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Originally Posted by PaceAdvantage
Yeah, he's done.
Convenient for the owners I suppose. No need to purchase hefty insurance policy if he were to continue to race.
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The insurance premiums argument doesn't really make much sense. If the horse has an estimated $75M market value, you'd likely insure him for $85M, regardless of whether you run him or not. You always try to insure for a little more than market value to hedge against having undervalued whatever it is you are insuring. You insure regardless of what you do with the item. There are a lot of $100M paintings insured for full market plus hedge value kept locked in climate controlled vaults. The difference in premiums btwn those hanging on walls is negligible. The vault is primarily to make the owner feel safe, not the insurance company.
Horses can be seriously injured or die in their stalls just as easily on the track, the odds of that happening are not greater on the track, it's about the same. Besides, Justify is going on the track daily IIRC to lope around anyway and the AM on the track is more dangerous than the PM.
The premium would be calculated as premiums always are, based on actuarial tables. The biggest determinate in those tables is going to be the injury/death rates for that trainer and barn and track. FWIW the risk of an insured racehorse for the owner is actually greater if something happens to the horse off the track. It took a boxing fan to explain this to me, the insurance companies always pay for on track deaths, it is a battle to get them to pay for off track deaths.
The thing about insurable value is you have to prove it in order to get the policy. The only way to prove Justify is worth $75M is with the bill of sale, which I am pretty sure they do not have. If they did, he'd either already be retired or Coolmore would allow him to continue racing as it did AP (someone paid the insurance on AP while he continued to race, a value not based on his sales price, but Coolemore's announced fee of $200k). Coolemore for sure would already have announced Justify's fee and be all out to fill his book now, just as it was with AP. Breeders already booked to him would be featured ad naseum in Bloodhorse, just as it did with AP.
If the sale has not taken place yet, they likely can't get a policy for $75M. If the sale has not taken place yet, they can't risk a loss on the track, because his value will go down. Losses are excusable for all except those on a streak. Coolmore or any other buyer wants to pay as little as possible and will look for any angle it can. If you've sold the horse already, his value going down means nothing to you. That's on the buyer.
For breeders the horse has a lot of negatives, not racing at two, chief among them, and the fact that there already is a TC champion throwing some of the prettiest little foals you'll ever see, but that aren't really selling for enough to make back a good ROI for the breeders. Orb's sell for $750k on average, he stood $25k initially. He's already got some winners, so that's going to rise. Nyquist's mares in foal and weanlings are selling for $400k on average, and he stands for $40k. AP had a lovely little filly fail to hit her reserve recently, and unless the breeder got a discount, they would have only gotten $45k after his fee. You can easily spend $20k just owning horse. So maybe, at best, they would have made a $15k net.
That Justify's a Scat Daddy doesn't matter as much as people think it will. Like Orb and Nyquist, even if Mendelssohn never wins another race and starts at $25k, he will have a full book immediately. A lot of breeders will opt for him over Justify for his pedigree alone, throw in proven on 3 surfaces, able to race at 2, and being, like Orb and Nyquist, perfectly conformed, opting for him as a business decision will seem a much better investment.
Better to spend $25k and get $75k, then $200k and get $45k. You could take 8 mares to him for the price of 1 to Justify and gross $600k. If your $25k is netting you $725,000k, like it did with Orb, and you're getting $5.8M for your 8 mares, would you care that Justify won the TC undefeated and that Mendelssohn came in 20th in the KY Derby? As for Coolemore, Mendelssohn is a sunk cost, probably guaranteed $5M minimum profut a year for the 1st two years. They won't see any profit on Justify for 2 years. But by then, Justify has to hope his runners are not only as good as AP's, Mo's, Frankel's, Madaglio D'oro's, Tapit's, and Galelieo's, but Mendelssohn's, Caravagio's, No Nay Never's and half a dozen other affordable Scat Daddies.
Coolemore knows this. And FuPeg is still in Coolmore's barn...so they get that reminder daily.
If the horse really isn't injured, he's not running out of fear of injury, but fear of losing. The insurance is expensive, but that isn't why he's not running.
