Chris Lee’s grand ambition with A List Stud has come unstuck, as administrators pick through the wreckage of the racing and breeding business and assets are auctioned off. Tim Rowe spoke to the major players to see where it all went wrong.
Chris Lee isn’t the first and won’t be the last to enter the exhilarating world of thoroughbred racing with grandiose plans of hitting the big time only to come crashing down.
History tells us that without patience, a big bank balance and a degree of good luck, many industry newcomers - blinded by the millions of dollars to be earned in the sales ring and the millions more to be won on the racetrack - will be brought down by the inevitable harsh realities faced by anyone in the racing game for any significant length of time.
And Lee’s A List Stud is just the latest casualty of that rollercoaster.
With its origins in Hong Kong, and much of its capital emanating from Asia, A List Stud went from boom to bust in the space of five years. Lee’s significant entry into Australian racing came just prior to the pandemic-charged inflation of bloodstock prices, increasing prize money and a wagering boom.
As all three came off their peak and the industry cooled, so too did A List Stud’s fortunes. Its financial troubles were brewing - and the operating costs were spiralling out of control - until it reached the point of no return earlier this year.
In a bid to pay off some of its mounting debts, an unreserved reduction of A List Stud-owned stock was conducted by Magic Millions at its National sale on the Gold Coast in May/June. Fifty horses, weanlings, yearlings and mares, sold for a total of $877,000.
A List Stud and Laceby Lodge Stud - two companies which were operated by Lee and bankrolled by investors from Hong Kong - were placed in the hands of receivers soon after that National sale.
On Thursday, one of Laceby Lodge Stud’s most valuable assets, a 41.69-hectare stud farm at Baddaginnie in North East Victoria that Lee had purchased in 2020, was auctioned on the instruction of Lee Crosthwaite of Queensland insolvency firm Worrells.
The on-property sale was conducted by Donovan & Co and Magic Millions, but the farm was passed in at $1.3 million. It will remain on the market with an asking price of $1.65 million.
“There was healthy bidding and interest,” Donovan & Co’s Clint Donovan told The Straight.
“We do have conditional buyers that I do believe will buy the property … and I think it’s very good buying (at that price).”
A List's farm at Baddaginnie in Victoria passed in at auction. (Photo: Donovan and Co)
According to ASIC records, Worrells was appointed as administrator on August 23 and a creditors’ meeting was held on September 26. Action to wind up A List Stud was brought by Logan Livestock Insurance Agency in May.
Laceby Lodge Stud, the business which was acquired from North East Victorian trainer Mick Gibson in 2020, was initially placed in the hands of B&T Advisory by the federal court on July 3 this year. The action was brought by the Australian Tax Office, which is owed about $136,000.
The Straight has been told former staff of A List Stud and its Gold Coast-based racing enterprise are awaiting final payment of their superannuation and other entitlements.
Lee claims A List Stud began to unravel soon after this year’s fire sale at the Magic Millions when he appointed a woman in Hong Kong as the company’s director.
Lee says he stayed on as CEO.
The Straight has not been able to verify the identity of the woman who Lee says worked in A List Stud’s Hong Kong office.
He vows to pay back the money owed to various people and entities and he expects to have correspondence from the liquidator by October 25.
“At this moment, the administrator is still talking with me … I think it’s just a little bit of money (owed), but I need to clarify with him. He still needs to send me the statement,” Lee told The Straight.
“I can't let you know too much about it.”
Lee’s entry into the market started in 2018 when he purchased one mare for $27,500 under the Laceby Lodge Stud banner. In 2019 he added another nine horses: four mares and five weanlings. They included Sanity and $420,000 purchase Global Thinking.
But it was in 2020 when things started to really ramp up for Lee and A List Stud, both in numbers and total spend on acquiring bloodstock as it spent $3.3 million during a time when the world was being plunged into a pandemic.
Despite owning a Victorian farm, the lure of having a permanent presence in the Hunter Valley proved tempting.
From there Lee could easily access many of Australia’s premier stallions with A List’s broodmare band as well as prepare yearlings in a climate to have them at their best for the premier Magic Millions and Inglis sales. Lee shifted the majority of his horses to Scone.
In early 2021, he leased Nick Posa’s Lincoln Farm near Blandford upon Aquis’ swift exit.
A List remained at Posa’s property for about 12 months, but again Lee relocated, leasing a farm owned by Vinery Stud general manager Peter Orton.
Posa told The Straight he had no issues with Lee and that money owed to him was always paid. Lee says there are no debts outstanding to Orton, which Orton confirmed was the case.
It was Vinery that also played a role in arguably A List’s biggest commercial success when it consigned an Exceed And Excel colt out of Sanity on Lee’s behalf at the 2021 Inglis Easter sale.
The colt was bought by Tony Fung Investments for $1.05 million. Lee paid $800,000 for Sanity under the Laceby Lodge Stud banner in 2019.
The private racing stable exacerbated the financial pressure on A List Stud, as was Lee’s reluctance to sell horses at a loss, even if parting with them would cover the cost of others.
In 2021, A List offered a talented and well-bred filly, Russian Warrior, at the Magic Millions 2YOs in Training Sale.
Lee had paid $425,000 for her that January from Magic Millions, so he would need a significant amount in return to break even given the education costs incurred since her initial purchase.
So, a hefty reserve was expected at that November sale, but it was set at an obscure $535,000 - an amount that factored in her purchase price, upkeep costs and a small profit margin.
That would be good in theory, if you were selling whitegoods, but horses aren’t TVs or washing machines. Their values aren't stable and are quite subjective.Russian Warrior would be retained and joined A List’s growing racing portfolio. She eventually sold through the dispersal earlier this year for $105,000.
What a win! 🐎 RUSSIAN WARRIOR🐎scored her 4th win🥇 in QLD- Aquis Park Gold Coast Turf Club- Provincial today , 🐴 by RUSSIAN REVOLUTION from A LIST STUD, 👍🏼 Congratulations to all. 🎉 pic.twitter.com/ZowfWfH9vj
— A List Stud (@Aliststud) December 9, 2023
Lee had horses in training with Chris Munce in Brisbane, but later the A List Stud founder decided to employ jockey Allan Chau as his trainer from stables on the Gold Coast.
Also from Hong Kong, Chau had ridden A List-owned horses in races and at trackwork, which led to the working relationship between the jockey and businessman.
Chau and Lee are no longer on speaking terms. The trainer handed in his notice in about August last year and in October 2023 Paula Barron, who was working for Chau, took charge of the stables. No horses currently with Barron are reported as being owned by A List Stud.
When Chau started training for A List, he started with about 20 horses in work. A year later that number had ballooned to close to 80, with 58 trained out of the Gold Coast and another 20 at Toowoomba.
Many of those horses were unable to compete in barrier trials or races as they had yet to be named. One of the reasons for this is believed to be the fact that the auction houses were still awaiting payment under their terms of credit.
Chau says the stable grew too quickly, a fact not disputed by Lee, with only about a dozen of the almost 80 in work, racing at a time.
“The money that he had to build it up, it could have been a very nice set-up, but it just went pear-shaped because he was trying to go too big too quickly,” Chau revealed.
“There were some quality horses there, if he had just come back a notch or two and just went at the speed that the horses and the industry take you rather than trying to jump four hurdles at once.”
Lee conceded scale and staffing was an issue.
“The stable (was losing) big money because I had 25, 26 staff. That was a big margin in there to lose. If I released the horses and sell, sell, sell (them) at auction (we’d lose a lot more money).
“But business is business. Win, we were happy and lose, we were unhappy.”
Chau, who is still training a small team of horses for other owners at the Gold Coast, doesn’t regret his A List experience.
“I've learned a lot from it and it was a good journey,” he says.
“I took a lot out of it and met some nice people, good people, and that's going to help me along the way, so I look at the positives that came out of it.”
Lee claims he was negotiating with an investor from China in February to save A List Stud from financial ruin, but that negativity surrounding the company prevented any deal from proceeding.
He also says he had plans to launch A List Stud on the Australian stock exchange.
In July, a five percent share owned by A List Stud in Vinery’s emerging stallion Ole Kirk - the sire of recent Breeders’ Plate-winning two-year-old King Kirk - was sold for $2 million to an investor.
Lee says the sale of the share cleared the debt that was owed to the investor who is also an owner with the Hong Kong Jockey Club.
A List also has equity in Swettenham Stud sire I Am Immortal and Newgate Farm’s now pensioned stallion Deep Field.
As a vendor, A List generated at least $7.5 million in returns at public auctions since 2020, but it wasn’t enough given the level of investment made and the upkeep costs associated with horses and the investment in farms.
A List had spent more than $9 million on horses at public auctions during that same time period and the balance sheet reveals many of the pitfalls of the A List operation.
Another part of the A List business model was trading horses to Hong Kong. On its website, it claims it was one of the official bloodstock agents listed by the Hong Kong Jockey Club from March 2018. A List Stud no longer appears on the HKJC’s list of bloodstock agents.
There’s a line a trainer once uttered about a prospective investor that all too well sums up this sorry A List tale.
“I have the experience and you have the money, by the end of it I’ll have the money and you’ll have the experience,” he said.
Unfortunately, in this case, it appears that it is not just A List Stud that’s out of pocket.
