Miami IP Stable Ready for Round 2

A group of Italians who call South Florida home banded together last year to form Miami IP Stable, a racing stable of American-bought horses to race in Italy. The partners' initial investment worked out so well, they plan on restocking at the upcoming yearlings sale and this time they hope to make use of evolving technology to increase their buying power. Paolo Romanelli, whose roots in Italian racing run deep, spearheaded the partnership.

“I have this passion for horse racing because of my family tradition,” Romanelli said of the origins of Miami IP Stable.

Romanelli's great-grandfather, Luigi Regoli, Sr. trained for Federico Tesio, while his great-uncle, Federico Regoli, won the 1933 Arc de Triomphe with Crapom and trained in Italy for Winston Guest. His grandfather, Luigi, Jr., trained in Italy for Kirsten Rausing's family.

“In Miami, I met my good friends Piero Salussolia, he is a lawyer, and Luca Gattai, an entrepreneur, and we talked about buying some horses in America to race in Italy.” Romanelli continued. “And if they did well, maybe, we would bring them back to America. And we put together a partnership called Miami IP.”

“Piero and Luca didn't know almost anything about horse racing, so we went to the March sale at OBS to study everything,” Romanelli said. “We watched the bidding, we went to a few farms, and then in April of 2021, we put together this budget with two other partners who gave us some money. The three of us went to Ocala, and with the help of my very good friends Emmanuel and Laura de Seroux of Narvick International, we bought three horses.”

Of the decision to buy horses in the U.S., rather than Europe, Romanelli explained, “We are based in Miami most of the time. I live here permanently, I go to Italy two or three times a year. Piero has a beautiful house on an island here in Miami Beach. And Luca owns a historical private resort beach in Italy in Viareggio, called Bagno Lido, but he has a place in Key Biscayne where he stays six months a year, when the season is over in Italy for the beach in the winter, he comes to Miami. So we are familiar with the horses in America more than in Europe.”

At last year's OBS Spring sale, Miami IP purchased a colt by Street Sense (hip 427) for $24,000, a son of Daredevil (hip 855) for $30,000, and a colt by Liam's Map (hip 1047) for $47,000.

Shortly after the auction, the group added another partner when entrepreneur Maurizio Mian, who generates headlines with his German Shepherd Gunther–nicknamed the world's richest dog–acting as a lead investor.

“I went to school with Maurizio,” Romanelli said. “We grew up together and we were part directors of a soccer team in the countryside of Pisa called San Prospero. We were very close. But we lost track of each other. For a few years, we didn't see each other. He was in Santo Domingo in the Dominican Republic on vacation and Piero, his friend and his lawyer, was also there. It was just after the sales at OBS in April. Piero told him, 'We have a new venture, we bought three horses.' Piero told him I was involved and we spent a little more than we thought. Maurizio asked if we needed money and Piero said, 'Maybe. Maybe $30,000 to keep everything paid until September, the shipping, the quarantine. And Maurizio said, 'Since Paulo is there, I will give you $50,000 and I want to be a partner.' So without knowing anything about the horses, he gave us $50,000.”

The three OBS Spring juveniles spent a month in quarantine in Miami before shipping to Rome to join the barn of trainer Agostino Affe'.

“The horses started running in October of last year,” Gattai said. “We had a few wins and places, everybody was very happy, so we bought another one, a yearling at Fasig-Tipton October. I named him Tequila Picante. He is by Summer Front and he is about to start. We were totally new to Thoroughbred racing, but we became very excited because of the results. We didn't win any big races, but with one horse–Di Lido (Liam's Map)–we ran in the May 22 US$700,000 G2 Italian Derby.”

The partners were so happy with the initial results of the stable, they plan on adding yearlings to the roster this fall. To increase capital and to attract new racing fans, they plan on making use of Non-Fungible Tokens (NFTs), digital assets which represent real-world objects such as art, music or videos. NFTs are generally bought and sold online using cryptocurrency.

Salussolia said he is excited to make use of NFTs in the horse racing industry.

“It is something that is pretty common for art, for real estate, but not really for horses,” the lawyer said. “I want to make 500 NFTs available at €1,000 each to raise a capital of €500,000, pay all the expenses and commissions and, with the remaining €350,000-€400,000, buy more horses.”

Salussolia said the group already has some 15 interested investors and the hope is, as the stable's successes grow, the value of the NFTs will increase.

For Romanelli, the stable's individual results aren't as important as his desire to keep his family tradition in the sport and to possibly be a part of racing's resurgence in Italy.

“I always wanted to give a positive picture of racing in Italy,” he said. “In the recent past, there were many negative comments about Italian Thoroughbred racing. But now, there is a new leadership in the Italian government and they are supporting racing strongly and there is a younger leadership in the horsemen. At the opening weekend at the San Siro racetrack in Milan there were 21,000 people. They are paying the purses faster–that was always the main problem–and we have foreign stables coming back.”

Romanelli continued, “So we are all Italians and we want to buy here in the United States because we are more familiar with the bloodlines here and also because we live here, so it's easy to go to Ocala and to Lexington, but at the same time, we want to race in Italy because we want to support Italian racing. I hope to go back to the big days of Federico Tesio, Nearco and Ribot. It's a mission.”

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OpenStable Launched to Engage Derby Fans

The sports marketing and technology startup OpenLocker, Inc. has launched OpenStable marketplace, a fan-friendly blockchain platform designed to engage a new generation of Thoroughbred racing fans. The Legendary Racing Prospects Collection of Non-Fungible Tokens (NFTs) will initially include GI Kentucky Derby contender Epicenter and GI Kentucky Oaks hopeful Echo Zulu.

OpenLocker is looking to expand its Bone Yard Huskyz Club for sports fans at the University of Connecticut with a platform which allows racing fans to become part of an exclusive community.

“We are excited to bring together the technology solution we created for the monetization of college NIL to the racing industry. Fans of racing want to follow a horse over the course of its entire career and be part of a special club. Our model grants access to exclusive information, collectibles, and experiences so fans can fully enjoy the journey,” said Brian Klatsky, OpenLocker President.

Both Echo Zulu and Epicenter are campaigned by Winchell Thoroughbreds.

“It's so important that the industry supports innovative ideas that help grow, develop and engage a new generation of racing consumers,” said Ron Winchell. “I am delighted that Epicenter and Echo Zulu are a small part of this initiative to allow fans the opportunity to feel closer to our athletes.”

Braxton Lynch, OpenLocker's Racing Director, added, “We look forward to supporting the owners, trainers and jockeys with an additional revenue stream that they can use to cover the costs associated with Thoroughbred racing or contribute to charitable causes.”

Other contenders and racing collections are expected to be announced in the near future. For more information about

OpenStable and to view the Legendary Racing Prospects Collection, visit www.openstable.io.

 

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The Week in Review: Breeding & Selling the Million-Dollar Racehorse That Doesn’t Exist

There's an adage in poker playing that says if you take a look around the card table and can't tell who the sucker in the game is, it's you.

There's also an old saw about never investing in any business transaction you don't fully understand or can't explain to someone else (or yourself) in fewer than 30 seconds.

Nevertheless, the cryptocurrency-styled racehorse trading spree rages on at Zed Run, the online global marketplace that went live in 2018 and has since sold 11,000 “Thoroughbreds” that exist only as digital assets on the Ethereum blockchain as non-fungible tokens (NFTs).

According to a May 12 New York Times article by Taylor Lorenz, one trader reportedly flipped a single “horse” that initially cost $16,000 on Zed Run for $125,000. Another sold an entire stable for $252,000 when demand skyrocketed for that particular collection of “limited drop” offspring. A third touted the thrill of being able to churn a “crazy return on investment,” and predicted that prices on individual digital equine assets could soon surge into the million-dollar range, matching–and at times far exceeding–the auction prices of real-life Thoroughbreds.

“This is either going to be the smartest or stupidest thing I've ever done,” one Miami-based Zed Run enthusiast who has amassed 48 horses told the Times. “I'll either buy a house with the money I make from it or never show my face for a year.”

The Australia-founded Zed Run has been thriving in recent weeks. Or it at least has the appearance of thriving, because, as with any rapidly emerging market–crypto, traditional, or otherwise–you never truly know who is driving or profiting from the stampede. This is especially true when highly hyped trading is based on assets that have no tangible underlying value outside of their specific marketplace.

I spent a good chunk of the weekend trying to get my head around Zed Run's core concept (“to create an ecosystem where collectible digital assets hold value and have use in an exciting and ever-evolving gaming and wagering environment”). I read through the company's work-in-progress website and absorbed varying outside opinions on it that ranged from “next big thing” to warnings about the platform being a pyramid-styled investment vehicle that could be rewarding early adopters at the expense of late-to-the-party participants who might have to bear the costs of any collapse.

My opinion? Although there are enough waving red flags surrounding Zed Run to keep my digital wallet fully sealed, I must admit to being drawn in by how the platform is completely unlike any other digital horse racing endeavor to date. Even though Zed Run conducts virtual races 24/7, it is not so much focused on the actual racing, per se. It doesn't even have a pick-the-winners or betting component (yet).

Rather, its entire structure is based on trying to replicate–and capitalize from–an ever-changing, real-time digital bloodstock marketplace.

Assets that take the form of NFTs have been popping up in the news with increasing frequency. On May 20, David Stevenson of the Financial Times in London described the complicated concept of an NFT as “a certificate of authenticity held on the blockchain, a digital ledger of transactions that cannot be hacked. These tokens may refer both to an actual item, such as an artwork, as well as its authentication. Cut through the jargon and they are just a piece of code with specific functionality and a unique identifier.”

In essence, the buying and selling of NFTs is closely linked to our society's infatuation with ownership and property rights. On Apr. 29, Sophie Haigney described that idea in the New York Times, detailing how someone recently paid more than $69 million at auction to “own” an NFT-derived JPG image that anyone else could freely download on the internet. Someone else bought a “digital house” that can be owned, but not actually lived in for $500,000. A conceptual artist created a specific shade of blue, stored it digitally, then sold it for $800.

Yet another New York Times story on May 13 described how National Basketball Association players are investing in and trading proprietary, NFT-backed video highlight collections. Some players have become so obsessed with the concept that on-court trash talk now involves barbs about how much spectacular dunks and blocks will be worth as crypto-collectible clips.

Earlier this month, The Stronach Group launched an NFT series of GI Preakness S. souvenirs that David Wilson, the company's chief marketing officer, said would “offer our consumers some really rare value.” The collection consisted of 18 different Preakness-related NFTs, 14 of which were video recordings of past races, plus four “special edition” NFT offerings that were paired with real physical assets and experiences, like VIP tickets to next year's Preakness or a replica of the Woodlawn Vase.

Zed Run pushes beyond the memorabilia mindset, but the company underscores on its site that “Zed is NOT a cryptocurrency. Zeds are digital racehorses which can be viewed as a digital asset on the Ethereum blockchain using ERC-721 NFTs.”

That description of a digital racehorse might seem fairly dry and sterile, so Zed Run attempts to infuse some life into the idea of NFT ownership wherever it can by pointing out that you can “nurture your racehorse and create an everlasting legacy” within what is repeatedly termed as the “ecosystem” on the Zed Run platform. “We are hellbent on creating an emotional connection with your digital asset,” a note from the founders explains.

Zed Run also refers to its digital racehorses as “breathing” NFTs, which is meant to refer to the fact that you can actually do something with the investment, like race the non-existent equines for purses and prestige that will purportedly add to their digital breeding value. The race outcomes are derived from algorithms, as are the results of the NFT matings. But nowhere on the Zed Run site could I find an explanation of exactly who or what controls those algorithms, and nothing in the documentation suggests that these blockchain transactions are being monitored or overseen by any regulatory agency here in the United States.

Zed Run's site states that the firm takes a 10% cut of all transactions on the platform, “which may vary from time to time without notice as per Zed's Terms.” It also charges a “small” (exact amount not disclosed) “gas fee,” which Zed Run explains is the standard blockchain term for processing and executing the “smart contracts” that underpin each transaction.

Supply and demand drive any marketplace, and in this respect Zed Run is no different. There are four primary “bloodlines” that exist within the Zed universe, and they can be thought of as the digital equivalent of our three real-life Thoroughbred foundation sires. As the site explains, “each bloodline contains differing levels of rarity and characteristics unique to that racehorse.”

Zed Run plans to initially make available, via periodic releases, a total supply of 38,000 “Genesis racehorses.” Think of this as the first foal crop. You can either buy individual horses via the platform when they “drop” as a batch (in previous drops, some of these could initially be had for under $100), or purchase them on a secondary marketplace, quite likely at a higher price.

“However, players can choose to breed their racehorses, thereby creating more unique racehorses,” the site explains, laying the groundwork for what Zed Run hopes will be many future generations of digital Thoroughbreds. But as of the writing of this column Sunday, the breeding section of the site was down for maintenance.

“There are two main criteria to look for when purchasing a racehorse in Zed; bloodline and genotype,” the site continues. “The rarer your bloodline is and the closer your racehorse is to its ancestors, the more desirable it will be for breeding and the better it will perform on the racetrack…”

Once enough races are in the database, past performances will be a key factor, and there are already virtual bloodstock analysts popping up within the Zed community to offer assessments on the value of horses. These digital horses are also prized for the unique names owners bestow upon them, and as the site explains, “color plays an important aspect in terms of the collectability nature of racehorses in Zed.”

In fact, the coat color of a Zed Run horse–they appear in races as riderless, luminescent, computer-generated equines running on an elevated straightaway against the futuristic nighttime backdrop of a city skyline–is a main driver of digital breeding considerations. The Holy Grail is to produce what is termed as a “super rare” coat color in an offspring that could translate to big bucks in resale value.

Unless you happen to be holding that horse of a different color in your digital stable just when the bottom drops out of the Zed Run market.

“A Zed racehorse belongs to the user, just like your house, car or boat belongs to you,” the platform's tutorial explains. “No one can take it away from you. And just like in real life, the value of your Zed racehorses is determined by the market and what other people or users are willing to pay for it.”

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