Quote:
Originally Posted by classhandicapper
I still don't fully understand the economics of this sport.
I understand how some lucky owners can make more money breeding than racing and how the opposite is often true with mares, which is why they keep running (Monomoy Girl may be back).
However, most owners are losing their shirt.
Yet they keep paying these huge prices for yearlings, which of course supports the prices for stallions, which in turn supports the incentive for retiring them early.
It seems like we have what amounts to being a bunch of economic lunatics buying million dollar lottery tickets hoping for a huge score but losing their shirts on a net basis.
I don't buy lottery tickets, but you can sort of get why an average guy might buy a few dollars worth hoping to change his life.
Why are they vastly overpaying for yearlings and throwing their money away?
The math should tell you what price range is reasonable for yearlings overall based on their potential earnings power and residual value (usually none but sometimes a major score). Then you get into specifics later. If you want to pay a small premium for the fun and are willing to get little or no return on your investment I get that. But some of these guys are incinerating large sums of money on what amounts to being lottery tickets that are damaging the sport.
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What the true percentages are one can only guess but at least some of it is a way to launder large sums of money. Just like so many of these businesses that are somehow still going strong with nobody in the parking lot every year. I have firsthand knowledge of some of this, that's as far as I'll go with it.
