Frankel mania hides hard going for racing

At Tattersalls’ yearling sales in Newmarket, auctioneer Alastair Pim is having trouble shifting a lovely-looking bay colt. “Come on lads,” he implores the buying agents in his strong Irish brogue, “at only 14,000 guineas, I’d be giving him away.”

Despite his jocular banter, Mr Pim has to bring down the gavel at this price – a guinea being equivalent to a pound and five pence, to allow for the auctioneer’s commission.

The pace of this and other sales are in marked contrast to last week’s record-breaking purchases when the prized crop of thoroughbreds came into the sales ring. It is symptomatic of the two-tier state of British racing: prices for elite horses are way out in front as international buyers seek out the next Frankel.

The four year-old thoroughbred has astonished the racing world with his 13 straight victories, and goes for number 14 at Ascot on Saturday in what is almost certainly his final race, the £1.3m Qipco Champion Stakes, Britain’s second richest race after the Derby.

Much of the chatter at Tattersalls is about Frankel’s breeding value, estimated at £100m. In a sign of increasing polarisation within the horseracing industry, the top yearling sales “exceeded expectations”, according to Jimmy George of Tattersalls. Last week’s sale of the elite “Book 1” race horses raised £68m, breaking records Tattersalls set in the boom year of 2007. “To break records in the current climate is pretty extraordinary,” Mr George said.

Buyers from around the world were after the progeny of Galileo, a two-time Derby winner who sired Frankel. There were 16 different buyers with winning bids of at least 400,000 guineas. The average sale of 162,000 guineas was another record.

“The best pedigree now is all in Europe,” said John Ferguson, racing manager of Sheikh Mohammed bin Rashid al Maktoum, Dubai’s ruler.

A packed sales ring last week witnessed the racing agents of Irish tycoon John Magnier and Sheikh Fahad al Thani square off for a Galileo colt called Hydrogen, before the member of the Qatari royal family prevailed with a winning bid of 2.5m guineas.

Sales at this end of the market generate “a rarefied atmosphere”, said Lord Grimthorpe, racing manager of Frankel’s owner Prince Khalid Abdullah of Saudi Arabia. “It helps the profile and general market confidence [of racing].”

But it is a very exclusive club, said Rachel Hood, president of the Racehorse Owners Association. “These sales are too expensive for our British owners and trainers to buy,” she said.

“The Maktoum family have been tremendous enthusiasts for British racing. But it doesn’t actually mean that British racing is healthy. A lot of the horses are being taken abroad.”

Racing experts insist that many of the top horses are staying in Britain. But lower down the scale, it is harder than ever for owners and trainers to make a go of it. The numbers of owners, horses in training and thoroughbred foals are in decline, while the number of horses exported from Britain and Ireland is on the up.

Producing a foal costs the same – about £20,000 minus stud fees – at whatever level of racing, said John Warren, the Queen’s bloodstock adviser. Thanks to global commodity price inflation, feed costs are poised to rise. “The production costs are enormous all round,” he said.

Yet because of racing’s underlying financial problems, the rewards are pitiful. Prize money in British racing is woeful compared with the rest of the world. An owner can expect to make a return of 21 per cent in Britain. In France, it is 54 per cent. Although the industry has a statutory right to a share of profits made by betting operators, this amount has steadily decreased as bookmakers move offshore.

“It’s good that we have the best bloodstock in the world and that it’s internationally attractive,” Ms Hood said. “The downside is we are having to sell the family silver year after year because of our dismal funding system.”

British racing cannot just be about the top end, Mr Warren said. “That would be too elitist. The elite wouldn’t survive on their own. If you take away the base, you don’t have a top.”

Mr Ferguson bemoaned British racing’s “two-tier system”. But even at the top end, prize money is disappointing. Frankel may be racingon Saturday for £1.3m but around the world there are 24 races offering the winner a more substantial prize.

“We’ve got to encourage the best horses to race here,” Mr Ferguson said. “The sales may be very strong but the rewards are small.”

Back in the yearling sales ring, Mr Pim brings down his gavel on the sale for another fine-looking colt, at a price of 32,000 guineas. “We thought he’d make triple this, in all honesty,” he said.