New York Daily News - - NEWS - BY CHILDS WALKER

BAL­TI­MORE — Be­hind the mighty ch­est­nut horse stands an am­bi­tious Ken­tucky farm owner, a for­mer Johns Hop­kins lacrosse player who bought in with less than two months to spare, an ex­ec­u­tive with the NFL’s New York Giants and a con­sor­tium of Chinese busi­ness peo­ple look­ing to pop­u­lar­ize thor­ough­bred rac­ing in their home coun­try.

On Satur­day at Pim­lico Race Course, ev­ery eye will fo­cus on Ken­tucky Derby cham­pion Jus­tify, who will start from the No. 7 post at 1-2 morn­ing-line odds in his quest to seize the sec­ond leg of the Triple Crown.

But this horse’s story is about more than pre­co­cious speed or the magic touch of his Hall of Fame trainer, Bob Baf­fert. The com­plex own­er­ship group be­hind Jus­tify of­fers a snap­shot of the rac­ing in­dus­try in 2018.

Gone are the days when a few prominent names — Van­der­bilt, Phipps, Han­cock — reigned over the sport. In­stead, high-stakes thor­ough­bred rac­ing has be­come a game of shift­ing part­ner­ships, sprawl­ing syn­di­cates and transna­tional in­vest­ments.

“Any in­dus­try, if it stays stag­nant and doesn’t move with the mar­ket and the times, will die a death by 1,000 cuts,” said Michael Wal­lace, rac­ing and blood­stock man­ager for Jus­tify’s co-owner, the China Horse Club. “Rac­ing is no dif­fer­ent. So we’re see­ing changes, and they need to be em­braced.”

Nine con­tenders in this year’s 20-horse Derby field were owned by some form of part­ner­ship, and top own­ers and train­ers ex­pect that per­cent­age to rise in the com­ing years. Win­Star Farm and the China Horse Club, which paired to buy Jus­tify, will run an­other horse, Quip, against him in the Preak­ness.

Of­ten, the horse, the jockey and the trainer are merely front-fac­ing tal­ent rep­re­sent­ing a larger corporation with a chief ex­ec­u­tive, stake­hold­ers and an ar­ray of side in­ter­ests. There’s still the mys­tery and ro­mance of un­earthing a horse for the ages from the thou­sands of 1- and 2-year-old run­ners who go on sale ev­ery year. But there’s also lots of talk about pool­ing re­sources and mit­i­gat­ing risk.

“I think peo­ple’s appetite to buy mil­lion-dol­lar year­lings has changed,” said El­liott Walden, pres­i­dent and CEO of Win­Star Farm. “And I think the only way they’re do­ing it now is through a part­ner­ship.”

Own­er­ship syn­di­cates — in which in­vestors buy shares of an in­di­vid­ual horse — have been around for gen­er­a­tions. And the sport be­gan to take on more of a Wall Street sheen in the 2000s, when, for ex­am­ple, 2008 Derby and Preak­ness cham­pion Big Brown was backed by a fund billing it­self as In­ter­na­tional Equine Ac­qui­si­tions Hold­ings, which ul­ti­mately crashed and burned.

But the unions be­tween deep-pock­eted own­ers — other ex­am­ples in­clude Ken­tucky’s Ston­estreet Farms and Euro­pean rac­ing gi­ant Cool­more or New York moguls Vinnie Vi­ola and Mike Re­pole — have in­creased in fre­quency and com­plex­ity over the past five years.

It’s a way to re­duce, or at least share, some of the pain in a sport full of bad news and busted in­vest­ments.

This new re­al­ity is one the top train­ers in the sport have ac­cepted quickly. In Jus­tify’s case, that means Baf­fert, who has a chance to tie the all-time record of seven Preak­ness wins Satur­day. But the same own­er­ship team also has Au­di­ble, who fin­ished third in the Derby, with trainer Todd Pletcher.

“There’s a point man, and it’s El­liott, so I just ba­si­cally talk to El­liott, and he talks to ev­ery­one else,” Baf­fert said in ex­plain­ing how the ar­range­ment works from his end.

Win­Star Farm — 2,700 acres in the heart of Ken­tucky horse coun­try with bronze steeds greet­ing visi­tors from atop two stone col­umns be­side the gate — rep­re­sents the old and the new of the rac­ing in­dus­try. Dal­las-based telecom­mu­ni­ca­tions ex­ec­u­tive Kenny Troutt bought the place in 2000, but to build it up, he tabbed Walden, a third­gen­er­a­tion horse­man who’d sad­dled two Ken­tucky Derby run­ners-up.

They cre­ated a tra­di­tional rac­ing and breed­ing op­er­a­tion in many re­spects, pro­duc­ing 2010 Derby win­ner Su­per Saver among many other cham­pi­ons, but they also kept an eye on the chang­ing dy­nam­ics of the busi­ness. That meant al­liances, and a few years ago, blood­stock ad­viser Tom Ryan sug­gested Win­Star pair up with China Horse Club.

The club’s founder, Teo Ah Khing, is a self-de­scribed bil­lion­aire from Malaysia who de­signed the op­u­lent Mey­dan Race­course in Dubai. He burst onto the Amer­i­can scene last year when the club’s filly, Baf­fert-trained Abel Tas­man, won the $1 mil­lion Ken­tucky Oaks. At the post-race news con­fer­ence, Teo stunned lis­ten­ers when he said the club had be­gun with 100 mem­bers, each of whom bought in for a min­i­mum of $1 mil­lion. His far-flung plans in­clude an an­nual rac­ing fes­ti­val in China and a rac­ing-themed de­vel­op­ment on the Caribbean is­land of St. Lucia.

As China Horse Club planned its en­try to the United States, Teo did not want to act alone.

“When you’re buy­ing and sell­ing colts, ev­ery­one knows there’s an el­e­ment of risk to it,” Wal­lace said. “To some de­gree, it’s a num­bers game. You feel you’ve got to buy a cer­tain amount

of horses — some­where be­tween 20 and 25 — to make the model work. By hav­ing part­ners, it just al­lows you to spread your cap­i­tal farther.”

The fledg­ling in­ter­na­tional op­er­a­tion might have seemed an odd part­ner for one of the most suc­cess­ful farms in Ken­tucky, but Walden said the foun­da­tion of the pair­ing is sim­ple.

“I like Teo. He’s a very nice man who has a lot of class, and we share a lot of the same val­ues,” he said. “It’s not just about the dol­lars and cents of it. Be­cause there’s noth­ing worse than own­ing a good horse with a bad part­ner.”

Win­Star and China Horse Club would buy 20-25 horses a year and hold equal shares of their own­ing and breed­ing rights. Ex­ec­u­tives from both en­ti­ties would at­tend sales and de­bate the mer­its of each prospec­tive pur­chase.

Such con­ver­sa­tions are oc­ca­sion­ally con­tentious, but no one dis­agreed about Jus­tify when Win­Star and China Horse Club bought him for $500,000 in Septem­ber 2016. He was among the part­ner­ship’s sec­ond batch of horses.

“He was a beau­ti­ful horse,” Wal­lace said on the phone from his na­tive New Zealand. “He wasn’t easy to find, but he was easy to like. He caught the eye, filled the eye, and he still does to this day.”

Beyond ex­pan­sive pair­ings be­tween en­ti­ties such as Win­Star and China Horse Club sit in­vestors who scan the prospects a few months be­fore the Triple Crown se­ries and look for smart buy­ing op­por­tu­ni­ties.

It makes sense to en­gage with such buy­ers, Walden said, be­cause Win­Star re­duces its fi­nan­cial risk on horses that are — per­cent­age-wise — un­likely to win one of the Triple Crown races.

“When­ever you have a good horse, you get a lot of phone calls,” he said. “It’s an at­trac­tive time to take a lit­tle money off the ta­ble. You get on that Derby trail, and there’s 10 or 15 horses whose val­u­a­tion are in­creased, and there’s re­ally only one of them that’s go­ing to be worth it at the end of the year.”

That’s where Bos­ton-based hedge fund man­ager Sol Ku­min, who played lacrosse at Hop­kins and now sits on the univer­sity’s Board of Trustees, comes into the story.

Ku­min jumped into the rac­ing busi­ness four years ago at the urg­ing of his buddy, Nan­tucket con­trac­tor Jay Han­ley. He’s suc­ceeded quickly, spend­ing most of his money on low-risk fil­lies but oc­ca­sion­ally tak­ing a plunge on a bigticket colt such as 2016 Preak­ness cham­pion Ex­ag­ger­a­tor. Last win­ter, he wasn’t sure whether any of his horses would qual­ify for the Derby, so he ap­proached Walden about buy­ing a piece of Jus­tify, at the time a promis­ing horse who’d never run against se­ri­ous com­pe­ti­tion.

Walden said yes, as long as Ku­min also agreed to buy a piece of Au­di­ble. Just like that, he owned 15 per­cent of the horses who would fin­ish first and third in the $2 mil­lion Derby. As for how to split the win­nings among every­body, that’s up to the own­ers.

Ku­min knows some peo­ple see a de­cided lack of ro­mance in the way he achieved his first Derby vic­tory.

He ac­knowl­edged that he de­vel­ops deeper feel­ings for horses when he buys them as year­lings and takes a di­rect hand in man­ag­ing their ca­reers. For ex­am­ple, he’d seen Jus­tify in per­son ex­actly twice be­fore the week of the Derby.

But he also dis­agrees with crit­ics who sug­gest his part of the glory is some­how un­earned. He still had to bet on the cor­rect horses.

“Peo­ple say it’s not pure or not real,” Ku­min said. “But I find that a bit un­fair. I’ve been part of 28 Grade 1 win­ners in three years, and zero of them were Grade 1 win­ners when I bought them.”

Starlight Rac­ing, run by Louisville, Ky., res­i­dent Jack Wolf that in­cludes Giants ex­ec­u­tive Chris Mara, also bought a share of Jus­tify around the same time.

Af­ter he romped to vic­tory over the mud at Churchill Downs, the podium at the post-Derby news con­fer­ence prac­ti­cally over­flowed with own­ers who could not thank one an­other quickly enough.

In Bal­ti­more, Jus­tify will have the car­ni­val with him, from Ken­tucky and China, Bos­ton and New Zealand.

“I’ve been asked if it’s a bad thing,” Walden said. “And I don’t see it that way. It’s a hard busi­ness to own horses. We should honor any­body who wants to own a race­horse.”


El­liott Walden, a co-owner of Ken­tucky Derby win­ner Jus­tify, and Bob Baf­fert, the horse’s trainer, talk shop as the Preak­ness fa­vorite pre­pares for sec­ond leg of Triple Crown on Satur­day at Pim­lico.

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