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Sanan has learned expensive lesson
WASHINGTON - If Satish Sanan appears in the winner's circle after the running of the Kentucky Derby, nobody in the sport should begrudge him the triumph. The Indian-born entrepreneur has invested $150 million over the last decade in order to get there, and he acknowledges that he has not spent all of that money wisely.
Sanan's experience illustrates a syndrome that has always been part of the horse business. When a rich person decides to get involved in the game by buying expensive Thoroughbreds, insiders do not view him as a client who needs to be cultivated. They view the newcomer as a lamb to be fleeced. Sanan believes that he was such a victim.
"The game is corrupt, the sales are corrupt," he said. "People take you for a ride."
Yet even after unhappy experiences as a horse owner, Sanan didn't give up on racing. Instead, he spoke out forcefully against corruption, changed his approach and intensified his efforts to succeed. Next Saturday he will have two chances to win the sport's biggest prize. He is part-owner of Curlin and Any Given Saturday, both of them highly regarded Derby contenders.
Sanan fit the profile of the typical wealthy person gets into racing. A self-made man who was highly successful in a complex business, Sanan assumed he could succeed in the racing game, too.
Sanan left his native India at the age of 17 and went to England, where he studied engineering, electronics, and computer science. He worked for a Canadian technology firm, and after a decade struck out on his own. He started his company, Information Management Resources, in 1988, working out of a tiny office in Clearwater, Fla., with three employees. But he had a big vision: He was going to deliver Internet-technology services to clients round the clock by outsourcing the software development to India. The company became known as IMRGlobal as it expanded to four continents, and it boomed in the late 1990s by developing software for the anticipated Y2K computer problems. Sanan eventually sold the business, and he had plenty of capital to spend on his passion.
He had become interested in racing while he was a poor student in England, living in a YMCA. A friend introduced him to the art of handicapping, and Sanan sought to earn a few extra pounds by betting.
"Once you get hooked - you know how it is," Sanan said. "I told myself that one of these days I was going to own horses."
Sanan entered the sport with a splash in 1997. He enlisted the services of the legendary trainer D. Wayne Lukas and announced his ambition to win the Kentucky Derby. That year he bought the most expensive yearling at the Keeneland fall sale. In "The Home-Run Horse," author Glenye Cain wrote, a bloodstock agent watched Sanan signing the $2.3 million ticket and observed, "He's a turkey fattened for plucking." That $2.3 million yearling won a single race. Over the next few years, the record of Sanan's high-priced buys made racing people wonder if the owner was the unluckiest guy or the biggest patsy ever to get into the horse business. In 2000 Sanan bought five yearlings for more than $2omillion. Collectively the five cost $15 million and barely earned $300,000 in purse money.
He did have some successes - he has won three Breeders' Cup races - but even his best buy turned out to be unlucky. Sanan spent $2.15 million for Vindication, who won the Breeders' Cup Juvenile in 2002 and was the early favorite for the next year's Kentucky Derby. A leg injury ended his career before he ever raced as a 3-year-old.
As he looks back, Sanan recognizes that he - like many other neophyte horse owners - underestimated the shrewdness of the people he was dealing with in racing. He was naive about the sharp practices that abound at horse auctions. If a seller has a horse he thinks is worth $200,000, the agent for a buyer may approach him, guarantee him that price and offer to split any amount above that figure. They collaborate to run up the price to $500,000 and fleece the unsuspecting buyer out of $300,000. It's one of the oldest tricks in the book.
Sanan said: "I think the people who were buying for us knew we had deep pockets, and the greed got to people. We got screwed. In this game there are no rules.
Sanan, however, he blames himself, too.
In the software business, he said, "We'd agonize over a $500,000 decision. But when you're buying horses, your emotions take over."
Sanan never sued anybody, but he was so incensed about the integrity issue that he launched a public drive to reform practices in the sales business. He penned an open letter denouncing "kickbacks and fraud in Thoroughbred sales" that "this industry doesn't want to hear about." Sanan definitely sparked some self-examination by the industry of its sales practices.
Yet Sanan remained committed to horse racing. When he retires from his latest business venture - Zavata Inc., which offers outsourcing services to the health-care industry - he wants to devote all of his time to the operation of his Padua Stables and his farm in central Florida. He has learned from his mistakes, and he said: "We're running this like a business now. You have to be able to manage and control the process all the way through."
Instead of buying yearlings at auction and relying on the judgment of agents, Sanan's strategy now is to breed his own horses and race them. He is steadily trying to improve the quality of the Padua horses, and the emergence of Vindication as a hot stallion may help him do so.
While he strengthens his breeding operation, he has also been trying to buy young racehorses with the potential to develop into classic winners. There is a lot of competition in this market - the sheikhs of Dubai are frequently looking at the same horses - and nothing is cheap. After Sanan watched Curlin win his career debut in February, he was so impressed that he made an offer and wound up in a partnership that paid $3.5 million for the 3-year-old. But the price seems a bargain now that Curlin is the favorite to win the Derby. After an expensive 10-year education about the horse business, Sanan may be be on the verge of achieving some dramatic results.
(c) 2007 The Washington Post