One of the biggest bets in horse racing each year is made by breeders who buy horses for their career at stud.
A few deals on premium horses are made before their third year with bonuses if they win. Others are consummated in between the Triple Crown races, while some don't get locked up after the Belmont.
Omaha Beach, which was scratched from the Kentucky Derby Wednesday after concerns about the horse’s ability to breathe properly, had his breeding rights surprisingly sold 24 hours before to Spendthrift Farm.
Three sources in the business told The Action Network that the Spendthrift deal was based on a valuation of $22 million.
Usually owners of prohibitive favorites — Omaha Beach was the morning-line favorite at 4-1 before getting scratched — roll the dice on trying to win the Derby first. But for whatever reason owner Rick Porter decided to do the opposite, announcing the deal on Tuesday.
It doesn’t mean Spendthrift necessarily lost money on its $22 million investment. (Omaha Beach's ailment isn't expected to be career-ending; he might only be out of commission for a few weeks.) But Spendthrift did certainly lose out on the opportunity to profit off the upside of a Derby win, which would figure to boost the horse’s value by at least $15 million.
Given the timing of the disclosure in relation to the sale of the breeding rights, one has to wonder if Spendthrift will inquire whether those associated with the horse had knowledge of the ailment prior to Wednesday.
Timing is everything. Many times, it all works out.
Ahmed Zayat sold the breeding rights to his American Pharoah in 2015 before the horse’s spectacular year that ended in a Triple Crown. Thanks for escalators in the contract for each Triple Crown race, the horse’s total value at stud was $35 million.
Two years later, Justify’s rights were sold ahead of the Belmont win that made that horse a Triple Crown winner. The valuation was $60 million, which turned into $75 million after a win bonus.
But it’s not a sure thing.
Fusaichi Pegasus was sold for $70 million after the Triple Crown races in 2000. The horse had won the Kentucky Derby, but didn’t prove to be a valuable stud.
Big Brown was sold for $50 million in 2008 ahead of the Preakness. The horse won that race but pulled up at the Belmont and didn’t finish, a damaging image to those trying to peddle his future stallion offspring.
Spendthrift made a big bet and lost. Its only hope is to get Omaha Beach healed for the Travers and have him put together a performance that's reminiscent of the horse's win at the Arkansas Derby, during which he showed enough promise to be the Kentucky Derby favorite.
