Wednesday, May 03, 2017 By Robb Levinsky

Who has had the most success purchasing two year olds at public auction? Of course, it depends on what metrics you use to define success, but an article in The Blood-Horse magazine (Feb. 18, 2017, pg. 48) looked at the 100 leading buyers of Two Year Olds at public auction for the last five years (2012-2016, minimum 10 horses purchased). They looked at a number of key categories including; the number of horses purchased, the average purchase price paid, the percentage of horses who earned more than their purchase price, average earnings, percentage of horses to start, percentage of horses to win, percentage to win stakes, and finally, the average number of career starts made. Collectively these statistics paint a very clear picture of the results achieved.

So how did Kenwood Racing stack up in these categories? Our average purchase price of $39,897 was 72nd out of 100, in other words 71 of the top 100 buyers paid more than we did on average for their horses. What did we get for our money? We were 6th out of 100 in the all-important category of the percentage of horses who earned more than their purchase price (a whopping 59%), 20th out of 100 in the percentage of horses to start (95%), 19th out of 100 in the percentage of horses to win (77%), and 9th out of 100 in the average number of career starts made (18.62) among others. In other words, we’ve always claimed to be value buyers, producing above average results while spending less, and the Blood-Horse stats certainly bear that out.

Most of the top 100 list were individual owners, but among them were many racing syndicates including Eclipse Thoroughbred Partners, Little Red Feather Racing, West Point Thoroughbreds and several other well-known names. How did Kenwood’s record compare with other entities offering shared-group ownership of racehorses? Take a look…

Buyer

# 2YO purchased

Ave. purchase price

%earning >purchase price

Average earnings

% Starters

% Winners

%

Stk. Winners

Ave # of starts

Kenwood Racing

39

$ 39,897

59%

$ 75,611

95%

77%

2.6%

18.62

Blinkers On Racing

16

$ 99,938

25%

$ 41,179

100%

81%

0.0%

12.69

Eclipse Tbd. Partners

31

$152,097

19%

$102,409

84%

58%

9.7%

  7.19

Little Red Feather

18

$ 91,167

   5.6%

$ 32,838

72%

50%

0.0%

  6.69

Pewter Stable

22

$ 53,364

 45%

$ 74,407

86%

64%

0.0%

12.79

Sovereign Stable

12

$103,917

 17%

$ 46,642

83%

50%

0.0%

  8.20

West Point Tbds.

68

$136,059

 18%

$ 90,066

84%

60%

5.9%

10.35

Zilla Racing Stable

13

$ 72,000

 23%

$ 53,411

77%

54%

0.0%

  8.20

The results in the above table speak for themselves so no need to say much more here. Worth noting our average purchase was by far and away the lowest, and while paying a LOT less we had by far the highest percentage of horses earning more than their purchase price and by far the highest number of average starts (we know how to buy sound horses and keep them running!). We were at or near the top of the group in all the other categories as well. We listed all the syndicates we know of here, except Dogwood Stable, which is no longer in business. If anyone reads the Blood-Horse article and sees someone we missed, please let us know!

Looking at the numbers, what are the conclusions to be drawn from this?

  1. Paying top dollar does not buy you the best racehorses. Of course there’s always a rare exception, but all you have to do is look at the numbers to see that paying 5 times as much gets you at best marginally better results. Hardly a good deal. The cheapest horses aren’t the best buyers either (if only they were!), it’s about finding the ‘sweet spot’; knowing how to evaluate horses and looking for quality at a reasonable price.
  2. It’s extremely rare to come up with stakes winners, no matter how good you are or how much you spend. Everyone dreams of winning the biggest races and rightly so, it’s where the greatest thrills are and where the most money is made. What’s hard to grasp is that about 3% of all horses win any stake in their lifetime, less than 1% win a major (graded) stake, and literally 15 or 20 horses out of a foal crop of about 22,000 win one of the famous races (Derby, Preakness, Haskell, Breeders Cup). Note of the 8 syndicates shown in the study, only three of them (including Kenwood) had so much as a single stakes winner in five years of purchasing horses! The other five syndicates collectively purchased 81 two year olds over the course of five years that they paid an average of about $90,000 each for; about 8 million dollars invested and not a single stakes winner between them!  That holds true in most sports, think of how many people want to play in the NBA, NFL, the US Open, or the Masters, and how many actually make it.
  3. Horses don’t run a lot.  Perhaps the stat we’re proudest of is the average number of starts our horses make, because it’s a sign of soundness and good management-training. Our horses in this study made an average of 18.62 starts in their careers. That was by far and away the best among all the syndicates (the next highest was 12.79, 1/3 less) and 9th highest overall out of the 100 people in the study, but it’s still not a huge number. This is a high-performance sport that requires real patience. Remember that the next time you think “I can’t believe my horse was on the farm all winter and ‘only’ ran 10 times the entire year”.

All this does NOT mean you can’t be successful in this business, it just means it’s not easy. You have to have a plan, lots of capital, and lots of patience. That’s why we structure it as entertainment first and foremost, with a modest one-time payment that makes it affordable for people to participate in a very exciting game without taking on undue risk.  Of course, these numbers don’t take into account what each syndicate charges in terms of mark-ups, management fees, training bills, etc., which have a very large effect on the ultimate financial results for people buying shares in these horses. We’ve never considered ourselves to be a syndicate per-se because we have no markups. In other words, a very different, more user friendly business model than the way most syndicates operate. Anyone interested in shared ownership of racehorses would be wise to read the legal documents and ask lots of questions before turning their hard-earned money over to anyone. There’s a lot more to this than raw stats. That said, the Blood-Horse study shows it is possible to achieve above-average results while spending a lot less, and we’re certainly proud to have achieved exactly that. 

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