08/02/2016 7:16AM

Simon: Taking a gamble on next hot new sire

Barbara D. Livingston
Despite a modest $10,000 stud fee, Flat Out has yearlings in the Fasig-Tipton Saratoga select yearling sale.

The selected yearling sales are upon us, a major test for young sires. The best and most diligent buyers and agents look at as many of a sire’s yearlings as possible to see their conformational traits and how he is stamping his foals so that they have an idea on whether or not they like the sire.

Buyers have every reason to be skeptical of young sires when looking for a racing prospect because it’s hard to predict whether a sire will succeed.

But that does not prevent buyers from gravitating toward young sires. There’s nothing more exciting to a potential racehorse owner than an unproven sire, a blank canvas of potential limited only by the imagination.

:: DRF BREEDING LIVE: Real-time coverage, including live streaming, of the Fasig-Tipton Saratoga sale

Buyers take the approach that it’s cheaper to take a flyer on a young sire while his stud fee is low, hoping he turns out to be a success, rather than paying a much higher price for a yearling by a proven sire who stands for a far higher fee.

The risk/reward ratio is far greater for the unproven sire, but if the buyer is right, he’s bought one on the cheap.

Of course, the chance of any sire becoming as successful as a stallion such as Tapit is remote, but that doesn’t dissuade people from trying. There’s nothing more exhilarating and gratifying for a buyer than being right about a young stallion.

As we head into the season’s first select sale of yearlings at Fasig-Tipton Saratoga, the spotlight will be on the progeny of young sires (see accompanying box).

The nine first-year sires represented by yearlings in the sale include Kentucky Derby winners Animal Kingdom and Orb, Preakness winner Oxbow, and Juddmonte International winner Declaration of War. Among the six second-crop sires represented are Bodemeister, Frankel, Shackleford, and The Factor. Third-crop sires represented are Uncle Mo and Union Rags.

As one can see by this pyramid of young sires (nine first-year sires, six second-year sires, two third-year sires), the group that is capable of getting progeny into boutique select sales quickly whittles down as their progeny reach the races. This is typical of select sales, which require strong pedigrees and conformation. If the sire power is lacking, the yearling generally has to be flawless in conformation to be accepted.

We have not seen the yearlings in the Saratoga sale, but one has to assume that for yearlings by Flat Out and Liaison (both with a $10,000 stud fee in 2014) to be in the sale, they must be great looking because the 2015 sale averaged $322,448. To attain that price, a yearling by a $10,000 stallion would have to bring 32 times the stud fee – when three or four times the stud fee is generally the norm expected by a seller and a 10-times multiple is a home run.

Buyers at this year’s Saratoga sale hope they will be purchasing a yearling by a sire who turns out to be another Uncle Mo, the kind of young sire buyers should have embraced more fully, if they only knew then what they know now.

But even with some evidence in hand last year when Uncle Mo’s first crop had reached the races, buyers were still not convinced that the Ashford Stud stallion was the next Tapit.

At the 2015 Fasig-Tipton Saratoga sale, Uncle Mo had three yearlings sell for an average of $156,667, half the sale’s average.

For the entire year, Uncle Mo had a yearling sales average of $88,566 for 99 sold, and he stood the 2013 breeding season for a fee of $35,000, so that was just 2.5 times his stud fee, a modest figure.

By comparison, fellow second-crop sire Union Rags had six yearlings go through the sales ring last year at Saratoga for an average price of $240,000, almost 50 percent higher than Uncle Mo’s average. That would seem to indicate that buyers at this time last year thought Union Rags would turn out to be as good as or better than Uncle Mo as a sire.

That notion seemed to hold up for the entire year, even as more juvenile racing was taking place. Union Rags had 61 yearlings sell in 2015 for an average price of $132,410, again 50 percent higher than Uncle Mo’s 2015 sales average. And you thought this game was easy.

Uncle Mo has turned out to be a great sire, and this is affirmed weekly as he gets one more stakes winner after another. The weekend of July 23-24 saw him sire two new graded stakes winners, and on July 30, the maiden Laoban won the Grade 2 Jim Dandy, running Uncle Mo’s total to 10 graded stakes winners in his first crop, an outstanding 6.5 percent from 155 named foals. He has 18 stakes winners, an excellent 11.6 percent strike rate from foals, and that should rise since his oldest foals are just 3.

Buyers finally caught on this year, and the demand for Uncle Mo’s progeny has driven up prices to an elite level. This year, he had 33 juveniles sell at 2-year-olds-in-training sales, and they averaged $264,636, the fourth highest of the year behind Tapit ($501,429 average), War Front ($473,333), and Curlin ($447,833).

But the laws of supply affected Uncle Mo’s average, as there were just seven juveniles sold by Tapit, three by War Front, and six by Curlin.

Sellers were taking advantage of Uncle Mo’s ascendancy off a stud fee of $27,500 in 2014, when the juveniles were conceived. The stud fee in 2014 for Tapit was $150,000 but is $300,000 today; the stud fee for War Front was $150,000 in 2013 and is $200,000 today; and the stud fee for Curlin was $25,000 and is $100,000 today.

It’s easy to predict that Uncle Mo’s stud fee will be much higher than the $75,000 fee he stood for in 2016, perhaps double, and buyers at sales this year will adjust their thinking accordingly.

Uncle Mo has 13 yearlings cataloged in the Saratoga sale, and you can expect them to compete for the highest prices daily.

Those buyers who can’t afford to play at the top of the market will be looking for bargains among the first-crop sires, hoping they find the next Uncle Mo.