Plunging Stallion Values Deflate Yearling Buyers' Dreams

Anyone who goes shopping for a yearling colt has a dream. For many buyers, winning the Kentucky Derby (gr. I) or another big race is the ultimate fantasy. They also think about the riches that might follow if a lucrative stallion deal can be hammered out following that victory.

In 2000, Coolmore Stud acquired the breeding rights to Derby winner Fusaichi Pegasus in a transaction that the operation's spokesman, Richard Henry, said was a record for a stallion. He didn't offer any details, but there were reports that it was worth upwards of $70 million for a horse that had been purchased for $4 million as a yearling. The previous record was the $40-million deal involving Shareef Dancer in 1983.

Unfortunately, recent economic woes within and outside the Thoroughbred industry have significantly reduced the amounts racehorse owners can expect for top stallion prospects. That's one reason why we'renot seeing nearly as many young horses sold for $1 million as we did in the past, according to Peter Bradley of Bradley Thoroughbred Brokerage in Lexington.

"The chance of a home run to get out of your cost of buying yearlings has just about gone by the wayside," he said. "The fact is that the values for stallions have probably decreased more than any values in the marketplace.

"For a Kentucky Derby winner with a good family, you basically used to be able to get $8 million to $10 million for him as a stallion. Now, I would be hard pressed to believe you get half that unless you had one ofthose super elite horses that comes along every five years or so. Those used tobe worth $20 million as stallions. You would be lucky to get $15 million forone now and $10 million is probably the real ceiling on those horses."

The falling value of stallion prospects isn't good news for yearling shoppers. Even in the best of times, they didn't find it easy to turn a profit with racing stable. But every once in a while, if they were smart and very lucky, a yearling purchase would race and excite breeders enough that his buyer could recoup a big chunk of his expenses as Robert Lewis did on several occasions.

It's a different situation in 2011.

"Not only are they (the people who race sale yearlings) not making money, there is no winning lottery ticket when they get it completely right," Bradley said. "It's got to take away from their incentive somewhat to spend money on yearlings."

On top of that, purses in this country have gone down, making it even more difficult for buyers to justify spending seven-figure prices for racing prospects.

16 Comments

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sceptre

Lower yearling prices lead to lower stud fees which leads to lower high-end stallion prospect worth.

Greater emphasis on yearling conformation=less emphasis on yearling pedigree which leads to reduced (relatively) worth of both sire and dam.

18 Jul 2011 11:59 PM
Zen4Zen

This is an astute set of observations, Mike; thanks!

I'd love to know if there are differences by gender and, if so, what would or might account for any changes over time in the relative valuations of fillies/broodmare prospects and colts/stallion prospects.

19 Jul 2011 5:39 AM
Linda in Texas

It is depressing enough that the obvious is upon us with regard to the worth of stallions.

It is a sign of all times for all of us. Cutting back on frivolities and things we can do without. Unfortunately those "things" usually mean the 4 legged ones of all shapes, makes and models. And that is truly a shame, but the sport of racing lived thru the depression and i have no doubt this economic situation will take a turn for the better in due time.

Thoroughbred Horse Racing is the sport of kings as i have always heard, however, there are fewer kings in the sport.

For me it is the love of the horse, not the love of money that drives my interest and i am sure many believe as i do. But then again, i am not the one paying the bills and i understand and respect those that do all too well.

Long live and in no certain order, Man O'War, Hoist The Flag, Seattle Slew, Secretariat, Azeri,Personal Ensign, The Dancer's, Ruffian, Affirmed, Alydar, John Henry, Ferdinand, Vindication, Spectacular Bid, Strawberry Road, Forego, Gone West, Holy Bull, Miesque, Dr. Fager, Kelso, Mr. Prospector, Forego et. al and all of the mares who died and those who did not while giving birth to the newer generation of all the bloodlines. Long live the memories of all of them and those they owned.

Meanwhile, hold on to your stallions, their worth is immortal.

19 Jul 2011 11:01 AM
Pedigree Ann

Maybe instead of looking for stallion prospects, yearling buyers should start looking at their purchases as RACEHORSE prospects. There are plenty of horses out there, reasonably priced, too, who can run at the better levels but don't have the fashionable pedigrees of the stallion prospects. Expand your horizons, look for the athletes.

19 Jul 2011 12:00 PM
Needler in Virginia

As in all things economic, the market will eventually self-level. That's what's happening now.........sad to say, but it IS reality. The yearling/potential stallion market was as inflated as the housing market, and look how well THAT'S working out for everyone.

Cheers (I think!) and safe trips.

19 Jul 2011 12:14 PM
LittleGuyBreeder

I'm with Ann....How about looking to buy a horse you can enjoy watching what he was bred for, rather than the money you think you can make with him AFTER he's through doing what he (should) be bred for?  If it's all about future stallion money - keep walking right out of the pavilion.

19 Jul 2011 6:01 PM
LittleGuyBreeder

I'm with Ann....How about looking to buy a horse you can enjoy watching what he was bred for, rather than the money you think you can make with him after he's through doing what he (should) be bred for?  If it's all about future stallion money - keep walking right out of the pavilion.

19 Jul 2011 6:01 PM
kincsem

Uh...isn't this the "free market" held so dearly? The more money in the game, the more players show up to churn and burn the product. The "correction" in the market gets rid of the unworthy and unknowledgeable grifters attracted to the big score. What the game needs is more real horsemen, not speculators.

19 Jul 2011 9:05 PM
Holysmoke

Perhaps the market will force those involved into saving the entire sport by leaving good racehorses to race longer.  By racing longer (rather than being rushed into a breeding shed), they build up a fan base and a fan base is what keeps the sport alive for those who aren't just into it for a winning ticket.  Like houses, the stallion prices were inflated beyond their true value.  Things are only worth what the market says they are worth.

The sport can hardly be called a sport anymore if a horse is raced just enough for its value as a stallion.  For one year (for the fun of it) I worked as a teller at a track.  The hardcore patron never even looked at a race.  They didn't know the name of a single horse.  They yelled "Com'on, number 7!"  But when a horse came along who was a name, a star, the track's attendance swelled, and the people yelled, "Com'on, Funny Cide!"  Funny was a gelding.  He put in his dues.  These days it's the fillies and mares carrying the sport.  The colts are merely studs.  One season and they're gone.  One Grade I race won, and their owners see money, money, money.  

I don't have a zillion bucks invested in a farm and all that goes with it, so it's easy for me to talk.  But I do have my heart invested in the horses that carry it all on their gorgeous backs.

20 Jul 2011 4:03 AM
Springsmom83

RACE the horses.  Too many "healthy" stallions are being retired to recoup money.  No healthy 3 year old should be retired unless it is Man O War and cannot be safely raced at 4 due to weight assignments.  An emphasis should be placed on soundness racing.  I would look seriously at a horse like Gio Ponti because of his  longevity over a horse like Lookin at Lucky.  Then, breed to the horses that were sound over a period of time over the quick outs.  We waste the colts rather than prepare them for the career that they were bred for and then enjoy them while they perform.

20 Jul 2011 12:08 PM
Woodland Dash

If we would go back to racing without drugs and other "masks" and allowed horse to actually race each other based on skill in an honest way, there would be more "regular" followers again. Remove the artificial BS without the games and return it to the sport it once was.

20 Jul 2011 12:37 PM
JerseyBoy

This was coming for a long time. Here is a quote from the Sunday Herald,Oct 12, 2008.

"The main sale at Keeneland reported its lowest gross returns since 2003 and was down 15.9 per cent on last year.

Had it not been for the Maktoum family, Godolphin and Shadwell Stud in particular, it may have been even worse".

The fact is, Coolmore and Godolphin influence the prices of yearlings. There is no pure market.

Coolmore now controls some of the best stallions in the world. They can go for years without buying yearlings that were not produced by their stallions. However, they do buy the sons of their stallions. So everyone must now dance to their tune.

This is taken from their website:

"Galileo is the centre of the universe as far as today's European breeding industry is concerned". Andrew Caulfield, TDN 24/06/08.

Coolmore owns Giant's Causeway in America. If Henrythenavigator pans out, it becomes a near Western domination.

This is akin to an oligopoly.

21 Jul 2011 7:57 AM
Needler in Virginia

An oligopoly is exactly what the US had for the years that Calumet, Claiborne, etc cherry-picked European stallions. Welcome to the real world.

Cheers and safe trips.

22 Jul 2011 12:03 PM
Kathmanblu

I don't see this as necessarily a bad thing. Too many horses are retired early for lucrative stud careers... it's sometimes is better to RACE THEM for another year or two than shuttle them off for stud. I also welcome lower prices so people like me can someday afford to get into the sport! :) I think a million dollar yearling is ridiculous anyway... especially considering how many of my personal favorites were sold cheaply at auction such as Funny Cide and Seattle Slew.

29 Jul 2011 10:17 PM
Kathmanblu

I don't see this as necessarily a bad thing. Too many horses are retired early for lucrative stud careers... it's sometimes is better to RACE THEM for another year or two than shuttle them off for stud. I also welcome lower prices so people like me can someday afford to get into the sport! :) I think a million dollar yearling is ridiculous anyway... especially considering how many of my personal favorites were sold cheaply at auction such as Funny Cide and Seattle Slew.

29 Jul 2011 10:17 PM
Kathmanblu

I don't see this as necessarily a bad thing. Too many horses are retired early for lucrative stud careers... it's sometimes is better to RACE THEM for another year or two than shuttle them off for stud. I also welcome lower prices so people like me can someday afford to get into the sport! :) I think a million dollar yearling is ridiculous anyway... especially considering how many of my personal favorites were sold cheaply at auction such as Funny Cide and Seattle Slew.

29 Jul 2011 10:18 PM

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