When he's not spending millions of dollars funding organizations that support the undemocratic imposition of his pro-free trade and pro-immigration policies, billionaire investor George Soros has, through his family office, made a very successful investment that places him at the forefront of the horsebreeding world. The New York Times reported Thursday that Soros Fund Management is the owner of SF Bloodstock and SF Racing Group, an international breeding and racing operation that was founded by the firm in 2008. Executives from Soros's investment firm oversee the operation.
Most recently, the firm has attracted unwanted media attention because of its 15% stake in breeding rights for the racing horse Justify. If Justify wins at the Belmont Stakes this weekend, he will become only the 13th horse in history to claim horse racing's Triple Crown. That could create a huge windfall for Soros - not that he needs the money. American Pharoah, the last horse to win the Triple Crown, has commanded roughly $200,000 per live foal. Pharoah produces roughly 150 foals per breeding season. Shortly after Justify won the Preakness, speculation swirled about a $60 million deal for his breeding rights involving American breeder Coolmore. However, some of Justify's owners have said any deal may need to wait until September, when the owners will face less onerous capital gains tax requirements.
As horse racing has faced an influx of foreign money in recent years, it's perhaps unsurprising that one of Soros's partners is a mysterious Chinese farm called China Horse Club.
WinStar Farm, one of North America’s leading thoroughbred racing and breeding operations, owns 60 percent of Justify’s breeding rights. China Horse Club owns 25 percent. A third group, a secretive entity that holds the remaining 15 percent, will remain out of the spotlight because it vigorously avoids any public attention. It is a company controlled by top employees of the billionaire investor George Soros.
Through SF Racing and SF Bloodstock, Soros owns a vast collection of breeding and racing properties on several continents.
Mr. Soros’s investment firm, Soros Fund Management, is behind SF Bloodstock and SF Racing Group, an international breeding and racing operation started in 2008. Executives from the investment firm oversee the breeding and horse ownership businesses. Gavin Murphy, an Australian based in New York who has served as the Soros Fund’s longtime tax counsel, is the manager of SF Bloodstock and SF Racing Group. Christopher Naunton, chief financial officer for the Soros Fund’s family office, is the president of SF Bloodstock and SF Racing Group, corporate filings show. Tom Ryan, an Irishman based in Lexington, Ky., is the team’s bloodstock agent.
SF, which is also a part-owner of Newgate Farm in Australia, has breeding stock in the United States, Australia, England, Ireland and France. It could not be determined how much money Mr. Soros’s firm has committed to the horse racing business.
SF Bloodstock, which according to court filings is owned by SF Agricultural Holdings L.L.C., employs a for-profit model and focuses on the breeding side of the industry, purchasing stallions, or shares in them, and broodmares while selling yearlings at auction. In 2015, it entered into a three-year partnership with WinStar Farm and China Horse Club that allowed them to spend big while spreading risk at yearling and 2-year-old sales. That is how the group partly acquired Justify and the third-place Kentucky Derby finisher Audible, but it quickly sold its racing rights in those horses to Head of Plains Partners and Starlight Racing.
"To me, and the couple guys that I do this with, it’s more fun to be in the winner’s circle when Justify wins the Derby holding the trophy," said Sol Kumin, a hedge fund executive who runs Head of Plains. "So you kind of have to pick. If this became my full-time job, which it won’t, I would have a different program, focusing more on the stallion business and breeding. Now we still want to make money, and so far we’ve done well, but it’s hard."
Readers who were around in the 1990s will remember that Soros has a long history of doing business with Chinese firms. He was one of the first western investors to invest in China, putting $25 million into China's Hainan Airlines back in 1995. He's become more critical of China in recent years, telling an audience at the World Economic Forum in 2016 that China's economy had started to resemble the US's before the 2008 financial crisis. According to the New York Times, don't expect to see him at Belmont Park on Saturday. His feud with Hungarian Prime Minister Viktor Orban will probably keep him occupied for now.