Tom VanMeter, owner of VanMeter-Gentry Sales, talks about American Pharoah’s filly that sold for $1.2 million at Keeneland.
Gentry Estes, Louisville Courier Journal
Once the auction ended and a coveted horse was somehow his for a measly $17,000, a young Bob Baffert was more nervous than excited.
“Wow, what did I miss?” the legendary horse trainer thought.
Not a thing, it turned out. This yearling Baffert purchased in 1996 alongside owner Mike Pegram was Real Quiet, eventual winner of the Kentucky Derby and Preakness before barely missing out on the Triple Crown in 1998 by a nose in the Belmont Stakes.
Real Quiet ultimately finished his racing career with $3.27 million in earnings and was the second of five Kentucky Derby winners trained by Baffert.
“I think it’s tougher to steal one now. I used to be able to steal one every once in a while,” said Baffert, recalling the sale. “The Real Quiets of the world, he would never bring $17,000 nowadays. … I just got really lucky there.”
With the Breeders’ Cup returning to Churchill Downs next week, titans of the horse-racing industry will be there with the best – though not necessarily the highest-priced – thoroughbreds in the sport. Unlike the Derby and Kentucky Oaks in May, exclusive to 3-year-olds, the Breeders’ Cup is a series of 14 races over two days. Each carries a purse of at least $1 million, including the showcase $6 million Classic.
The stakes will be high. So are the costs for horse owners who are investing lucrative sums on top yearlings in the hopes of grooming them for a shot on such a stage.
However, most of those horses, despite million-dollar price tags, won’t reach Breeders’ Cup or Triple Crown races.
Buying horses has become more of a science than most might realize. But it is still a remarkably inexact science.
When it comes to the real gambling in horse racing, forget exactas and trifectas at a betting window. The biggest wagers are in sales rings at sites like Keeneland, high-stakes auctions that are preceded by a complex vetting process to help determine which horse is worth which amount.
Baffert’s tale from more than two decades ago is rare. The world’s top horsemen will miss far more often than they will hit on the largest purchases. If anything, price seldom dictates specific success on the track.
But at this level, it’s not necessarily about the money.
In Baffert’s view, it’s more like an addiction, triggered by winning that first big race.
“Now I know why,” Baffert said, “you can justify the adrenaline and the excitement for those prices. … Once you get hooked, there’s no rehab for it.”
These are good days for the horse-breeding industry. It’s not the biggest boom the industry has seen, but it is said to be a seller’s market.
The attention gained by Baffert’s two Triple Crown winners in the past four years – American Pharoah and Justify – has met positive economic factors. With more money to spend on young horses and more wealthy people eager to do it and teaming up in syndicate groups in greater numbers, the business appears to be experiencing an upswing.
That was apparent at Keeneland, where this September’s annual yearling sale welcomed one of the better crops in years (highlighted by American Pharoah’s first crop as a sire) and ended with 2,916 yearlings being sold for a total of $377.13 million, the fourth-highest total in the event’s history.
Of those yearlings, 27 sold for at least $1 million, up from 13 last year.
“The foal crops keep going down, so the supply is reduced while the demand is strong,” said Ric Waldman, a bloodlines expert and consultant who has managed the breeding of some of horse racing’s most successful sires. “… Buyers are bidding with more confidence with the sophisticated pre-sale work that can be performed. That still doesn’t mean the horse is going to run, but as far as buying yearlings go, all the right components are in play to drive the prices up.”
Five of the more expensive 12 yearling purchases at Keeneland in last month’s sale were by Godolphin, a stable founded by Sheikh Mohammed Bin Rashid Al Maktoum, the prime minister of the United Arab Emirates and the Ruler of Dubai. The most expensive was a $2.4 million colt bought by M.V. Magnier of Coolmore Stud.
Compare those 27 horses who brought at least $1 million with the sport’s two latest Triple Crown winners, who together combined to sell for $800,000 at yearling auctions. American Pharoah didn’t bring his reserve of $300,000 at Saratoga, thus remaining with owner Ahmed Zayat, and Justify was sold for $500,000 in the 2016 September Keeneland sale, which saw 75 other yearlings sold for more.
How can the world’s best horsemen be so far off on pricing eventual winners?
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For one, there is an impulse aspect to the rapid-fire auction process, which drives up prices quickly for elite horses. In many cases, it depends on who is doing the bidding.
“I don’t know the difference in a half-million-dollar horse and a million-dollar horse. I will admit to that,” said horse trainer Dale Romans. “That’s just when two people or three people decide that they feel the same way you do.”
A horse’s pedigree remains the most important factor in determining cost, but that’s only the first thing on a long and detailed checklist for competing owners and ownership groups looking to land the sport’s next sensation as a yearling.
Prospective buyers will send veterinarians. They take measurements. They watch the horses walk, check the legs, check the lungs, check the airways.
“Some people scan their hearts to see if their hearts are big or whatever and can pump the blood to get them to run faster,” said consignor and veterinarian Tom VanMeter of VanMeter Sales. “There is some science to it, but it’s not all science. There’s art to it, too. There’s a feel. There’s something in their eye. You can’t measure a horse’s will to win.”
For all the background work and time and effort, the reality of this process is that the odds remain heavily stacked against any yearling purchase – no matter how promising or expensive – becoming a star in horse racing.
“Lottery tickets are getting more expensive, and that’s basically what it is,” Baffert said. “… We all know at the end of the day, the percentage of them that’s going to be really good horses is pretty low. But it’s the dream, you know.”
Sometimes, the big price tag can be worth it.
Since 2010, the highest amount paid for a yearling in the September Keeneland sale was $3 million by Magnier. That went for Mendelssohn, who ran in the Kentucky Derby this year. He is already over $2 million in career earnings and is entered in next week’s Breeders’ Cup Classic.
Far more often, the investment proves to be a major loss.
For ownership groups, these sales are therefore more of a numbers game. The idea is that it just takes one purchase to hit it big, bringing with it earnings in addition to the promise of breeding riches down the line, to pay for a lot of misses along the way to get there.
And exorbitant prices in horse sales are nothing new.
Waldman, for example, helped manage the retirement of Northern Dancer, the 1964 Kentucky Derby winner. Through the 1970s and 1980s, Northern Dancer became “probably the most prolific sire of the last 50 or 60 years,” according to Waldman.
“When his yearlings were selling,” he said, “they were bringing $3, 4, 5, 8, 10 million per yearling. So there is a history of buyers overpaying — I won’t saying overpaying — but paying even higher dollar value than what we’re talking today.”
Subsequently, the mid-2000s was a heyday for yearling auctions. Peaks in prices during that period set records that still stand.
A descendant of Northern Dancer – named The Green Monkey — was sold as a 2-year-old for a record $16 million, which remains the most-ever at a public auction. The price was driven up by a heavyweight bidding war. Demi O’Bryne, representing Coolmore Stud, eventually outbid John Ferguson, who was representing Sheikh Mohammed.
The Green Monkey never won a race. He dealt with injuries and earned $10,440 on the track.
To date, the five highest-priced yearlings in the history of the September Keeneland sale were all from 2004 to 2006. None of those five colts truly panned out on the track either.
Meydan City (sold for $11.7 million in 2006), Jalil ($9.7 million in 2005), Plavius ($9.2 million in 2006), Act of Diplomacy ($8.2 million in 2006) and Mr. Sekiguchi ($8 million in 2004), – four of the five were purchased by Ferguson — combined for career earnings of $518,660.
That comes out to about 1.1 percent of the collective $46.8 million spent to purchase those horses as yearlings.
If a general manager for a professional sports team got that kind of return for investment, he or she wouldn’t be a general manager much longer.
Horse racing is different, of course. Purchases aren’t just for success on the track.
“The sale arena, that’s where the money is made,” Romans said. “You buy a mare. You buy a stallion. If you get a stallion that you can stand for $50,000 … you don’t have to buy any more horses. Then it runs itself.”
But there’s also no guarantee of long-term, prolific success in the breeding avenue either, even for the sport’s best thoroughbreds.
“They can be a great racehorse, but I think from the time they quit racing and start breeding, the odds are probably against them,” Waldman said. “Not greatly, but nonetheless, the odds are still against them making it that big as a stud horse.”
Baffert trained Mr. Sekiguchi, the $8 million purchase who won twice in four starts but was ultimately sidelined by a tibia injury and put out to stud.
“Half of them probably,” Baffert said, “they don’t make it because they get hurt.”
The flip side of so many high-priced busts are the horses like Real Quiet, the success stories that through the years have woven a hopeful and seductive mythology about horse ownership in that you can never be sure which horse is going to be the one.
That’s the appeal for a novice owner. Even with a cheaper horse, there is always that chance of hitting it big, because it has happened before.
“The guys that spend $1 million may not get it right, and the guy that spends $1,000 may,” said Mark Maronde, director of sales development at Keeneland.
Think you couldn’t afford a Kentucky Derby winner? One might assume those are the highest-priced horses in the business, but in this century at least, that hasn’t proven to the case.
At $500,000, Justify brought the highest price in a public yearling auction of any Derby winner since Fusaichi Pegasus, the 2000 winner who had a $4 million price tag. The 2017 winner Always Dreaming ($350,000) would be next, followed by American Pharoah’s $300,000. On the other end of the list are horses like 2009 upset winner Mine That Bird ($9,500) and 2012 winner I’ll Have Another ($11,000).
The average sale price of the past 11 Derby winners who were auctioned publicly as yearlings was $153,864.
Of the 2,916 yearlings sold in September at Keeneland, 768 went for more than that. The average price of all yearlings in the entire event was $129,331.
There are plenty of other value stories.
The past two Kentucky Oaks winners – Abel Tasman ($65,000) and Monomoy Girl ($100,000) – weren’t especially high-priced yearlings. Neither was Midnight Bisou ($19,000) who was third in this year’s Kentucky Oaks and has earned $1.385 million to date. Each of the three fillies were entered in next week’s $2 million Breeders Cup’ Distaff.
Mind Your Biscuits, a horse to watch during next week’s Breeders’ Cup, has more than $4.27 million in career earnings after once being sold as a yearling for $47,000.
Gunnevera ($16,000) was seventh in the 2017 Derby and is past $3 million in earnings and was pre-entered – but not selected as one of 14 horses – in the Breeders’ Cup Classic. My Boy Jack ($20,000) finished fifth in this year’s Kentucky Derby.
Another Derby horse, Promises Fulfilled, has won his last three races and will be entering the field in the Breeders’ Cup Sprint or Dirt Mile.
Romans purchased him for $37,000 at Keeneland in 2016, saying the horse landed on his radar because he once trained his father, Shackleford.
“That was strictly on physical,” Romans said. “He looked the part to me. He looked like he could run. … Did I think he was going to make a million dollars and be one of the favorites for the Breeders’ Cup? No. So he’s overachieved by far.”
The biggest overachiever in recent years, in terms of price, was still American Pharoah, whose offspring are selling for far greater amounts than the $300,000 that kept him with Zayat in 2013.
The knock on Pharoah at the time was he had an unproven sire in Pioneerof the Nile. Justify’s $500,000 cost also had to do with pedigree. His lineage suggested he’d be a turf horse.
“The pedigree tells you how much they’re going to cost,” Baffert said. “So when you get a good athlete, a good physical and the pedigree, and they can run, say, like a Justify, that’s when you hit the home-run ball. Everybody is looking for the home-run ball. … You’re going to have a lot of misses. There’s hits and misses. But in the number game, one pays for the whole lot, and you enjoy it.
“Having a horse like Justify, it was priceless what the owners went through. American Pharoah, same thing.”
Gentry Estes: 502-582-4205; email@example.com; Twitter: @Gentry_Estes. Support strong local journalism by subscribing today: www.courier-journal.com/gentrye