Earning back auction price

[FenceBored]

Anybody have an idea on the percentage of horses who went through a sale who fail to earn what the buyer paid? Clearly some horses are going to earn more than their purchase price, and some will underperform what their buyers thought was their potential. A couple of horses have jumped out at me as having earned about 50% of their purchase price (which doesn't even include the training/vet/shoeing/extras). And there are the complete bombs <cough>Green Monkey</cough>.

Then I read this yesterday.
Of 35 Grade I winners sold as yearlings, 20 were purchased for $85,000 or less. They included no less than seven champions (Curlin, Zenyatta, Big Brown, Wait a While, Forever Together, Midnight Lute and Stardom Bound), as well as Derby winner Mine That Bird, who brought all of $9,500 at Fasig-Tipton’s 2007 October yearling sale.
-- http://www.saratogian.com/articles/2009/08/11/sports/pinksheet/doc4a80b1224f0bf852020333.txt (http://www.saratogian.com/articles/2009/08/11/sports/pinksheet/doc4a80b1224f0bf852020333.txt)

That's 57% of of the G1 winners for a total combined price of less than $1.7m or roughly the price Sheikh Mohammed paid for the MDO filly Monday night. Just curious about the ROI on just the sales price of weanlings/yearlings/unraced 2 yr olds at every level of the market. Does it really make sense for buyers to be spending $250k or more on these youngsters?

[macguy]

I often wonder this, though I'm not sure on the exact statistics.

Reading the Southern California Racing Form (Del Mar, Santa Anita, Hollywood Park) you really get the impression that there are a lot of horses that don't ever come close to earning their keep.

I've seen lots of $50K+ auction sales making their debut for 3 year old Maiden Claiming, often times a fraction of what the connections paid for them. As you stated, that's not including 2 years of training/shoeing and vet bills.

And of course, who knows how many horses out there never even make it to the races.

[DJofSD]

Ya, I'm curious about that to. I assume we're referring to horses that show RNA when the results of the auction is published? Or, is the question a different one, like, once purchased via an auction, they total earnings from the track do not offset the purchase price?

[lamboguy]

paying big money is no pre-requisite for obtaining champions. paying big don't gauarantee a bloody thing.

the most important thing in all of horse-racing is to have a top notch conditioner that kinows what he or she is doing at all times. good trainers find the best in horses, bad trainers depreciate the horse.

spending crazy amounts of money insures the fact that you are nuts to begin with, so the trainer automaticallycharges you more. you might think that paying alot for a trainer gets you more. that is not the case either. good trainers don't worry about day rates, they worry about winning and continual winning.

[FenceBored]

Ya, I'm curious about that to. I assume we're referring to horses that show RNA when the results of the auction is published? Or, is the question a different one, like, once purchased via an auction, they total earnings from the track do not offset the purchase price?

Not the RNAs, the ones purchased. A few examples from Saratoga 8/2 (pre-race):

5yo Warn in the 2nd sold for $100k (yrlng) w/ earnings $118,820.
4yo Unbridled Heart sold for $1m (yrlng) w/ earnings 68,170.
4yo Golden Gushka in the 4th, sold for $70k (wnlng) w/ earnings $25,746.

[DJofSD]

I would think that as an owner, you have legitimate deductions against earnings. The expenses of keeping and competing would have to be usual and customary, making it a little more complicated. But, it still looks like those horses that earn not enough to offset the original purchase price are still money losers. Maybe there's an accelerated depreciation schedule!