8/3/2004

Smarty Jones was no Seattle Slew

Smarty Jones is off to pastures green. Thoroughbred racing in North America will be that much the poorer.

However to compare him to Seattle Slew and the like is quite preposterous. And the $40 million valuation (per the apparent sale of 50% to Three Chimneys Farm for $20 million) simply does not add up….even for the most optimistic bloodstock huckster.

Back when Seth Hancock syndicated Conquistador Cielo for $36 million, eyebrows were raised. And, although that good son of Mr. Prospector has sired his share of decent stakes winners, nobody would consider him to have been an elite stallion.

In those days the conventional equation was that 40 shares would be sold, with the service fee roughly 1/3rd of the share price. So a share in C.C. was $900K: meaning that one in Smarty Jones should cost $1 million…..with him standing for about $300,000.

This particular formula allows investors to more or less get back their money, within 3-4 years, while the jury is still out on whether their horse is going to make it or not. Also it is predicated upon all the shares being sold and the book being full, which in many cases was not true, because the original owners and/or the syndicating farm very often held most themselves. So the evaluation was speculative….at best.

Today, in the wake of recent Kentucky Derby and Preakness winners like Silver Charm, Real Quiet and War Emblem who have not excited anyone at stud, it is hard to believe that anyone would want to pay more that 50-70K to breed to Smarty Jones….who, after all, was just a good horse for a magic 5-week period. And how good remains to be seen, because what he beat may not turn out to be a vintage crop of 3-y-olds.

So anyone who invests in this year’s Kentucky Derby winner better be in it for the long-term. Because nobody is going to pay anything close 300K a pop (until he’s proven his worth) to fill his book for three years. And, if he turns out to be ‘just an average stallion’ he’s going to have to live a very long time and cover many, many mares to re-coup investors’ money.

But then, this most probably is all a sham (like so much of the breeding industry today) and, in fact, Three Chimneys have already got several mugs lined up to pick up their end of the freight……while Smarty’s people are well ahead of the game, thanks to the $5 million bonus that they picked up for winning the Arkansas and Kentucky Derbies etc. So those involved have little to worry about, and besides….why not price the ‘peoples’ horse’ out of sight, as it goes along nicely with how the sport in general is being promoted.

Personally I’d rather breed a mare to Elusive Quality, Smarty’s Dad. Whatever, Smarty Jones was no Seattle Slew on the racetrack and it’s a long-shot that he’ll come close to rivaling him in the breeding shed.