Risk and Reward
Like many horse racing fans, I was disappointed when Big Brown met defeat at the Belmont Stakes on Saturday, June 7. After the bay colt’s impressive wins in the Kentucky Derby and Preakness, railbirds were hopeful that he would be the first horse in thirty years to win the Triple Crown.
No one is sure what went wrong with Big Brown. But his owners say they plan to race him through the end of the year.
When Big Brown is retired, he will stand at stud at Robert Clay’s (OPM 4, 1980) Three Chimneys farm www.threechimneys.com in Lexington, Kentucky. (Read a Bulletin profile of Clay at www.alumni.hbs.edu/bulletin/2005/march/profile.html). Three Chimneys paid a reported $50 million for breeding rights to Big Brown after he won the Kentucky Derby. Smarty Jones, another near-Triple Crown champ at Three Chimneys, commands a stud fee of $100,000 and is bred to approximately 100 mares each season. That’s $10 million a year, a sum that could go up (or down) depending on the success of his progeny (the first Smarty foals hit the racetrack next year).
Many assume that Big Brown’s bloodlines will merit a higher fee than $100,000. Undefeated Triple Crown champion Seattle Slew (a former Three Chimneys resident) sired foals to the ripe old age of 28. Big Brown is only 3 years old. So you do the math.
So here’s a real-life business dilemma. If you owned Big Brown, would you ship the colt straight for the stud farm, or keep him on the race circuit for several more months, risking two decades of stud fees for an additional several million in winnings? More wins could mean higher stud fees. But the sad demise of Barbaro and Eight Belles have got to give you pause. Then there’s the sport itself to consider. The number of racing fans is shrinking, and if the better horses only run four or five races, where does that leave us?
The decision of whether to race Big Brown lies with his owners, not Clay. What would you do in their position? Race Big Brown? Or take the money and run?
Your Comments
I wonder what an insurance policy would cost on Big Brown? As an owner of that horse, one could only risk racing him if you could somehow insure against a serious injury which would affect his ability to work as a stud horse. Furthermore, there's the risk of underperformance. What is the risk/reward for future success (or failure)? If he wins his next five starts, by how much does his stud fee increase? How about if he loses his next few starts?
Bottom line: Big Brown's owners will take the safe road and let Big Brown retire to the hundreds of mares waiting his services.