Newsmaker of the year: Bloodstock market soars, splits

Sale prices and Fusaichi Pegasus syndication keep marketplace in the headlines

by John Sparkman

After a seven-year winning streak, it seemed unlikely at the beginning of 2000 that the market for Thoroughbred bloodstock could get much hotter. Well, it did-and, then again, it did not. In fact, news from the marketplace and expressions on the faces of the major players covered the full gamut of human emotions in 2000. Reactions ranged from the ecstasy of world-record prices and sale-record averages to the despair of yearling and juvenile pinhookers who saw their $194.6-million investment in 1999 turn into a $35.3-million overall loss. The year began on a high note, with Keeneland’s January sale producing a $5-million mare in Mackie, a record median, and the second-highest average in its history. The sales of selected juveniles in Miami, Los Angeles, and Lexington, however, sent mixed messages to the industry. True, David Shimmon made headlines by paying a record-equaling $2-million for a two-year-old by Saint Ballado at Barretts, but buy-back rates soared over 40% at many juvenile sales. Averages generally rose, but only because of intense competition among buyers for the horses perceived to be the best on offer. Yearling-to-juvenile pinhookers became increasingly disconsolate as the two-year-old sales season wore on. Although their most attractive horses sold for unprecedented prices, it became increasingly difficult to sell the rest of their horses at any price. Losses piled upon losses, and it soon became obvious that many pinhookers would go to yearling sales with less money in hand than in 1999. At about the same time, William S. Farish, whose Lane’s End had been leading consignor at Keeneland’s July selected yearling sale on seven occasions in the 1990s, announced that it would not sell any yearlings at that glamorous venue in 2000. None of that seemed to matter at the summer sales of selected yearlings, where averages soared well into record territory, easily surpassing benchmarks set at the height of the bloodstock boom of the 1980s. While the world’s inflated financial markets formed the firm foundation for the market for boutique Thoroughbreds, another factor also made a huge impact: Fusaichi Pegasus. Keeneland July came only a few weeks after word leaked out that Coolmore Stud had outbid several American and Japanese contenders for the star three-year-old. As Coolmore’s publicist, Richard Henry, pointed out, Fusaichi Pegasus embodied the "Holy Grail" of the commercial breeding industry-the top-priced yearling of his year, winner of the 2000 Kentucky Derby (G1), and a son of sire of sires Mr. Prospector. The reported $60-million-plus valuation of Fusaichi Pegasus loosened the grip of top-level yearling buyers on their wallets and set visions of six-figure stud fees dancing in the heads of Kentucky stallion managers. The buzz held through the first two days of Keeneland’s gargantuan September yearling sale, where Farish’s consignment set a single-day record for a single consignor, selling more than $45-million worth of yearlings. As that 14-day sale wore on, however, buy-backs rose and average prices fell from the same sessions in 1999. The pattern repeated itself at Keeneland’s huge November breeding-stock sale two months later. In the meantime, leading sire Storm Cat’s fee was increased 33.3% to $400,000 for 2001, and market value of seasons to other popular commercial sires such as Seeking the Gold and A.P. Indy soared to over $300,000. The astronomical valuation of Fusaichi Pegasus meant his stud fee was bound to be in the $150,000 range, while the $30-million syndication of leading older horse Lemon Drop Kid guaranteed a six-figure stud fee for him as well. Ahhhh, the good old days were here again. The Thoroughbred marketplace had not seen those kinds of stud fees for newly retired horses for more than a decade. But there was more. After multiple Group 1 winner Giant’s Causeway ran another brilliant race, beaten only by a head in the Breeders’ Cup Classic (G1), his stud fee-albeit to stand at Coolmore’s Irish base-was also raised over $100,000. Breeders’ Cup Mile (G1) winner War Chant, a well-bred son of Danzig who had raced only seven times and was still sound, was retired at a fee of $75,000. Not since-well you remember when-had a sound colt like War Chant with tremendous racetrack earning potential been retired to stud simply because he could earn for his owner much more in one year at stud. By the end of the year, it had become clear that the marketplace had cleaved into two distinct parts: the elite and all the rest. There are now more players in the game with enormous amounts of cash at their disposal than at any time in history. All use essentially the same techniques and a small group of commercial agents to select the most likely horses, whether as racing or breeding prospects. They have little interest in the rest of the market for racing prospects, breeding stock, or stallions, leaving the owners of those horses with little hope for profit. Whether the top-end buyers’ interest and the two-level market are sustainable will be revealed over the next few years. In the meantime, due to the tremendous price spike at the top end of the market in 2000, bloodstock prices at all levels of the business will be feeling the effects for years to come. John Sparkman is bloodstock/sales editor of Thoroughbred Times.

On and off track, 2000 was a busy year

Following Newsmaker of the Year bloodstock markets, the rest of the top ten newsmakers of 2000

by Michele MacDonald

While horses selling for millions of dollars grabbed much of the attention in the racing industry over the past year, a number of other issues also were competing for headlines. From the turbulent internal politics of the National Thoroughbred Racing Association (NTRA) to the continuing onslaught on the record books by jockey Laffit Pincay Jr., the year 2000 produced a wide array of compelling news stories. From a vote of the editorial staff of Thoroughbred Times, the following have been ranked as the top stories of the year after the soaring bloodstock markets. Twenty-two racetracks threaten to quit NTRA For the second year in a row, the NTRA faced the threatened defection of a group of racetracks, with the number of apparently dissatisfied track members swelling to 22, all of which planned to withdraw, effective at the end of the year. Negotiations were continuing in December, but NTRA Commissioner Tim Smith said the organization had prepared its budget for the new year-which will be its first under a merger with Breeders’ Cup Ltd.-with the assumption it would not regain the rebel tracks. Major issues in the dispute included the NTRA’s association with the Television Games Network (TVG), including the operation by NTRA Services of the TVG betting hub in Oregon, and governance by and representation in the organization. "We don’t have the luxury of spending too much more time on internal conflict," Smith said. Yet the issue seemed destined to spill over into 2001. Frank Stronach, chairman of Magna Entertainment Corp., which owns seven racetracks and plans to pull all of them out of the NTRA, slated a summit meeting on the issues at Magna-owned Gulfstream Park on January 14. Arlington Park reopens and merges with Churchill Downs Inc. The silence that hovered over Arlington Park since 1997, when owner and Chairman Richard Duchossois closed the track after failing to win political concessions from the Illinois Legislature, exploded into the shouting of fans when the track reopened to racing on May 14. After gaining 1999 measures for tax relief and for racing industry revenue from a proposed casino in Rosemont, Duchossois presided over a 2000 race meeting that featured the first running of the Arlington Million Stakes (G1) with a $2-million purse. Won by Juddmonte Farms’ Chester House, the Million was showcased as part of the Emirates World Series Racing Championship on August 19. Shortly before then, Duchossois signed a deal to merge the track-which he had rebuilt for a reported $200-million after a fire destroyed the grandstand in 1985-with Churchill Downs Inc. His family’s Duchossois Industries became the largest shareholder in Churchill Downs under the merger, and Duchossois, now 79, and other Arlington officials are keeping their executive posts. Frank Stronach builds Magna, campaigns probable champions Last year’s Newsmaker of the Year, Frank Stronach came close to claiming the title again by making major news in many areas of the industry. From buying more racetracks with Magna Entertainment to challenging the NTRA’s policies to winning two Breeders’ Cup races with likely champions Macho Uno and Perfect Sting and the Preakness Stakes (G1) with Red Bullet, Stronach dominated the news like no other individual. Magna Entertainment, with seven racetrack properties, stood poised to grow by "three or four" more tracks in the next few months, Stronach said. Yet even as the company is pursuing aggressive growth, its top-level management continued to change as Stronach sought the right combination of leadership. Two presidents-Jerry Campbell and Mark Feldman-resigned from their posts, and Stronach made himself interim chief executive officer on December 11. At the end of the year, the NTRA offered Stronach a post on the organization’s board in hopes of retaining his tracks’ membership. Fusaichi Pegasus soars to star status He had it all-the bluest blood in the registry, a captivating classic victory, and a trainer who often kept him sequestered, enhancing his mystique. Fusaichi Pegasus kept racing fans enchanted most of the year, wondering if he could prove himself as the next superstar racehorse. A $4-million Keeneland July selected sale yearling purchase by Fusao Sekiguchi, Fusaichi Pegasus smashed stallion records when Coolmore Stud purchased his breeding rights for a value between $60-million and $70-million after he won the Kentucky Derby (G1). The son of Mr. Prospector out of the Danzig mare Angel Fever will stand at Coolmore’s Ashford Stud near Versailles, Kentucky, for $150,000 in 2001. With a Derby win that was a powerful tour de force, "Fu Peg," as he became known in the racing media, lost some luster with a second-place finish in the Preakness over what trainer Neil Drysdale called a "greasy" track. Kept out of the Belmont Stakes (G1) with a slight hoof injury, Fusaichi Pegasus was rested for four months before returning victoriously in the Jerome Handicap (G2). Although his nine-race career ended with a sixth-place effort in the Breeders’ Cup Classic (G1), Fusaichi Pegasus earned $1,994,400 with six wins. Laffit Pincay Jr. rolls on to more records Less than a year after breaking Bill Shoemaker’s all-time record of 8,833 career wins, Laffit Pincay Jr. crossed the finish line aboard his 9,000th winner-just one of five stakes victories for him on October 28 at Santa Anita Park during the California Cup program of state-bred races. "As long as I feel good and I keep getting good horses, I will continue to ride," said Pincay, who will celebrate his 54th birthday on December 29. "If I really put my mind to it, maybe I could reach 10,000, but I don’t know if I want to ride that long. I want to do other things in life." Pincay scored his landmark victory aboard Chichim in the $150,000 Louis R. Rowan California Cup Distaff Handicap. Winning the five California Cup stakes also rewrote Santa Anita history, smashing the previous mark of four stakes wins on a card shared by Alex Solis and Patrick Valenzuela. New York City Off-Track Betting Corp. put up for sale New York City decided to offer for sale a majority interest of its OTB operation after the network, which includes 68 off-track betting parlors, three teletheaters, and four restaurants and sports pubs, topped $1-billion in handle for the fiscal year ended June 30. Since 1995, when home simulcasting began, the operation’s handle grew from $30-million to more than $187-million. Five bidders submitted proposals that New York City officials were considering in mid-December. The bidders are: a three-way partnership of Magna Entertainment, Greenwood Racing Inc., and Thoroughbred owners Robert Baker and William Mack; the New York Racing Association in a joint proposal with TVG; Churchill Downs Inc.; Japan-based Nomura Securities International Inc.; and the Catskill (New York) Off-Track Betting Corp. Julie Krone becomes first woman in Racing Hall of Fame Standing on a milk carton to reach the microphone, retired jockey Julie Krone emotionally accepted her place in the Racing Hall of Fame on August 7 in Saratoga Springs, New York. "Today, I know for sure that life doesn’t get any better than this," said the 37-year-old who was the winningest woman rider in history with 3,545 victories and the only woman to win a classic with her triumph on Colonial Affair in the 1993 Belmont Stakes. Krone served as an analyst for TVG in racing broadcasts this year but was let go by the network after signing to be a spokesperson for Gulfstream Park in 2001. Internet Gambling Prohibition bill left in limbo Although they did not achieve success, many racing industry officials spent the year focused on the proposed Internet Gambling Prohibition Act, which endured numerous legislative changes but which supporters believed still would allow racing to conduct account wagering in traditional forms and over the Internet. The bill, passed last year by the United States Senate, did not win approval from the House of Representatives. Rep. Bob Goodlatte, a Virginia Republican who sponsored the bill, said he may come back with a revised version in next year’s Congress. Deaths of Allen Paulson, Fred Hooper, and Clement Hirsch Racing lost some of its most esteemed participants in 2000 with the deaths of owners-breeders Allen Paulson, Fred Hooper, and Clement Hirsch. Hirsch, founder of Oak Tree Racing Association and a Southern California industry leader, died from cancer on March 23 at age 85. Paulson, who made his fortune in the aviation business before getting into racing, died on July 19 of cancer. Best known for campaigning two-time Horse of the Year Cigar, Paulson won four Eclipse Awards. Hooper passed away on August 4 at the age of 102 after an illustrious career in which he campaigned and bred numerous top horses, including champions Susan’s Girl and Precisionist, and won numerous honors, including the 1991 Eclipse Award of Merit. Racing also lost many other stars in 2000, including trainer Hubert "Sonny" Hine and jockey Chris Antley, the victim of an apparent homicide on December 2. Michele MacDonald is executive news editor of Thoroughbred Times.