Stronach’s Vision, Shareholders’ Commitment Lead The Way For Pegasus Success

by | 01.30.2017 | 3:46pm
Frank Stronach, creator of the Pegasus World Cup, the world's richest horse race
Frank Stronach, creator of the Pegasus World Cup, the world's richest horse race

On Jan. 12, 2016, Frank Stronach announced plans to create the world's richest horse race in 2017, the $12-million Pegasus World Cup, at Gulfstream Park in Hallandale Beach, Fla. The race would be funded by 12 individuals or entities putting up $1 million each for a guaranteed spot in the starting gate.

We polled our readers, asking if they thought this proposed $12-million race would ever happen. Sixty-nine percent of them said “no.”

Fifty-four weeks later, on Jan. 28, 2017, the inaugural Pegasus World Cup took flight at Gulfstream Park, featuring a rematch between Arrogate and California Chrome, the respective 1-2 finishers in the Breeders' Cup Classic at Santa Anita on Nov. 5 and first and second in the Longines World's Best Racehorse Rankings for 2016. NBC Sports was on hand to televise the event nationwide. It was an electrifying atmosphere on-track as the big race approached. By all accounts, including a Gulfstream Park record $40-million plus in total wagering, the event was a major success (even 72 percent of the skeptical readers of the Paulick Report agree in our latest poll that it was successful).

Moral of the story: Don't bet against Frank Stronach.

When the dust had settled in the twilight of a sunny South Florida afternoon, Arrogate had only strengthened his hold as the world's best Thoroughbred after an overpowering performance, winning the inaugural Pegasus World Cup by 4 3/4 lengths. California Chrome, only a week after being named Horse of the Year for the second time in three years, ran the worst race of his career – finishing ninth, beaten nearly 30 lengths. He now exits the racing stage and moves on to a new life in the breeding shed at Taylor Made Stallions in Nicholasville, Ky.

Going into this inaugural Pegasus World Cup, people were wondering if there would be a second one in 2018.

Don't bet against that, either.

For this year's running, only three of the 12 original $1-million shareholders will make money or break even: Coolmore Stud, which worked out a deal with Arrogate's owner, Saudi Arabian Prince Khalid of Juddmonte Farm, to run the 3-year-old champion of 2016 in their slot; Frank Stronach, whose Canadian-bred Queen's Plate and Woodward Stakes winner Shaman Ghost finished second; and Starlight Racing, whose 4-year-old Neolithic ran extremely well in only his second stakes start.

The Pegasus World Cup purse structure had $7 million going to the winner, $1.75 million for second and $1 million for third. The rest of the runners received $250,000.

But the shareholders will also be getting a rebate – their cut of the handle (about $16 million was wagered on the race, including multi-race bets) and any sponsorship money. In the future, officials with The Stronach Group – owner of Gulfstream Park – hope there will be a television rights fee to divide among shareholders.

This year's rebate – in addition to the purse money – is expected to be in the range of $150,000 to $200,000.

Tim Ritvo, The Stronach Group's COO, said the long-term “recipe for success” for the Pegasus World Cup will be for shareholders of the first four finishers to show a profit, the next four to break even and the final four to wind up slightly in the red.

The Stronach Group – now led by Frank Stronach's daughter, Belinda Stronach, who enthusiastically embraced the Pegasus World Cup – invested millions of dollars in this first running, said Mike Rogers, president of the company's racing division. That came in the form of marketing and the creative video series involving mixed martial arts star Conor McGregor, the television buy on NBC, staffing and security for the event, food, beverages and entertainment.

Critics complained about ticket prices for the Pegasus World Cup, but Rogers said the track would have been overwhelmed if Gulfstream kept to its everyday policy of free general admission. “It wouldn't have been a good experience for anyone,” said Rogers. “Belinda wanted to make sure that anyone who paid for a ticket got great value.”

The Stronach Group's team and the first-year shareholders will conduct a post-mortem on this year's running and begin planning for the 2018 Pegasus World Cup. That's been the process leading up to this inaugural running.

“Every time we had an issue to discuss, the whole group (of shareholders) was involved,” Ritvo said. “We've had good discussions all along and they were very professional. It's one time people in racing have worked as one. It reminded me a little of the NFL: each shareholder was trying to make the most money, but understood that if we didn't function as a group we wouldn't succeed.”

“They were fantastic to work with,” Rogers said about the shareholders.

Ritvo said another group, the Florida Horsemen's Benevolent and Protective Association, also deserves credit for helping make the Pegasus World Cup a success by giving up their share of the handle on the big race.

“I'm not sure other jurisdictions would have been as cooperative,” Ritvo said. “We got a letter from Bill White (FHBPA president), commending us for a new innovative way of thinking. They got 50 percent of the revenue from the undercard, which was double what it was on Donn Handicap day in 2016. They took a chance and did pretty well.”

Rogers is hoping for more international participation in year two after nearly getting Awardee – runner-up as the favorite in Japan's biggest dirt race, the Dec. 4 Champions Cup – to commit to this year's running. Awardee is owned by Koji Maeda, who is planning to bring 2016 Triple Crown runner Lani back to the U.S. this year to target the Breeders' Cup Classic.

One thing that won't change in the immediate future, Rogers said, is the site for the Pegasus World Cup, which takes place just a furlong or two from Gulfstream Park's iconic horse and dragon statue. There had been discussions about possibly moving the 2018 Pegasus World Cup to Santa Anita Park, another Stronach Group-owned racetrack.

“Belinda developed good relationships with marketing people in Miami,” said Rogers. “It's a fun venue, even though it is limited in space. We want some consistency, to get some legs under us in the beginning. I think it's staying here.”

  • Tinky

    Tim Ritvo, The Stronach Group’s COO, said the long-term “recipe for success” for the Pegasus World Cup will be for shareholders of the first four finishers to show a profit, the next four to break even and the final four to wind up slightly in the red.

    Not a chance that the above will happen.

    Everything broke well for this first running. The two, exceptionally good principals showing up to race, industry figures stepping up to support the concept, even without the prospect of a good runner, etc. Given the economic headwinds on the horizon, it’s going to get tougher, not easier over the coming years, to make this model work.

    I do give Stronach credit for thinking outside of the box, but counting on rich owners to subsidize a race without, in most cases, any reasonable expectations for profit, is not a model that I would care to bet on over the long term.

    • McGov

      It will be interesting to see if all the starting spots sell in a week like last year….but they will sell. There are only 12 spots…..won’t be that hard I don’t think. A million bucks ain’t what it used to be ;) We all knew that CC would likely come to this race…..we didn’t know about Arrogate…he wasn’t even on the radar yet….and yet, still a strong response.
      Not too often I think you’re wrong Tinky….cause you are rarely wrong ;)….but maybe this time you are underestimating wealthy people and their propensity to spend on silly things….and especially those social status type things :) It’s not like the Derby where you have to earn your way in…..you only need money for this one.

      • Tinky

        I think that you are missing a crucial variable – the broader economy.

        Now, if I am wrong about there being another major economic crisis around the corner, then the race will have a chance to gain some real traction. But I don’t expect to be wrong, and believe that even those with serious money will be tightening their purse strings.

        As I’ve said more than a few times on this forum, the world is in the final stages of by far the biggest credit/debt bubble in history, and it’s not if, but when it bursts. Wealth cannot be created on a keyboard, or with a printing press, and we are headed for a bonfire of paper promises that will impact everything.

        • I Concur
          Just cannot figure where the tiping point is yet

        • McGov

          To those people who make a living by predicting the future….I say good luck. The most powerful person in the world is also the most volatile of any before him. Trying to predict the future in this brave new world is something my small mind cannot even begin to understand where to start.
          I agree it is likely not going to go well. However, only 12 spots. Certainly 12 can sell, perhaps during a nuclear war even ;) hahaa… I probably shouldn’t kid about that…anything is truly possible when reality tv becomes reality. Political apprenticeships as President. Yep. Really happening.

    • gus stewart

      Everything went ok, but if arrogate isnt in race next year it will be even bigger. Remember tinky, its about entertainment not bottomline dollars to most wealthy owners. If you have sit in a nightclub or a concert or a game with multi millonares or a billionaire, you might understand its not the money, you have a better chance of drawing in a new multimillionaire into the biz of you say, hey lets buy a stall in this pegasus deal, lets go buy a horse for a few million thats racing and maybe work a deal breeding rights they can still have the breeding, So lets gamble a few million to win eight million.. there are many wealthy people that would like the action and fun and wouldn’t blink an eye at the cash.. look out of the box too tinky.

      • todd fortune

        Win this race and you get 7 million, not 8.

        • gus stewart

          Oops my bad

    • Larry Ensor

      While I don’t disagree. Stake races are called a “stake” race because the owners at that time put up a “stake”. Money that made up the entire prize money. In those days I am pretty sure the winner took “all”.

      • Tinky

        Yup. Those were real gamblers!

        • Larry Ensor

          “Those were real gamblers”

          Pretty much what Evel Knievel said in interview I read in Golf magazine a while back. . He was a keen and very good golfer. But he didn’t play for beer money at the 19th.

          He played/gambled for big money. When asked what he thought of the pros, leading money winners at the time. He said something to the effect that he admires them. But they have it easy. They’re playing for other people’s money, no skin in the game.

          He went on to say he would like to see how well they’d do when standing over a 3 foot putt with $500,000 of their own money on the line.

          That’s no exaggeration, the size of his bets were legendary and well known.

          Wonder how they settled up after game. Check or wire transfer?

    • molly julia

      Tinky – Frank Stronach Horse Almost Won The 2017 Pegasus World Cup – Conflict Of Interest?

      • Tinky

        Nah.

      • Lawrence R

        Get a life Molly.

    • Lehane

      I just don’t think it’s good for racing to conduct a horse race as in the manner of the Pegasus. $1million to buy a gate immediately denies many others from entering the race and it clearly is only for the very wealthy owners/connections. Is it a genuine horse race?

      • Tinky

        I agree, Lehane, but for different reasons.

        I don’t think that fans will ever be deprived of seeing the best available horses, if their connections want to run them. In other words, the entry fee won’t stop the connections of the best from running, only some also-rans, and that really isn’t important.

        The main reason that I object to the race is that it is a grotesquely large amount of money being given away for what will always amount to one of two kinds of races: a virtual match race between a couple of top-class horses, or a free-for-all featuring forgettable runners. Either way, it is a ridiculous amount of money to offer.

        Look no further than the Dubai World Cup as supporting evidence. They have been throwing stupid money around for years, and only ever attract one or two top horses. The race hasn’t “developed” at all, and this was predictable.

      • Tom Davis

        The race was designed for the best dirt horses in the country. And that’s who showed up. It wasn’t designed for “many others”. Just like the Derby. Preakness and Belmont Stakes are designed only for certain horses.

        • Lehane

          The reports i read opined that there were several horses in the Pegasus that were mediocre and that the best dirt 12 in the country were not represented. The $1million gate fee would be prohibitive for some.

      • Curt Muth

        If you have a horse good enough to compete in this race he/she has already earned the $ 1 million in purse money that the starting spot costs.

      • Lawrence R

        Its called the Sport of Kings and for good reason. If you happen to own a top notch race horse ,and even live in a trailer, a backer will show up and front you. Yes it is and will be a genuine horse race

  • Lefty_Orioles_Fan

    I still think this whole idea is silly.
    I mean who in their right mind is going to continually put up a million dollars to race a horse that is roughly 50 to 1 or worse
    1.) Prayer for Relief, never had a prayer.
    2.) War Story, never has a story to begin
    3.) War Envoy, never heard of him
    4.) Semper Fortis, I can see a theme building here with the Armed Forces, just not winning horses
    5.) Eragon. Oh, it just brings tears to my eyes that the Mattress King’s horse came in last.

    You can’t lose a million bucks in one spin and not feel it and that is what this race was all about.

    • JustJoe

      You think small Lefty, that’s why your not a billionaire.

      • talkingman17

        He is a billionaire, because he is smart enough not to own race horses!

        • Meydan Rocks

          B Wayne Hughes reminds you that it can be a business write off (to balance the main business) if structured property. Added bonus, give joy to guys like you and I who are going to be billionaires by NOT owning race horses! ;-)

    • Molly Julia

      Lefty – Only 2 Horses Grade 1 – Material – Arrogate & California Chrome – Everyone Else Grade 2 & Grade 3 – 2017 Pegasus World Cup?

      • Lefty_Orioles_Fan

        Yes, exactly…..all that money and for what?
        Then again, I am a simple man who is not a billionaire.

        • Lawrence R

          Obviously.!!!

      • Meydan Rocks

        Funny! Hey After you think big, you gotta start somewhere. After all, Rome wasn’t…

    • Meydan Rocks

      Lefty – Did you know that the losing shareholder participate in the gate and balance of the pool after payouts to betting winners?

      • Lefty_Orioles_Fan

        No, but still to cough up that kind of coin.

        • Meydan Rocks

          Lefty – I used to live in a small town back east. I picked up and moved to the big city and a guy I befriended in the big city turned me on to this simple expression. “It’s all relative”.

          Take B Wayne Hughes who founded Public Storage for example. Public
          Storage does business as a REIT (Real Estate Investment Trust). He is basically a commercial real estate magnate who (if I can say this) happens to have storage units for rent” sitting on the valuable land he owns. Just like McDonald’s is one of the biggest real estate companies on the world. They just happen to sell burgers. Public Storage tenants (and now share holders) pay for the mortgages of these facilities that INCLUDES the land.

          Today, he can bank roll race horses from his personal account
          but guess what? Before this company went public, he was THE major share holder so technically, he could literally take a revolving corporate
          loan of say 50 million a year backed by his land worth multi millions and buy horses to his heart’s content. AND HIS TENANTS WOULD TECHNICALLY BE FOOTING THE BILL. Of course it’s not as cut and dried as it sounds but it’s not inconceivable.

  • Ida Lee

    The people in this business are not in it just for the money. I had a major adrenaline rush just before the race and even with Chrome having an off race, it was fun. If it was electrifying and crazy fun for me, who had no horse or money in the game, can you imagine how much fun it was for these competitors with so much money and prestige on the line. I mean these are big time gamblers. That’s why they’re in the game. These people who put money into the race are not in it to get rich …they’re already rich. It’s the rush you get and the euphoria of winning something so big. I’m sure most fans enjoyed the fun of the preparations leading to the race, the jockeying around for a horse… it was just fun from beginning to end. Let’s do it again.

  • AxelFreed

    If I’m reading this right, 8 shareholders lost over half a million each. That is a lot of hay. I have to think that there won’t be as much interest next year.

  • carlo

    Congratulations to frank and Belinda for a phenomenal day of racing, but a parson who deserves a huge mention is PJ Campo he is the hero behind this great event

    • Molly Julia

      Carlo – Notice None Of The Real Fans Made It To The 2017 Pegasus World Cup – Just The Fake Fans Into Fashion?

  • kuzdal

    With this race being held at Gulfstream (or Santa Anita, going forward), the only winner is this equation becomes Frank Stronach. He’s the one playing with OPM; he’s gonna have a race to promote, a track that creates one helluva write-off (think like a Trump).

    This year, you had the mystery of CC breaking from Post 12, where starters have been 0 for 8204 since Silic in the 1989 Breeders Cup Juvenile, and seeing whether Arrogate would be pinned down on the rail. And those two storylines were settled before a half.

    And, unless you’re playing with other people’s money, you don’t toss around a million dollars (more than once).

    • Molly Julia

      Kuzdal – California Chrome Hurt – Scratch The Horse – Don’t Play With The Racing Fans Dinero?

    • Cheap Speed

      Actually, the last horse to win from Gate 12 going 1 1/8 at Gulfstream was Big Brown in the 2008 Florida Derby.

  • J

    GOOD LUCK TO STRONACH IF HE CAN FIND 12 OWNERS TO PUT UP $1 MILLION EACH FOR THE 2018 RUNNING. OWNERS LOST MONEY!
    THIS IS A RIDICULOUS CONCEPT.

    • todd fortune

      Look at the chart. It’s a joke. Two owners made money, one owner got his money back, and everyone else lost 750K. Does this look like a model that has any chance of being a success?

      • Riatea

        Wrong, 3rd got a mil plus the “rebate” of 150-200k. The rest got 250k, PLUS the 150-200k rebate.

      • Molly Julia

        Todd – One Of The Owners – Owns Gulfstream Park & Santa Anita Park?

        • Lawrence R

          Wow are you sure about that? I Heard he also leases Calder and owns Golden Gate Portland,and Pimlico too.

    • Judoon

      Lol, most horse owners lose money. They know going in that they probably will, but they go for it anyway. It doesn’t take running in the Pegasus to do that, yet you’re acting as if it’s a new and unexpected thing.

  • SaratogaJ

    For those who think that losing a half million is a big deal to most of these owner/investors, consider how many tens of millions of dollars are spent each year on high priced yearlings who might never win a race or will end up running for a $5k tag in West Virginia in a couple years. (yes, this really happens).
    $500k to have a shot at a race and purse like this might not seem so expensive in this context.

    • Lawrence R

      The Green Monkey !!!!

  • Jay Stone

    Just think for a moment that the two favorites didn’t make it to the gate. You would have had a well balanced 12 horse race with Connect, Midnight Storm, and a few others. Instead the public got to see a horse who is a generational talent and a old warrior. Throw in a Japanese horse or two next year and the huge Asian money will be bet. It was an electric atmosphere and the rest of the card was as good as any ever drawn. The shareholders, win lose or draw, made relationships with other owners that will work out going forward. The few people posting here should not worry about these people that enjoyed the experience and will go forward. They will learn from this experience.

    • Molly Julia

      Jay – Japan Horse – Lani Should Have Made It With Lasix?

      • Jay Stone

        Attempt was made to entice this horse and other Asian entrants but there was a. It if lack of understanding on their part. With a year to learn next year it will happen. There was a very eclectic crowd watching this race. It ranged from wealthy owners to young people watching their first race to average people who payed to see a great sporting event. Compared to watching a NASCAR event or A pro basketball game the hundred dollars was minor.

    • Terri Z

      Great idea Jay Stone. At least the Japanese and Chinese know about the race now. And how about some South American and South African horses as well?
      I thought it was a great way for share holders to team up with other owners. That’s what the Reeves did and they are going forward with a partnership with their entry. And as the Reeves is trying to have thoroughbred racing in Georgia, getting together with other owners who love racing might help to make it happen.
      Also, I am so glad that the tickets sold and that Pegasus will remain in South Florida. (Kudos to Belinda Stronach for that.)
      I attended the Pegasus and really enjoyed the event. I sat in the first row of the show ring and next year, I think I will go to the Sport of Kings.
      And I appreciate that Gulfstream lowered the cost of many of the tickets and the parking; that also helped to boost ticket sales. This year was unique in that California Chrome was racing against Arrogate and we Chromies and Arrogate fans filled the stands.

  • Kevin Callinan

    This was a rousing success for a first year event. I’m sure there will even more of a build up next year with network coverage. The date is perfect.

    One change- 1.6 million was wagered on the Pegasus super (a good full day at PARX) yet 4th place paid the same as 12th.; every other stake that day paid incentives down to 5th. You can’t offer a wager down to 5th and give the jockey no reason to persevere- not a good look.

    • Molly Julia

      Kevin – Should Have Been About $5 Million Bet On The 2017 Pegasus World Cup – All Rich People Attended The Show?

  • Tom Davis

    A million bucks is chicken feed to those who bought a spot in the Pegasus. They participated for the excitement and the fun. And they’ll do it again. Like Michael Douglas said in one of his movies, “there’s a sea of money out there.” (not the movie Wall St)

    • Molly Julia

      Tom – The 2017 Pegasus World Cup Was A Fashion Show Not A Horse Race?

  • Flag Is Up

    How quickly do you think the 12 spots for the 2018 race will sell out? Pretty sure there’s nobody in line to buy one of those slots!

    • Lost In The Fog – Robert Lee

      I disagree. Those who participated in the 2017 edition crunched the numbers before making their commitments to buy a slot. I doubt that any of them were surprised by the average financial outcome for the participants. They were gambling and they knew it when they tossed their $1M into the pot. I expect there will be little problem filling the 2018 slots.

      • Molly Julia

        Lost In The Fog – Tax Write Off – Travel Expenses?

        • tony a

          Very clever, its 100% deductible, great way to offset loses.

    • Curt Muth

      These owners don’t blink when they sign a ticket at the sales for multi million yearlings, why would they hesitate to pay 1 million with a 12-1 chance on 7 million?

      • tony a

        It’s hardly a 12-1 chance just because there’s 12 horses running. Also some of the owners don’t blink and some, you blink they’re gone. If they can bring in additional revenue and markets, such as Japan betting into the pool, maybe people will hang around but if it were a slam dunk why would the track structure it this way, sponsor it themselves.

      • Flag Is Up

        This is the way I’d look at this race.

        1. I’m buying my position up to one year prior to race day. How many things can go wrong with the horse you’re considering in that one year? I’m pretty sure Semper Fortis wasn’t the horse that the connections were thinking about when they put up their money!

        2. Winning the race pays 6-1 and running second pays even money on your $1 million entry fee. Plain and simple this is a suckers bet!

        If this race runs twice I’d be surprised, if it runs three times I’d be shocked!

  • joey

    Alot of negativity. I am normally very
    pessimistic and can admit I never thought in a million years this race would have more than 7 starters in the gate or that fans, owners, racing officials, and Industry types would be discussing next year’s running…. Against all odds it did yield mild success in the inaugural running. I thought stronach group was nuts for even considering this but they deserve alot of credit for temporarily pulling this thing off. I thought the structure of the under card with the pick 6 and pick 4 races was very curious (poor), not sure what they are doing with 3 turf races in the pick 4 two of which were long back to back routes. I would have liked to see another dirt race in there or at least some type of mile or mile 1/16 turf race. But maybe I’m being picky….the day was a success for racing and racing fans so stronach deserves all the credit.

  • Steve

    They need to make the race 1 1/4 miles if it stays at Gulfstream. The horses with the extreme outside posts have little chance with the short run to the first turn

    • Lefty_Orioles_Fan

      Well, Chrome might have broken down if it were 1 and 1/4 miles.

    • Figless

      at least a mile and 3/16

    • Lehane

      It was reported that $30million was paid for the Pegasus statue. That amount of money could’ve been used to improve the racetrack.

  • Winky

    Don’t forget… jocks earn 10% of the purse for 1-3 & trainers earn 10% of the purse for 1-3.

    • Curt Muth

      trainers earn 10% of the purse for 1-12. jocks earn 10% of the purse for 1 and 5% for 2-5

  • Smitty

    One way to get a little more money on the back end would be to not give the first 3 finishers any cut of handle or ad revenue, it might sound harsh but it will benefit others to take a shot.

  • Richard C

    As in all major sports – pro and college – the TV deal is where the “free” money makes an event highly profitable. The 90-minute program was a time-buy with (mostly) in-house ads. If a long-term contract can be signed with NBC and several major advertisers (a title sponsor, perhaps) are brought aboard, then every entity with a starting gate ticket will see a tidy profit at the finish line…..and make the future growth envisioned by Eddie Olczyk a reality.

    • Molly Julia

      Richard – NBC Sports Covered The 2017 Pegasus World Cup – Most Of The Staff Were Shaky – No Sound Kept Going In & Out?

      • We’re watching

        At least they didn’t have smiley Matt Bernier who couldn’t pick a winner out of a two jellybean fish bowl.

  • Molly Julia

    2017 Pegasus World Cup Was For All The Rich People – Now Have A Race For All The Poor People – 2017 Florida Derby?

    • Curt Muth

      They have the Claiming Crown.

    • Terri Z

      I went and I’m not rich. I spent $130 for a seat in the walking ring and $20 for parking. The seats for the rich were in the restaurants and in the private rooms. I usually spend $60 or $80 for the Florida Derby in The Sport of Kings (where they have the Eclipse Awards). I would never go to the Kentucky Derby as air fare, hotel, and crazy seat prices are too rich for my blood.

    • Lawrence R

      Poor people should not go to race tracks.

  • We’re watching

    Would like to see more races where the local FHBPA or similar gets cut out. Why should they profit in such a race composition?
    The Virginia group virtually killed Colonial Downs racing with their piece of the action demands.

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