INTERVIEW Bloodhorse Daily “MarketWatch”
Sept 28, 2018
By Meredith Daugherty
Ten years ago, Hank Nothhaft founded HnR Nothhaft
Horse Racing and dove into the world of
Thoroughbred breeding, racing, and sales. Blood-
Horse MarketWatch spoke with Nothhaft about what
sales mean for his operation, how the state of the market
affects breeders, and what the industry can do to
help ensure continued success at all levels.
MarketWatch: How did you get your start in the
Hank Nothhaft: After graduating from the (U.S.)
Naval Academy and serving in the Marine Corps, I
became a startup technology executive. I ended up
as the CEO of five venture-backed, high-tech-based
startups in the telecommunications business. It’s a
high growth environment; I call it adrenaline-driven.
Looking over the horizon and going from being
the young bull to the old bull, I realized that even if
I wanted to go on forever, I had to be realistic. So I
systematically decided to start a business that would be
a viable alternative to being a CEO that I could run in
retirement and have a lot of fun with. To have the same
sort of thrills I experienced in the business world. So
in 2007-08, I stuck my toe in the water of the industry
and have proceeded from there via the school of hard
knocks, trying not to make the same mistake twice.
We’ve had a lot of tumult in a short period of time
because of the significant financial recession that
occurred in 2008. I got started just before that, and
I had made some calculations that turned out to be
not very accurate, but because I was a financial expert
when the collapse occurred, I took advantage of that
situation to do what I call a “restart round” and push
aside the things I had done incorrectly to try and have
a more successful path. I certainly had the satisfaction
of enough good things happening that my adrenaline
addiction has been satisfied.
MW: Were you familiar with the industry at all
when you made your transition?
HN: I had no direct connection with the horse
racing industry whatsoever when I started, but I get up
most mornings very thankful that I made that fateful
decision to get involved. My wife and I were very casual
fans, so that was certainly part of it. The other part was, I
went to Europe frequently and I was addicted to reading
Dick Francis novels, and I would carve a day out here or
there to go to tracks within easy rail distance from London.
I had a romanticized view of the British horse racing
industry, but as silly as that sounds, it
did play a part in my decision.
The American Pharoah colt consigned as Hip 91 at the
Keeneland September Yearling Sale
MW: Ten years after forming HnR NothhaftRacing, how did you feel
about watching the American Pharoah—Kindle colt that you sold
as a weanling for $400,000 sell for $2.2 million as Hip 91 at this year’s
Keeneland September Yearling Sale.
HN: It was a great time. I derive a lot of satisfaction from those
moments, and it doesn’t have to be a big monetary achievement. I think
the sale was fantastic. I think it was like a Hollywood script that we had
the first yearlings from a Triple Crown winner, and we
had Sheikh Mohammed there for the first time in 10
years. We also had the Coolmore/Godolphin détente in
place and a phenomenal stock market going, a new tax
bill, new players in the industry, a global marketplace …
what could be better than that? The results of the sale
are unequivocally outstanding.
MW: What was special about that colt that you
remember from your time with him?
HN: I paid $50,000 for his dam, Kindle. I had a
tremendous relationship with the horse, spent a lot of
time with her when she was racing, and she was our
first stakes winner. She has the greatest disposition.
The reason I was able to buy her was that she was a
bit short. I moved her to Kentucky because regional
sires are not really commercial, but I breed all my
Pennsylvania mares in Kentucky, and they’re all foaled
out in Pennsylvania.
With Kindle, and a handful of really commercial
mares, I’ve been producing Kentucky-breds, but
mostly I have Pennsylvania-breds. No one knew with
her what kind of foal she’d produce, but she’s a robust
mare. With American Pharoah, I was lucky to have a
couple mares that were good enough to be accepted, so
I bred Kindle to him. From the get-go, she produced
an exceptional foal. Almost perfect. He’s the proudest looking,
most balanced horse, and I love the streak of
lightning blaze on his face. He was the prime candidate
to sell as a weanling. My reserve was $400,000, and it was exactly on
I’m so excited for the horse, because I’ve heard rumors that they’ll
ship him to the United Kingdom. Assuming that’s the case, the top
folks in the Sheikh’s operation will get a good look at him and then
put him in a position somewhere in the world to be as successful as
possible. My great hope would be that he works out as a dirt horse and
that maybe he could be the Sheikh’s Kentucky Derby (G1) horse.
The one thing I realized by selling horses is that they
end up in better hands than mine. People with better
contacts, more money, and better resources than my
own. There couldn’t be anyone that meets that criteria
better than Sheikh Mohammed. When you sell them,
you set in motion a chain of events that could never
have occurred had you retained ownership yourself.
I bred Kindle to Pioneer of the Nile, and I have this
phenomenal Pioneer of the Nile colt. He’ll be in Book
1 of the Keeneland November Breeding Stock Sale.
I also had Hip 1 in the (September) sale. She was an
RNA, so I have entered her in the Fasig-Tipton October
Yearling Sale (as Hip 624). I want to try to capitalize
on the current market demand for quality American
Pharoah bloodstock. I am confident that given a better
position, she will be a standout in this sale. If not, we
are certainly prepared to keep and race her, as she is a lovely filly.
“When you sell them you set in motion a chain of
events that could never have occurred had you
retained ownership yourself.”
MW: From a breeder’s perspective, what did you
think about the Keeneland September sale and the
quality of the yearlings being offered?
HN: In terms of the sale’s success being a mark
of our industry turning the corner from the market
downturn, the thing that I really look at as a breeder
is, how many horses are being bred? The last numbers
that were available are not super encouraging. We kind
of flattened out more or less three or four years ago,
and we haven’t really turned the corner. Kentucky has
gotten back to where they were 20 years ago, but if
you look at what percentage of horses that represents,
they’ve gone from being 35% of the horses bred in the
industry to somewhere around 55%. That means, likely,
if you look at each state, all the other states have had
I look at those bigger states that have had a tradition
in the horse racing business, and some of them are
at a third of where they were, some have all but
disappeared. So coming out of the sale, I think the thing
is that the industry will have really turned when the
horse population responds or we reduce the amount of
racing that is taking place, because there aren’t enough
horses to feed the engine we currently have.
I think you have to look at the sales and look at the
later books and see how many horses are being sold at
a loss. You have to ask yourself, “Why and how could
this sustain itself if there are people who are breeding
and losing money?” And they can’t continue to do that
indefinitely. I think one of the bright spots can be state
incentive programs like in Pennsylvania, where I’m
involved. You can breed a reasonably competitive horse
there, keep it, race it, and make money and have fun,
or take it to a sale and maybe it sells at a loss, but if
the owners race it, then you can actually break even or
make a profit.
What’s kept me happy and in the game is that I’m
treating this like a startup. I’ve been bootstrapping and
reinvesting what I have back into the business to grow
it, and one of the big things that has helped me do that
is the state incentive program. Relative to my needs,
it’s generated a lot of cash that’s helped keep me in
the game. I can tell you without breeders, there is no
If the industry wants to maintain the broad racing
schedule they have, they’re going to have to inevitably
produce more horses. Eventually, it has to be profitable,
or at least help people break even, for breeders and
enthusiasts to get into the game. I do know a lot of
people took mares out of service in smaller states, so we
need those to come back in.
MW: Do you think the market can continue the
trajectory it has taken this year?
HN: There are hard-core, central players in the
Thoroughbred industry, and those non-newcomers
are not that affected by the stock market and non discretionary
income. They are to a certain extent, but I
think the U.S. economy is in a sweet spot, and the only
thing that could upset the apple cart in my mind would
be the federal reserve increasing interest rates too
fast and somehow cutting off this really perfect scenario
we’re seeing in the economy.
My view right now is that we’re solid in the U.S.
I think other countries will adopt more pro-growth
strategies (for) their economies, and that will provide
even more underpinning to the industry. The other
side of the coin, however, is that with breeders, some
other countries have the same problem I proposed that
we have. I think they’re thinking, for example in the
U.K., of putting together a type of incentive program.
Hopefully, breeding numbers start reflecting that
programs are working here in the states.
The top end and the middle market are much higher
than they were. People have got to bid higher for horses
than they would have had to previously. I think what is
true is that people had to bid more money because you
have more money chasing the same number of horses.
The thrill of owning a horse and being involved in the
industry is fantastic. If people were more exposed to it,
many people would want to do it. BH