer John O’Kelly began briskly taking bids in rising increments of 100,000 guineas. Within a few minutes, bids had shot past the reserve price of just under one million – the ballpark figure set by the vendor. At two million, the bidding slowed to a canter as bargain-hunters folded.

At three million, photographers grabbed cameras; owners leapt up from lunch in the Tattersalls Pavilion. In the ring, two bidders were slugging it out.

The yearling sales at Tattersalls in Newmarket is the world’s most prestigious bloodstock auction

At 4.1 million guineas, one of them, Mitsu Nakauchida, the Japanese trainer, signalled that he wanted to raise the bid by 200,000 guineas. But, encouraged by O’Kelly, Nakauchida’s rival wasn’t done. When the hammer finally came down at 4.4 million guineas, history was made. This was the second-highest sum paid for a yearling in Europe. (The most expensive changed hands for 5 million in 2013.)

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The yearling in question was a skittish daughter of Frankel, the £350,000-a-pop super-stallion owned by Juddmonte, one of the world’s leading breeding and racing operations, founded by the late Prince Khalid bin Abdullah, a member of the House of Saud. In bloodstock terms, any child of the house of Frankel is proclaimed equine royalty. However, some – no, many, well, almost everyone – wondered how the buyer could possibly hope to make a return on his investment.

[See also: Horse therapy holidays are the latest in luxury wellness]

The buyer in question was Kia Joorabchian of Amo Racing – a football agent by trade. Having seen two of his other horses, Mojo Star and King of Steel, finish second in the Derby, Joorabchian was in no mood to settle for anything but the very finest bloodstock. As soon as the applause subsided, he splurged another 2.5 million on another of Frankel’s daughters, this one belonging to Kirsten Rausing. Was this frenzied bidding clairvoyance or just sheer recklessness?

By the end of the Book 1 sale, Tattersalls had cleared nearly 128 million guineas of horseflesh in 345 lots, up 34 per cent on the previous year. At 370,000 guineas, the average price of yearlings shot up by 54 per cent. The market had decoupled not only from past performance but also perhaps from common sense. Amo Racing was the biggest spender: nearly 23 million blown on 25 yearlings.

Taking a gamble

Never mind the minuscule prize money in all but the top end of racing today, buyers are rolling the dice and hoping – hoping – that their purchase will prove the next world-class stallion or brood mare, a horse with winged progeny that will redefine bloodlines for posterity. On the other hand, Lot 68 may prove a dud. For sellers, bloodstock is pure business.

[See also: Best equine experts for high-net-worth individuals in 2024]

For buyers, though, the ‘Sport of Kings’ confers legitimacy on a host of other powerful and esoteric desires and gratifications. Price is irrelevant. Price is for losers. Meanwhile, Graham Smith-Bernal, the elated vendor of Lot 68 via his stud farm Newsells Park in Hertfordshire, could scarcely believe his luck. ‘I knew something was up when I noticed Evangelos Marinakis [an associate of Joorabchian who owns Nottingham Forest and Olympiacos football clubs] photographing the yearling in the parade ring,’ he said as he called for vintage Pol Roger for his guests. ‘Maybe those billionaires are spending their money before the world blows up.’

‘Lot 68’ was sold for the second-highest price for a yearling in Europe

Until he bought Newsells in 2021, Smith-Bernal was one of Britain’s most successful tech entrepreneurs you’d never heard of. His obscure but lucrative niche was the court-reporting sector. His businesses developed easy-to-use computer programmes for use in law courts to help judges and barristers sift large volumes of evidence, depositions and testimony. After defence attorney Johnnie Cochran used one of those programmes, LiveNote, in OJ Simpson’s murder trial in 1995, every pitbull across the pond wanted it too. Soon LiveNote became a global standard for managing evidence in major disputes, public inquiries and arbitrations.

When the non-competes expired after Smith-Bernal sold LiveNote in 2008, he strapped on the guns and did it all over again, but this time better: Opus 2 took evidence management into the Cloud, enabling seamless and slick collaboration between teams of lawyers in live hearings around the globe.

Making its debut in Berezovsky v Abramovich in 2012, Opus 2 later won Smith-Bernal the Queen’s Award for innovation. In 2021 he sold Opus 2 for more than £325 million – not bad for a Slough-raised school dropout with one O-level.

A rare prize

After nearly 45 years of dealing with lawyers, he needed a break. By chance, the sale of Opus 2 coincided with the sale of Newsells, whose owners – the heirs of Klaus Jacobs, the Swiss coffee and chocolate trader – wanted out. Having kept a few of his own horses there, Smith-Bernal knew the set-up and the staff. The obvious buyers were large Middle Eastern or American interests. However, while Covid prevented these heavy-hitters from doing due diligence, Smith-Bernal was able to negotiate a brief lockout. With the field to himself, he managed to produce the cash with fractions of a second to spare, buying Newsells ‘lock, stock and barrel, including all the bloodstock’ for more than £40 million.

Newsells is a rare prize. The 1,200-acre estate near Newmarket dates from the late 17th century. In 1926 Sir Humphrey de Trafford, racehorse owner and grandfather of Brigadier Andrew Parker Bowles, acquired it and bred several famous horses there. Besides its undulating acres and immaculate facilities – ‘Claridge’s for horses’ – Newsells’ value lies in its £25 million portfolio of brood mares and its high-profile stallion in Nathaniel (£20,000 a pop).

If you want to play the bloodstock game, it helps to be a billionaire, or at least a centimillionaire. But Smith-Bernal has an answer for those looking for an investment at a (slightly) more modest level – a chance to crash this gilded parallel universe of coveted pedigrees, opaque breeding strategies and, perhaps, megareturns. Last year he created a Newsells Bloodstock Syndicate to give people a chance not only to own top thoroughbreds, but also to benefit from their performance in the breeding shed, where the real pay-off happens. For credibility, Newsells retained 50 per cent of the shares. This covered off one of the maxims of bloodstock investment: it is a game to be played only if you understand it.

Knowing that Newsells has skin in the game, investors have an opportunity to ride on its coat-tails. ‘It allowed discerning individuals to invest in top racehorses and broodmares in 100 per cent alignment with Newsells,’ says Smith-Bernal. De-risked, investors can buy the sort of horse they’d always promised themselves, while enjoying the ‘full scope of bloodstock ownership’, from the Queen’s Stand at the Derby via the parade ring at Royal Ascot to the top table at Tattersalls, where starry-eyed owners throw guineas at you.

A yearling at the October sale at Tattersalls

The winning formula

The open-ended fund got off to a flyer when its first race filly, You Got To Me, co-owned with Valmont, won the Irish Oaks, massively increasing her value.

‘Seventy-five per cent of Newsells’ income comes from breeding,’ says Smith-Bernal. ‘Investors share that upside. Of course, there are risks: a Frankel foal might prove [to be] a dud. But you share that risk with Newsells.’

History shows that breeding Classic winners is not simply a matter of covering an Oaks winner with a Derby winner. Every winning streak requires 5,000 things to go right in order to continue.

When trying to capitalise on such a capricious business where necromancy, art, science and great deal of luck combine in unpredictable ways, the trick is to shorten the odds of success. According to Smith-Bernal, you do this by concentrating on the top end of the market.

‘Once you have paid the upfront cost of breeding your horse, whether £250,000 by Frankel or £20,000 by Nathaniel,’ he says, ‘the cost of looking after it and training it are the same. You want the expensive end. You want to deal with people for whom money isn’t a valuable commodity, where the overriding impulse is “I love that horse; I want that horse.” I have experienced that emotion myself. It is very compelling.’

This year Smith-Bernal is launching a larger Bloodstock Syndicate: 32 shares of £125,000 each, Newsells holding 16 of them. ‘We will launch a new fund every year,’ he says. ‘Building partnerships and bloodstock syndicates will be a key part of our commercial strategy. I’m not a bottom-line person; I’ve never written a business plan. I’m more a head-in-the- clouds type, creating new ideas and opportunities. And I love a challenge.’

Back at Park Paddocks, after the guineas had been totted up, Newsells had emerged as the biggest consignor (seller) in the Book 1 sale for the seventh year running, raising more than 17 million guineas. Once all those guineas had been flipped into sterling, the men with the hammers walked off with nearly £1 million in commission

This feature first appeared in Spear’s Magazine Issue 94. Click here to subscribe

Spear's Magazine issue 94
Spear’s Magazine Issue 94 / Illustration: Cat Sims

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