Our recent Kenwood Racing blog, “What does paying more buy at sales?” showed statistically that in total, buyers overpay for horses at sales relative to their racetrack earnings potential and overestimate the results the most expensive horses produce. Another blog, “Spending more money offers no guarantees” detailed horses purchased for hundreds of thousands or millions of dollars who were competing in maiden claiming races at Gulfstream Park (and other tracks throughout the year). That elicited the following comment from one of our co-owners, “Wow! That's very depressing. It sounds like people who put money into 2 year olds from sales are just suckers!”.

Indeed, the realities are tough, but that does NOT mean there aren’t opportunities to make real money with value priced horses at public auction. An outstanding race card at Gulfstream Park on Saturday, March 4th, featuring 9 stakes including the $200,000 Grade II Davona Dale, a major prep for the Kentucky Oaks, and the $400,000 Grade II Fountain of Youth, a major prep for the Kentucky Derby, featured a number of bargain sales purchases competing at the highest levels on racing’s biggest stage. In the Davona Dale, was Summer Luck, purchased for $40,000, Modacious, purchased for $90,000, From Ria to Riches, purchased for $25,000, Yes I’ll Go, purchased for $40,000, Ellie’s Honor, purchased for $110,000, and Gran Cherie, purchased for $55,000. That’s 6 horses, half of the 12 horse field, purchased within the value-priced range detailed in the above referenced blogs. Three runners were homebreds who never went through the auction ring, while the final three, Saratoga Citizen, purchased for $220,000, Aspen Hilltop, purchased for $350,000, and Pretty City Dancer, purchased for $825,000, were purchased in the range where statistically, it’s extremely unlikely you will earn a profit, even if the horse turns out to be of stakes quality (which less than 10% are). The result? Miss Sky Warrior, a homebred won the race, Jordan's Henny, another homebred, was 2nd, and $40,000 purchase Summer Luck was 3rd. The top two finishers were modestly bred horses who if they had been offered for sale would very likely have sold within the $25,000 - $100,000 range detailed in our blogs as offering by far the best risk-reward ratio at the sales. Of course we'll never know what they actually would have sold for, but we do know the three highest priced sale horses were nowhere to be found. 

Turning to the Fountain of Youth, Huracan Americo was purchased for just $14,000, Gunnevera for just $16,000, Quinientos for $50,000, and Talk Logistics for $100,000. That’s 4 of the 11 horses in one of the top Triple Crown preps in the country purchased for value prices. Four horses here were homebreds, Three Rules, Irish War Cry (a New Jersey-bred and Kenwood Racing's sentimental favorite), Takaful and Lookin for Eight, while three, Beasley, purchased for $340,000, Made You Look, purchased for $360,000, and Practical Joke, purchased for $240,000, were premium-priced purchases. When the dust cleared, $16,000 sale purchase Gunnevera won the Fountain of Youth in a romp, high priced Practical Joke was a distant (but good off a layoff) 2nd, and homebred Three Rules (another modestly bred horse) was a well beaten 3rd. Once again, paying top dollar proved to be a pretty much a total bust. Could Practical Joke (or some other high-priced horse) go on to win one or all of the Triple Crown Races? Of course, and some high-priced horses certainly do pan out. The point is, you don’t have to spend top dollar at the sales to buy a horse that can compete at the highest levels of the game. And, unlike paying $1,000,000 for a single horse, with the value-priced purchases, you are going to make serious money if they win even one or two modest ungraded stakes, let alone if they take home the top prize in a race like the Davona Dale or the Fountain of Youth. 

The lesson to take from all of this is to be realistic about what you can expect. If you pay a rational price at a sale, you are not a “sucker” (though you can certainly make the argument that buyers paying $500,000+ for an un-proven yearling or two year old are!). It’s as if you had a child who wanted to play in the N.B.A. or earn a living as a rock star, or become the next Picasso. You know going in, the odds are way against them making it. You can accept that and encourage them to follow their dreams, or tell them to seek another profession. Same with racehorses; you know the odds are tough, but you also know the potential rewards can be great. The key is not to overpay, so that when you do come up with a stakes-quality horse, you are going to make real money, and when (as in most cases) you don’t, you still have a shot to have some fun and pay most or all of the bills with a solid claiming or allowance horse.  

With Kenwood, because we don’t overpay, and we know how to find good sound horses at sales, and don’t mark them up, our owners get MUCH better results than almost any syndicate, but financially that’s still not going to compare to an “investment” in stocks or bonds or real estate in terms of the risk – reward ratios.  We have 5% stakes horses, (graded stakes placed), 15% allowance winners, almost 90% winners, and 100% starters from ALL two year olds purchased at public auction the last 6 years. That absolutely blows away the national averages, and we paid less than $50,000 per horse, a fraction of the average prices at the sales we buy at. That still means that about 80-85% of our purchases are going to be modest-priced claiming horses, just like everyone else.

Unlike so many in this game, we tell people the truth because we want everyone to understand going in what the game is about. Done right, it’s a LOT of fun and you CAN make real money. But the odds are against it with any individual horse, so you need to work within a realistic budget at the sales AND have real patience and a long term perspective. Like any highly competitive endeavor, it’s tough and not for everyone, but the rewards can be great. Just ask the owners of the winners of the Davona Dale and the Fouintain of Youth!