Sire Chat 3/7/18 – Evaluating Younger Sires
Following trends in the breeding industry requires not just analyzing who is siring the winners of big races today. It starts pretty much when a sire is retired. A lot can be gleaned by looking at the farm that stands a stallion, how they price him and how they market him. In general a farm that purchases a stallion prospect wants to make their money back within three years. Once a sire’s foals start running the game is up. 90% of sires fail at stud. Stud farms want to get out as soon as they can.
On the other end of things are the mare owners. They costs of owning a mare are not as easily quantifiable as the costs for keeping a stallion but obviously it is a business and there are bills to be paid. Most people who breed racehorses in America are considered commercial breeders. They plan on selling most of the horses they produce.
Which brings us to a third group – people who buy horses to race them. For various reasons this group usually places higher value on young horses sired by new stallions. This in turn encourages mare owners to breed their mares to unproven stallions (and in turn fuels the value of outstanding young male racehorses). Generally speaking the first foals a sire produces are often his most valuable based on auction prices for weanlings, yearlings and two year olds (you also see it in the first mares in foal to a young stallion that go through the ring).
This in turn means that mare breeders will likely send the most/best mares to a stallion in his first year at stud. There will usually be a drop off in the second year and again in the third year. After a stallion’s third year at stud things start to change. In his third year his oldest babies will be one year old and many will have been sold at public auction, either as weanlings or importantly as yearlings. Paying attention to how many mares are bred to a stallion in that third year (and also in the fourth year) you will get a sense of how breeders are reacting to a stallion. If the numbers of mares bred to a stallion in the third year only drops slightly from the first and second year – or even if the number holds steady you can reasonably assume that someone likes the stallion’s foal. Mare owners may have seen newborns or weanlings that left a positive impression or been impressed by the quality of mares others sent in the first two years at stud.
There is a lot of risk/reward for mare owners who breed to a stallion in his third or fourth book. By that time the stud farm may be more inclined to make a deal to get mares or even have cut the stallion’s stud fee to make him more attractive. There is some data available on how the sire’s foals have been received by early purchasers. The risk is that by the time your foal is ready to sell the sire will have horses racing and, especially in the US which judges stallions harshly, that stallion has likely been judged as a success or failure.
Here’s an example. Take Charge Indy entered stud in 2014. His first foals were born in 2015, they sold as yearlings in 2016. In November of 2016 he was sold to breeding interests in South Korea. If you bred to Take Charge Indy in 2016 you were left with a mare in foal to a sire who had already been considered a flop, before his first foals were three years old and before your mare had even foaled out. There were 66 foals registered by Take Charge Indy in 2017 and for every one that stood and nurse the farm that sold Take Charge Indy took in $17,500. Six of those foals were offered for sale in 2017, five of them sold. Two sold for more than $17,500. One was $35,000 and the other was $18,000. Things were even bleaker for mare owners who had bred in 2015. They paid a $20,000 stud fee. There were 107 foals produced at that price and 73 of them were offered for sale in 2017 of which 54 sold. The median price for those yearlings was $17,000. A lot of people were losing money on this deal.
As sometimes happens, Take Charge Indy’s first foals started running when they turned 3. He is currently the leading second crop sire in the United States. Breeders who jumped on board in 2016 look a little more secure as their now yearlings are being prepped to sell and might even look better if they invested in breaking and training those foals with the idea of entering them in 2yo sales next year. I would not be surprised to see Take Charge Indy repatriated for the 2019 breeding season. He was sold with a buyback clause that could be initiated if his situation changed.
With all that said, I was inspired to write a column on a hot young sire Cairo Prince. His first foals are two year olds this year and the Blood Horse published an article about the prospects his runners have at the upcoming two year olds in training sale (you can read that article here). Cairo Prince went to stud with little fan fair but is now a very hot property. Part of that is based on the success of his sire Pioneerof the Nile but part of it is that Cairo Prince’s foals have been impressing breeders and buyers tremendously. He’s a terrible secret, everyone is in on him. As a sim-prospect he’s probably a bad bet at this point. He’s done reasonably well in the game and is not in a point in his career where it is unlikely his sim-rating has changed since he retired. It is very rare for Mike to announce a re-rating on a sire that has no runners (the notable exception here is American Pharoah) and even if Cairo Prince’s foals come out running the only two sires in recent memory who received an announced upgrade after their first crop of two year olds were Uncle Mo and Frankel, both of whom had sensational early runners. Cairo Prince has also been used heavily in the game with initial crops of 90, 93 and 78 foals respectively. The cat’s out of the bag on this one. He is very likely a bad buy for the game. But don’t be surprised to hear this name in years to come.
Songbird was sold in November for 9.5 million. Now that is just the mare, her owners are now going to have to shell out, let’s say 5 years worth of six figure stud fees. She will likely be sent to Uncle Mo, Curlin or Tapit. For the sake of math lets say it averages out to $200K a year for 5 years, so they are another million in. There is almost no chance those 5 young horses will sell for an average of over $2 million each. Why take 5 years? Well if a mare hasn’t produced black type in her first 5 runners further runners won’t be selling for a monster price tag. This was a really risky purchase. The lesson? IRL as in the SIM people often make irrational decisions when buying and breeding horses.
Mandy Pope (current owner of Songbird) is not what I would call a commercial breeder. She does sell some horses but I think it is a safe bet that her thoroughbred holdings are run at a loss every year. Interestingly she used to own a much smaller operation and was more cost conscious with her purchases (and did actually sell more than she bought). I know the business she owns (discount retail) has done extremely well over the past decade or so and that the money she spends on horses comes primarily from that.
There is a danger though to looking at the Mandy Popes and John Magniers and Sheikh Mohammeds of the world and assuming that is the norm for people in the industry. The vast majority of breeders are people who actually earn their livelihood by working with horses. They typically have a small number of mares and usually sell all of their foals. Those are the people who are taking big risks on young sires. Note Mandy Pope made big news when she decided to send Songbird to Arrogate as she is typically very conservative with her major-mare breeding choices. She generally goes for proven stallions like Tapit, War Front and Distorted Humor.
Case in point – sending Songbird (who doesn’t have a great pedigree to begin with) to Arrogate is a terrible decision. Much of the luster came off Arrogate so it’s not like there will be this buzz “oh it’s the first crop of American Pharoah’s going through auction” that will propel sales. And the horse won’t have the Tapit or War Front potential to lean on, who very soon will both be in the Storm Cat zone when it was common for Storm Cat colts to set sales records as people dropped millions in the hope of stallion prospects (Green Monkey anyone?) It will be based solely on looks and confirmation. From a risk analysis standpoint this is a cover your eyes awful business decision.
Do small operation breeders make budgeted decisions? Sure. But virtually everyone else in the industry, from bettors, to pinhookers, to those buying from a share in a horse to a $2 million dollar purchase they just fought Magnier over makes impulsive decisions. And most of those decisions lose money.
In any event there is no risk so to speak in the SIM because stallions get rated and will have that rating for several years regardless if they can produce IRL or not. It does relate to us SIM players though when people drop ridiculous sums of BPs and credits on new sires like Gun Runner and our guy Midnight Lute stays fairly cheap even though Midnight Lute is a proven commodity and people are only guessing what Gun Runner is rated at (likely not as high as Arrogate who in turn isn’t as high as American Pharoah). Popular horses also tend to do well in both real life and the SIM. How much money did Smarty Jones burn out of people in both arenas? BTW – kudos to Mike for nailing Smarty Jones’ SIM rating.
In what world does songbird not have a good pedigree
Thought I read Tapit was in line for her second foal
The best choice was Curlin. He is being bred to monster mares right now. Breeder’s Cup Winner Life is Sweet just had a Curlin foal as did Rachel’s Valentina. Beholder was bred to Curlin this year. The next 2-3 years are going to be the age of Curlin (and he already has horses all over the classics trail). Year 2 I would have gone to Tapit for sales home run potential. Year 3 War Front. Year 4 – if they are running well American Pharoah and then in year 5, pending what he does, Arrogate.
Breeders are odd though – Coolmore wasted half a decade of Rags to Riches trying to breed her to Galileo (and Henrythenavigator!!).
Curlin is a horrible commercial choice. If breeding for commercial basis there are basically 4 rules.
1 Confirmation
2 Confirmation
3 Confirmation
4 Be a Colt
Curlin’s offspring can run assuming they can run due to the high percentage who are just to unsound to run. They are owner breeder horses. If you want to sell you have to make sure they look good so need a stallion that stamps his stock well and does not have the same faults as the dam. There was an article floating around on Cairo Prince in the last week that highlights points 1-3 perfectly.
LOL, OK says the guy who doesn’t know a thing about American racing. Anyway, let’s keep the discussion to those who want to talk about the horses in question. If you want to babble nonsense about American sires go elsewhere.
Rickybobby – I would not be surprised, Mandy Pope has bred several of her recent major acquisitions to Tapit. I believe both of Groupie Doll’s foals are by him, as was Havre de Grace’s first foal. Unrivaled Belle saw Tapit last year as well although her story is a little different in that she was purchased in 2016 in foal to Tapit and had already produced Unique Bella so anyone who bought her would probably send her to Tapit.
Very much enjoying these articles, Spin
A young sire in Australia, who I’ll be watching with interest, is Deep Field
He’s a G2 winner by Northern Meteor (died way too soon), standing for 20k (+10% tax) in Aus at the moment
He creates interest because of his first foray into the Sales Ring, where he achieved an average of 10 times his stud fee, with 35 lots sold at the Gold Coast Magic Millions Sale, arguably the second most prestigious sale in the country.
Somebody liked what they saw
He’s currently available in the sim for 31 credits / BP’s
When he’s not – You saw it here first!
Thanks for getting this sort of conversation onto the front pages
John
Thank you for the tip. Picked up a share @31. Great race record. From the previous discussion I acquired a share of American Lion for 27. There are lots of deals to be had in the SIM. One from last year I picked up a lot of shares in was Toronado who is getting over 130 mares a year IRL and just got a G1 in the SIM. I pulled 4 shares for all around 20 last year and now he is trading for 100+. Before that you could get Charm Spirit for 80 and now he is well into the hundreds. Good conversations, lots of good stuff in these.
American Freedom, not American Lion….sorry Pulpit….