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American Pharoah, Pioneerof the Nile, likely to command six-figure stud fees
As Triple Crown winner American Pharoah’s second act begins with the Haskell Invitational on Sunday, the wheels are already turning on his second career.
It was announced in May, shortly after the Preakness Stakes, that American Pharoah’s breeding rights were sold to Coolmore Stud for an undisclosed amount and that he will begin his stud career at the international operation’s Ashford Stud in Versailles, Ky., upon his retirement.
At the time of the announcement, owner and breeder Ahmed Zayat said he retains full control of the son of Pioneerof the Nile through his 3-year-old campaign. With that campaign still in progress, Coolmore officials have declined to comment in recent weeks, though at the time of the acquisition, Ashford manager Dermot Ryan called the horse “an outstanding sire prospect.”
“We’re very grateful to the Zayat family for entrusting us with his stallion career,” Ryan said.
American Pharoah, the first Triple Crown winner since Affirmed in 1978, brings that impressive credential to an American market that has changed dramatically since a Triple Crown winner last stood at stud. Affirmed retired to stud in 1980, and it has been more than a decade since there was an active Triple Crown winner in the breeding shed. Secretariat died in October 1989, Affirmed in January 2001, and Seattle Slew in May 2002, leaving the racing world without a living Triple Crown winner until this June.
“I think [the market will respond] very enthusiastically, just in the sense that it hasn’t happened in so long,” said Chad Schumer, founder of the Schumer Bloodstock Agency, noting American Pharoah’s stellar race record even prior to the Triple Crown. “Recently in Triple Crown history, sometimes a 3-year-old will kind of pop up and improve dramatically right before the Derby. This horse is a little different. He was a champion 2-year-old. He showed tremendous ability from Day 1 and, aside from his first start, would have been unbeaten. I think he’s clearly a real Triple Crown winner in every sense, and because of that, the market will absolutely enthusiastically respond to him.”
A hot topic of conversation has been what American Pharoah might command at stud in his initial season. For all first-year stallions, factors such as race record, performance of relatives on the racetrack and in the shed, and commercial viability of the sire line play a role. Only a handful of stallions in North America are currently advertised at a six-figure stud fee, led by leading sire Tapit, who stands for $300,000 at Gainesway in Lexington, Ky. He is the first North American stallion to stand for that high of a fee since 2008, when Storm Cat, A.P. Indy, and Distorted Humor shared the mark. War Front, who stands at Claiborne Farm in Paris, Ky., stood for an advertised fee of $150,000 in 2015. Medaglia d’Oro stands for $125,000, and Distorted Humor, Kitten’s Joy, and the late Smart Strike all began the season at $100,000.
That elite club almost certainly will have two new members in the near future in American Pharoah and his sire, Pioneerof the Nile, who stands at WinStar Farm in Versailles, Ky. Pioneerof the Nile was advertised at $60,000 this year and certainly will get a significant boost for 2016 as the only living sire of a Triple Crown winner.
“To me, a $100,000 stud fee [for American Pharoah] certainly makes sense,” Schumer said. “We’ve had a rebounding market commercially. I think that sort of a number, plus or minus, makes sense. I think some of the people predicting $200,000 or more, that’s going to be hard to pull off. For a commercial breeder to be successful, the horse’s yearling average has to be $400,000 or more. That’s tough to achieve on a first-year horse.”
Of the two Triple Crown winners to stand in the 21st century, Affirmed was last advertised at $30,000 at Jonabell Farm in Lexington for his final breeding season in 2000. Seattle Slew, whose eight champions were led by Horse of the Year and prominent sire A.P. Indy, was listed at $150,000 the same year while standing at Three Chimneys Farm in Midway, Ky. With his breeding career interrupted by spinal surgeries, he stood for shareholders only in 2001 and was listed with a private fee in 2002, siring four foals in his final crop. Dan Rosenberg, the general manager at Three Chimneys in those years, surmises that American Pharoah’s fee could be “the highest new stallion fee in recent years.”
The highest fee for a first-year stallion since 2003 was the $200,000 asked for Horse of the Year Ghostzapper when he retired for the 2006 season. Just a few years later, the economic crash of 2008 took its toll on the Thoroughbred industry, with falling yearling prices, fewer mares bred, and, of course, decreased stud fees. Curlin, one of the most accomplished runners of the modern era, entered stud at just $75,000 in 2009. A resurgent market in recent years has shown favorable signs for new stallions, but by and large, the market still trends toward proven stock. The highest advertised fee for a new stallion in 2015 was $30,000 for champion Will Take Charge.
Neither Coolmore nor Zayat has disclosed the amount that American Pharoah’s rights were sold for, though Zayat did say in the weeks prior to the Belmont Stakes that there were incentives attached to the deal, should the colt continue to perform at a high level.
Secretariat made history when he was syndicated for $6,080,000 prior to his 3-year-old campaign, with 32 shares sold at a record $190,000 each. Using the Consumer Price Index’s inflation calculator, the total amount of the deal would be approximately $32.7 million today. A half-interest in Seattle Slew was sold for $6 million, placing the total valuation of the horse at about $43.9 million. Affirmed established a record with a $14.4 million stud deal in 1978 – $52.7 million today.
In the more than three decades since a deal was struck for a Triple Crown winner, the market has changed “exponentially,” according to Schumer.
“Back then, a full book was 40 mares,” Schumer said. “There was no Southern Hemisphere aspect to it, and the commercial market wasn’t as large as it is now. Back then, X percent of mares would be bred to race and X for the market, and now I think the percentage for the market is infinitely higher than it was in the late ‘70s.”
Rosenberg, who left his general manager post at Three Chimneys in 2007 to form Rosenberg Thoroughbred Consulting, also references the number of mares in a stallion’s book as a key market change that plays into stud fees.
“I would say that the biggest change is the number of mares a stallion will breed,” he said. “When Seattle Slew and Affirmed retired to stud, a normal book of mares was in the area of 45. Now, 150 mares for a new stallion is more typical. There was a scarcity value in the price of a stud fee then, and partly because of that and partly because of the economy, stud fees in general were higher than now.”
The risk factor is too great to keep him in training for another whole year. All his fans can be glad they can see him running through the Classic and even happier to see him retire - and wait for his foals. What else does he have to prove?
Even a small share in the breeding rights of AP is like an annuity for the next 15+ years. I understand that he retained a share of the breeding rights, and also, he has indicated without being specific that there were some "kickers" in the deal, which I took to mean if AP advanced through the TC races and were to win the TC, he gets a bonus. At $100,000 per breeding, and a book of 150 mares, that's a cool $15 Million per year. Even 10% is $1.5 Million per year. Not hard to see why they wouldn't continue to race him. Would make absolutely no sense whatsoever to risk a horse worth at least 5 times his annual earning ability to injury or worse. In Japan, the reverse setup encourages horses to continue to race: purses are 2-3 times what they are here, and stud fees are 2-3 times less than they are here. My observation is it would take an insane person to risk losing this kind of revenue stream just for the "thrill" of racing in the U.S. Anyone who would suggest such an idea would likely be committed.
With all of this money to be made why can't Zayat just wait one year.Obviously he is not the sportsman and racing fan he makes himself out to be.The almighty buck has him paralyzed.