Bucking the Recession at Track Takes Horse Sense : Racing: It’s been a good year for Cobra Golf co-founder Gary Biszantz, a horse owner and racing enthusiast. He’s making money at it.

Gary Biszantz has had his share of thrills in his varied and successful business career.

He co-founded Cobra Golf of Carlsbad in 1978 and then built the company into a leading manufacturer whose 1992 sales will top $40 million. Along the way, he signed up PGA tour superstar Greg Norman as an investor and public spokesman.

Before starting up Cobra, Biszantz, 57, owned Ford dealerships in Glendora and Poway and routinely gave the late Henry Ford II a piece of his mind in dealer council meetings.

But nothing matched the thrill Biszantz got last March. That’s when he led his 3-year-old Thoroughbred Three Peat to the Winner’s Circle after the Bay Shore Stakes at Aqueduct, one of horse racing’s top races. The victory at the Long Island track--and the $100,000 winner’s purse--meant that Biszantz had arrived as a horse owner.

Three Peat’s success--the horse has had two other first-place finishes in its five starts this year--should also make Biszantz’s 32-horse racing stable profitable this year. He won’t say by how much, but Biszantz said his purses this year will exceed the $500,000 he will pay out in trainer fees, maintenance and horse purchases.

It is the purses, obviously, that Biszantz and other owners covet to offset the enormous training and maintenance costs, which average $20,000 per horse per year.

But Biszantz’s profits are hardly typical of the thoroughbred racing industry. Overall the Sport of Kings is in the midst of tough times, a “transition period,” as one industry source puts it. In fact, the economic recession and the rising costs of owning and racing horses have driven many owners out of the business.

Making a profit has never been an imperative for those who breed, buy, sell and race horses. The high cost and small probability of breeding or buying a winning horse make most owners view thoroughbred racing as an expensive hobby, not a business proposition.

But the hobby has, in the past few years, become more costly.

“Like any other luxury business, the current economic environment is affecting people’s ability to use discretionary income, whether it be to acquire horses, Porsches, artwork or anything else perceived as not a necessity,” said Craig Fravel, executive vice president of Del Mar Thoroughbred Club, operator of Del Mar Race Track which is in the midst of is eight-week season.

Even in good economic times, more than 90% of all horse owners lose money in racing, according to Nat Wess, general manager of California Thoroughbred Breeders Assn. in Arcadia. “It certainly is a labor of love. . . . We know it’s an exceptional year for Gary, but even he would agree that (owning horses) is a losing situation more years than not.”

Breeding and sales figures indicate that the industry is under pressure. According to the Jockey Club, the Lexington, Ky.-based thoroughbred registry, the number of foals born in 1993 will decline to 36,000, down from a peak of 53,000 in 1986, a strong indication of declining buyer interest.

Stud fees paid to owners of famous sires have dropped by as much as 90% since 1985 when the industry peaked, said Bill Oppenheim, editor of Racing Update, a Lexington-based newsletter that tracks the thoroughbred industry. Said Oppenheim: “A well known stud named Saratoga Six has dropped his fee to $7,500 from $75,000. Devil’s Bag is down to $20,000 from $220,000.”

The price of top yearlings is down by an average two-thirds from the mid-1980s heyday, Oppenheim said, and the frenzy that surrounded the sale of top horses at the famous Keeneland auction in Lexington and other markets has long since dissipated.

The highest priced yearling at Keeneland sold for $1.7 million last month, far off the $13.1-million record set in 1985. And only three Keeneland yearlings sold for more than $1 million this year, contrasted with the dozen or more that were typical of the 1980s.

Another negative sign, Wess said, is that the number of thoroughbreds registered over the first six months of the year with the California breeders’ association was down to 800, contrasted with 1,000 over the same six months last year. Owners must register with the CTBA to race at California tracks and to qualify for bonuses awarded to state-bred animals.

The conditions have put enormous pressure on the nation’s 100 horse racing tracks, a number that will dwindle in coming years, Oppenheim predicted, because of competition from off-track betting and other gambling alternatives such as casinos and card rooms. Tracks are having trouble filling fields and filling the stands, he said.

Despite those trends, the Del Mar Race Track continues to thrive. Perceived as a backwater 20 years ago, Del Mar leads the horse racing industry both in daily average attendance and in daily average “handle,” or total money wagered. Last year, Del Mar’s handle was $7.8 million per day during the eight-week racing season.

A sign of Del Mar’s growing status is that its Pacific Classic, a $1-million race to be run Sunday, is equal to the largest purse now offered at any West Coast track.

As for Biszantz, the business would be worth it without the profit he stands to make this year. “The thrill of winning and competition is, in my judgment, a greater reward,” he said.

Nevertheless, after 35 years in horse racing, Biszantz is now making enough money in his golf and real estate interests to enable him to afford better horses, to compete for bigger purses and to keep a stream of competitive horses “turning” through his operation.

Biszantz uses top trainers, including John Sadler and Walter Greenman. But observers credit Biszantz’s skill at appraising horse flesh for much of his success. In fact, Biszantz purchased Three Peat for $55,000 the day after a Del Mar auction at which the horse was overlooked by other buyers.

Biszantz’s approach doesn’t “guarantee success, but he places himself where luck can run into him more that most people,” said Rollin Baugh, a Rancho Santa Fe-based horse blood stock consultant and international broker who is also on the Del Mar Thoroughbred Club’s board of directors.

“There are some disciplines and procedures he follows that increase his probabilities of success significantly,” Baugh said. “Biszantz is particularly able to differentiate between good and bad horses. When a horse falls below his standard, he quickly rids himself of it, relieving the stable of the ongoing cost. An ineffective horse is a burden and the carrying cost is very high when it’s in race training.”

Biszantz’s business acumen is well known. He was named San Diego County’s 1991 entrepreneur of the year by the Union-Tribune Co. for his role in building Cobra Golf into one of the golf industry’s most successful manufacturers.

Since incorporating Cobra Golf in 1978 with co-founder Tom Crow, Biszantz has seen sales increase by an average yearly rate of 25%. Cobra is now one of the top half-dozen club manufacturers in the nation. Biszantz is chairman and Crow is president of Cobra, which employs 175 at an ultramodern, 70,000-square-foot plant in Carlsbad.

The company’s biggest coup was in attracting Australian golf superstar Norman to invest $2 million in the company for a 12% equity interest. Biszantz, who owns a 30% stake in the company, expects Cobra either to go public or be bought by a larger sporting goods concern over the next year or so.