TWO HORSES OF THE YEAR?

If we needed confirmation that Horse of the Year is a highly subjective award, look no further than what transpired in January 2018.  Which Horse of the Year is the relevant question?

CNN reported on January 23, 2018:

“He may have retired from racing, but that hasn’t stopped Arrogate scooping up more silverware.

The American colt was named as the Longines World’s Best Racehorse for a second year in a row at a lavish awards ceremony in London’s Claridge’s hotel Tuesday.”

Two days later, on January 25, Teresa Genaro wrote in Forbes online:

“In a year in which Triple Crown race winners took a backseat to older horses, Gun Runner was the expected, and worthy, recipient of the 2017 Eclipse Award for Horse of the Year.  He ran in six races and won five of them, finishing second in the Dubai World Cup, earning nearly $7 million.”

An outsider to horse racing, or an insider for that matter, would surely wonder how Arrogate could simultaneously be the “World’s Best Racehorse” yet not judged to be the superior racehorse in the United States, especially since he beat Gun Runner in two of the three career races in which they ran against one another and split with Gun Runner 50/50 in 2017.  Further, Arrogate earned the most money of any racehorse in history, $17.42 million, of which $13.2 million came in 2017.

Anytime relative merit is determined by opinion, there will likely be disparity of outcome.  This holds for Olympic figure skating, talent contests, horse-racing awards, voting for inclusion in various sports hall of fames, and other “in-the-eye-of-the beholder” endeavors.  Should Pete Rose or steroid-aided home-run sluggers be in the MLB Hall of Fame? are recurring questions debated on sports-talk shows.

In the end for Arrogate and Gun Runner, it does not make a great deal of difference that their owners can truthfully advertise in stallion listings that one was deemed to be the “World’s Best Racehorse” in 2017 and the other was the Eclipse champion in 2017.  What matters now is which one sires the best racehorses and justifies a higher stud fee.

Copyright © 2018 Horse Racing Business

WHY THE PEGASUS WORLD CUP ATTRACTS OWNERS

What prompts racehorse owners to put up $1 million to enter their charges in the Pegasus World Cup Invitational?  The apparent answer is a huge payout if their horse wins and a big check for second or third place.  But that is an incomplete explanation for the motivation since some of the entries have little chance.

Horse racing draws owners from a wide assortment of backgrounds.  An oft-seen trait among them is an apparent affinity for risk-taking across life’s endeavors, as personified by legendary historical characters like Edward Bradley, James Keene, and John Madden.

Racehorse owners whose fortunes were made in not-for-the-faint-of-heart business and financial ventures are still plentiful.  To illustrate, Seth Klarman of Klaravich Stable–who grew up blocks from Pimlico racetrack–is the chief executive officer of Baupost Group, which is one of the largest global hedge funds.  His tolerance for problematic outcomes is demonstrated by Baupost’s ownership in late 2017 of nearly $1 billion in highly hazardous debt issued by Puerto Rico.

Another example:  Vincent Viola, part owner of 2017 Kentucky Derby winner Always Dreaming, accumulated a substantial part of his billion dollar-plus net worth by betting on oil prices at the New York Mercantile Exchange.  Even West Point graduate Viola’s initial occupation, U. S. Army soldier, is perilous.

Such narratives are common around the globe.  Irish businessman J. P. McManus, who owns the largest stable of National Hunt horses, made a substantial part of his considerable wealth via currency trading.  The Guardian wrote “McManus doesn’t bet in thousands; he bets in hundreds of thousands.”

Similarly, prominent Wall Street notables like to play poker for big pots in their spare time.  Business Insider once published an article titled “The 22 Biggest Poker Players on Wall Street.”

In January 2018, instead of a hedge-fund titan turning to horse racing or poker, the reverse occurred.  That is, a high-stakes gambler crossed over to the world of high-stakes investing.  Bloomberg reported: “The World’s Best Female Poker Player Joins the World’s Biggest Hedge Fund.”  The reference is to 33-year-old Vanessa Selbst, who took a full-time position with Bridgewater Associates.  Her bio reads:

“Vanessa Selbst is a professional poker player and the highest earning female poker player of all time, with over $11.6 million in total winnings.  She is a member of Team Pokerstars Pro, where she plays under the username ‘V. Selbst.’  A native of Brooklyn, New York, Vanessa has been playing poker for over 10 years, starting out in online and live NLHE and PLO cash games.  In 2007, Vanessa hopped onto the live tournament scene and never looked back (apart from that two-year hiatus she took to go to [Yale] law school)!”

Selbst says that successful gamblers and exceptional investors have “so many similarities,” such as patience, strategic flexibility, and aggressiveness when “you [think you] have the best hand.”  She compared her work at Bridgewater with poker playing:  Like gambling, investing is “also really freaking difficult.”

Horse racing and other skill-combined-with-chance plays have always been compelling to driven individuals who have made their marks by starting businesses or trading and investing on financial exchanges.  Risk in the pursuit of great rewards is a powerful allure.  That verity will be on display Saturday in the Pegasus World Cup Invitational.

Copyright © 2018 Horse Racing Business

THE PEGASUS WORLD CUP INVITATIONAL IS A HUGE BOOST TO RACING

Frank Stronach is an octogenarian but that fact has not diminished the entrepreneurial aptitude he demonstrated as a young man, when he went from being a poor Austrian immigrant in Canada to founding and building Magna International, a giant auto-parts manufacturer and supplier.  Much later in life, he conceived and brought to fruition the world’s richest horse race, the $16 million Pegasus World Cup Invitational.

The second annual running is at Gulfstream Park near Miami, Florida on Saturday, January 27, 2018.  Basically, Gulfstream sells twelve slots in the race, valued at $1 million each, to shareholders, who have several options.  They can start a horse they own or lease or sell their slot to another owner.  The $12 million purse money has been supplemented by The Stronach Group, bringing the total purse to $16 million (the purse in the inaugural year of 2017 was $12 million).

In conjunction with the Pegasus World Cup, Gulfstream is holding a high-stakes handicapping contest.  The buy-in is $12,000 to be bet on Friday and Saturday, with the Pegasus World Cup being a mandatory race to play.  In addition to Gulfstream, satellite facilities owned by Frank Stronach will allow bettors to participate for an extra fee of $1,000 that goes into the betting pool:  Golden Gate, Laurel Park, and Santa Anita.  Stronach Group-owned Xpressbet.com is another way bettors can join the competition.  The payout for first place in the contest is 50% of the pot (an estimated $250,000), with the second-place winner getting 14%, third place 10%, and so on.

The Pegasus World Cup instills some excitement into the racing calendar early in the year, preceding the beginning of fan interest in the major prep races for the Triple Crown.  Moreover, owners now have plenty of monetary incentive to keep top-flight horses running after the Breeders’ Cup–at least for one more race–before retiring them to stud.

Mr. Stronach’s creation has not only stirred interest among race fans, but it has given them a respite from winter as they await the annual focus on the Triple Crown races, with the promise of longer and warmer days.

Copyright © 2018 Horse Racing Business