Dermot Cantillon - What it takes to breed winners and run a racecourse

Article by Daragh Ó Conchúir

“My philosophy is if you’re in something and you can get into a position where you can bring change about for the common good, that’s a thing to aim for. I’m not one for being a hurler on the ditch, give out and not try and do anything about it.” 

Dermot Cantillon, The Irish Field (February 24, 2018)

Living true to his motto, Dermot Cantillon ran for election to Seanad Éireann—the upper house of the Irish Legislature (the Oireachtas)—two years ago. He was prompted to do so, even though he had no political background or experience, by a firm belief that horse racing and the bloodstock industry lacked representation despite their significance to national and local economies.

As an independent candidate, the Co Waterford native was up against the powerful party machines with their established lobbies and financial clout, so it did not come as a big surprise he did not make the cut. But he would not have been true to himself and his ideals had he not had a go.

Proactivity is a default setting for Cantillon, who along with his equally industry-immersed wife Meta Osborne, owns and runs Tinnakill House Stud in the Laois village of Coolrain. As a man who has walked the walk and continues to do so, he is always worth listening to on matters pertaining to the sport and business of thoroughbred racing.

Apart from being a breeder of multiple Gp. 1 winners and overseeing a flourishing enterprise for two decades, Cantillon has also helped steward the massive strides made by Naas Racecourse in 13 years as chairman. 

In addition, the 62-year-old is chairman of Irish Thoroughbred Marketing, a director of Goffs and board member of the Irish Equine Centre. Previously, he has served as chairman and president of the Irish Thoroughbred Breeders’ Association, chairman of Tote Ireland and director of Horse Racing Ireland. 

He also served as manager of the Smurfit family’s Forenaghts Stud outside Naas for 32 years until standing down two years ago. This is a polymath on breeding, selling and running racehorses.

Osborne is the daughter of Michael, the late Irish Turf Club (IHRB) senior steward and Irish National Stud managing director. He was also the creator of Dubai as an international racing venue and of Sheikh Mohammed’s stud operations in Ireland. Meta would follow in her father’s footsteps by becoming the first woman—and still the only one—to be Turf Club/IHRB senior steward and is a current HRI director. 

She is Kildangan Stud’s chief vet, having worked there for 34 years, while her family has been inextricably linked with Naas Racecourse since its foundation.

She and Cantillon make a good couple and that they don’t agree on everything is a positive. Among the many things they shared a page on was the desire to own their own stud. They bought Tinnakill in 2002 when it was a sheep farm, and the fecundity of the land and broodmares that have inhabited it since has propagated substantial success. Among the stellar cast of those bred there are Alexander Goldrun, Red Evie (dam of Arc-winning Breeders’ Cup heroine Found) and Casamento.

As a four-time Gp. 1 winner in four countries and three continents before injury brought his career to a premature conclusion last month, State Of Rest is the best though. 

Due to the colt’s astounding feats in adding the Prix Ganay and Prince of Wales’ Stakes this year to last season’s Saratoga Derby and Cox Plate triumphs, Juddmonte made a bid for the son of Starspangledbanner’s 10-year-old Quiet American homebred dam Repose, who is in foal to Frankel. 

“To be perfectly honest, like most Irish people in the industry, I’m a trader at heart,” Cantillon relates. “By definition then, if a big enough offer comes along, you’re gonna sell. Legacy is important but at the same time being able to meet your commitments for a long period of time and the security of that is also very important; and that won it over for me. She became too valuable a mare nearly to hold on to in proportion to the other mares I had. She was worth nearly more than everything else put together. That’s a total imbalance. 

“We have a philosophy to buy taproot-type females in outstanding American and European families, and she was the embodiment of that in that her dam Monaassabaat, who we bought initially, was out of It’s In The Air, who was one of the best mares in America ever (five of her 16 triumphs were Gr. 1’s) and also a fabulous producer. So it was an overnight success that took 15 years.”

Despite the windfall, Cantillon will not be splurging unnecessarily, though he will look to improve the lowest bar. With around 40 mares, Tinnakill focuses on quantity; and thanks to their canny approach and eye for a bargain, that tends to produce some quality along the way.

“We don’t spend a lot at the sales. We buy mares from one grand to maybe seventy five. That’s the comfort zone for us, and that’s where we intend to stay. To be successful at that level, you need a lot of mares; and you hope some will make it big for you. The philosophy is probably to throw enough at the wall and some of it will stick.”

They are willing to sell their homebreds at any stage up to and including as a racehorse but will not be forced into accepting a price that doesn’t match their value.

“I see five different opportunities to sell along the way. The first one is in utero, the second one is the foal, the third is yearlings, the fourth is breeze-ups and the fifth one—the ultimate one—is in training. So within the philosophy of business, all five operate—and I’d say more so now, the fifth one. To show confidence in our own yearlings especially, we’ll keep 25 percent in them in partnership if whoever buys them asks us to do so. We’ll go to the next level on the understanding that if they prove themselves on the racetrack, they will get sold in a commercial way.

“We’d predominantly be known as foal sellers, and we sell a lot of foals in England and Ireland. People want foals that they can bring to the Orby and so on, and we sell those sort of foals. If they make money, so be it.

“We tend to keep any foal after the 15th of April. People have an idea of what a foal should look like—it’s a good, strong foal. As they head towards a May foal, the discount that you’re expected to take can be fairly big, so we don’t tend to bring the later foals to the foal sales; they tend to go on to the yearling sales. At the yearling sales, we bring mostly foals we failed to sell because we didn’t get what we thought the foal should’ve made, and also later foals.”

The demand for precocity and immediate results has inflated that specific market, but that means there is value for discerning buyers.

“What happens at yearling and foal sales is that people have a certain view of what a good foal or a good yearling should look like, and most people have exactly the same view. So if you have that particular product, you get a big premium. But for people buying horses, I think the value is slightly to either side and for a deviation of 10 percent, you might get a discount of 50. 

“So if you can forgive some slight physical flaws, these are going to be discounted significantly; and I think there’s great value if people can get away from perfection to look upon the foal and yearling more as an athlete with slight imperfections but at the same time, an athlete.

“I think for that reason trainers probably make the best buyers because they’ve seen it all, whereas often, agents are under pressure to buy the horse that ticks all the boxes.”

Fashion also applies to stallions and again, Cantillon is imaginative when it comes to where he sends his mares. He has said previously that he likes to go against the tide when selecting stallions.

“I like to breed to middle-distance horses. Last year, I bred five mares to Australia. I think he’s a very good stallion. He can get you a two-year-old, he can get you a good three-year-old, he can get you a horse you can sell to Australia for a lot of money if it shows some form. The demand for middle-distance horses is enormous and very lucrative.

“The only time I would be breeding to ‘expensive stallions’ would be a foal share. I wouldn’t be putting more than 30 or 40 grand into any mare, barring we owned a nomination. I do invest in a lot of stallion shares, and to a large extent, that dictates what my mare is going to.

“I think it’s a great business move. It’s not without risk, but you can buy a stallion share; and in most cases, you’ll get most of your money back within three or four years. And if it hits, you’ll get many multiples of it. So, I think, if you’re in the industry, you have a nucleus of mares that you can use these nominations on, it makes huge sense economically to invest in stallion shares.”

He sees the economics of horse breeding as being cyclical and thus predicts a significant downturn in two or three years, with the thoroughbred industry tending to “have a significant correction” within a couple of years of a societal recession.

There is no hint of doom in these utterances, given that he has always cut his cloth to measure, and he expects any shrewd operator to insulate themselves in preparation for what’s down the tracks. Indeed while he has expressed concern for the smaller breeders in the past, he believes the environment is more conducive to them getting a positive return for their investment now. 

“I think it’s a bit healthier than it was. The top end was very lucrative and is still very lucrative, but maybe there aren’t as many players at the very top end where there’s a lot of players in the middle tier now.

“I think that ITM and the sales companies in Ireland have done a great job in attracting American buyers. There was a significant increase in yearlings going to America from the Orby Sale last year. That’s a tremendous result. To some extent, the American market is replacing the Maktoum market in Ireland. And when you look at history, you always see that major players come and go; but the industry always survives, and I think now the American market is going to get better and better.

“There’s a couple of factors there. The injuries in turf racing are less, the number of participants in turf races are more, and that’s good from a gambling point of view. And the fact we’ve sent a lot of horses over to America now, they’re acting as advertisements for the next bunch, and they’re doing exceptionally well. So as night follows day, I think that at the upcoming yearling sales, the American influence will be huge.

“I think Charles O’Neill (ITM CEO) has done an outstanding job. To see him in action internationally is a joy to behold. That’s a role that takes a long time to get people’s trust. Our industry is based on trust, but he has it now; and a lot of markets have been opened up year-in, year-out by him visiting these places with his team. Over time there’ve been very lucrative transactions, especially for horses in training, as a result of that.”

Back at home the evolution continues, and Cantillon’s entrepreneurial son, Jack, has become a key part of a team in which manager Ian Thompson is also a vital cog.

“I think Jack is a good catalyst because he pushes you. A lot of the accolades have to go to him because I’d be at the sales sometimes and he’d be after buying a mare without me knowing. He’d never buy a mare I wouldn’t have bought myself, but he pushes the boat out more than I would and that keeps me on my toes.”

Among Cantillon Jnr’s interests is Syndicates.Racing, which focuses on the fractional ownership model and has been a resounding success on both codes in a very short span of time. The founder’s proud parents have shared the journey, and Dermot emphasises the importance placed on having a positive race-day experience. This is a central tenet of all the improvements that have taken place at Naas during his tenure.

“In terms of building the new stand, the whole concept of it was to bring the horse into the main focus. You look to your right, and you have the horses in the parade ring along with the actors—the jockeys, the trainers—you have that whole environment there. Then you look to the left, and you see where the horses will be participating. So the whole philosophy of that stand was to bring the horse more into focus.”

Osborne calls Naas her husband’s “fifth child,” and it has certainly flourished in an atmosphere that promotes and encourages imaginative thinking. Former manager Tom Ryan oversaw much of the improvement, and Eamonn McEvoy continues in a similar vein.

“The philosophy is ‘never stop.’ What’s next? Eamonn has done a super job. He’s a very progressive, inclusive person. He tries to bring everybody with him.”

Rewards have come in the form of the upgrading of the Lawlor’s of Naas Novice Hurdle to Gr. 1 status and being asked to take up the slack during The Curragh’s redevelopment. But there is clear impatience about the difficulty in climbing further up the ladder. Not yet having a Gp. 1 race on the flat is especially annoying.

“My big frustration is that within the whole structure of Irish racing there’s no pathway in how you can get better. How do you go from being classed as a second-grade track to being one of the elite tracks? I’ve asked this question five years, six years now, and nobody has been able to tell me. How do we change it so that the 13 Gp. 1 races in Ireland are not divvied out every year to two tracks? Why can’t other tracks that have a good proposition get one of those races? Why don’t we challenge the status quo for the benefit of Irish racing? Nobody’s been able to tell me why not except that they won’t rock the boat.

“Convention is an easy way of management, but it’s not the progressive way.”

In any high performance network, the existence of a clear pathway provides an incentive for improvement and as a consequence, raises standards. Why do more than trouser the media money if it doesn’t matter what you do?

“That’s exactly it. That’s what we’ve been told for generations, more or less. There are little tweaks where they give progressive tracks like Naas additional fixtures; and also, we’ve been able to increase our black-type races. But at the same time, there’s a glass ceiling there, and we need to break that for the good of Irish racing. We need to be progressive. We’re not progressive. We just maintain the status quo.

“There’s two ways we can get a Gp. 1. The first is to have an existing Gp. 1 transferred from another racecourse. The other way would be one of our races, over time because of the ratings, would qualify as a Gp. 1. At this point in time, there are one or two races that we would think could be due to be upgraded, but it hasn’t happened yet and that’s frustrating.”

There are some “outside the box” plans that are being considered at the moment that include some potential ground-breaking global partnerships. Further enhancements for the course are also in the pipeline.

As for the racing product itself, he believes maintaining quality is critical.

“My view of Ireland: we’re like what the All Blacks tend to be in rugby. If a horse wins a good two-year-old race in Naas, then he’s marketable to the whole world as that’s as good as you can get in terms of a young horse and where he’s performing. I have a lot of sympathy that everybody gets a run because I have some bad horses myself that can’t get into races, but I think it’s very important that we maintain the brand.”

He believes that the betting tax should be limited to winnings for off-course bookies but be increased to three percent. This would lead to a likely increase in funding for racing, he argues. It would also go some way to arresting the decline of the on-course betting ring that used to be central to the race-day experience.

“We need to give an advantage to bookies on track. There needs to be something which makes you go racing if you want to bet and a differentiation between off-track and on-track in terms of the three per cent could be a big help.

“When I was on the board at Naas first around 25 years ago, a very good race meeting could turn over a million pounds on-track. Now we’re looking at 150 (thousand). There’s a crisis. We need to do something radical about the crisis. My solution would be to have no tax on-course and increase the tax off-course on winnings.”

This might also help increase attendances, which despite what some industry leaders suggest, has to be a cause for concern with racing’s supporters getting older by the year.

“We’re nearly totally dependent on media rights money to operate the racecourse. You could do a strength-and-weakness analysis, and a massive weakness is its dependence on the media rights. Because of the media rights, we’ve maybe neglected the attendance.

“We now have a new audience, which is the digital audience and… people don’t travel to race meetings like they used to, so the emphasis has to be on the local audience, and we have identified that at Naas. We have taken a number of steps, and we’re going to take more to be more and more part of the Naas community. If we’re going to get people back racing, we see our growth within Naas and its environs.”

It is a recipe that has worked for a number of regional venues but has not yet been utilised, successfully at least, by too many. And as Cantillon has already suggested, media rights income has removed much of the incentive to bother doing so.

That said, he understands the disappointment of some of the smaller racecourses that feel the distribution of the media rights income has been inequitable. 

“Something like an extra seven-to-nine percent went back to central funds when the last agreement was made. I was in the room when the thing was voted on, and people were looking at how much extra they were getting; and they were so happy about how much extra they were getting, they didn’t really think of the implications of giving an extra seven or eight per cent to Horse Racing Ireland. Horse Racing Ireland said, ‘Oh that’ll all come back in grants.’ And as a totality, it came back in grants. But for certain racecourses, it didn’t come back proportionally because if a track couldn’t come up with 60 percent of the cost, they wouldn’t get the 40 percent grant; and I understand their frustration.”

The current deal concludes next year, and he yearns for a “unified approach” towards negotiating the next one. But whatever unfolds, positive or negative, Dermot Cantillon will be putting his best foot forward. He knows no other way.