Determining the value of a horse

[Linny]

The figure is usually arrived at my determining the maximum stud fee would supply a full book and then doing a series of calculations. I'm not exactly what they are but it would have to involve depreciation, anticipated years at stud etc. It is based not nessessarily on how many races he won, but what the breeeding market will bear, considering his race record, pedigree etc.

Two stallions with identical race records could have very different fees because of their own pedigrees. Obviously once a stallion has foals on the ground, his can can change immensely, usually for the worse (Point Give) but somethimes for the better(Distorted Humor).

[Cannon Shell]

$60 to 70 million is a pipedream.

[Danzig]

Originally Posted by Cannon Shell

$60 to 70 million is a pipedream.

crack pipe dream no doubt.

[freddymo]

Originally Posted by Cannon Shell

$60 to 70 million is a pipedream.

Agressive but hardly a pip dream.. 125 mares at 50k for 10years.. I would bet the under as well but I could see someone buying 10% for 5 or 6 mil

[paisjpq]

Originally Posted by Linny

The figure is usually arrived at my determining the maximum stud fee would supply a full book and then doing a series of calculations. I'm not exactly what they are but it would have to involve depreciation, anticipated years at stud etc. It is based not nessessarily on how many races he won, but what the breeeding market will bear, considering his race record, pedigree etc.

Two stallions with identical race records could have very different fees because of their own pedigrees. Obviously once a stallion has foals on the ground, his can can change immensely, usually for the worse (Point Give) but somethimes for the better(Distorted Humor).

40-50 shares over 4-5 years....60 mill is probably pretty high.

[Travis Stone]

Very interesting stuff!

[IrishofNDMan]

Nice call on the Superderby Travis, just watched it.

[Thoroughbred Fan]

Most today are based on 60 shares. Simple math from there. Let's suppose $50k for Curlin.

The prospective buyers would be offered shares with the idea that for the first four years they would get two seasons.

They need to pay $100k per year for four years. Most would pay the fees the first year and get the payback for there shares covering the next years fees for the next three years, assuming he stays booked full.

So, that would amount to $400k per share X 60 shares = $ 24 M.

So, I think it is pretty easy to see how $60-70 million is probably too high.

However, you can see how it might be a good investment for those close enough to the farm to get the chance to buy a share. You'd nearly own the share outright for just $100k by the time his first runners get to the track. As long as he is promoted enough and sells reasonably, after a few years its all profit.

That is how the stud business works. However, investing in a few different stallions will spread your risk. Putting all your eggs in one basket can be risky.

[Travis Stone]

Originally Posted by IrishofNDMan

Nice call on the Superderby Travis, just watched it.

Thanks, I appreciate it!

[Travis Stone]

I guess my big and ultimate question is at what point does the lack of racing earnings start to outweigh the need to retire for stud profits. In other words, when does the bubble burst?

[paisjpq]

Originally Posted by Travis Stone

I guess my big and ultimate question is at what point does the lack of racing earnings start to outweigh the need to retire for stud profits. In other words, when does the bubble burst?

too many variables to have one answer....ego, greed, ability to pay insurance premuims, laws of supply and demand, they start to lose....just a couple of the factors that go into deciding when to retire.