Spendthrift Expanding Down Under

by Michele MacDonald

After rebuilding Spendthrift Farm into a top American stallion station that has become renowned for industry-transforming breeder reward programs, B. Wayne Hughes is looking across the globe to make his next big move. 
Hughes and his Spendthrift team are poised to set up a stallion shuttle base and, eventually, a broodmare band in faraway Australia, a strategy typically employed by only an elite few global powerhouses, most notably Darley and Coolmore. 

At age 81, billionaire Hughes is not only newly enthusiastic about Australian horses and racing after participating in two Australian yearling sales, he is also keen to take on the challenge of creating a business approximately 9,000 miles away from Spendthrift's base nestled in the gentle hills of Lexington. 

“The population of Australia is very much more into horse racing than is the population of the United States,” Hughes said while attending the Fasig-Tipton Kentucky winter mixed sale this week. “We've had such a good time there and met so many nice people that we've decided to race some horses there and stand stallions.” 

“He's a guy who probably personifies thinking outside the box, and part of that is always looking to the future. And he's a guy with just boundless energy,” Spendthrift General Manager Ned Toffey said when discussing Hughes and the farm's ambitious strategy. “I think that we're in all this for the long haul. We're moving forward and that will be the plan.” 

Spendthrift tested the Australian waters in April 2014 by selling a Tapit colt and buying a pair of fillies by Fastnet Rock (Aus) and a colt by Street Cry (Ire) during the Inglis Easter yearling sale. During the Magic Millions Gold Coast yearling sale last month, Spendthrift added colts by Sepoy (Aus) and Redoute's Choice (Aus) to its stable of young Australian-breds. 

Those five yearling purchases, acquired for a total of A$3 million (US$2.3 million), will be trained by John Hawkes and his sons under their Hawkes Racing banner, Hughes said, and they will be the first to campaign for Spendthrift in Australia. The colts will run with the goal of becoming stallions that could stand in both hemispheres, while the fillies have been selected as much for their potential as broodmares as for racing. 

Toffey said decisions will be forthcoming soon about how many and which Kentucky stallions will shuttle to Australia for the 2015 Southern Hemisphere season and where they will stand. Consideration had been given to acquiring a farm, and Toffey inspected properties including part of the Patinack complex previously owned by financially troubled Nathan Tinkler, but Hughes indicated the current plan is to work with an existing Australian stud operation. 

Details of a formal shuttle arrangement with an Australian partner have not yet been completed, Hughes said. 

Jimmy Creed (Distorted Humor), a six-year-old out of Grade I winner Hookedonthefeelin (Citidancer) who blazed to victory in the 2012 G1 Malibu S. in 1:20.36 for seven furlongs, is the first Spendthrift stallion selected for Australian shuttle duty. The half brother to Grade I winner Pussycat Doll (Real Quiet) possessed the raw speed that the Australian market generally demands and also should nick well with the Danehill (Danzig) blood that dominates the landscape. 

“He was extremely fast, and his foals this year are really spectacular,” Hughes said. 

Jimmy Creed covered 141 mares in his first American book last season. 

Toffey said there could be perhaps two to four stallions in the first shuttle contingent to carry the orange and purple Spendthrift colors abroad. Toffey said they will be carefully selected for their potential to appeal to Australian breeders and thus receive solid books of mares and sire enough foals to have a legitimate chance to succeed Down Under. 
“We're really in the process now of deciding what stallions we have on our roster in America that will really work, or we feel like will get a chance to work,” Toffey said. 

“We feel like if we can get a horse that has some [characteristics] you can sell–that you can hang your hat on as a stallion prospect–and get that horse opportunity, then you've got a chance to make that horse a stallion,” he said. “And I think that while what [horse] works in Australia may be very different, I don't think there's any reason why the same formula won't work. It won't necessarily be the same horses, but I don't know why the formula wouldn't work there.” 

To assist in the process of tailoring an Australian program, Spendthrift has hired Australian bloodstock agent Garry Cuddy, 27, as its full-time representative. Cuddy–who worked with the Internet Thoroughbred sales platform Bloodstock.com.au, which is affiliated with William Inglis & Son, after being associated for more than five years with Vin Cox Bloodstock–has spent time in Lexington getting to know the stallions and is coordinating plans in Australia. 

“It's a pretty exciting role to have,” said Cuddy, who has attended Keeneland bloodstock sales since 2007 and is familiar with the American market. “The plan is to bring in as many of the promotions as Mr. Hughes has introduced [in the U.S.]. He's definitely an innovator and hopefully we'll continue to innovate and help the breeders.” 

Basic economics is the primary inspiration for Spendthrift to take the giant leap across the world. 

“You have stallions that are very productive for half the year and then eat a lot of grass the rest of the year. And so obviously the idea of trying to use a horse in the Southern Hemisphere is very appealing,” Toffey said. “Ultimately the idea of taking these stallions down there and giving them the chance to breed a good book on Southern Hemisphere time is the way that we need to go.” 

The idea has been percolating for a few years. 

Hughes initially traveled to South America and became intrigued with racing and breeding on that continent, Toffey recalled. Spendthrift has both offered Southern Hemisphere breeding opportunities with its stallions in the U.S. and Canada in order to cultivate South American clients and sell and race horses there, and also has shuttled stallions; last year, Awesome Patriot (Awesome Again) and Court Vision (Gulch) were sent to Chile. 

“But commercially it is not as strong [as Australia],” Toffey said. “[Spendthrift's Southern Hemisphere expansion] really started with South America, but expanded to the idea of Australia. On the higher end, Australia certainly has more appeal; it's a better commercial market.” 

To test the market in Australia, Spendthrift took the first step in 2011 by breeding the mare More Than Pretty (More Than Ready), dam of graded stakes-winning Malibu Moon full sisters and “TDN Rising Stars” Kauai Kate and Winding Way, to leading sire Tapit on Southern Hemisphere time. More Than Pretty was shipped to Australia and delivered a chestnut colt in September 2012. 

That colt was sent to Australia's premier yearling marketplace, the Inglis Easter sale, in April 2014 as part of the draft of Arrowfield Stud, which co-owns and stands Animal Kingdom (Leroidesanimaux {Brz}) and also stood Gio Ponti (Tale of the Cat) on shuttle duty in 2012. 

Hughes and Toffey traveled to Australia for that Easter sale with two goals: to watch the Tapit colt sell and to buy some yearlings as they explored the industry there. 

“We had a little bit of luck with that sale,” Toffey recalled. “[Buyers] were not lined up on that [Tapit colt]. That just demonstrates that as popular as Tapit is here, he's not at a point where he resonates with Australian breeders yet. But we were fortunate that there were just enough of the right people there that were interested that we were able to sell him quite nicely.” 

Leading Japanese owner and breeder Katsumi Yoshida, who has bought several high-profile offspring of Tapit including his champion daughter Stardom Bound, purchased the colt for A$500,000. Japanese records show the colt was named Baby Tapit (Aus), but is still unraced. 

With the sale of the colt and then the purchase of three yearlings during the Easter auction, Hughes and Toffey found themselves becoming more and more enthusiastic about the horses they were seeing and the overall climate for the Thoroughbred business in Australia. 

“It was an industry that in looking at it, we felt it was a place we wanted to be,” Toffey said. “[Racing is] very popular, it's very much part of the sports culture there–from a betting standpoint and from a fan's standpoint. And that was something that was great to see and, frankly, very refreshing. It has a lot of appeal for us.” 

Thus, it was perhaps no surprise when they returned to Australia for the Magic Millions sale last month and set an Australian record price for a yearling by a first-crop sire, paying A$1.2 million for a colt by Sepoy (Aus) (Elusive Quality) out of Group 2 winner Sister Madly (Redoute's Choice), a half sister to Hong Kong champion Silent Witness (Aus) (El Moxie).

 “That was exciting–absolutely,” Toffey said of the purchase. “It was a little more than what we wanted to pay, but he was a very nice colt and really has all the ingredients, so hopefully he'll be standing at stud down there. You know when you play this game it's always pretty long odds, but that's the goal. He's certainly a nice individual so we'll keep our fingers crossed. 

“We've been very impressed by the horses we've seen there, primarily the yearlings and the stallions,” he continued. “You can see that a lot of the horses you see at stud and a lot of the yearlings you see at sales are very much built for early speed. It seems to me that it is a very muscular, very stout, correct, good bone, low to the ground type of horse, all things that sort of suggest sprinter. They seem to have the bone to be sound enough to stand up to the kind of training that it takes to be successful early and fast. 

“That [good bone] is something we see a little bit less of in the breed in America, so I love the idea of, over time, being able to infuse some more of that bone and more of that substance into our broodmare band,” he said. 

The Spendthrift team also is very mindful that they will have to approach the Australian market with stallions that can deliver what is expected by breeders there. 

“We are trying to get as good as an understanding of their market, their perspective on things, because this is not just a matter of stand a horse here, ship him Down Under and stand him there. They have different things they are looking for,” Toffey observed. “It is, I think, a very commercially driven marketplace down there… a very speed-driven market.” 
Looking to the future, Toffey said he hopes the Spendthrift shuttlers will be able to make a mark in Australia and be as successful as some of the farm's stalwarts in Kentucky have been, such as the initially unheralded but now very much in demand Into Mischief (Harlan's Holiday). 

To assist the stallions sent to Australia, Spendthrift probably will establish a broodmare band there in the coming years. Spendthrift currently maintains approximately 100 mares in the U.S., Toffey said. 

“Certainly in America we use our broodmare band very much as a tool. It's probably a little less about breeding for ourselves than it is a tool to support the stallion business,” he explained. 

“Right now, we're not set up today to do that in Australia, but I think that's something that likely will have to be part of the plan. Breeders want to know that you are supporting your own stallions-that gives them confidence.” 

Hughes Finding Fun in Latest Endeavor… 

B. Wayne Hughes obviously knows how to create successful businesses. 

Not only did the Oklahoma-born son of a sharecropper found Public Storage, the empire that catapulted him on to the Forbes 400 list of America's most wealthy, he also has reinvigorated Spendthrift Farm since he purchased the historic breeding landmark in 2004. 

As he approaches establishing a new shuttle stallion operation in Australia, Hughes is quick to say “I want to be successful down there,” and he and his team are scrutinizing all the elements they will need to meet that goal. 
But the venture means much more to him than just the bottom line. 

“We are having a blast. We love it,” Hughes declared, his eyes twinkling and his voice lilting with youthful exuberance. “It can't be just all business.” 

For Hughes, part of the delight is discovering that Thoroughbred racing and breeding in Australia is less politically divided and more publicly embraced as a glorious sport, rather than shadowed by headlines about drugs and declines as the American business seems to have been for years. 

“It has a lot of appeal for us,” said Spendthrift General Manager Ned Toffey, calling the Australian image of racing as a thriving sport “refreshing.” 

“Australia is a great place to do business,” Hughes said, adding of the long distance, international nature of his new venture: “And I love the challenge of it.” 

Hughes, who paid tribute to the investment made in both the Northern and Southern Hemispheres by Coolmore and Darley, does not offer any bold predictions of big success for Spendthrift. When asked what he would hope to see from the new program in five years, the 81-year-old quipped: “I'd like to still be alive in five years.” 

But he did make it clear that he intends to export to Australia some of the incentives that Spendthrift has developed under his guidance for small-scale American breeders along with his shuttle stallions. Spendthrift has revolutionized breeding with its Share the Upside and Breed Secure programs that offer, respectively, cost-effective ways for small breeders to invest in the farm's stallions and/or to have a guarantee of return on sale of the offspring they breed.

“Let's make it where the breeders make money. It can't just be the stallion owners making money,” Hughes said. “We can't exist without the small breeders. 

“[The incentive programs] help everybody… and [the small breeders] own the stallions. I'm one of the beneficiaries because without the breeders, the stallions are worth zero. Who wants a stallion who doesn't have any mares?” 

Toffey pointed out that Hughes is actively engaged in managing Spendthrift, particularly when it comes to marketing the stallions, and that he will be the primary force in directing the Australian operation as well. 

“He does love the challenge of the business exercise of making this a successful venture and he is very hands on, particularly in our sales department. So many of the innovations that you see are very much Wayne Hughes's ideas,” Toffey said. “It's been a great experience for all of us to be involved in implementing these things and helping to make them work, but it is very much Mr. Hughes who has driven them.” 

Spendthrift currently has 19 stallions on its Kentucky roster and stands two each in the regional markets of New York, Louisiana, Maryland and Ontario. 

In looking to Australia, Hughes noted that he has built the infrastructure at Spendthrift to the point where the shuttle plan can work in terms of the horsepower and other resources needed. 

And, since he joked that the only aspects of Australia he doesn't like are that the people speak English with such thick accents that he can't readily understand them and that there are too many biting insects, he is excited to watch what will unfold. 

“We're going to take a shot. We're just having a good time and we'll see what happens,” he declared.