06/14/2007 11:00PM

What are the odds?


Ira Gumberg, half of the Skara Glen Stable partnership that bred Rags to Riches, is passionate about the business of breeding. But while some breeders get their greatest joy from poring over five-cross pedigrees, Gumberg also likes to tally up asset values to determine what and when to buy and sell.

Now that Skara Glen, an 18-mare operation, has bred consecutive winners of the Belmont Stakes from the same mare – Better Than Honour – Gumberg sees it as a validation of the business-first approach. Skara Glen bought Better Than Honour in 2002 and sold her in 2004, profiting handsomely in the auction ring from the sale of two yearling fillies, a yearling colt, and the mare herself while in foal to Mineshaft. The yearling colt was Jazil, the 2006 Belmont Stakes winner, followed by the yearling filly Rags to Riches, whose victory earlier this month gave the Gumbergs a signature achievement for a breeder in the 139-year history of the Belmont.

"This, for us, is a tremendous punctuation for our breeding program," said Gumberg, who owns Skara Glen in partnership with his father, Stanley Gumberg. "It's almost an affirmation that the strategy, the plan we employ, is right for us. We're absolutely tickled."

The Gumbergs, who live in Pittsburgh, came up with Jazil and Rags to Riches by combining two tenets that sometimes seem at odds: a thoroughly modern business savvy that looks objectively at horses as commercial assets, and an old-fashioned determination to breed for running ability and not just sale-ring looks.

"They've constantly focused on breeding top mares the way they should be bred, not necessarily just for the market, but to produce the best racehorse," said William S. Farish, a longtime friend of the Gumbergs and owner of Lane's End Farm in Versailles, Ky., where the Gumbergs board all 15 of their American-based mares.

"I think this is what's been the source of their success," Farish said. "They're very interested in the market itself, but they haven't necessarily bred to the most fashionable stallions. They breed to stallions that pedigree-wise, conformation-wise, and performance-wise have the best chance at producing a good runner."

Property developer Stanley Gumberg and his wife, Marcia, founded Skara Glen, named after the Skara isles north of Scotland, in 1968. The elder Gumberg is the chairman of the shopping-mall development business J.J. Gumberg Company, founded by his father. Ira, one of three sons, also works for J.J. Gumberg, which he calls the family's "core business."

"My father had a real intrigue with the Thoroughbred racing and breeding business," recalled Ira, 53. "He was always a person who thought internationally and liked the group of people who were involved in the industry."

Stanley Gumberg, 80, got started by purchasing the mare Parida, who had run third in the 1968 Mother Goose. When her foals sold well at auction, the elder Gumberg discovered he had found a new business to love.

"That really was the foundation of his interest," said Ira Gumberg.

Racing and breeding aficionados have seen Skara Glen listed as breeder for numerous stakes winners over the years, such as Cara Carissima, Lyphard's Delta, and Take Your Place. Marcia Gumberg also bred graded winner Delay of Game in her own name. Among the fillies the stable has raced before retiring them to the Skara Glen broodmare band are Wimbledon, dam of Delay of Game, and stakes winners Cinnamon Sugar and Red Roses Story.

The Gumbergs' main focus has been, and still is, on commercial breeding.

"Each 10 years, we were able to improve the quality of the bloodlines until we have finally reached the point where we have these international-quality bloodlines with mares in the United States, Great Britain, and sometimes in Ireland," Ira Gumberg said.

Skara Glen is strict in its quality standards, and though they buy selectively, the Gumbergs will pay for expensive stock if they feel the filly or mare is likely to become an asset to their commercial program. That was the case with Better Than Honour.

Ira Gumberg won't disclose the private price they paid for the then 6-year-old mare in 2002, but confirms it was above $2 million.

Better Than Honour, a Grade 2 winner, was carrying an A. P. Indy filly - an older full sister to Rags to Riches now named Magnificent Honour - and seller John Sikura of Hill 'n' Dale Farms was reluctant to part with her. Sikura had outmaneuvered another suitor, Three Chimneys Farm, to purchase Better Than Honour privately from Robert Waxman at the conclusion of her racing career, according to John Kimmel, who trained Better Than Honour. Sikura knew she could be a jewel in his own collection.

"It was a huge stretch for me to get her," Sikura recalled.

A year earlier, when the Gumbergs made their initial approach to buy her, the offer was "very substantial," Sikura said, but he declined. "Then I told them that if she foals and has a filly and you want to make the same offer next year, I'll consider it," he said. "I felt obligated to at least leave the door open, but I never expected them to call again."

They did. Sikura, after long thought, accepted the offer. But he kept Better Than Honour's first foal, the Storm Cat filly Teeming, and later sold her as a weanling for $1.5omillion.

Better Than Honour fit the Gumbergs' requirements perfectly.

"The platform we follow is to have young mares that have wonderful race records, that have flawless conformation, and that come from deep pedigree lines," Gumberg said. "Those are expensive, and Better Than Honour was enormously expensive when we acquired her."

Better Than Honour did well for the Gumbergs in the auction ring. Magnificent Honour sold for $925,000 as a 2003 yearling; Jazil (by Seeking the Gold) brought $725,000 the following year, also as a yearling; and Rags to Riches (by A.P. Indy) sold to Michael Tabor for $1.9 million as a yearling in 2005.

But by the time Rags to Riches went to auction, the Gumbergs already had let Better Than Honour go, selling her to Coolmore for $2 million at the 2004 Keeneland November sale. She was carrying a Mineshaft colt, now named Casino Drive.

"You should know that we view this very much as a business," Gumberg said. "It is not our core business, but we bring the same discipline to this as we do to our core business of shopping-mall development. We look at the value of money over time, the amount of revenue it will produce, and that's our metric for determining if something is the right kind of acquisition to make.

"Selling is part of the discipline. We were able to take a couple of foals out of her, put her back in foal to a fashionable sire. Part of that measuring the metric of a good investment for us is looking at the internal rate of return. The internal rate of return often requires that you sell. The price you pay going in is one piece of the component. The dollars that you earn during the period that you hold the asset is a second part of the component, and the third part is the price you receive when you sell the asset again.

"It's a very fluid business, and our financial people update those values monthly," he added.

Gumberg says he and his father have no regrets about selling Better Than Honour. The same could not be said for Sikura, who says he never felt entirely happy about letting the mare go in 2001.

"I always regretted selling that mare," Sikura said. "I had had a long-term plan of acquiring mares that could become centerpieces for us and what we wanted to accomplish."

Last year, Sikura and partner Mike Moreno privately bought Better Than Honour back. She's now at Hill 'n' Dale, where she has a Giant's Causeway colt and is carrying a full sibling to Rags to Riches. That gives Sikura and Moreno a license to dream big.

For Stanley and Ira Gumberg, a historic dream has already come true. And that's meant more than business as usual to the father-and-son team.

"This is a crescendo for our breeding operation," Ira Gumberg said. "I must say, it's fun for a father and son to be able to do things together. It means a lot to me that he and I have this pleasure to be able to do this together.

– additional reportingby David Grening