Archives for June 2015


Mike Greenberg and Mike Golic of ESPN’s Mike & Mike show were discussing (on Tuesday) the appropriateness of the Burger King mascot being shown standing behind trainer Bob Baffert and his wife during part of the telecast of the Belmont Stakes.  Baffert reportedly received a $200,000 payment for cooperating, which he donated to four equine charities.

The issue Mike and Mike brought up was whether the presence of the Burger King mascot was tactless and detracted from the historic moment.  (The Burger King mascot also accompanied boxer Floyd Mayweather and his entourage as it made its way from the dressing room to the ring for the recent Mayweather-Pacquaio title fight in Las Vegas.)

Greenberg and Golic agreed that Baffert should have accepted the money from Burger King in order to benefit the equine charities.  They did not venture, however, what their opinions would have been if Baffert had pocketed the money for himself.

In the current era of sports marketing, very few promotions are surprising.  The Dallas Cowboys organization under Jerry Jones is perhaps the best example in the United States of capitalizing on the aura surrounding a sports team for commercial purposes.  In Europe, the professional soccer teams and Formula 1 drivers are exemplars of the marriage of sports and business.


Greenberg and Golic also interviewed jockey Victor Espinoza.  Espinoza comports himself very well and is an able ambassador for horse racing.  Mike and Mike called attention to Espinoza’s philanthropy.


The major horse racing telecasts, namely for the Triple Crown races and the Breeders’ Cup, are always faced with the question of what to do with all of the air time that is not devoted to an actual race.  As a result, the programs are typically full of human-interest factoids or stories.  For example, during the 2014 Breeders’ Cup, viewers learned that jockey Rosie Napravnik was expecting her first child.  One announcer also periodically referred to “Rosie.”  Imagine a casual sports fan tuning in with no context and wondering who is this Rosie?  Horse racing broadcasters tend to assume that viewers know more about the sport than they do.

An announcer on the Belmont telecast gratuitously editorialized that American Pharoah’s owner Ahmed Zayat is “controversial,” with no explanation at all for the characterization.  Is the viewer supposed to know why Zayat is controversial?  Does it matter?  A racing telecast is usually no place to raise doubts about an owner or trainer, especially right after his colt has won the Triple Crown, unless the subject pertains directly to racing, as when Kentucky Derby trainer Steve Asmussen was fending off charges by PETA in 2014.

On the 2015 Triple Crown telecasts, viewers heard time and again about Bob Baffert’s son Bode and the change in the elder Baffert after his heart attack and the passing of his parents.

How different this intimate approach is compared to the telecasts of most other sports events.  For example, to my knowledge, the NBA finals announcers haven’t frequently mentioned LeBron James’ wife, children, or mother, if at all.  How much did we hear during the 2015 Super Bowl about the head coaches’ families?  In the midst of an Indianapolis Colts game, do the announcers mention that the team’s owner has had problems with substance abuse and law enforcement?

A few human-interest vignettes or mentions are sufficient during a horse-racing telecast.  Beyond that they get tiresome and at times seem contrived.  Most viewers are told more than they care to hear or need to hear.  Moreover, it seems as though the announcers are basically saying, “You viewers should like our sport because it has all of these inspiring  people who have overcome [fill in the narrative].”

The alternative is more focus on horses, with a few human-interest vignettes sprinkled in, and shorter telecasts, so there is not so much air time to fill.

Copyright © 2015 Horse Racing Business


The value of a breeding stallion is simple to model but difficult to calculate in practice because current and future cash flows derived from stud fees and selling his offspring, discounted to account for the time value of money, depend on how successful the stallion turns out as a sire and how long he lives and remains fertile.  A stallion may start out with a high stud fee based on his prowess on the racetrack only to have the stud fee drop some when his first crop does not impress visually or plunge after his initial crops are not impressive as racehorses.

In that I don’t know the sales arrangement between American Pharoah’s owner, Ahmed Zayat, and Coolmore Stud (Ashford Stud is its American subsidiary), I have made the following assumptions for some very rough calculations of the colt’s worth.

American Pharoah’s stud fee is likely to be in the range of $75,000 – $125,000.  Assume that the initial stud fee is $100,000.  Further, also assume that he will be bred to 150 mares and get 90% in foal.  The contractual terms will be that the stud fee is due if a foal stands and nurses.  Finally, suppose that Mr. Zayat retains 10% ownership, or 15 shares, and that Coolmore breeds 15 of its own mares to American Pharoah.  Therefore, owners of about 108 mares (120 x .90) would pay the $100,000 stud fee to Coolmore.

The cash flow from stud fees from this scenario for two years would be $21.6 million plus what Coolmore received for selling progeny from the Coolmore mares it bred to American Pharoah.  Say that seven of the Coolmore-owned progeny were sold as weanlings in year 2 for an average price of $200,000.  This would be an additional (to stud fees) $1.4 million.  Coolmore’s total take would come to $23 million in American Pharoah’s first two years at stud (not accounting for expenses and the time value of money).

If American Pharoah proves to be less than a stellar sire his stud fee will drop dramatically.  On the other hand, if he is a sire of distinction, his cash flow could be astronomical over his lifetime.  These are the great unknowns:  how he will pan out as a sire and how long he will live and be fertile.

The correct multiplier on potentially $23 million in cash flow over two years and considering the associated risks is certainly arguable.  Since the cash flows for a stallion at stud in the out years are problematic, to say the least, a low multiple is warranted.  At a very low (conservative) multiple of, say, 2 to 1, American Pharoah would be worth in the neighborhood of $46 million.

If American Pharoah succeeds fantastically at stud and remains fertile for 10-15 years, a sales price of $46 million would in retrospect be a bargain.  By contrast, if he flops as a sire of racehorses, half the purchase price can be recouped within two years (his first crop won’t be yearlings until 2017–if he is retired at the end of 2015–and won’t race until 2018).  The worst-case scenario is, of course, that he is sterile, as with Triple Crown champion Assault and the great Cigar.

That 90% of a 3-year-old racehorse may prove to be a bargain purchase at $46 million.  Amazing!

Copyright © 2015 Horse Racing Business


An adage from the world of sports goes “records are made to be broken.”  That is true for most records but not all.  Consider five from the annals of the Triple Crown, which most likely will never be equaled, much less surpassed.

1.  When the first Triple Crown winner, Sir Barton in 1919, won the Triple Crown the Preakness was run at 1 1/8 miles and the Belmont at 1 3/8 miles.  All of the other Triple Crown winners competed at today’s distances for the Preakness and Belmont.  One can say with virtual certainty that Sir Barton’s times for the Preakness and Belmont will stand the test of time because the races will never revert to the shorter 1919 distances.

2.  Gallant Fox, winner of the Triple Crown in 1930, sired Omaha, the winner of the 1935 Triple Crown.  The record of a Triple Crown winner siring a Triple Crown winner is extraordinarily difficult to match.

3.  The legendary Calumet Farm dominated the Triple Crown from the early 1940s through the late 1960s.  Calumet owned eight Kentucky Derby winners (and bred a ninth that raced for another owner), eight Preakness winners, and two Belmont winners.  Among these 18 winners were two colts (Whirlaway in 1941 and Citation in 1948) that were also Triple Crown champions.

4.  Two stables each bred and owned two Triple Crown winners.  Belair Stud had Gallant Fox and Omaha and Calumet Farm had Whirlaway and Citation.  Both of the Belair colts were trained by “Sunny Jim” Fitzsimmons.  Similarly, Eddie Aracro rode both of the Calumet champions and they were trained by the father-son team of Ben and Jimmy Jones.

5.  Secretariat ran the fastest times ever in both the Kentucky Derby and the Belmont.  (His official time for the Preakness was not a record, but the racetrack timer may have malfunctioned.  Two clockers from The Daily Racing Form said that Secretariat broke the stakes record.)   In order for a horse to match Secretariat’s record, he or she would have to equal the record times in two of the three Triple Crown races.

Copyright © 2015 Horse Racing Business