MONTJEU.COM

An Independent View of the Bloodstock World

Author: Victor Sheahan

  • 2013 value sires

    Just as the stallion ranks are full of over-priced, over-hyped dross there are also a few examples of good value sires for the canny breeder.  Below are four sires that I believe represent good value for either owner breeders or commercial breeders and sometimes both.

    1. Medicean (1997 Machiavellian ex Mystic Goddess by Storm Bird) 2013 fee £10,000

    I wrote about Medicean last year when he stood for £8000 and after an exceptionally good year on the track a modest increase to £10000 is fully justified.  In my view he is now the best value sire around. 2012 saw him sire three Group 1 winners in Siyouma ex Sichilla by Danehill, Bayrir ex Balankiya by Darshaan and Capponi ex Nawaiet by Zilzal to bring his lifelong total to 9 Group 1 winners. A strong supporting cast included other Group winners Sapphire ex Polished Gem by Danehill,  Casaca ex Priena by Priolo, Mince ex Strut by Danehill Dancer, Regal Realm ex Regal Riband by Fantastic Light and Al Shemali ex Bathilde by Generous.  Those are the sort of results that outperform many sires standing at a multiple of that fee and will bring market recognition.  His 2012 sales results were decent with a median of 26,000 guineas.  His son Dutch Art has also made a very impressive start to his stud career,which might bring some reflected glory. Medicean’s overall stats at 4% stakes winners are decent and he represents great value for owner breeders, particularly anyone who likes the thought of a horse who will improve with age and racing or for commercial breeders as he is modestly priced for such a proven stallion, with solid sales results.

    2. Dalakhani (2000 Darshaan ex Daltawa by Miswaki) 2013 fee €25,000

    Dalakhani is now half the fee he was in 2009 and 2010. He is a proven sire of 5% stakes winners and the proven successor to his sire Darshaan. He has already sired 4 classic winners in Moonstone, Duncan, Reliable Man and Conduit. His sales median was 72000 gns in 2011 and 47000 guineas in 2012, so he should still be of interest to commercial breeders as a sire who offers a good prospect of commercial success.  In addition the risk for breeders is reduced as his fillies have almost the same median as his colts, which is not surprising given that Dalakhani is free from Northern Dancer and there are plenty of people willing to use his daughters to  try and follow the famous Sadler’s Wells /Darsahaan cross. In conclusion he is a high quality proven stallion, with very sound percentages who is reasonably priced on his achievements to date and who can be profitably utilised by owner breeders and commercial breeders alike.

    3.Kendargent (2003 Kendor ex Pax Bella by Linamix) 2013 fee €6000

    I wrote about Kendargent last year when he stood for €4000 and his very small first and second crops continued to give the impression that this is a sire going places.  If he continues his rate of progress with bigger and better crops in the future he might just go and become a Gallic rags to riches story to rival Ahonoora.

    4. Azamour (2001 Night Shift ex Asmara by Lear Fan) 2013 fee €10,000

    Azamour is a good sire with good percentages whose fee has dropped from €15,000 to a reasonable €10,000. 2012 also saw him sire his first Group 1 winner and classic winner in Valyra, who unfortunately died shortly after her French Oaks win. He has sired plenty of high class performers but lacked a real standout in the UK or Ireland, hence the drop in fee and for commercial breeders the fact that his 2012 median dropped to 12000 gns will have activated the alarm bells and he is not recommended for commercial breeders. However for owner breeders, I think he is a useful sire for the money who is well capable of getting a decent horse with some regularity.

     

  • 2013 stud fees- some overpriced examples

    Beauty is in the eye of the beholder and defining value is a very subjective measure. Looking at the published fees for 2013 there were a few fees that took my eye as representing particularly poor value.  I wouldn’t have time to list all the overpriced first season sires, so I’m restricting myself to those sires with runners……

    Poor Value Sires

    1. High Chaparral (1999 Sadler’s Wells ex Kasora by Darshaan) 2013 fee €25,000

    I could just cut and paste my comments from last year regarding High Chaparral- yes he was a great racehorse, yes he has done very well in Australia/New Zealand but there is no way his European results merit a €25000 fee.  It is extraordinary to think that he has yet to sire a European Group 1 winner from his huge number of European conceived progeny. His sales returns have been good for the past two years but  sooner rather than later European breeders will wake up to the fact that he is only managing 3% stakes winners and is due a significant cut in fee. By way of comparison for the same fee you could access Dalakhani who has 5% stakes winners and has sired 5 individual European Group 1 winners.

    2. Footstepsinthesand (2002 Giant’s Causeway ex Glatisant by Rainbow Quest) 2013 fee €10000

    Not as egregiously bad value as his stud mate but nonetheless I think Footsteps has been a disappointment and is now overpriced.  He has managed only 2% stakes winners and if you take into account that his stud fee was over 20k for his first three years at stud, his record is not going to improve in the coming years. His median for the past two years has hovered around his stud fee so the commercial market is hardly in love with him. Interestingly he is the last and only Storm Cat line horse now in Coolmore Ireland but I’m sure if a suitable offer came from overseas, Coolmore would be happy to offload him and that particular experiment would come to an end without too many tears being shed by Ireland’s breeders. By way of comparison you could use Azamour for the same fee and he has 4% stakes winners.

    3. Elusive City (2000 Elusive Quality ex Star of Paris by Dayjur) 2013 fee €12,500

    I wrote about Elusive City last year when he was France’s most expensive stallion at €15000. He no longer holds this particular title but he still remains a sire who manages only 2% stakes winners and he remains considerably overpriced. You could pick 20 stallions who represent better value but two similarly priced Mr Prospector line stallions that are far better sires (albeit standing in the UK) are Medicean and Zamindar.

    4. Teofilo (2004 Galileo ex Speirbhean by Danehill ) 2013 fee €35,000

    I might be eating my words on this one, given that he produced three very nice two year old colts last year in Loch Garman, Havana Gold and Trading Leather. However I’m not arguing that Teofilo isn’t capable of producing high class horses but to me he didn’t do enough last year to justify a hike from €25000 to €35000. This is particularly the case when I felt that his three year olds were somewhat disappointing although admittedly the absence of his first crop star Parish Hall had a big impact on this.  His stud fee owes a lot to the growing belief in Galileo as a sire of sires and the fact that he shares the Galileo/Danehill cross with Frankel probably helps along with some strong Autumn sales results. People are taking a punt of fashion and on potential and  although he is an interesting sire his fee should have stayed at its 2012 level until he truly delivered on that potential.  By way of comparison at the exact same fee, his stud mate Cape Cross has demonstrated his ability to produce the goods and I would rather the proven over the possible any day.

  • the opposite of nostalgia

    So now its official- Frankel is the top rated horse since the beginning of the international rankings.  So how did he achieve this feat? Well his stunning performances in the Queen Anne and Juddmonte International certainly played a part, but they were not in themselves sufficient to garner him that accolade.  The fact that the handicappers strangely rated his 11 length Queen Anne victory as being akin to 12.5 lengths and his 7 length Juddmonte victory as being akin to 9.25 lengths also helped, but was still not enough to give him the top honours. No he achieved the top spot by virtue of the handicappers rewriting history.

    At the end of his three year old career, Frankel was rated 136, a long way short of Dancing Brave’s 141. At the time Phil Smith, the British Horseracing Authority’s senior handicapper was quoted as saying “I don’t believe that Dancing Brave would get that rating now, but it’s in the book and that’s what [Frankel] has got to aim for, because we are not going to rewrite history.” Fast forward twelve months and rewriting history is exactly what Phil and his colleagues have done. I can’t find a suitable antonym for nostalgia but it is clear that the handicappers don’t think much of the greats of the past and  they don’t trust their predecessors. When Phil Smith explained that Shergar’s rating was a retirement ‘gift’ to a former handicapper it hardly counted as an endorsement of his predecessors and somewhat undermined a statement in their explanatory piece see link that “the purpose of this paper is absolutely NOT to say that the current Handicappers are right and those who compiled the ratings between 1977 and 1991 were wrong”. Some of the other arguments in their justification are also odd as for instance “Much easier travel coupled with an increase in valuable International races enabled connections of the better horses to avoid each other” could just as easily be an argument supporting the thesis that we have more competition not less between the best horses of the world. Also the statement that “The ownership of so many of the top horses in just a few hands meant competition and higher ratings suffered.” is as valid now as ever before. The statement that ” The extension of the Classification to 115 and above in 1985, to 112 and above in 1989 and to 110 in 1990 had a depressant effect as there was now a safety net in which to include the type of horse that had been overly promoted in the past”, again seems to imply that past handicappers were assigning ratings for reasons other than merit. Finally I’m not sure there is a solid basis to the statement that the increase in the number of handicappers means “It is much more likely that horses will be downgraded with a larger Committee” unless larger groups are somehow assumed to be more negative in mindset, and a strong voice is somehow incapable of swaying a committee.

    In Orwell’s 1984, the Ministry for Truth was responsible for updating records to ensure that the recorded ‘facts’ of history matched the current needs of the regime. History was rewritten on a daily basis and documentation was destroyed or updated as required. To be fair to the handicappers they probably won’t resort to destroying my books containing old ratings.  There were three slogans outside the Ministry for Truth namely “WAR IS PEACE,” “FREEDOM IS SLAVERY,” “IGNORANCE IS STRENGTH”, perhaps if there was a section dealing with sport, a fourth slogan “FRANKEL IS THE GREATEST” would have been included?

  • First Season Sires,Keynes and a little poetry

    In this month’s international thoroughbred magazine I examined the profitability of first season compared to subsequent crops. The full text is shown below:

    First season sire-watch the bidding go higher
    Second season sire- will find a buyer,
    Third season sire- results will be dire
    Fourth season sire- playing with fire.

    One of the mysteries of the bloodstock markets has to be the infatuation with first season sires. Inevitably 90% of new sires disappoint, yet buyers still covet to the next big thing. I analysed the commercial returns on the main UK and Irish stallions who retired to stud in 2006 and plotted the profitability of their first four crops. The results are shown in the table below and summarised in my above piece of doggerel. It may not appear in too many poetry anthologies but I think it gives some useful guidance to commercial breeders, when deciding on a mating.

    Methodology and findings

    My analysis was based on stallions who retired to stud in 2006 and who remained standing at stud in the UK and Ireland for the next four years. The averages for their yearlings sold at public auction were then plotted from 2008-2011. Stud fees and sales averages were converted to a common unit (in this cases UK guineas) and an amount of 7000 guineas was allowed for upkeep. The average sales price of each crop of yearlings was then divided by the production cost of those yearlings (stud fee+annual upkeep). The results show that the first crop of foals were the most profitable with an average sales price that was 1.42 times the productions cost and the third crop was the worse achieving only 1.07 times the production cost. The year three and four results are of course influenced by racecourse performance by the first two and three year olds for those stallions. In that respect it is no surprise to see Dubawi and Shamardal show positive results, as amongst the selected stallions they best fit into the 10% category of successful stallions.

    Average vs production cost
    Sire    1st crop    2nd crop    3rd crop    4th crop
    Antonius pius    1.16    0.53    0.27    0.76
    Arakan    0.93    0.63    0.55    0.27
    Avonbridge    1.26    0.92    0.99    1.15
    Azamour    1.85    2.17    2.11    1.60
    Camacho    1.52    1.30    1.15    1.27
    Chineur    0.70    0.81    0.83    0.63
    Dubawi    2.03    1.72    2.67    4.52
    Firebreak    0.94    2.89    0.71    1.77
    Footstepsinthesand    1.38    1.42    1.16    1.03
    Motivator    2.18    2.27    0.99    0.89
    Oratorio    2.01    1.27    0.70    0.89
    Pastoral pursuits    1.22    1.32    1.93    1.35
    Rakti    1.17    0.53    0.48    0.23
    Shamardal    2.15    2.03    1.77    2.99
    trade fair    0.98    0.61    0.71    0.55
    Whipper    1.66    0.92    0.35    0.65
    Zafeen    0.95    1.36    0.75    0.30

    Average    1.42    1.33    1.07    1.23

    Weaknesses in Methodology
    It is acknowledged that there are a number of weaknesses in the above analysis.
    The sample size is quite small, but reflects the fact that some sires who started covering in 2006 either died, were sold or did not have enough sales representatives to provide four years results. In addition there was considerable movement in the euro/sterling exchange rate over the period and this had a significant impact on the results. Ideally an adjustment would also be made for the trend in the overall yearling markets in those particular years. The chosen upkeep cost of 7000 gns is also quite arbitrary and does not allow for the depreciation in the value of the mare. Finally it would perhaps be better to look at medians rather than averages to negate the possibility of associated parties paying very high prices for stallion offspring to achieve headline grabbing top prices that also increase averages.

    Making sense of it all-Keynesian wisdom

    As far as I know the economist John Maynard Keynes, never wrote about horse racing but had he done so he would surely have recognised some of his theories in operation in the bloodstock market. One of his concepts became known as the Keynesian beauty contest.  This described a fictional newspaper contest, in which entrants are asked to choose from a set of six photographs of women that are the “most beautiful”. Those who picked the most popular face are then eligible for a prize.
    In terms of a winning strategy, Keynes wrote  “It is not a case of choosing those [faces] that, to the best of one’s judgment, are really the prettiest, nor even those that average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be”.

    Commercial breeders are involved in such a game. They may not particularly like the first season sires they are using, but their own beliefs don’t matter, it is about trying to guess what everyone else thinks, everyone else will think. They are short term investors who exit before the fundamental value of the yearling (ie its racing merit) is known.  As Keynes also wrote “Successful investing is anticipating the anticipations of others” and when it comes to breeding it seems that people think, that people think it is worth paying more for the latest sires.
    All of this irrational behaviour is possibly explained by the prejudices of trainers. As trainers handle more bad horses than good ones and one bad horse can turn them off a sire, then they are likely to dislike a lot of sires! With new sires, trainers have not had the chance to form such prejudices.

    Conclusions:
    It’s not easy being a commercial breeder. Survival requires profit and that requires suitable stallion selection.  The statistics above can help in that stallion selection. If breeders are to be tempted to use third and fourth season sires then breeders should be looking for substantial discounts on the published fees before the use of such stallions becomes attractive. The use of unproven stallions will continue as long as it is profitable. I will leave the final word to the great Keynes, who had sage advice, relevant to any breeders thinking about challenging the madness of the markets preference for unproven sires when he wrote “the markets can stay irrational, longer than you can stay solvent”.