09/20/2016 1:40PM

Pegasus World Cup stake sold to Earle Mack

Barbara D. Livingston
Earle Mack purchased a slot in January's Pegasus World Cup.

A starting-berth slot in the $12 million Pegasus World Cup has already changed hands.

Sol Kumin and James Covello, Wall Street financiers who had put $200,000 down on a slot in the Pegasus with 11 other groups, sold the stake last week to Earle I. Mack, an owner-breeder who is a real-estate developer, both sides in the transaction said. The sale was brokered by officials of The Stronach Group, which created the Pegasus World Cup and is administering the race, just prior to the deadline for the stakeholders to put up $800,000 each to complete their purchases of one of the 12 Pegasus starting gate slots.

Kumin, a hedge-fund manager, said that he and Covello decided to seek a buyer after doing additional analysis of the potential returns from the Pegasus stake, which gives each stakeholder a reserved spot in the starting gate plus a share in some of the revenues derived from the race. Kumin and Covello, who did not own a horse that would be competitive in the race, put $200,000 down on the stake in mid-May, when many details about the race had yet to be ironed out.

“I still like the idea of the race, but when we looked at it again as a value proposition … we were looking at maybe losing 50 cents or 60 cents on the dollar for running seventh with a decent horse,” Kumin said. “We wish [The Stronach Group] all the luck in the world. They are trying to do a great job, but for us to do well we figured we needed to come first or second to make any money, maybe third to break even.”

Kumin declined to provide an exact price for the stake, but he said it was “very, very, very close to the original price” of $1 million.

The Pegasus World Cup, which was first proposed in general terms by owner-breeder Frank Stronach in January of this year, is scheduled for the last weekend in January, 2017, at Gulfstream Park, which is owned by Stronach’s private company. If it goes off as planned, it will be the richest race ever held, and it is the first race run under conditions in which buyers of stakes are able to sell, lease, or otherwise market their starting slots.

[For an in-depth look at the Pegasus World Cup, click here.]

Mack, who is on the board of the New York Racing Association, called Stronach a “dear friend” in an interview on Tuesday. He said he had been interested in buying a stake in the race since it was announced, though he does not currently own a horse that would fit in the race. Mack also said that he has lined up a partner for his stake, but he would not name the partner, while being coy about whether the partner owned a top-class horse.

“You never know,” he said. “This is horse racing.”

Mack called the concept of the World Cup “very exciting” and said that he thought it would be a “great investment.”

“When you put on the richest, the best, the first, that is remarkable,” Mack said. “I want to be part of that excitement.”

Under the terms of the race, each stakeholder is set to receive a one-twelfth share in the revenue derived from most of the wagering on the Pegasus and from sponsorships and television-rights deals tied to the race. However, Stronach Group officials have acknowledged that there will be no revenues from a television deal this year, and that the Stronach Group plans to pay a major television network to broadcast the race instead.

Mike Rogers, a member of The Stronach Group executive board who has been heavily involved in the planning for the race, said on Tuesday that all other 11 stakeholders in the race made their final $800,000 payments by the Sept. 15 deadline last week. The stakeholders include Frank Stronach, who purchased a share through a company controlled by The Stronach Group, and the owners of California Chrome, the top-rated horse in the world.

Rogers said that The Stronach Group plans to release additional details about the race in the near future, including the announcement of a television partner.