06/28/2004 11:00PM

The $39 million deal

A half-interest in Smarty Jones, shown with groom Mario Ariaga, will be kept by his owners.

LEXINGTON, Ky. - Breeding shares in Smarty Jones, the Kentucky Derby and Preakness winner who will eventually stand at Three Chimneys Farm in Midway, Ky., are being offered at $650,000 each, according to reliable sources.

That puts the total syndication value of the 3-year-old Elusive Quality colt at $39 million based on 60 shares, down from initial estimates of $48 million that were reported in Daily Racing Form and other publications. Neither the colt's owners, Roy and Pat Chapman, nor Three Chimneys Farm have disclosed the share price or total valuation since announcing the deal on June 25.

The $39 million valuation still makes the Smarty Jones deal one of the biggest for a stallion, behind Fusaichi Pegasus's reported $60 million value in 2000 and Shareef Dancer's $40 million deal in 1983.

On Tuesday, there was no word on whether Smarty Jones would campaign at 4. The Chapmans have reserved the right to make that decision. They have outlined four possible races for the remainder of 2003: the Aug. 8 Haskell, the Sept. 6 Pennsylvania Derby, the Pegasus Handicap in October, and the Oct. 30 Breeders' Cup Classic.

Trainer John Servis said Tuesday that the colt's immediate plans are "sort of up in the air."

"He's doing great," Servis said. "He just had a routine day today. I probably won't breeze him for a couple of weeks, and we won't make a decision until then."

Three Chimneys Farm bought 30 shares in Smarty Jones and is syndicating them. The Chapmans have retained the other 30 shares, giving them a strong say in the colt's career as a stallion.

For breeders, the question now is what stud fee Smarty Jones will have, but they will have to wait.

"We generally set fees close to the horse's retirement, because his value can go up or down, and the price can go up or down, depending on what he wins and what he loses," said Three Chimneys president Dan Rosenberg. "When we set a fee, we take into consideration what his race record is at the end of his career, what we think the demand is at a range of price levels, and the competition - what other horses are standing, at what prices."

A farm sets the fee, Rosenberg said, "but, actually, it's the marketplace that determines whether or not the fee is accurate. We would like to set a fee so that the demand for seasons exceeds the supply, so we can be choosy about the mares.

"If we set the fee too high, people don't buy," he said. "If we set it too low, then we're not doing our job for the syndicate."

The colt's book will be limited to 110 mares. Shareholders will receive a season with each share, as well as a bonus season every other year. So far, Rosenberg said, interest from potential shareholders has been "overwhelming."