I recently received a call from a gentleman interested in joining our Kenwood Racing co-ownership program. He had previously owned racehorses with two well-known syndicates and had stated that he was unhappy with the results, explaining “I had a share of two horses by two of the best sires in the world. One never ran and other ended up being a claiming horse. If you can’t get a good horse with these sires, you have no idea what you are doing”.

This is conventional wisdom and seems to make perfect sense. After all, there has to be a reason people pay $100,000 to $300,000 to breed to the top sires in the world. However, as is the case with much conventional wisdom, the facts are quite different than perception. The gentleman I spoke to seemed stunned to hear me say that while we’d love to have his business and couldn’t comment on the two specific horses he’d owned a share of, there was nothing out of the ordinary in a leading sire producing a horse that never makes it to the races or ends up to be a claiming horse. A look at the actual numbers makes clear what breeding to a top sire actually buys. The Blood-Horse magazine regularly publishes a list of the leading sires, with # of foals, starters, winners, stakes horses, etc. You can find it here, but let’s start with a closer look at the top three sires in North America for 2015 just for some perspective…

Number one is Tapit, leading sire in North America the last two years; a true phenomenon whose career stats to date indicate he may by the end of his career end up being as good a sire as Northern Dancer, Mr. Prospector and Seattle Slew, probably the three top sires of the last 50 years. Note that Tapit began with a very modest $15,000 stud fee, proof that it isn’t always the best racehorses or most promising stallion prospects that end up making the best sires, but that’s another story. Here’s Tapit’s stats for 2015 (all stats as of November 1, 2015).

Looking at the above, you can see that just about half (161 out of 303) of Tapit’s runners managed to make it to the winner’s circle at least once. About 18% (52 out of 303) won more than 1 race, about 7% (21 out of 303) were stakes winners and just over 1.5% (5 out of 303) won a grade 1 stake. Remember that’s the #1 sire in North America, with a $300,000 stud fee, having probably the best year of his stud career. Pay $300,000 and you have just over a 50% shot of your horse making it to the winner’s circle at any level and less than a 10% chance of winning any kind of stake. You can be sure a number of those 21 stakes winners won small, ungraded stakes worth less than $100,000; not that winning a $75,000 stake at The Fairgrounds or Parx is a bad thing, but it’s not exactly a classic horse and not likely to come anywhere close to paying back the $300,000 stud fee (forget the cost of the mare, or the training bills!).

The second leading sire in North America is a perennial member of the leading sires list, Medaglia d’Oro:

The numbers here aren’t radically different than with Tapit. 21 stakes winners out of 246 runners, about 8%, is an exceptional number. That also means of course that 92% of this outstanding sire’s runners have not won a stake of any kind for 2015, and only two out of 238 are grade one stakes winners.

Let’s look at one more example; Pioneerof the Nile, sire of American Pharoah, # 3 on the 2015 leading sires list:

Overall, his percentages are roughly the same, a little lower in most of the categories than the top two. Most interesting, note that American Pharoah is his only grade one stakes winner in 2015! A lot of people will undoubtedly be breeding to him next year based on American Pharoah (Pioneerof the Nile’s stud fee is now over $100,000), blissfully unaware or in denial of the fact that of his 110 runners this year, the 109 not named American Pharoah have had markedly different results. That’s not a knock on the horse. In fact, Kenwood Racing purchased two very nice fillies at the OBS March two year old sale this year by Pioneerof the Nile for bargain prices, before American Pharoah won the Derby (although he was already a highly regarded prospect). Both have started, neither one has won. One of our co-owners who has a share in them expressed a similar sentiment to me not so long ago as the gentleman at the start of this article, i.e. “how could we have bought two horses by such a great sire and neither one has won yet?”. My answer was, “join the club!”. As you can see above, 57 of the 110 runners by Pioneerof the Nile this year have yet to win a single race. Our two fillies are young and we think still have potential. Recall that statistically only about 11% of all horses win even a single race at age two, so it’s way too soon to give up on them. But as the above stats clearly indicate, even the best sires produce a lot more horses who never win or end up being modest claiming horses than stakes winners, let alone classic grade 1 horses.

The numbers aren't all that different with remaining horses on the top 20 in the leading sires list if you take a look at the Blood-Horse link above. There's a gradual fall-off as you go down the list; Tapit is a better sire statistically than anyone else, but the difference in all the key metrics aren't nearly as great as the difference in Tapit's stud fee, and the stud fee of say Curlin or Scat Daddy, (#s 7 and 9 on the list with $35,000 stud fees respectively). So why do people pay $300,000 to breed to Tapit, or the $584,000 average for his 2015 yearlings sold at public auction, or the $660,000 average for his 2015 two year olds? A lot of it is simple ego; there are a cadre of billionaires at the top of the racing business to whom money is no object; they want the best bred horses and don’t really care about the stats. Remember that the top sires DO outperform those lower down the list in most or all of the key categories (percentage of allowance winners, stakes winners, graded stakes winners, etc.), so you aren’t paying for nothing, you simply are grossly overpaying for somewhat increased odds. Statistically, you’d have a much better chance of standing in the winner’s circle in a classic race by purchasing 20 two year olds for an average of $100,000 each by excellent, proven sires like Curlin, Scat Daddy, City Zip, Hard Spun (all in the top 20 on this year's leading sire list), than by buying three Tapit’s for $660,000 each, but that’s where ego and prestige and name recognition comes into play.

Looking at the above statistics, it would be easy to conclude that there’s just no way to come out ahead in the thoroughbred business. If the absolute best sires in history produce at most about 10% stakes winners, and very good sires produce about 5-7% stakes winners, how does one earn a profit?   No doubt, it’s a tough, tough game, as I (among many others) have stated on more than one occasion. However, if you put ego aside and look at the numbers, there is a (narrow!) path to success. They key is to have a team that does thier homework before buying any horse and not to overpay; whether it’s for stud fees, yearlings, two year olds, broodmares, or active racehorses. Experienced and skilled horsemen-women are able to increase the odds by weeding out a lot of horses at sales that may have the pedigree, but lack the physical attributes to make it on the track. The two Pioneerof the Nile fillies we purchased cost us a total of just $55,000. At that level, if they turn out to be solid $25,000 claiming horses, we’re probably going to end up ahead of the game. No doubt those were unusual bargain purchases, not easily repeated. But every year, people buy a number of horses for $25,000 - $125,000 at public auction that win graded stakes and are highly profitable. If you paid $660,000 for a Tapit colt that beats the odds and ends up to be a minor stakes winner, you still are out a lot of money. If you pay $50,000 for a nice colt by a solid, proven sire that ends up to be a minor stakes winner, you are almost certainly nicely in the black. It's a numbers game, and you need to let the numbers work for you.