"Down to the Wire" - Horsing Around With Thoroughbred Investments
Thursday, May 05, 2005SUSIE GHARIB: There`s a good chance this Saturday`s Kentucky Derby winner will be the offspring of a previous stakes winner. Good bloodlines are the lifeblood of the thoroughbred horse racing industry. But those family ties cost big bucks and recently the prices of some thoroughbreds have been going through the roof. In part three of our special series "down to the wire," Diane Eastabrook looks at the economics behind yearling sales. This is a War Chant Colt and the mother`s name is Defer West.
DIANE EASTABROOK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Thoroughbred horse racing is called the sport of kings, so bloodlines mean everything. This yearling`s father won the breeders` cup mile in 2000, and this yearling is the sibling of a dozen stakes winners. Taylor Made Farm and Sales has been consigned to sell the horses in September. Taylor Made Vice President Mark Taylor thinks each horse could net up to a million dollars at auction.
MARK TAYLOR, V.P. SALES, TAYLOR MADE FARM & SALES: If you look at the top price horses we`ve sold over the last 20 years, the chances of them becoming a stakes winner are infinitely higher than the rest of the population. But it`s no guarantee. You never know.
EASTABROOK: Thoroughbred sales are soaring again, following a slump in 2001 that was the result of the 9/11 terrorist attacks and a reproductive disease in mares. At Keeneland race course last September, this yearling went for a record $8 million. He`s the son of Storm Cat, North America`s top stallion. Keeneland`s director of sales says the thoroughbred market is basically following in lock step with the U.S. economy.
GEOFFREY RUSSELL, SALES DIRECTOR, KEENELAND RACE COURSE: It is a luxury item, thoroughbred horses. So you see people who buy horses here using their discretionary income, so when the stock market is up and when the economy is good, you see the thoroughbred market get better and stronger.
EASTABROOK: A weak U.S. dollar is also helping. More foreigners are coming to the blue grass state to buy thoroughbreds. Chilean breeder Marcel Zarour came to Keeneland to watch the races and to inspect some horses he might purchase later.
MARCEL ZAROUR, CHILEAN BREEDER: We can buy very good mares. Maybe not so expensive, but it`s a good price for us.
EASTABROOK: Industry watchers can`t predict how long yearling prices will remain robust, but they`re fairly confident that this year`s sales should be as profitable, if not more profitable than last year`s. The prospect of even higher yearling prices is putting upward pressure on stud fees. And former superstars like Smarty Jones, winner of last year`s Kentucky Derby and Preakness stakes, are commanding some of the biggest fees. Breeder and owner Robert Clay says in this economy, money isn`t much of an obstacle when it comes to producing a possible stakes winner.
ROBERT CLAY, OWNER, THREE CHIMNEYS FARM: The baby boomers are coming of age. They`ve got a little more discretionary income. They`re looking for art, antiques, yachts, and maybe to beat their fellow man with a horse.
EASTABROOK: Or better yet, find themselves the proud owner of the next triple crown winner. Diane Eastabrook, NIGHTLY BUSINESS REPORT, Lexington, Kentucky.
