[Danzig]

farms make a deal based on what they know a horse can draw at stud, x's the first couple years they can get that fee, x's # of mares bred. that # sets the initial price. most farms who set up these huge deals know they have to 'get out' after those first few seasons, while the name of that horse is still big, and before any of those first crops hit the track--hopefully to do well, but more often then not, horses stud fees decrease.
once they lock in a price, they can't take the chance of the horse going in a tailspin and lowering his value at stud. much as we like to think WE understand that horses are not robots, the truth is that losses will lower future value--take discreet cat for instance. he's really lowered his value. of course he's going to stand for his owner, so it's not as tho a big syndicate was put together, and there are part owners to keep happy. of course at times you also have horses such as lawyer ron, who improved his value at four, and will command a higher fee at retirement now than had he foregone racing this year.
also, once a syndicate is put together, and value set, insurance will have to meet that, pushing premiums thru the roof if you continue to race the horse--that's what forced smartys retirement.