Bloomberg News

Irish Horses May Ease Bailout Burden as ECB Pushes Asset Sales

June 16, 2011

June 16 (Bloomberg) -- Irish horses may end up carrying some of the weight of the country’s economic collapse.

The National Stud in Tully, Kildare, is among the 5 billion euros ($7.3 billion) of state assets earmarked for disposal by a government-appointed group in Dublin, as Ireland, Portugal and Greece try to raise money as a condition of their financial aid. As well as bigger ticket items such as ports and utilities, a Greek casino and grain silos in Portugal are up for sale.

“Beggars can’t be choosers really,” said Alan McQuaid, an economist at Bloxham Stockbrokers in Dublin. “You want to ease the burden as much as possible on the taxpayers.”

The bailout bill for Greece, Ireland and Portugal is currently running at 273 billion euros and the Greek government is in talks on securing more money. While Irish Finance Minister Michael Noonan said on June 8 his country wouldn’t hold a “fire sale,” European Central Bank President Jean-Claude Trichet said the following day that the rescued countries have “immense responsibilities” to deal with their own debt problems.

A report commissioned by the Irish government and published in April recommended part of the country’s electricity company, airports, ports, forests and racecourses be sold, as well as a stake in airline Aer Lingus Group Plc.

The European Union, International Monetary Fund and ECB asked Ireland to examine privatization after agreeing to finance Ireland’s 85 billion-euro rescue package in November last year.

Stud Central

Ireland is home to some of the world’s largest stud farms including those owned by Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum and Prince Khalid Abdullah of Saudi Arabia. Coolmore, a breeder of champion racehorses, is based in Tipperary in southern Ireland.

The National Stud, about 50 kilometers (31 miles) west of Dublin, is the centerpiece of the biggest horse breeding industry in Europe. Ireland produces 10 percent of the world’s thoroughbred foals and more than France and Britain combined, the government-commissioned report said.

The stud farm, where stallions service mares from Ireland and overseas, played host last month to Queen Elizabeth II, who has had some of her champion racehorses at the farm. The most expensive horse, Invincible Spirit, fetches 60,000 euros for each mare he “covers,” or impregnates.

The sale is unlikely to be a big money-spinner for the government, John Osborne, chief executive officer of the farm, said in a telephone interview. Osborne, who opposes the privatization, estimates the farm is worth “a seven figure sum, possibly an eight figure sum,” he said.

‘Piece by Piece’

“You would hope that the entire construction of the bloodstock industry isn’t disassembled piece by piece,” Osborne said. Breeders can invest in the stud’s stallions, while it aims to keep a 25 percent to 50 percent stake in the horses, he said.

The state took over the stud in 1946, when the Irish breeding industry was undeveloped, according to the report for the government, headed by economist Colm McCarthy.

Now, there are almost 100 stallion studs in the country and the Kildare operation “no longer plays a critical role” in providing access to the best stallion lines, the report found. The stud lost 4.3 million euros in 2009, the latest figures available, with the Finance Ministry injecting 1 million euros to buy horses as recently as 2006, the McCarthy report said.

Small independent breeders who can’t compete with the world’s largest operators may lose access to the stud’s services, according John Weld, 53, owner of about 30 horses.

“The National Stud is a tremendous shop window for investors who come from abroad,” said Weld, who is also based in Kildare. “The smaller independent studs have fallen by the wayside to the larger extent. The stud plays a valuable role in facilitating those smaller breeders.”

--With assistance from Jim Silver in Lisbon. Editors: Dara Doyle, Rodney Jefferson

To contact the reporter on this story: Finbarr Flynn in Dublin at fflynn3@bloomberg.net

To contact the editor responsible for this story: Colin Keatinge at ckeatinge@bloomberg.net


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