8 million Stormcat Baby

[CryingForTheHorses]

Huge sale for Storm Cat colt who's mom weekend surprise is a 1/2 sister to AP Indy.Thats a lot of cash, Seems a japenese man purchased for undisclosed owners.Wish them luck.Wonder if he is looking for a trainer?

[Bubbles]

Well, for every one of these babies, there's one like this.

A chestnut colt walked into the sales ring at Keeneland. Look at these bloodlines. FuPeg-Secrettame, by Secretariat. Horse looks EXACTLY like his grandpa.

Only went for $220,000.

[CryingForTheHorses]

Only 200k..Hell guess Ill buy several..Nice looking colt, He does look like his grampa

[Buddha]

according to TVG and the guy who bought the 8 mill baby, the horse is planned to be campaigned in north america, but that is still a ways away

[OTM Al]

$8 Million is absolutely insane and the whole reason the sport is being controlled from the wrong direction. I'd actually be interested to study the auctions from the basis of seeing if the "winner's curse" is a regular occurance with these big blockbusters. The winner's curse occurs in common values auctions, an auction at which no one knows what the true value of the object being bought is but everyone bidding has an estimate of the object's worth (think oil drilling rights to a patch of ground). Its called the winner's curse because whoever has the highest estimate will issue the highest bid. However, the highest estimate generally overstates the true value of the object, so the winner often ends up getting something worth less than what he paid for it. I know there are some savy horsemen out there, but when you think about how many of these top price horses ever did anything it makes you wonder.

Of course I've got to agree that a FuPeg-Secretame colt going for $220,000 sure sounds like a hell of a value in todays market.

[JPinMaryland]

HOw is a "common values" auction different than any other auction? Doesnt the same dynamic (owner paying more than it's worth) kick in? Isnt every auction, from eBay to Keeneland like that? I guess I just dont understand what is significant about the term "Common value" is.

[OTM Al]

Common values auction occurs when an item being bid on has a fixed worth that is unknown to all participants in the auction. For a horse, that would be current value of lifetime earnings from racing and breeding. An eBay type auction is what is known as a private values auction. In this type of auction, all bidders have a private valuation for the object. The object itself does not have a fixed worth like in the common values framework. Each bidder has a private individual valuation for it. Clearly, the bidder with the highest valuation should win the auction as he is willing to bid more than everyone else. On average, he should win the item at the price approximately equal to the valuation of the person with the second highest valuation. This is because the second highest valuation bidder is the last bidder to drop out when the price reaches his valuation. In a private values auction, the winner will never "pay too much" for the item he won because he never would bid higher than what he values the object at. This is in contrast to a common values auction where again, the winner will get the object at approximately the valuation of the second highest valuing bidder, but the valuations of all bidders are guesses at the true worth of the object. Thus, the person with the highest guess may well have guessed too high.

These are basic auction theory definitions, but in the real world, some auction become a kind of mix of the two auction types. A bidder for a horse may have some private valuation for the horse on top of the common value. Abstracting from such occurances though, I would definitely model a horse auction is a common values auction, not private values.