THE RISKY BUSINESS OF OWNING A RACEHORSE BREEDING FARM

The late B. Wayne Hughes owned Spendthrift Farm in Lexington, Kentucky, until his death in August 2021.  The farm is now property of his daughter Tammy Gustavson.  Forbes recently valued the Spendthrift operation–on a Podcast–at $400 million.

Using expert guidance from two bloodstock agents (Chad Schumer and Peter Bradley), Forbes estimated that all of the farm’s horses in Kentucky and Australia are worth $360 million, of which the “hottest stallion in North America” Into Mischief accounts for $135 million, or 37.5%, of the total.  The 16-year-old horse stood for a stud fee of $225,000 in 2021, which is set for $250,000 in 2022.

Spendthrift stallion metrics were based on each stallion getting between 80% and 85% of mares bred in foal for a certain number of years in the future, with younger stallions having a longer time span to produce. 

Forbes employed information from Fayette County property records to conservatively value the Spendthrift farmland and buildings in Kentucky at $25 million.  The land and building assets in Australia were projected to be worth $15 million in United States dollars.

Predicting cash flows from stud fees is not a precise undertaking because advertised fees may be reduced in practice in order to attract mare bookings.  Moreover, a stallion’s fee and number of mares bred can rise or fall quickly, depending on how his foals look and later perform on the racetrack.  Into Mischief, for instance, stood for a fee of $7,500 in 2012.  In the earliest days of Storm Cat’s renowned stud career, his owner, William T. Young, phoned mare owners to sell them on breeding their mares to the unproven stallion.

Even with the limitations of accurately determining the monetary worth of a horse-breeding business, the Forbes calculations vividly demonstrate how valuations can depend heavily on one stallion.  In Spendthrift’s case, around 33.8% of the farm’s aggregate valuation ($135 million/$400 million) derives from the virility of Into Mischief, who at age 16 could die, not be able to breed a large number of mares, or become sterile. 

Family-owned farms like Spendthrift are often sold by heirs because they are not interested in the business of breeding and racing horses (e.g. the Mellons, Van Lenneps, and Youngs).  In other instances, heirs are interested but find the farm to be an unattractive investment and sell once a premier stallion like Into Mischief is gone from the breeding shed. 

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RACEHORSE OWNERS ON THE 2021 FORBES 400

The 2021 Forbes list of the 400 wealthiest Americans has at least four members with deep involvement with Thoroughbred horse racing.  A record net worth of $2.9 million is required to make the list.

John Malone, age 80, is the 98th richest American, with a net worth of $8.4 billion. He is the largest land owner in the United States (2.2 million acres), and has racehorse farms in Florida and Ireland—Bridlewood in Ocala and Ballylinch Stud in County Kilkenny.  Malone’s main source of wealth comes from cable television.  His primary residence is in Elizabeth, Colorado.  Malone holds an earned doctorate in Operations Research from Johns Hopkins University.

Tamara Gustavson, age 59, is 108th on the Forbes 400, with a net worth of $8 billion.  She is the daughter of B. Wayne Hughes, who died in August 2021.  He pioneered the concept of self storage.  Gustavson lives in Lexington, Kentucky, where she and her husband Eric Gustavson own Spendthrift Farm.  She earned bachelor and masters degrees from the University of Southern California.

Gayle Benson, age 74, is number 300 on the Forbes list, with a net worth of $3.8 billion.  She is the widow of Tom Benson and owns the NFL’s New Orleans Saints and the NBA’s New Orleans Pelicans franchises.  She races under the name of GMB racing.

Vincent Viola, age 65, is 318th on the Forbes 400, with a net worth of $3.6 billion.  His source of wealth is electronic trading.  He lives in New York, New York. Viola owns St. Elias Stable and was a partner in 2017 Kentucky Derby winner Always Dreaming.  Viola is a graduate of the United States Military Academy.

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SAM HUFF, R.I.P.

Robert Lee “Sam” Huff rose like a rocket from a coal mining town in West Virginia to the pinnacle of football fame, starring at West Virginia University and earning NFL Hall of Fame induction for his years as a fierce linebacker with the New York Giants and Washington Redskins.  Mr. Huff played in what many consider to be the greatest NFL game ever, the 1958 championship between the Giants and the Baltimore Colts.  This nationally televised overtime game is credited as being the catalyst for the NFL’s huge popularity. 

Sam Huff died Saturday at age 87, with dementia.  He was so famous in his day that he was on the cover of Time magazine.

Mr. Huff was less known for his participation in Thoroughbred horse racing.  He and his partner Carol Holden raised horses at Sporting Life Farm in Middleburg, Virginia.  They were the co-founders of the West Virginia Breeders Classics.  The couple also had a radio show, Trackside Weekly, devoted to racing that ran for 28 years, ending in 2016.

Mr. Huff enjoyed storytelling.  When I was a guest on Trackside Weekly, we chatted during commercials about football and horse racing.  He told me that once when he was traveling on an airplane–and had on his Hall of Fame ring–a millennial seated next to him asked him where he got it. Sam laughed at the memory.

His most well-known vignette is about a game against the Cleveland Browns and the great running back Jim Brown. After Huff tackled Brown on first down for a 1-yard gain, Huff trashed talked: “You’re overrated.  You stink, Jim.”  On second down, Brown broke away for a 79-yard touchdown run with Huff in hot pursuit.  Standing in the end zone, Brown inquired “Hey, Sam, how do I smell from here?”

Football and horse racing are poorer today with the loss of Sam Huff.

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