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MARCH 11, 2006

High-Rolling Horseplayers

by Tim Holland

Two recent events, the Santa Catalina S. (G2) win by Brother Derek (Benchmark) on Saturday and last week's $16 million sale price of a two-year-old in training, served as reminders that some of the biggest "horseplayers" in the business are owners and breeders.

When Brother Derek made his winning debut in May of 2005 at Hollywood Park, one of the major clues to his ability may have been his purchase price at the Barretts two-year-old sale just two months earlier. The figure he realized, $275,000 paid by Cecil Peacock on the advice of trainer Dan Hendricks, is by far the highest achieved by any of sire Benchmark's offspring. Indeed, the six other two-year-olds by Benchmark that sold in 2005 averaged just $10,416. Combined with some sharp workouts, Brother Derek looked like a good bet first time out and, even though Hendricks owned a low 5 percent win rate with first-time starters, the public dispatched him as the solid favorite. He did not disappoint his supporters when rallying under Alex Solis to win by a half-length.

Having now earned more than $700K, and with the promise of more to come, Brother Derek has quickly proved to be bargain.

However, we are entitled to wonder as to how one could justify the $16 million invested last week by Coolmore on the two-year-old by Forestry out of Magical Masquerade (Unbridled) at the Calder Selected two-year-olds in training sale. Indeed, the records of some of the previous highest priced racing prospects to be sold at auction do not, at first glance, inspire much confidence. In 1983, a colt by Northern Dancer, later to be named Snaafi Dancer, became the first yearling to sell for more than $10 million. Bought by Sheikh Mohammed, Snaafi Dancer was sent to be trained in England but was, according to his handler John Dunlop, too slow to race. When dispatched to stud in Canada, he was unable to redeem himself after being discovered infertile.

Two years after Snaafi Dancer's record-breaking sale, Seattle Dancer, a half-brother to Seattle Slew by Nijinsky II, achieved new heights bringing $13.1 million, setting a record that would hold until last week. Seattle Dancer is often referred to as a flop, but that is hardly the case considering he finished second in the Grand Prix de Paris (Fr-G1), and at stud has sired more than 30 stakes winners, including Pike Place Dancer, winner of the 1996 Kentucky Oaks (G1).

Imperial Dancer (Northern Dancer), Jareer (Northern Dancer), Laa Etaab (Nijinsky II) and Amjaad (Seattle Slew) were the next four highest priced yearlings that sold in the 1980s and each of them faded into obscurity. In the following decade, only one racing prospect sold at auction for more than $5 million, Abshurr (Nureyev), who was purchased by Godolphin at Newmarket, England, in 1998.

Abshurr did not race and was another disappointment, but two Storm Cat colts who have sold more recently have a chance to make amends for previous sale toppers. Mr. Sekiguchi, who sold for $8 million in September, 2004, is the first foal out of Grade 3 winner Welcome Surprise (Seeking the Gold), who is a half-sister to, among others, Summer Squall and A.P. Indy. Making his debut at Santa Anita in February for owner Fusao Sekiguchi and trainer Bob Baffert, Mr. Sekiguchi was briefly outpaced in the first half-furlong before being rushed to a clear lead. After tiring and running green in the final sixteenth of a mile, the colt was caught close to home by his stablemate, Rising Rate (Exchange Rate), in an encouraging performance.

Meanwhile, last fall's sale-topper at $9,700,000, a colt out of the multiple Grade 1 winner Tranquility Lake (Rahy) who was bought by Sheikh Mohammed, is expected to race later this year.

While none of the 11 yearlings, or two-year-olds, who have sold for $6 million or more have vindicated their buyer's faith, it is possibly only a matter of time before one does, and in that instance the rewards may be huge. Fusaichi Pegasus, the 2000 Kentucky Derby (G1) winner, was purchased for $4 million at the 1998 Keeneland July Sale and is just one example of how lucrative the payday can be. After his racing career, which in addition to his Derby victory included a win in the Wood Memorial (G2) and a second in the Preakness S. (G1), the son of Mr. Prospector was sold to Coolmore for a reported $70 million.

At first, $70 million seems like a huge sum, but it becomes more realistic after some quick mathematics. Through his first four breeding seasons, Fusaichi Pegasus has sired 724 foals at an average fee of around $120,000, which comes to a total of nearly $87 million in money earned through stud fees. Moreover, and very importantly for Coolmore, Fusaichi Pegasus seems to have weathered the tough times that all stallions must face -- the third and fourth years at stud when breeders are reluctant to pay high stud fees on a stallion whose runners could possibly turn out to be no good on the racetrack. Consequently, Fusaichi Pegasusís fee dropped, from an original $150K in 2001, to $85K for the 2004 breeding season.

However, when his first crop, including Grade 1 winner Roman Ruler, proved successful and he wound up fourth on the first-crop sire list, his fee was raised to $100K for 2005. After finishing second in the second-crop sire list in 2005, his fee was again raised for the current breeding season, to $125,000. With top runners, including recent impressive return winner Bandini, to look forward to this summer, Fusaichi Pegasus could well command an even higher fee for next year.

As lucrative as Fusaichi Pegasus has become, Coolmore's biggest goldmine in recent years was a result of the $2,600,000 purchase of broodmare Mariah's Storm (Rahy), carrying her first foal by Storm Cat, at the Keeneland November Sale in 1996. The result was Giant's Causeway, a colt who, nicknamed the "Iron Horse," won five Group 1 races in a row in England and Ireland before finishing a game second to Tiznow in the Breeders' Cup Classic (G1) in his only attempt on the dirt.

An instant success at stud, Giant's Causeway finished the 2004 racing season in fourth place on the leading first-crop sires list, with the Godolphin-owned Shamardal as his leading earner. Last year was a banner year for Giant's Causeway with, among others, Shamardal and Footstepsinthesand winning classics in Europe, and First Samurai winning the Champagne S. (G1) and Hopeful S. (G1), which helped the stallion become the leading sire of two-year-olds in 2005. These successes have enabled Coolmore to double the "Iron Horse's" fee to $300,000 for the 2006 breeding season, without scaring away any potential clients.

While Giant's Causeway and Fusaichi Pegasus are the leaders, stud fee-wise, of Coolmore's deep American stallion division, they are not alone in popularity. Indeed three other sought-after stallions, Grand Slam, Hennessy and Tale of the Cat, command fees of more than $50K, while 13 more stand for fees higher than $10K.

Meanwhile, Coolmore's Irish-based division boasts an equally impressive roster. Spearheaded by the legendary Sadler's Wells, a total of 21 stallions are on the books, including Montjeu (Ire), who was runner-up in the 2005 European leading sire list, as well as exciting young prospects High Chaparral (Ire) and Rock of Gibraltar (Ire).

So while many have, understandably, questioned the wisdom of Coolmore, one must remember that after taking into account the magnitude of this worldwide operation, the $16 million spent on a horse whose sire stands for $100,000 is less of a gamble to this player as of that of a smaller horse operation that spends $275,000 on a two-year-old from a $7,500 stud fee, as is the case with Brother Derek. Both are risks, the likes of which many fail, but both have huge upsides and it is through these "gambles" that Coolmore is in the position it is today.



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