American Graded Stakes Standings brought to you by Keeneland: Playing Armchair Millionaire

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Far be it from me to tell someone how to spend their money, but I sometimes can’t help but play a little game of armchair millionaire when there’s a horse sale going on.

It happened earlier this month during the select portion of Keeneland’s September yearling sale when Benjamin Leon made headlines with his $4.2 million purchase of an A.P. Indy colt on the opening night of the auction under its reconfigured format.
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Leon, a native of Cuba who made his fortune in the health care business in South Florida, is a newcomer to the Thoroughbred industry though he is well known in the Paso Fino world as an accomplished breeder. He first hit the radar screen during Fasig-Tipton’s Saratoga yearling sale in August, where he also bought the sale-topper, another colt by A.P. Indy, for $1.2 million.

He wasn’t finished at Keeneland after he and bloodstock agent J.J. Pletcher outbid Coolmore for the $4.2 million A.P. Indy colt. Buying under the name of Besilu Stables (the name he uses for his Paso Finos), Leon purchased two more yearlings for a total of $860,000, bringing his aggregate spending at Keeneland up to $5,060,000, and ranking Leon as the sale’s second-leading buyer, behind Dubai Sheikh Hamdan’s Shadwell Estate Company Ltd, which bought 22 horses for $8,230,000.

So in the course of just over one month, Leon spent $6,260,000 for four unraced Thoroughbred yearlings. Todd Pletcher, J.J.’s son and a future Hall of Famer, will train the Besilu Stables horses.

Leon’s big splash at Keeneland is good news for the industry on multiple fronts. First, there is always a need for new investors to prime the pump for the commercial breeders, especially those who play at the top of the game and breed to the best stallions with the highest appeal. Second, momentum is an important part of the commercial market, and the dramatic bidding war on the sale-topping colt, which took place during the early portion of the auction’s first night, got the sale off to a very good start. That was extremely important for a market that came into the sale in a fragile state, and in some ways set the tone for the remainder of what has been good, solid horse trading.

So what does all of this have to do with American Graded Stakes standings?

Leon, I anticipate, wants to win events like the Kentucky Derby, Breeders’ Cup or other Grade 1 races. You don’t spend that kind of money to win on a Thursday afternoon. He is hoping to have bought Saturday horses.

But Saturday horses, those who win Grade 1 races, are not so easy to identify, and it’s difficult to reach that level with just a handful of runners. These races are rare and the horses can sometimes be fragile.

So far in 2010 there have been 30 individual Grade 1 winners sold at public auction. Their prices range from a low of $8,000 for Evening Jewel (sold at the Keeneland September yearling sale before being resold privately as a 2-year-old) to $650,000 for Tuscan Evening (sold last year at Fasig-Tipton’s November mixed sale). The average price of the 30 Grade 1 winners sold at public auction is $196,200 and the median price if $155,000.

The sum total these 30 Grade 1 winners brought when they sold at public auction was $5,886,000, which is $374,000 less than Leon spent on those four unraced yearlings.

I want Leon to have a long, successful, and enjoyable experience in Thoroughbred racing. I hope that $4.2 million colt turns out to be a Grade 1 winner down the road, just as his sale-topping daddy did after selling for $2.9 million at the Keeneland July yearling sale in 1990. It can happen. And by virtue of the fact that astute horsemen like the Coolmore group and Bob Baffert were underbidders on the colt, if any horse in the sale was worth $4.2 million this one surely was. But the odds are against him.

Would Leon have a better chance of winning Grade 1 races if he had spread that $6,260,000 around on more horses? By shopping in the $200,000-$300,000 range, he could have a stable of between 20 and 30 horses and be in better position to deal with the attrition that comes with racing and training. Of course, by doing so he would be increasing expenses because it obviously costs far more to operate a 20-horse stable than one with just four runners. But this can be a game of numbers, and 20 in my book is a better number than four.



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  • South of the Border

    What’s Pletcher’s day rate or the avg day rate all the big time trainers? $150 a day? Just wondering.

  • Funny Cide

    Ray, please consider adding the total to your charts so that a percentage can be had, as the percentage is as telling as any number regarding excellence. Taylor Made and Keeneland may forever top their lists due to the numbers of horses they sell, while the smaller guys could be tops in percentages. That’s true also for the trainers, owners, breeders, etc.

  • http://www.gallopfrance.com G. Rarick

    Thank you for finally putting some numbers together on sales prices relative to results. I’ve never seen this done – there is the usual gushing over who bought the top lots, and never any followup to tell us that oh, by the way, those top lots are useless as race horses. Yes, 20 is a better number than 4. But you hit the nail on the head: Owners are far more willing to shell out money at a sale than to pay their training bills while they wait for results. It’s hard to get people to understand that buying the horse is the easy, and often cheapest, part of the racing equation.

  • LJBroussard

    As a certified thousandaire, I love the way you play “armchair millionaire,” Mr. Ray Paulick. Love it! As far as which type of colt to buy, I’d like one of each, please.

    Racing needs guys like Mr. Leon. I look forward to seeing him on in the winner’s circle.

    Plus I hope he rides around the elite meets on one of his Paso Finos and shocks the stuffing out of a few stuffy old coots I could but will not name.

    Linda

  • Thehorses

    Astute horsemen at Coolmore bought The Green Monkey for $16 Million and he never won a race. I am sure that there are many people who would be thrilled to know that their health care dollars helped one man to spend millions on a few horses. Many people have gone bankrupt because of greed in the health care industry. People have had their entire life savings and then some wiped out so some greedy people could spend millions on horses,mansions,yachts,jets,etc.

  • http://www.sctbrescue.org Caroline Betts

    Agreeing with #2 on seeing the total or percentages, would be interesting. The current sale “spectacular” results and headlines are driving me crazy on this issue. Results by book/session/day are all impossible to compare. If you compute the cumulative gross and average price over roughly equivalent number of horses actually sold or by roughly equivalent numbers of horses catalogued, the 2010 increase in average price so far compared to 2009 is a bit less than 2%, higher at 8% for roughly the same number of hip numbers and even that’s hard to interpret.

  • LJBroussard

    Caroline Betts, you always put into words matters I think about but don’t have the words for. Thank you.

    Linda

  • http://www.sctbrescue.org Caroline Betts

    #7. Linda – yes, it’s a disease I suffer from. But thanks for putting a good spin on it :)

  • LJBroussard

    #8, I know this isn’t a chat room. But I love articles such as this. Horses, I understand. Racing politics, alas I know too much. But this high-end sales stuff, nope, no personal knowledge. This is one of the reasons I visit the Paulick Report time and again. To learn, I mean.

    It’s fun to read about guys like Mr. Leon and read the comments (who knew Eugene V. Debs was back from the dead and commenting online?). I wish Mr. Leon the best.

    Maybe he doesn’t want a whole bunch of horses. Maybe he isn’t chasing a title at the moment; maybe he loves quality horseflesh, is willing to pay for beauty and bloodlines knowing it doesn’t guarantee any wins, and wants to have a good time?

    I hope Mr. Leon enjoys his racehorses as much as I enjoy mine. From the bottom of my heart I mean this.

    And I still hope he rides around Saratoga or Santa Anita on a Paso Fino.

    Linda

  • http://www.sctbrescue.org Caroline Betts

    #9. I love Paso Finos, they are the best trail horses ever. You feel never so much as a tremor, no matter what the terrain, yet their legs are spinning like crazy. I hope he rides one around too.

    The big sales are fascinating and fun to be at, even if you’re not buying. Interesting that AP Indy was the sale topper. I was trying to think of examples of sale toppers that had won G1s, TC races etc., but I’m going to update my numbers now instead. I think the latest news is that day 11 2010 produced a zillion percent improvement over day 11 2009.

    Caroline

  • Bocephus

    I have known farm owners who would spend more than $1 million on 1 mare and it is because they want that mare’s yearlings to fit in Book 1 of the September sale or have one in the Saratoga yearling sale. They are usually right, as the top of the market is where commercial breeders make all of their money.
    As a yearling buyer, I am on the other end of the spectrum, and (as you suggest) I spread my risk by attempting to purchase as many good colts as I can within that budget. I strive to buy colts at, near, or even below their stallion’s stud fee, which does happen, even for acceptable individuals. It can be done, but it takes a lot of days in 90+ degree heat shuffling between Keeneland barns over a 12 day period… Boys of Tosconova was purchased for $35,000 I believe in Book 5 last year, although a guy like Leon (Besilu) wants a stallion prospect that can march straight into the stallion barn of a major farm and command a high stud fee. I doubt any of my colts could do that even if they won a G1…

  • john greathouse

    Ray
    has anyone ever called you and asked you to buy a horse for them? Or asked yor advice on what to purchase?
    Try to stay at blogging and out of the Sales Arena

  • Ray Paulick

    Funny Cide and Caroline,

    We’d like to add numbers to the leader lists to give them some perspective, but not all categories are simple, and I’d be interested in your thoughts.

    For example, for sale companies and consignors, what numbers would you recommend using? Since Graded Stakes winners might range in age from 2 to 7, where would get the totals for sale companies and consignors? For Keeneland September, would you use the number sold in 2005, 2006, or 2007, or maybe average the number from those years? I don’t know that it would be possible to accurate to pay for prgramming that would pick up every U.S. starter this calendar year who was ever sold at a Keeneland sale If you have some thoughts on this (and Caroline I know you are a statistical maven), please email them to me at [email protected]

    Ray

  • Ray Paulick

    John G.

    You and I have seen too many people enter the game with a similar business plan, get frustrated when bad luck happens, and get out too quickly. My only point is that I want people to become long-term investors.

    Mr. Leon is a horseman so I assume he understands the risks and I’m under no pretense that what I write is going to change his mind. I just want him to succeed and stick around for a long time. Having Mr. Leon in the game is a great thing for everyone in this industry.

    As I wrote, it’s his money, and he’s got a good team advising him. I sincerely wish them the best

    Ray

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