Anatomy of a stallion deal: American Pharoah and a Triple Crown winner's future

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Ed DeRosa

May 26th, 2015

Before I marketed and communicated about for Churchill Downs Inc., I wrote full time about the Thoroughbred racing and breeding industries for Norman Ridker’s now-defunct Thoroughbred Times rag.

One of my primary beats was stallion news and along with it the annual derby (usually) among Central Kentucky farms for the breeding rights to the hottest prospects in training, which most often are the horses who perform best in our classic (i.e. Triple Crown) races.

There was no such derby this year because Zayat Stables had already sold the breeding rights to its champion two-year-old American Pharoah to Coolmore’s Ashford Stud in December 2014. The background of the video below shows Ashford's Adrian Wallace and other Coolmore associates cheering home American Pharoah in the Kentucky Derby (notice the #11 paddock badge; Coolmore co-owns #11 Stanford, who scratched from the race).

The deal was a savvy move by both parties, as at the time of the deal, American Pharoah was “only” a two-time Grade 1 winner who had missed the Breeders’ Cup because of injury and whose championship credentials were not guaranteed following Texas Red’s emphatic Juvenile victory.

Ultimately, voters sided with American Pharoah, who had defeated Texas Red, and the dominos began falling on a very successful gamble by Coolmore, as American Pharoah has returned as a three-year-old to win three Grade 1 races, including the Kentucky Derby and Preakness Stakes, and on June 6 at Belmont Park will try to become the first Triple Crown winner since Affirmed in 1978.

The deal started out at $8-million with another $7-million available if American Pharoah hit certain benchmarks like become champion two-year-old male and win certain races such as the Kentucky Derby. Presumably there are other incentives still in play such as win the Triple Crown, become champion three-year-old male, and earn Horse of the Year.

A Belmont Stakes victory would clinch all three, which is why I don’t think American Pharoah would race beyond the Belmont Stakes if he wins, and I’m not alone.

“If we are lucky enough to get a Triple Crown winner we’ll be happy, but we would be foolish to think the horse is going to run much longer than that; it’s just probably not going to happen unless he’s a gelding,” trainer Todd Pletcher said in 2006 at the University of Arizona Race Track Industry Program’s Symposium on Racing and Gaming.

Martin Panza, then the racing secretary at Hollywood Park, agreed.

“If a horse wins the Triple Crown, how can he run?” Panza said. “Unless it’s someone where money doesn’t matter … how could you possibly afford to run him again? It sucks for the sport … but that’s sort of the point where we’re at.”

The only thing that may have changed from 2006 until now besides Panza’s job (he’s now senior vice president for the New York Racing Association) is the money involved. At the time Panza speculated a Triple Crown winner would be worth more than $100-million, but that was during the mid-decade boon when horses like Strong Contender could stand for $20,000 on debut, and that money (along with Thoroughbred Times and Hollywood Park) is gone (and Strong Contender himself is now in Indiana standing for $3,000).

Coolmore’s deal for American Pharoah’s breeding rights started at $8-million guaranteed and allegedly caps at $15-million, but it’s impossible to value the colt without knowing what percentage of the horse the farm is acquiring. Ahmed Zayat always stays in for a piece, which is most often between 25%-75%. I don’t think it’s in the higher end of the range for this deal, so my sense is that American Pharoah is worth between $20- and $30-million with a Triple Crown sweep.

And if you don’t think a post Triple Crown loss or hiccup can hurt a horse’s value, Pletcher has an answer for that too, as he experienced it with 2005 Travers Stakes winner and Breeders’ Cup Classic runner-up Flower Alley, who returned for a four-year-old campaign in 2006 and failed to win a Grade 1.

“[Flower Alley] probably was worth somewhere between $12-million and $14-million,” Pletcher said. “His owner Eugene Melnyk is a sportsman and wanted the horse to stay in training, and he is in the business to watch his horses run, but it was a situation where it really didn’t work out, and it probably cost him somewhere in the neighborhood of $6-million-to-$8-million. The horse’s value decreased that much because he didn’t have a good year.

“I can’t blame anybody,” Pletcher said. “We want to see horses stay in training; we want to see starts, but if they have a horse that’s in a situation where they can capitalize and hit a home run, it’s hard for me to tell them not take advantage of that.”

American Pharoah is the ninth dual classic winner this century. Among the previous eight, only the gelding Funny Cide and California Chrome raced as four-year-olds while Smarty Jones, Afleet Alex, and I’ll Have Another never raced again.

History is kinder to Triple Crown winners, however, as only 1943 winner Count Fleet failed to race past the Belmont. Will American Pharoah? It’d be nice, but I don’t think it’s likely. But I said the same thing about California Chrome last year even after he failed to win the Triple Crown, and he's run five times since! Sometimes I'm wrong, you know.