Social Inclsion draws the 11 for a race that starts on the turn

[TMW]

Of course, the key is what has their value proven to be? None of them frankly $8 million plus. Pioneer of the Nile is off to a great start as a stallion. He was very good. Babies are dong very well. Maybe will be an important sire. Absolutely not proven yet in my opinion.

Good luck in your decisions regarding your very good horses!

[Leamas57]

Re: Shorting horses.

When social media IPOS are priced based on a bunch of kids\' A.D.D., it\'s no surprise...then again, the true value of the horse is the discounted future earnings times the chances of that event.  So if the odds are 50% that he becomes a monster, and 50% that he already ran his best race, then the monster scenario would have to mean about about 30-35 million in lifetime earnings and stud fees (because you have to get to 20 million present value x 50% probability = 10million present value).

If those were accurate estimates (and I don\'t suggest that), then 8 million of for 75% equity is not that far off (depending on the return you expect, useful lifespan of the horse, etc.)

Though I am sure many here know how short-sellig works, You would have to \"borrow\" the horse, sell it, and buy it back later at a lower price, returning the horse and pocketing the difference. Hey, can I borrow your horse for a couple years?...

Leamas

[TGJB]

The rule of thumb for stallions starting in that range is 200 times stud fee, at least as of a few years ago (when I got paid based on it).

Your model depends on getting 150 mares a) to him and b) in foal-- that\'s a lot. Also, second and third year the actual (not listed) fee often goes down, until people see the runners.

[TGJB]

That\'s what derivatives are for. Like betting on horses you don\'t own in the Derby.

The actual market price in this \"business\" is almost always what the seller thinks his maximum result would be if he kept the horse. Which is why it\'s only right to buy horses that are somehow concealed (better than the public thinks they are).

[covelj70]

there have been deals the last few years that were far in excess of that equation for horses that are standing their first or second years now so maybe something changed in terms of how they are being valued or maybe those deals that I am talking about are the exception not the norm

again, you and others have much great knowledge on the topic than I do

[TGJB]

Probably not greater knowledge, it\'s been a while. Size of books and Southern Hemisphere may have changed the equation. Also, the multiple is lower for horses standing for less, and presumably higher the other way, because the relationship between expenses and revenue changes.

[TMW]

That is why if the owner of Social Inclusion really was offered $8 million for 75% (still seems absolutely crazy that someone would offer that deal AND even crazier that the owner would turn it down) he should have taken the deal. He would be maximizing the value of the asset to the Nth degree while at the same time able to enjoy derby fever. (Seems like a dream situation to me).

[mistermoose]

As a pure business decision doesn\'t make any sense. One issue, however was
that they would take the horse from the trainer. For a lot of owners it
 is not all about the money and it is possible that the horse wont perform
 for a different trainer. So if the horse is special and trainer is changed,
 it could be a once in a lifetime opportunity down the tubes. I have seen as
 an owner in my short time horses taken from my trainer that didn\'t run a
 lick for a new barn. The flip situation has also happened. So although
 economically it doesn\'t make sense, I can relate to the current owners thinking.

[TMW]

I just read the owners of California Chrome turned down $6 million.

I am not sure how the SA Derby sets him up for a peak performance for the KY Derby but I have to admit the SA Derby being such a big race for west coast owners/trainer and his obvious liking for the track surface would be a tough one to pass. The alternative would be to pass this race and peak for the KY Derby (maybe the smarter move but what do I know?).

[phil23]

From your lips (pass the race, peak for the big day), to Sherman\'s ears. Alas alas.

[TMW]

According to Beyer, you are correct. Sanchez, the owner, insisted he keep a share in the horse (I am guessing 25%) and have Manny Azpurua continue the training. Oh, I almost forgot, the price for Social Inclusion was not $8 million but $15 million!

Now, he has turned down any offers until after the results of the Wood. I am a west coast guy and unfamiliar with Aqueduct but I hope there are no bridges nearby. Hard to root for folks associated with this kind of nonsense...