At the fine blog Hangin’ with Haskin, owner Paul Reddam has a guest post about his decision to sell Kentucky Derby and Preakness Stakes winner I’ll Have Another to Big Red Farm in Japan.
This is one of the great beauties of the internet and the advent of blogs because the man who made the decision has a forum to express himself directly, and he makes a persuasive and illuminating explanation of his decisions.
It’s even more interesting to me because Reddam’s decision was made in the nexus of other decisions, largely here in Kentucky, about the potential of I’ll Have Another as a stallion prospect.
Reddam writes: “There might have been a lot of talk behind the scenes, but there were only two written offers from American farms, one for 3 million dollars and the other for 2.5 million for half of the rights plus 9 lifetime breeding rights, which puts his value at a little less than 5 million.”
I know there was a lot of talk behind the scenes because I listened to it, and it was no surprise to those who watch racing and breeding daily and who have an understanding of the economics of maintaining a breeding operation that I’ll Have Another would not be a big ticket in the Bluegrass.
He simply was not made that way.
As a yearling, I’ll Have Another sold for only $11,000, and then as a 2yo, he brought only $35,000. Clearly, as a younger horse he was immature, backward, not a “special” prospect that could underwrite huge expenditures that breeders, farm owners, consignors, and others involved in breeding have to undertake to create the next generation of racehorses.
In fact, as Japanese-based breeder Harry Sweeney has said, “The only racing jurisdiction that fully justifies the cost of producing racehorses is Japan.” Sweeney, an Irish-bred veterinarian and horse breeder, is a pragmatist by nature and by the very serious reality that if you don’t make money when you are breeding horses, you starve. Even worse, your horses starve too.
Today, the only part of American breeding that fully justifies its cost of production is the subset of big, robustly made, highly progressive stock that will show speed and early racing ability.
If you don’t believe that is either the right attitude for breeders to take or a correct assessment of the situation, the gentle reader is welcome to buy a dozen mares or two and find out in person.
The situation in Japan is much different. Racing is very tightly regulated by the government bureaus tasked with that duty, and the operations that are licensed to breed or to race have the opportunity to prosper at a rational level … perhaps better.
As a result of this difference, Reddam noted that, “By contrast the offer from Big Red in Japan was 10 million, with another farm bidding just under that. For further contrast, Bodemeister’s rights recently purportedly sold for about 13 million in America.”
How could two horses of nearly equal excellence illustrate the differences of physical type and racing potential or aptitude more effectively?
Reddam answers the emotional question also:
Still, if I loved IHA so much, how could I take the Big Red offer instead of keeping the horse in partnership with a farm in America?
Well, certainly greed has something to do with it. Being that the one offer was four times higher in cash than the best offer here meant that I couldn’t rationalize not selling him overseas. Beyond that however, it should be said that the American offer anticipated a stud fee of $17,500 to $20,000, which means that he wouldn’t get the best mares and thus wouldn’t be given the best chance to succeed as a stallion. In contrast, the Big Red offer means that he will get a much better book of mares, and thus be given a higher chance for success.
Even the emotional decision hinges on the economics of breeding. And why is that so? Because emotion will carry a horse or a breeding project only so far. As breeders and investors found with Flower Alley, the sire of I’ll Have Another, if a stallion doesn’t produce the type of young prospects that buyers want, there is no demand for his yearlings, then there is no demand to breed to him, and his stud fee must be set lower — much lower.
When Flower Alley went to stud, his fee was $25,000. That’s the cost of the breeding that produced I’ll Have Another. The seasons this spring were available for $3,500 live foal, with some selling later in the year for the full advertised price of $7,500.
Economics determine our decisions to a degree that most of us do not appreciate, and they are at the base of nearly all things in breeding and raising livestock.
nice post and good story, although I’d say it contains a tinge of “contract horse racing” philosophy. We want to be Japan where they have like what–30 owners in their major racing. Good for the 30, questionable for the rest of us. Possibly Mr. Mitchell might write about the Arch angle sometime. I’ll Have Another and Uncle Mo, last year’s KY Derby favorite where both out of Arch broodmares. Everywhere u look there’s something winning by Arch. I have one of those myself and can attest to the stout stout legs and major league rear ends. which brings one to the irrationality of the commercial market. they are so savvy that an an $11,000 yearling almost wins the TC, and the farms still are unable to figure it.
In other words, the American breeding industry is so fragile, the economics so thin, that the buyers will only consider those horses who show a predisposition to early maturity, who can get to the races sooner. BINGO!!! I GET IT!!! No one has the resources to take their time to nurture a true Triple Crown winner…..quite by accident we were given a gift that for a brief shining moment almost took us to the stars. It magnifies how far over the cliff the American breeding industry has fallen! This is really very sad and disturbing. Not trying to shoot the messenger, Mr. Mitchell, but your words crystallize — for me at least — what is wrong with the sport in the U.S.
American breeding is so fragile because it has been one of many victims of the international economic collapse … etc.
And politicians in Kentucky would rather kill it than help it because horse breeding is an agricultural business, rather than one conducted on Wall Street.
Perhaps I cannot help admiring the success and decades’ long positive trend of Japanese breeding and racing. But I much prefer the American brand, free to a fault, and independent and bold and faulty. Ever so faulty.
One of the benefits of the rigidity of the Japanese racing regime, however, is that classic horses get the gravy, and classic winners are prized because they are the best source of those elite distance performers. If we had anything approaching that program, even something as self-regulating and gloriously uneconomic as the English racing program, then breeders in the US could likewise hope to retain a classic performer and give his offspring a place to race and win.
Of course you are correct, Frank, and thanks for elaborating more. I am a true believer in good old American free-enterprise, and in no way wish to put a stranglehold on our freedoms. It does make one appreciate though the old adage that the best form of government is a dictatorship, provided one has a benevolent dictator! It would be nice, though, if our system could make room for more than one form of breeding model. The sport here is shrinking with more and more races that are shorter and shorter. It was an absolute feast to be able to watch all of the Royal Ascot races and see such a wide variety of racing distances, more than half of which were at 1 1/2 miles or longer! Those few marathons we have here have paltry purses! As far as Japan racing goes, I have enjoyed watching many of the big races there, learning about their horses, and I was absolutely amazed that in the Japan Derby recently, of 18 runners, only one did not have Sunday Silence in their blood line! And, isn’t Deep Impact awesome! He is gonna surpass his daddy in the breeding shed, it looks like.
Yes, Deep Impact has immense promise for Japanese breeding in the short term, like several other sons of Sunday Silence there. Maybe I’ll Have Another is their long-term star!
And what you’re saying about American breeding is true. It would be better if we had two or more models of breeding, like Japan, for instance, which also has a secondary circuit of racing conducted primarily on dirt. Yeah, like ours.
American breeding, in practice, had two different models for most of the 20th century. There was the more pragmatic breeding operation, both on a large and small scale, as well as the sportsman-breeder who operated without much restraint on expense.
The latter are more typical of the Whitneys, Calumet, and others who could deduct losses from their vast incomes but whose operations usually went into the red. When these classic breeders did hit a long ball, however, it was out of the park, and they reaped some very high rewards for racing and for breeding.
The tax law changes of the late 1980s, however, destroyed the classic breeders who tried to operate on a less rigidly commercial footing. And who benefited from those changes? Our little friends on Wall Street whose representatives in the Reagan administration wrote the new regs.
The Japanese have been buying up our best broodmares for over a decade, why is it only stallions and stallion prospects that get people’s attention? While the average US breeder is focused on the “new kid on the block” the Japanese are slowly amassing a quality breeding operation that will outlast ours if we don’t change how we are doing things. Is there going to be an uproar when Havre de Grace winds up on a plane?
I just wish that thoroughbred breeding lines were the only loss due to the instant gratification generation created by “consumerism. This kind of intellectual and spiritual poverty invariably foretells the actual poverty of the “fragile market’” you mention above. President Carter warned against this “genetic drift” in the national pysche and now, here we are. If this, continues, the only americana left, will soon be owned by China.
Since we are primarily breeding speed merchants, perhaps any AQHA horse inbred to any combination of Top Deck, Three Bars, or Beduino should be eligible for Jockey Club registration. I hope that the classicists who are trying to preserve the old breed are eclectic enough to borrow whatever is needed from other agricultural disciplines to stay afloat. I suspect that it is time to use artificial breeding methods to store representative male and female gametes of classic lines in the doomsday vaults, without waiting on changes in Jockey Club policy.
One eclectic method would be to drought proof horse pasture by renovating paddocks with grazing alfalfa. My Bulldog 505 is still green, while bluegrass and orchard grass are crispy.
AI would devastate the breed and the industry. It would become whoever has the most money up front wins because nobody else could compete. Those people would then control the market and charge what they want. Sure it’s free enterprise but it would put every small breeder in the country out of business. It would also destroy the breed because instead of having 5% of the foal crop sired by first year stallions it would be more than twice that. Over 200 people sent a mare to Uncle Mo this year, with AI it would easily be twice that and nobody has a clue what his foals will look like.
Japan is over saturated with Sunday Silence but they don’t have a problem going to other countries to bring in desperately needed outcrosses, in this country it’s “beneath” them to think perhaps we should do the same.
The argument you are offering is the one that the Aus Jockey Club used as the counterpoint in the recent lawsuit by Bruce McHugh to allow the use of artificial insemination.
We will be interested to see how the court rules there.
I was specifically suggesting the storage of classic bloodlines which are most emphatically not being bred to, let alone not being over bred. This segment of the breed has already been devastated or nearly enough “destroyed” to be worth preserving as an eventual outcross. Cryogenic preservation is often used for nearly extinct species and hindsight a few decades hence will likely prove it worthwhile. Anyone who breeds to Mo till he has sound four year olds will be holding the bag.
As Bart Cummings said when interviewed about why “So You Think” was sold to race overseas, “You wither love money or you love the horse, as the horse is no longer with me, you can guess what the owner loves more” (loosely quoted)
How much money does Paul Reddam have?
$10million for “I’ll have another” won’t make or brake him?
Same with other owners who have sold abroad, its all about the money, the more they have the more they want.
On the new website “Clean Horse Racing’s” supporters’ page there is this quote by Isamu Takizawa, from the Japan Association for International Racing & Stud Book.
“In horse racing, for the purpose of selecting breeding prospects, it is imperative that racing performance reflect drug·free, healthy, and fair racing”
Opps….. I guess that was before the big purchase….
I’m guessing that you’re taking issue with the “clean” part of the JRA mission statement? But despite the numerous overages that suggests anything was illicit in the training and racing of I’ll Have Another.
He was too good a horse to need any help, don’t you think?
@jim culpepper – Your clarification is appreciated, and while valid, would still benefit only those with enough money to purchase those straws of semen. It would also introduce an additional element into every existing “system”, ie, dosage and nicking that would render them completely irrelevant and would force the jockey club to spend tens of millions of dollars to upgrade their database (I am an IT and database architect so I can substantiate this claim) just to take into account that a long dead stallion could be a sire and crossed with mares that did not have a single ancestor alive in the previous five generations on her pedigree page.
That being said, perhaps a “round table” of a few hundred people could set the stage for some future improvements?
The problem with every worthwhile task is that there are always problems; I am a student of population genetics, and I feel that dosage and nicking are hardly better than the random number generator called the bell curve.
Otherwise, I am more interested in preserving the breed than the Jockey Club. In view of the muddle created by contemporary management of stock, intervals since living ancestors are not a huge problem. Indeed, one of the top two thoroughbred geneticists in north america answered a question of mine by saying that most thoroughbred breeders would do as well using stallion names in a hat.
That’s what they have been doing but instead of pulling it out of a hat they are selecting mates based on stud fees. The higher the better because hey, if it’s expensive it must be good.