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In Which We Consult With An Expert | Superfectablog v3.0

Racehorses in History

June: Fairy Chant
b. 1937
Why: A champion at 3 and 4, Fairy Chant won the Beldame twice. She was in the money for 26 of her 42 races.

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In Which We Consult With An Expert

The Thoroughbred Times ran a feature article which focused on the welcome news that eight of last year’s champions will remain in training and explores some of the economic realities which have led to this unusual turn of events. However, some parts, alas, just don’t ring true – like this quote from Michael Iavarone:

“We want to run. Our people buy horses to run, and when you have horses like Stardom Bound and you have the ability to run them against someone like Zenyatta or run her in the Santa Anita Derby (G1) against other big names, that’s what’s going to drive people into the seats.”

Really? You buy horses to run (for more than a year)? That doesn’t sound like you’re offering your investors the best possible return (although, granted, these are hedge fund investors, so presumably they’ve already written that money off as lost). It seems disingenuous to claim racing is the goal when there are ‘real’ investors involved, rather than the ‘we’re in this for fun’ partnership types; instead, there is the presumption investors will get some sort of return (in horse racing!) – which means stud fees, not racing purses. To make sure I was not entirely insane, I checked with Friend of the Blog, Holy Prepuce.

Holy Prepuce, an attorney and Harvard-trained economist, explains:

“As nearly as I can tell, IEAH organizes, enters into, and manages
partnerships for the ownership of particular horses. Its proposed
hedge fund would own multiple horses, but if structured like most US
hedge funds it will still be a partnership, with investors as limited
partners and IEAH as fund manager and general partner.

“In either scenario, IEAH owes a fiduciary duty to its partners, and
could violate that duty if it runs horses under circumstances where it
should know that putting to stud would provide the greater return on
investment. In other words, Iavarone can sacrifice economic return
for the love of the sport when he’s playing with his own money, but
not when his investors are footing the bill.”

There you have it.

Now, I am very happy that Zenyatta, Stardom Bound, Forever Together et al. are still in training, but I prefer Bobby Frankel’s much more realistic take on the situation:

Racing Hall of Fame trainer Bobby Frankel told Daily Racing Form in early February that multiple Grade 1 winner Champs Elysees (GB) is still racing this year because of the recession.

“A lot of studs are going to be starving,” Frankel said.

See, there is an upside to a down economy!

3 comments to In Which We Consult With An Expert

  • Wind Gatherer

    I have added Holy Prepuce to my follow list.

    For some strange reason I now have the urge to go buy a turtleneck sweater.

  • Jessica

    A companion post from Kennedy, who also finds a silver lining in the recession. Kinda funny that amid economic uncertainty there could be an opportunity for racing, one that people have been asking for — Eclipse winners and older horses remaining in training, being given a chance to really develop into the stars many think the game needs.

  • Valerie

    King of the Roxy returning doesn’t sit well with me. At the time he retired, it appeared to be a serious career-ending injury, not just an excuse to be hustled off to the barn. I hope I’m wrong.

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