Determining the value of a horse

[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.

You could figure out the value of him based on what Sanan sold his interest for. Let's say he owner 25% of him and got $15M for that 25% than the horse would be valued at $60M. Highly unlikey that happened though. I heard it was $10M for 20%, which would make him worth $50M. That is just rumor though. I heard the rumors when he was initially sold in the $2M-$3.5M range. One guy who knows the deal pretty well told me it was $3.5M.

The value of a horse is really whatever an insurance company is willing to insure it for or whatever a purchaser will pay. I am sure if they were willing to pay an insurance company would insure him for $60M. Nobody is going to pay that much for him though if he was sold in full.

[NoChanceToDance]

The word "value" has very little meaning in the breeding industry anymore.