Zayat Files Bankruptcy

[bdw0617]

I think that the main problem is thawt most owners dont' really like racing, as much as they like the attention of owning a grade 1 type triple crown horse if that makes any sense.

if most people would just adjust their expectations, it would solve alot.

do you really have to go out and spend 8 million dollars at keeneland to have a good time?

if owners would be content with buying that nice looking maria's mon that will probably turn out to be a nice hard knocking high level claimer or allowence horse instead of having to buy every unbirdled's song that walks across the stage in hopes of scoring with a derby horse...


regardless of how successful I may or may not end up being, I hope to god the day doesn't come where I cringe at having to run a horse in a 40k claiming race on saturday at santa anita.

the day that happens I need to get out of horse racing.

[NiteOwl666]

Now the bank says Zayat tried to hide almost $3 million he collected in insurance money after the apparent death of Thorn Song - bank says that Zayat's stable, the collateral for the $34 million he owes, is at risk:

http://www.kentucky.com/latest_news/story/1130600.html

[oliverstoned]

Oooooo that's bad and the trainer saying there was a small chance he'd make the BC when he was already dead oooo man. I assume the ins. co. did an investigation before shelling out almost 3 mil. Wonder if they thougt it strange there was no announcement he had died. I also wonder the circumstances of Zayat horses no longer being insured, non payment? canceled by Mr. Zayat? canceled by the Ins. Co.?

[FOS]

hi oliverstoned

I assume the ins. co. did an investigation before shelling out almost 3 mil.

I'd be amazed if underwriters shelled out a significant amount of cash...much less $3mil...without requiring a necropsy by and a detailed report from sources acceptable to them; the results of which they were completey satisfied with.

Best.

Respectfully

[Fireslam]

Especially on a horse thats not dead.

[oliverstoned]

Jeez this is getting weirder, heres the latest (link below)


That sounds like insurance fraud to me. I'd like to hear the Ins Co. take on all this.

http://www.bloodhorse.com/horse-racing/articles/55285/zayat-not-required-to-report-insurance-check?utm_source=BreakingNews&utm_medium=email

[ageecee]

The guy is a multi millionaire yet has to borrow money to get in the racing business. What am i missing?

[tinners way]

There is no doubt he sold the beverage business for a lot of money, not sure if it was as high as a billion, but several hundred million. He would not be the first or the last to fully leverage his ventures. It would be bad for the bloodstock market if these issues continue to occur. I am probably in the minority, and I am sure the bank believed there was ample collateral between hard assets and the actual horses, but how do you get yourself that upside down. As I said in an earlier post, look at Tom Hicks. Never would I have thought he would have cash problems, but first the Rangers, next the Stars, and most likely Manchester is right behind that sale.

[Sysonby]

The guy is a multi millionaire yet has to borrow money to get in the racing business. What am i missing?

What was the interest rate of the money he borrowed?

Some extraordinarily wealthy people prefer their own money tied up in their own investments making money while they speculate with lender money having attractive terms. Or they use a line of credit as a bridge loan instead of cashing out assets.

One thing I can guess is that "Zayat Stables" is a very different and separate pocket than Zayat himself.

[zinn21]

Sysonby wrote:

Some extraordinarily wealthy people prefer their own money tied up in their own investments making money while they speculate with lender money having attractive terms. Or they use a line of credit as a bridge loan instead of cashing out assets.

One thing I can guess is that "Zayat Stables" is a very different and separate pocket than Zayat himself.

Bingo.....

[tinners way]

I really don't think it is that simple. I am sure they are different pockets, but you are talking about a 3 million payment on the loan. It is not as if they were calling in the entire loan, just trying to get a scheduled interest payment.

If he is trying to prove a point with the bank not to mess with him, that will put him in an almost impossible position to obtain any financing in the future. So if he has the cash, he will have to use it one way or another. It is also curious that Keeneland is also mentioned in the release. So obviously money is owed there as well.

In the old days, pre 2008, if you owed a bank a lot of money it usually found a way to work things out, as it was both parties problems. Fifth Third is fairly sound, a big lender to the equine industry. This will most likely tighten credit on many more.

[ageecee]

They called the loan in August i think.

[HR LLC]

How would the bank make money without making loans? If another rich person showed up to Fifth Third wanting to borrow money to purchase horses, they would do that type of loan again. I am willing to bet they are charging anywhere from 5 to 15% interest on those types of loans.

A good friend of mine worked in the Bank of America credit wealth department and he worked on a certain family purchasing a baseball team in DC. He told me you would be amazed at how rich people never like to use or try to limit the amount of their own money they put into a purchase. All they do is pledge collateral or rights to future revenue to the bank for the loan.

The rich keep their money in cash/gold/investments and offshore... look at the situation with UBS. That is just the tip of the iceberg regarding US citizens with offshore accounts.

[Sysonby]

The other thing boarding farms will tell you is that the super wealthy have been known to use their clout to be slow and no pays. One farm owner told me once how frustrating it was to watch a major TB owner--not Zayat--buy several million dollars worth of horses at an auction all the while he was months behind on a $25,000 board bill. He eventually got paid but it took a lot of effort. And I understand that situation is not uncommon.

[Gallop58]

Re: Late Pay
The biz types know that one of the tricks you can play with money is cash flow management and one of their favorite tricks is to delay vendor payment. It's a culture of "get your accounts receivable ASAP and your accounts payable go out as late as you can". Because it's a typical and dominent theme in many businesses, I think it gets defaulted to many times even though there's no good reason to practice it with the little guys who need payment.
They know that all those "accounts payable" will take their terms so they don't really care. It's the same everywhere, not just in horses.
If the customer is king, and you want to play in the pool with these fat cats, you have to be prepared for this type of child like behaviour.