Havre de Grace: Are big-ticket mares worth their price tag?

Barbara D. Livingston

Havre de Grace’s $10 million price tag at the recent Fasig-Tipton fall mixed sale was the third-highest ever for a broodmare or broodmare prospect.

On Nov. 5, Mandy Pope of Whisper Hill Farm paid $10 million for 2011 Horse of the Year Havre de Grace at the Fasig-Tipton Kentucky selected fall mixed sale. The following day, Pope paid $4.2 million for 2011 Kentucky Oaks winner Plum Pretty at the Keeneland November breeding stock sale.

As one of the owners of the Variety Wholesalers Inc. retail chain, Pope probably does not need the money that might come from prospective foals out of Havre de Grace or Plum Pretty. It is possible, however, that Pope’s tax accountants might encourage her to sell those foals in an effort to make a profit. Internal Revenue Service guidelines require that a business make a profit two years out of seven or be considered a hobby and therefore taxed at a higher rate.

Of Havre de Grace, Pope said the farm will initially breed her with the preference of selling.

“It will take a bit for her to pay for herself through her foals,” she said. “But if her foals look anything like she does, they should be in here bringing a lot of money in two years.”

The purchase of Havre de Grace with the intention of selling her foals commercially raises the question of whether purchasing such high-priced broodmares makes economic sense.

A look at the produce and sales records of previous high-priced mares gives an idea of the viability of such a plan. As shown in the accompanying chart, Havre de Grace’s $10 million price tag ranks third all time among broodmares or broodmare prospects. Mike Moreno’s Southern Equine Stables paid $14 million for Better Than Honour to buy out a partner at the 2008 Fasig-Tipton November sale, and Sheikh Mohammed bin Rashid al Maktoum (with agent John Ferguson signing the ticket) paid $10.5 million for Playful Act at the 2007 Keeneland November sale.

The chart includes every broodmare or broodmare prospect sold for $4.5 million or more in North America and summarizes the commercial achievements of their offspring both before and after their high-priced sales.

The results are not pretty from a strictly commercial standpoint.

Of the 34 mares listed, Better Than Honour, Playful Act, Havre de Grace, Royal Delta, Round Pond, Stardom Bound, Untouched Talent, and Pure Clan have had little to no chance to prove their worth as commercial investments because their sales are too recent. None has produced enough foals yet for their buyers to have a realistic chance to recoup their investment.

Even among the 26 mares who have had a chance to pay back their purchase price, however, not one produced foals who sold for an aggregate price greater than its purchase price. The mare who came closest was Jewel Princess, the champion older female of 1996, who was purchased by the Coolmore partnership headed by John Magnier for $4.9 million at the 2000 Keeneland November sale. The six foals sold as yearlings since her purchase brought $3,885,000, 79.3 percent of her purchase price. (Only initial sales of weanlings, yearlings, and 2-year-olds in training are considered in the sales figures since those are the most likely to be sales by the breeder.)

Catchascatchcan, the undefeated winner of the 1998 Yorkshire Oaks, also did relatively well. Purchased for $4.7 million by the Ryan family of Castleton Lyons at that same November sale, her five subsequent foals sold at auction brought a total of $3.6 million, 76.6 percent of her purchase.

Catchascatchcan also was one of only three of the 21 mares who were in foal at the time of sale to produce a major winner the following spring. The Danzig colt she carried in utero, Antonius Pius, sold two years later to the Coolmore partners for $1.5 million. He won the 2003 Railway Stakes and placed in three Group 1 or Grade 1 events in 2004.

The only Grade 1 or Group 1 winner in utero at time of sale was 2009 Debutante Stakes winner Mi Sueno, the Pulpit filly in utero when Southern Equine and Hill ’n’ Dale Farms purchased Madcap Escapade for $6 million at the 2006 Keeneland November sale. Champion It’s in the Air was carrying Group 2 winner Bitooh, by Seattle Slew, when she sold for $4.6 million at the 1984 Keeneland November sale.

It’s in the Air was purchased by Sheikh Mohammed’s Darley operation, which illustrates one of the main factors in reducing the bottom-line profitability of high-priced mares. Sixteen of the 34 mares listed were purchased by entities whose first objective is racing the foals, not selling them. Coolmore, which bought five of the mares, and Darley, which bought six, are primarily interested in breeding to race, although each sells a portion of their foal crop each year.

But how does one measure the ultimate value to Darley of a mare such as It’s in the Air or Priceless Fame when each has established a classic-producing family in Sheikh Mohammed’s far-flung broodmare band?

It’s in the Air produced two stakes winners, and her daughters have produced multiple Grade 1 winner Music Note, by A.P. Indy; French classic winner Musical Chimes, by In Excess; and Grade 1 and Group 1 winner Storming Home, by Machiavellian, for the Maktoum family.

Priceless Fame did not produce offspring for Darley to match her previous top-level winners Saratoga Six and Dunbeath, but her daughter Headline, by Machiavellian, produced 2002 Coaching Club American Oaks winner Jilbab, by A.P. Indy, and 2004 Italian highweight Ancient World, by Spinning World, for Sheikh Mohammed. Better Than Honour, Cash Run, Korveya, Estrapade, Sassy Pants, Windsharp, and Santa Catarina all have produced valuable daughters for their purchasers.

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Other recent purchases such as Playful Act, Ashado, Cash Run, Round Pond, Riskaverse, and Untouched Talent are more likely to have a major influence on the breed through their sons and daughters than in the auction ring. In the long run, that, rather than the potential return at yearling sales for their foals, is why Darley and Coolmore are willing to pay $5 million and more for them. That residual value as a genetic treasure cannot be measured accurately by the bean counters at accounting firms or by the IRS.

Mandy Pope is obviously aware of that genetic value.

“And, of course, if she has a filly along the way,” Pope said of Havre de Grace, “I will probably keep that.”

Highest priced mares sold at public auction in North America

Progeny auction records before and after sale: