The Business of Thoroughbreds
With the Kentucky Derby coming up this weekend, we sat down with Keeneland president and chief executive Nick Nicholson to talk about the horse business.
Darren: How bad has it been?
Nicholson:I think it’s fair to say that we are part of the overall economy. The sales have been down. It’s a reflection of the stock market. Keeneland last year sold horses to people from 38 different countries, so usually some place around the planet is doing well and we’ve been able to buffer our losses through the years because of that. But this time the economy seems to be affecting everyone around the world so that’s what unique about it now.
Darren: How much are people leaving the business altogether because of the recession?
Nicholson:We really start in September so we won’t know the answer to that question completely until then and then later in November when we have big breeding stock sales. But from a business standpoint, that’s one of the key questions. Will people stay in the industry and perhaps cut back or will they be people who will totally get out of the industry because of this economic situation? We are also hoping that there will be some new people that will come in and take advantage of the lower prices in bloodstock just as in the stock market. Maybe when the Kentucky Derby happens two years from now, there will some people who consider the horses they bought this year a big bargain.
Darren: How off have sales been?
Nicholson:About 25 to 35 percent is right. In some cases, maybe 40 percent.
Darren: Because of the downturn in the economy and in the business, would you say it’s more important now than ever before for a horse to win the Triple Crown?
Nicholson:Many people would say yes. My inclination would be to say not more than any other year. The Triple Crown is a very elusive target. Back in the days when you had more frequent Triple Crown winners, you might 5,000 or 6,000 thoroughbreds in a year’s crop. Now we have more than 30,000, so you have a lot deeper field. We don’t know whether this is a good crop of 3-year-olds, but we do know that it seems like a deep crop and they’re pretty competitive. So, thus far, there has not been one horse that has been so dominant that you think that there would be the potential to dominate. It would be nice to have a Triple Crown. What’s amazing is that if you look at the three races together they are almost four miles long in total. And we’ve missed a Triple Crown by a half of a length several times. We’ve come very close. So it’s not as though it’s not achievable, but I don’t think it’s necessary for the business.
Darren: How many of this year’s Derby horses did Keeneland sell?
Nicholson:Keeneland has sold 13 of the 20 horses that are in the Derby. We sold Dunkirk for $3.7 million and then all the way to a few thousand dollars. There’s a one-horse trainer by the name of Tom McCarthy, who claimed General Quarters for $20,000.
Here are the prices paid for some this year’s Derby horses, according to Bloodhorse.com:
Advice: $37,000 (2006), $68,000 (2007), $170,000 (2008)
Atomic Rain: $170,000 (2007)
Flying Private: $700,000 (2007)
Friesan Fire: $725,000 (2007)
General Quarters: $20,000 (2007)
Hold Me Back: $400,000 (2007)
I Want Revenge: $95,000 (2008)
Join in the Dance: $130,000 (2007)
Mine That Bird: $9,500 (2007)
Mr. Hot Stuff: $200,000 (2007)
Musket Man: $15,000 (2007), $35,000 (2008)
Nowhere to Hide: $200,000 (2006), $250,000 (2007)
Pioneerofthe Nile: $290,000 (2007)
Regal Ransom: $675,000 (2008)
West Side Bernie: $62,000 (2007), $50,000 (2007)
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