Year after year people pay outrageous prices for unraced, unproven yearlings and two-year olds perceived to be the ‘best’ racing prospects. As we’ve detailed in previous columns, paying top dollar produces top results on the track an amazingly small percentage of the time. But the facts have never stopped a few billionaires with more money than common sense from throwing away millions on unproven young horses and this year's Keeneland yearling sale was certainly no expection. For those who didn't see the numbers from the elite 'book 1' of the marathon sale, the first three days at Keeneland smashed all kinds of records. Horses sold for literally insane prices, topped by $8,200,000 spent for a yearling filly as you can read here in the Thoroughbred Daily News.

Royally Bred American Pharoah Filly Commands Record $8.2 Million During Dynamic Third Session Of #Keeneland September Yearling Sale. Read the #KeeSept story → https://t.co/yVznFjF3md pic.twitter.com/RAKrsA3ZBU

— Keeneland Sales (@keenelandsales) September 11, 2019

Did you miss the live coverage of hip #498 (American Pharoah -- Leslie's Lady)?

Watch the entire bidding process here as the 1/2 to Beholder, Into Mischief & Mendelssohn sells for $8.2 Million to Mandy Pope of Whisper Hill Farm. pic.twitter.com/wbp96wtNGS

— TVG (@TVG) September 11, 2019

20 yearlings sold for over one million dollars and 61 sold for $700,000+, record numbers. This is a very select area of the market where a few billionaires are competing for elite pedigreed racing prospects. The vast majority of these horses will never win a stake of any kind, never earn back a fraction of their purchase price, and never be worth a fraction of what they were purchased for. Many will fail to win a single race of any kind or end up running in claiming races. There’s simply no logic to it, just people with so much money they don’t mind spending a few million dollars for entertainment, just as most people don’t mind spending a few hundred dollars for football or basketball tickets. 

So what is the right amount of money to pay for a horse you really want? The answer lies in your budget and your goals. If you are doing this for pure entertainment with no concern about financial returns you can pay whatever you need to own the horses you like the best, as some people clearly do year in and year out. Statistics clearly show if your ultimate goal is winning graded stakes on the track you are likely better off paying $100,000 each for ten nice prospects than $1,000,000 (let alone 8.2 million!) for the ‘best’ horse in the sale but some people don't seem to care about facts. 

Racing is a high-risk game; around 90% of all horses lose money and about 35% never even make it to the winner’s circle at any level, so there are certainly easier and less risky ways to spend money if you’re strictly looking at the financial aspects of an investment. That said, limiting your purchases to a price range where IF the horse IS successful on the track you will end up in the black is generally the difference between pure entertainment with most or all the investment lost and a legitimate buisness with a shot to make a profit if things turn out right.

A long-time personal friend and successful trainer for decades used to say whenever we were looking at horses we loved at any auction  “it’s a long way down the elevator”. His point was that the majority of the top prospects given to excellent trainers end up to be claiming horses at some level (assuming they make it to the winner’s circle at all), so if you pay a premium price going in you are bound to lose a lot of money on the back end. If you buy a horse for $30,000 - $75,000 and it turns out to be a decent claiming horse you have a legitimate chance of gettng back most of your investment or perhaps even making money. If it turns out to be a major stakes winner you have not only have an incredible emotional thrill, you’ve likely made serious money that can pay for other, less successful purchases. The majority of stakes winners don't come from the sales toppers, but rather are purchased for much more rational  prices, many for under $100,000. As stated above, your bid depends on your budget and your goals. If financial results matter, the price you pay at the sale is usually the deciding factor when you calculate the bottom line at the end of the year.