Jan. 6 (Bloomberg) -- Cradling his iPad, Sheikh Fahad bin Abdullah Al-Thani, a member of Qatar’s royal family, casts his gaze on a bay colt.
The horse is coming up for bidding on a sunny October afternoon at Tattersalls auction house during Europe’s biggest yearling sale in Newmarket, England, Bloomberg Markets magazine reports in its February issue. Fahad pushes his TAG Heuer sunglasses back on his head and flips through his iPad for details on the colt’s bloodline.
Not so long ago, a 22-year-old sheikh in jeans and sneakers would have been the ultimate outsider at “Old Tatt,” a tradition-drenched institution dating from the mid-18th century.
Here, bidders are usually British, and the horses are still priced in guineas, an antique monetary unit that’s now equal to 1 pound, 5 pence ($1.64) and has otherwise disappeared from usage.
Even though he started buying Thoroughbreds less than 20 months ago after attending his first race, Fahad knows what he’s looking for. “The temperament is important,” he says, glancing at his Breitling watch to check the time before bidding begins. “It’s mostly the pedigree and how the horse looks.”
As a newcomer to the world of Thoroughbred horse racing, Fahad was up against some of the biggest names in the sport at Tattersalls, including Sheikh Mohammed bin Rashid Al-Maktoum, the ruler of Dubai; John Magnier, the Irish owner of the biggest breeder of Thoroughbred horses in the world, Coolmore Stud; and John Warren, Queen Elizabeth II’s bloodstock and racing adviser.
Given the money spent at Tattersalls and other auctions in 2011, the superrich who dominate the global market for Thoroughbreds seem immune to shaky markets and the European debt crisis.
Fahad peers at lot 49’s details on his screen: The colt’s a big draw at today’s sale; his father is Invincible Spirit, champion of seven races, sire to more 2-year-old winners than any other stallion in 2010.
Fahad is determined not to go wild and bows out of the bidding. Warren snaps up the bay colt for 150,000 guineas.
With a relatively tiny budget and a newcomer’s luck, Fahad, nephew of Qatari Emir Sheikh Hamad bin Khalifa Al-Thani, is making waves on the global horse-racing circuit -- and not because he’s throwing around cash.
At Tattersalls, he spent 215,000 guineas on three untrained yearlings. That was a fraction of the 6 million guineas shelled out by the owner of the world’s richest stable of Thoroughbreds, Sheikh Mohammed, the ruler of Dubai, Qatar’s glitzier Persian Gulf neighbor.
World’s Richest Race
Yet in less than two years, the young Qatari has pulled off a feat that Sheikh Mohammed, 62, has yet to achieve after more than two decades of investing in flat racing.
On Fahad’s first try, his stallion Dunaden won the prestigious Melbourne Cup on Nov. 1 in a dramatic photo finish: It took the judges 2-½ minutes to declare the victor.
“Those 2-½ minutes felt like three years,” Fahad says.
The prize at the world’s richest turf race was worth it: A$3.6 million ($3.6 million). Not a bad return considering he scooped up Dunaden for only 120,000 euros ($156,300) in 2010.
Fahad’s restraint has earned him the admiration of some of the most important figures in racing.
“It’s nice that he’s not rushed in and gone crazy,” Warren says several weeks later at Highclere Stud, his horse farm near Highclere Castle, where the award-winning TV show “Downton Abbey” is filmed.
Dunaden’s victory embodied Qatar’s ambitions as well as Fahad’s. The natural gas-rich state on the Arabian peninsula is on a mission to project its influence around the world, and racing is just a slice of a bigger branding exercise.
Fahad has at his disposal his own capital as well as money from Qatar Investment & Projects Development Holding Co., for which he’s a director.
Qipco, one of Qatar’s biggest private investment companies, is chaired by Fahad’s father, Sheikh Abdullah bin Khalifa Al-Thani, who served as prime minister from 1996 to 2007 and is a brother of the Qatari emir.
In March, Fahad persuaded Qipco to sign a multi-million-pound deal to sponsor the British Champions Series, one of the perks of which is hobnobbing with the queen.
The series consists of 35 races culminating in a final in October at Ascot Racecourse, where Qipco British Champions Day is the richest day in U.K. horse racing, with total prize money of 3 million pounds ($4.7 million).
Fahad says the sponsorship deal will raise Qipco’s profile worldwide.
“It opens a lot of doors for us,” Fahad says. “Sports unites the world, and that’s the vision of Qatar.”
While Fahad may be a new rival to Sheikh Mohammed on the racetrack, the competition between Qatar and Dubai on the world stage has been gathering force for several years.
To the east of Qatar, Dubai has made a show of its sky-scraping office towers and tourist resorts. As the Wall Street of the United Arab Emirates, Dubai is struggling to recover from the financial crisis and a collapse in property values.
Qatar, whose gas reserves are the third largest in the world, is wielding its financial clout in a manner reminiscent of the U.A.E. a decade ago -- with sovereign-wealth investments, real-estate purchases in world capitals and an expanding national air carrier.
And to a greater extent than the U.A.E., Qatar has spent money to gain political influence.
Having bankrolled the Al Jazeera satellite news channel since 1996, Qatar more recently was one of the first countries to grant official recognition --and money -- to anti-Qaddafi forces in Libya.
Qatar sees sports as another way to raise its profile -- and more.
“Sport is a way of raising awareness of Qatar and branding the country but also a way of building infrastructure and attracting inward investment,” says Simon Chadwick, a sports business professor at the Coventry University Business School in England.
For four years, the Qatar Racing & Equestrian Club has sponsored the Prix de l’Arc de Triomphe in Paris, one of the world’s top horse races.
In December 2010, Qatar won the right to host the 2022 soccer World Cup, a decision so dogged by concerns about the heat -- temperatures rarely fall below 37 degrees Celsius (99 degrees Fahrenheit) in June and July when the event is held -- that Qatari officials promised to air-condition the stadiums.
Out of Nowhere
It’s also bidding for the 2020 Summer Olympics. Qipco, with stakes in Qatar Airways Ltd., Qatar National Bank SAQ and some of the emirate’s biggest construction companies, is poised to profit from the country’s hosting such events.
In the past decade, Qatar has come out of nowhere to become the world’s richest nation per capita, surpassing Luxembourg in 2010, according to the International Monetary Fund.
Smaller than Connecticut and with a population of 1.7 million, Qatar has the fastest-growing economy in the world, with gross domestic product growth of 16 percent in 2010.
In recent years, the Qataris have moved on London. In 2010, the investment arm of Qatar’s sovereign-wealth fund bought iconic London department store Harrods from Mohamed Al-Fayed for an undisclosed sum. In 2007, the Qatari royals shelled out 34.7 million pounds for 100 Park Lane, a 17-bedroom mansion overlooking Hyde Park. Fahad says his mother owns it.
Entering the rarefied world of racing brings Fahad into direct contact with business elites and royalty from around the world.
At Tattersalls, Sheikh Mohammed moves through the hubbub in combat trousers, desert boots and a baggy khaki jacket. Everyone seems to know who he is. Crowds part as he glides from the parade ring to the barn where the bidding takes place.
“The market is healthy and strong,” Mohammed says. He dismisses a question about why he cut his spending on yearlings in 2010.
“We never cut,” he says. “We just buy what we want.”
He says the Qataris’ foray into horse racing will be a boon to the market.
“It’s great!” he says and then dashes off for his next bid.
Today, more than three decades after he got into horse racing, Sheikh Mohammed’s operation is massive.
Godolphin, the Maktoum family’s private horse-racing stable, which takes its name from Godolphin Arabian, a stallion imported to England 300 years ago, raced 382 horses during the first 11 months of 2011, earning Godolphin $19 million in prize money.
Darley, Mohammed’s global breeding operation, has stallions in six countries. Those horses include Dubawi, who commands 75,000 pounds for a stud visit.
Sheikh Fahad is just getting started. He says he doesn’t need to get big to win.
He now has about 50 horses in training after spending more than $9 million in the past 18 months buying up yearlings, 2-year-olds and broodmares for himself and his family.
With his Melbourne Cup win, he was profitable again in 2011; in addition to prize money, he sold three horses to buyers in Hong Kong for $1.57 million each.
While profiting from racing is difficult, breeding can be a gold mine.
In May 2010, Fahad attended his first ever horse race -- the 2000 Guineas in Newmarket, one of Britain’s five so-called classic races.
After watching a horse called Makfi win the race as a 33-to-1 outsider, Fahad asked David Redvers, his bloodstock adviser, to see whether it made sense to buy the animal and start a stud business.
In August, Fahad and Qipco bought Makfi for $11 million and formed Qatar Bloodstock, which operates alongside his personal racing business, Pearl Bloodstock.
Makfi, an offspring of Sheikh Mohammed’s Dubawi, is now commanding 25,000 pounds per visit with a broodmare.
In 2011, he “covered,” or tried to impregnate, 140 mares at Redvers’s Tweenhills Farm & Stud west of Oxford, England, before being shipped to New Zealand, where he was scheduled to cover 120 mares. Makfi generated 6 million pounds for Qatar Bloodstock in 2011.
“Within three years, we will have made back the money plus some profit,” Fahad says. “But the main thing with stallions is, if their progeny actually perform well enough, you can make 200 to 300 percent of what you’ve paid for it easily a year.”
‘Take the Flight’
Such talk would have been unfamiliar to Fahad before he got a bachelor’s degree in business administration at the London campus of European University in 2008.
While there, he began watching racing on television. He was hooked. Fahad says he started researching agents who could help him buy, and several people recommended Redvers.
Until Redvers met a sheikh with millions to invest in horses, he’d spent 15 years running his Tweenhills operation.
It was in February 2010 that Redvers got a message that Fahad wanted to talk to him about racing.
Redvers was in New Zealand at the time. He’d never heard of Fahad and wasn’t sure whether it was worth flying all the way back to Britain just to meet him.
Redvers says he asked a friend who had served in the U.K. Special Forces to figure out who Fahad was and whether meeting him was worth the journey. The next day, the friend sent Redvers a three-word text message: “Take the flight.”
Looking back, Fahad says he liked Redvers’s restrained approach.
“He popped up to me as kind of a shrewd person who doesn’t buy the top lot in the sale, where it can go crazy money sometimes,” Fahad says.
Redvers, 41, returns the compliment, saying Fahad doesn’t get carried away in the bidding even when he likes a horse.
“If one of the Maktoums decides they want something, it takes a very, very strong bid for them to get beat,” he says.
With Fahad’s financial backing, Redvers has been able to translate his skills as a talent spotter of racehorses into a successful business for the young Qatari.
Fahad says he gave Redvers a limited 2010 buying budget of 1 million pounds and told him he’d re-evaluate their business relationship at the end of that year.
Fahad’s horses won 26 percent of their races -- an impressive rate; most owners are happy with about 17 percent. For 2011, he upped the ante.
Cocktails With a Prince
Redvers says he likes Fahad’s approach to investing.
“We’ve taken the view we need to run it almost as a business,” Redvers says. “I say ‘almost,’ because with racehorses, there’s an element of ‘You can never expect to make money.’”
With Qipco’s sponsorship of the British Champions Series, Fahad and his family gain cachet for Qatar by associating the country with British racing.
On Oct. 14, the night before British Champions Day at 300-year-old Ascot Racecourse, Fahad attended a private cocktail party at St. James’s Palace hosted by Prince Andrew, the queen’s second son.
The next day, Fahad mingled in the parade ring with the queen, who was dressed in a pink coat and hat, and Saudi Prince Khalid Abdullah, the owner and breeder of 3-year-old Frankel, the top-rated horse in the world over 1 mile (1.6 kilometers) and the winner of the day’s 1-mile race by four lengths.
Two weeks later, Fahad was the envy of the Gulf horse-racing set.
His Melbourne Cup win capped a rags-to-riches story that began in 2006 with the sale of Dunaden -- for 1,500 euros -- to a Dutch couple, Jetty van der Hulst and her husband, Hans Diehl, at a yearling sale in Deauville, France.
“He didn’t have a fancy pedigree, but he moved well and he looked strong,” says Van der Hulst, who together with Diehl runs a dog-grooming and -breeding business. “No one else was bidding, so we ended up taking him home.”
For the next three years, the couple’s labradoodles -- Labrador retriever-poodle crossbreeds -- exercised and played with Dunaden at their farm in Nederweert, the Netherlands.
The setting was a far cry from the cushy stables and Boeing 747 transoceanic transport to which top Thoroughbreds are treated.
In Nederweert, with a small shed for shelter, the future champion was kept with other horses in fields spread over 15 hectares (37 acres), Van der Hulst says.
Diehl, who had worked as a racecourse official in Dutch trotting competitions, got Dunaden accustomed to starting gates when he was a year and a half old -- by letting him walk through doors at their house, Van der Hulst says.
After Dunaden was broken in, Van der Hulst and Diehl sold him for 17,000 euros at a sale in Strasbourg, France, to Alban de Mieulle, owner of a Qatari racehorse stable.
When Redvers bought Dunaden last year on Fahad’s behalf, the goal was not the Melbourne Cup; it was winning a less important race at l’Arc de Triomphe. Dunaden lost -- in a photo finish.
Confident of Dunaden’s progress, Fahad stumped up more than 60,000 euros to transport him to Melbourne for another, happier photo finish.
“We’ve been lucky,” Fahad says.
“We’ve also bought into the right horses at the right value,” he says.
After all, the young sheikh from Qatar is not one to throw around what he calls “crazy money.” Even in the sport of kings.
To contact the editor responsible for this story: Michael Serrill at email@example.com