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UAE Formula One of horse racing

When an economic crisis in Uruguay strained the finances of Pio Olascoaga Amaya’s family farm, he found salvation halfway across the world: the horse racing industry of Dubai.

Olascoaga took one of his horses from Uruguay to try his luck in an endurance race in Spain.

The start of the first race during the 17th Dubai World Cup at the Meydan racecourse in Dubai on March 31. — Reuters

After the horse finished third, he was able to sell it to a trainer working for His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, owner and rider of horses.

That led to Olascoaga opening business ties with Dubai and 10 years later, at the age of 31, he helps run a family business selling Uruguayan-reared horses with Arabian blood to the UAE.

He acts as an agent for other farms in Uruguay as well as his own farm, which has 600 horses.

“If I sell a horse in Uruguay for let’s say $20,000 on average, here you can sell at a minimum $40,000,” he said. The margin makes it worth paying the $10,000 cost of transporting a horse by plane from Uruguay to Dubai, more than 17 hours away.

“Here in the UAE is the Formula One of horses. They need horses all the time, and from all around the world,” Olascoaga said after making a presentation to Saudi owners at an Arabian horse fair in Dubai. As the oil-rich Gulf economies boom, the hobbies of its wealthy local populations tend to become big business - and nowhere is that more true than for horses, a traditional passion of the region’s Bedouin tribes.

Dubai, with its large tourist sector and web of international transport links, has emerged as the focus of the horse business in the region.

The business took a hit in 2009-2010, when Dubai was forced to begin restructuring billions of dollars of corporate debt, but has since bounced back with the local economy; the Dubai World Cup race, launched in 1996, attracted 65,000 spectators this year.

“This is something very important for Dubai, for tourism,” said Saeed H. Al Tayer, chairman of Meydan Group, which operates the opulent racecourse where the World Cup is held.

He said the racecourse had a capacity of 85,000 but this could in future be expanded to 120,000 if needed.

The UAE is famous for endurance races across the desert by “drinkers of the wind”, as locals sometimes refer to Arabian horses.

About 50 races of 80-240 kilometres (50-150 miles) are held in the cooler months between October and March; riders use scarves to shield their faces from the dust of dozens of vehicles which accompany the race to supply water.

Some 2,000 active endurance horses and 87 racing stables are listed by the Emirates Equestrian Federation; that compares to 800 such horses in France, where long-distance riding is also popular and which has a human population about eight times the size, data from the Federation Equestre Internationale shows. Dubai is also a world power in flat racing; its annual World Cup in March is the world’s richest race with a $10 million purse.

The average flat race in the UAE during 2010 offered €100,073 ($130,000) of prize money, the highest level in the world, according to the International Federation of Horseracing Authorities.

Even show jumping, historically more of a focus in Western countries, has been growing in the UAE.

One recent show jumping competition offered Dh260,000 ($70,800) of prize money, while show jumping horses bought for as little as $5,000 in Eastern Europe can fetch prices of $80,000 in the UAE if they perform well.

Traditionally, Dubai’s wealthy have cherry-picked the world’s top horses at sales abroad.

Shaikh Mohammed was the biggest purchaser in an auction of two-year-old thoroughbreds last month at Europe’s largest auctioneer, Tattersalls of Britain.

He bought a colt sired by 2004 European Champion Shamardal for $844,000, the third highest price ever seen at the sale.

The colt had been sold for roughly a tenth of that price as a foal.

“We are used in the Emirates to picking the best horses in the world,” Shaikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and UAE Finance Minister who owns some 1,000 horses around the globe, told the Dubai Racing television channel.

But the industry is also supporting the development of home-grown businesses within the UAE.

Several studs in the UAE breed pure Arabian horses, not only for races but also for horse beauty contests, which are popular across the Gulf Arab region. “It is a very good business,” said Khalid Ghanem Al Omairi, general manager of the Ajman Stud, which belongs to the crown prince of Ajman.

“Every year we have about 35 mares for breeding. But out of these 30-35 you may get only three or four good ones,” said Omairi, whose stud has around 80 horses, some kept in the US and Germany.

Dubai’s Godolphin stable, which flies some of its 400 horses to Britain in April to race and escape the Gulf’s summer heat, has made $14.8 million in prize money so far this year. That brings the total to $232 million since 1992.

Olascoaga, the Uruguayan agent, says he plans to open a stable of his own in the UAE with a local partner next year, to keep 20 endurance horses.

Csaba Marton, stable manager at Lootah Equestrian Club, said local families in the UAE thought nothing of paying Dh10,000-12,000 ($2,720-$3,264) every other month for riding lessons taken by four family members.

An investment in a riding school might take 10 years to be repaid in his native Hungary, Marton added, but five years in the UAE.

In some ways, the economics of the horse business in the Gulf are difficult.

In contrast to Europe, the desert terrain means the roughly 7,000 horses in the UAE have little chance to graze, pushing up owner costs.

Hay is imported from as far away as Canada along with feed, tack and other products.

The UAE’s hot climate means hooves grow faster, so a farrier has to change horseshoes every five weeks, one or two weeks earlier than in Europe, said farrier Alexandre Chuette.

Cost considerations are unlikely to sway the behaviour of the affluent citizens of the UAE, however.

“I think that in the future, horse racing in Dubai and in the United Arab Emirates will increase,” Shaikh Hamdan bin Mohammed Al Maktoum, Crown Prince of Dubai told Reuters after handing out trophies at a recent endurance race.

“We have a lot of owners who are trying to buy horses now, and we can see even more locals trying to train.”