Hurley sued for alleged loan default

[KYtotheCore]

Disclaimer -KYtotheCore cannot accept responsibility (nor blame) for anything a duke fan may infer from the article below. Article was written In Lexington Herald-Leader. Any complaints, doubts of truth, rebuttal should be addressed to the article's creator.

PNC bank in Lexington has sued former Duke Blue Devil and NBA player Bobby Hurley and his Devil Eleven Stables for allegedly defaulting on a $1 million loan. Link: http://www.kentucky.com/latest_news/story/1056451.html

[KyDevilinIL]

Don't want to jump to any conclusions about anything, but stuff like this is rarely good news.

[BlueintheFace]

The only collateral for the 1 million dollars was Hurley's 12 shares? What agent at PNC made that gamble?

My real question is, how many other secured parties are circling around? ... cause its not like those 12 shares are going to be the Hurley stables' prinicipal asset. Right?

[MChambers]

The only collateral for the 1 million dollars was Hurley's 12 shares? What agent at PNC made that gamble?

My real question is, how many other secured parties are circling around? ... cause its not like those 12 shares are going to be the Hurley stables' prinicipal asset. Right?

Have you paid attention to the news of the last two years? Banks made worse loans than this.

[BlueintheFace]

also, it is kentucky... maybe they filed suit a little quicker than they otherwise might have.... nudge nudge. Decided not to work as closely with this particular defaulting debtor as others...wink wink.

[KyDevilinIL]

Unless I'm mixing some facts and memories, didn't Laettner/Davis get sued in Lexington a few years ago?

[devildeac]

Unless I'm mixing some facts and memories, didn't Laettner/Davis get sued in Lexington a few years ago?

I don't know about Davis, but I believe it was assault charges filed against Laettner...:rolleyes:;)

[Bostondevil]

Somehow I think this is news only in Kentucky. Well, and maybe here.

[sagegrouse]

Unless I'm mixing some facts and memories, didn't Laettner/Davis get sued in Lexington a few years ago?

There were some lawsuits involving Christian and Brian, related to a stalled development in Durham. I believe it was picked up in the Kentucky papers.

sagegrouse

[CameronCrazy'11]

That sounds more like financial trouble than legal trouble.

[hurleyfor3]

That sounds more like financial trouble than legal trouble.

You're right. Anyone can sue anyone for anything. Title changed.

[DevilHorse]

I wanted to share some thoughts on this story.

I don't have any inside information into the horse affairs of Bobby Hurley, Devil Eleven Stables, or Devil Eleven Farms beyond what is in the public media. I also only have my experience as a horse owner/breeder to draw on. This is purely a personal outside analysis and opinion.

Owning race horses and especially breeding stock is a risky business. All of the animals eat everyday and you never know when one of your assets will take a bad step or will get kicked in the field and significantly lose their value due to unforeseen events. For horse farms, if you board mares, you get income for keeping the mares on your farm. Otherwise, you get your money by breeding and selling your foals from mares at the big sales. If you don't get the prices you want, your business plan takes a big hit; if you get lucky, your bottom line looks great. This is a business where you can get behind quickly.

Similarly, with racehorses, their monthly burn rate for cash due to costs for training, vet bills, stall rent, and upkeep is significant if this is not balanced out with purse winnings.

To my knowledge, Bobby Hurley and Devil Eleven Stables hasn't had a significant stakes winner (your chance for significant sustained cash inflow). Their best horse, Stream Cat, has underperformed IMHO. The majority of other horses have been racing in low level claiming races, where they have been very competitive, which means they can be claimed (bought out of the race); and they have.

Also, I've noticed no new 2 year old for Hurley or Devil Eleven Stables this year. This suggests de-emphasizing the racing wing of the stable (for 2 YOs anyway).

I don't know what a Songandaprayer share is worth on the market today (I couldn't find it). Let's assume that a share provides for one breeding per year to Songandaprayer, whose stud fee is now $12K. Songandaprayer is a good, but not great sire. On average, people who breed to him see their yearlings sell for 6.6 times his stud fee. This is a good price, but not a great price for a yearling. As a foal of 1998, Songandaprayer is in the middle of his stud career and may have 10 years left of providing stud services. So you can see where approximately 10 years x $12 K x 12 shares ~ $1.44M which is a bit more than the value of the loan (excepting risk and the time value of money). So that is where the value of the loan is.

Devil Eleven Farms is located in Florida, where the racetracks have hitched their futures to the racinos and slots funded purses. Although this inflates some of the purses (good for owners and horseman) this draws some of the interest away from the racing itself which doesn't bode well for the long term prospects for the sport in that state.

So what does this all mean?

In my opinion, on the surface it means that Hurley and his business entities are in a pickle. The racing enterprises are not showing a lot of income. I haven't noticed the horses that have been sold at the sales (I've looked at the larger ones), which might have provided enough income to keep things running, but this law suit suggests otherwise. This doesn't mean things are circling the drain. It has been my experience that it takes one good horse to pay for the other 9 that aren't earning their weight. Bobby and Devil Eleven may have horses on the farm right now that could bring a big price at auction or race on the track that could bring in significant cash. That will just take significant time and intestinal fortitude to see unfold. Many people in the horse business have been there, some of which have come back.

I'm sure that if what they are going through is close to what I am reading (and I could be way off) they are streamlining their operation and will emerge in the black. I sincerely hope that they emerge with a flourish and we see the Blue and White checkered silks in the winners circle again soon and often.

Larry
DevilHorse

[SoCalDukeFan]

Devil Horse

You know about a million times more about this business than I do. Thanks for the insights.

Hurley is one of my all time favorite Duke players. I was really down when he got hurt but also down when I heard he got involved in horse racing/breeding business.

There are two ways to take a small fortune out of that business - get really really lucky but its probably easier to win the lottery or take a large fortune into the business.

I had some small investments in broodmare syndicates years ago. I did ok after tax but decided that the return did not compensate for the risk.

The business is also very incestuous and who you know is important. It just seemed like a long shot that a New Jersey gym rat would be successful at horse racing/breeding over the long term. Hurley had early success with Songandaprayer but that may have only led him in deeper.

Maybe there is more to the story and in fact the claim is false. Hopefully he will be able to make changes and be successful.

SoCal

[DevilHorse]

Devil Horse

You know about a million times more about this business than I do. Thanks for the insights.

Hurley is one of my all time favorite Duke players. I was really down when he got hurt but also down when I heard he got involved in horse racing/breeding business.

There are two ways to take a small fortune out of that business - get really really lucky but its probably easier to win the lottery or take a large fortune into the business.

I had some small investments in broodmare syndicates years ago. I did ok after tax but decided that the return did not compensate for the risk.

The business is also very incestuous and who you know is important. It just seemed like a long shot that a New Jersey gym rat would be successful at horse racing/breeding over the long term. Hurley had early success with Songandaprayer but that may have only led him in deeper.

Maybe there is more to the story and in fact the claim is false. Hopefully he will be able to make changes and be successful.

SoCal

SoCal,

It is hard to find your niche in the horse business, but there are many niches to be found. It sounded like Bobby experienced early success in many areas and got invested in quite a few. I'm sure that he will find his way out of his present situation and have a chance to decide if he wants to stay in it or not.

There are some very promising signs there. Go Go Shoot is a very good sprinter and blossomed 'after' he left Ryerson's charge. That's a Songandaprayer horse that was bred by Devil Eleven. A number of their horses improved when leaving their trainer's hands. That's not always a bad thing if you want to buy young horses, develop them, and sell them perhaps as 2YOs in training. There is a premium for those types of things. That's a business model!
He can also make his farm work if he has a good Vet and good location so he has access to the state's stallions. There are many non-racing ways to be successful.

A broodmare syndicate sounds like a hard way to get satisfaction from the horse racing business since it takes so long to get payback from the time you pick a sire to breed to till you sell the yearling. Compare that to the claiming game where you can claim a horse one week and win a check the next week (and be in the winner's circle). I enjoyed both ends of the business.

I'm sure you have a rich experience in the business and I appreciate you sharing it. Your point about who you know is spot on. Surrounding yourself with good people that you can trust, and understanding their particular strengths, is very important.

Larry
DevilHorse