To Sell or Not to Sell ?
To Sell or Not to Sell?
Although it’s hard for the smaller racehorse owners and horse racing syndicates to compete with the likes of Coolmore and Godolphin on a consistent basis, horse racing is a sport where it is possible to mix with the elite and beat the big boys. One of the best examples was Sir Percy who, in 2003 as a weanling, was bought for 20 000 guineas by Anthony Pakenham as compensation for losing a National Hunt Horse. In a career which lasted from July 2005 to June 2007 he ran ten times, winning five including the Dewhurst Stakes, and was one of the leading British two-year-olds in 2005. In the following year he recorded his most important success when winning The Derby at Epsom.
However, with the purchasing power of the big owners here in the UK and abroad, especially Hong Kong, America and Australia, where prize money eclipses the UK, it’s understandable that smaller owners may be tempted to cash in on their prized asset at the sales. We faced this dilemma with Surrey Thunder, who as a three-year-old came 5th in the Group 1 German Derby, won a listed race in France and accumulated career winnings of over £77,000. After some lengthy discussions, the majority decision was to sell and the owners were rewarded at the Tattersalls Horses in Training Sale when he was sold for £300k to continue a racing career with Chris Waller in Australia. Not bad for a horse that cost £65,000 and supports the fact that horses with ability and potential can be worth three to ten times their yearling price after they have won well.
However, financial reward is not the main driver for many owners, who do not view racehorse ownership as a business. For them it is a passion and the chance to live the dream. Those lucky enough to have a potential star performer in their racehorse syndicate will always have to ask the question of when is the right time to sell, if at all? Sell too early and you could miss that dream win, wait too long and you run the risk of a permanent dip in form, injury and the inevitable drop in value and disappointment. Regardless of the quality, owners understandably get attached to their horses, so the decision to sell becomes a tug-o-war between heart and head. It is important therefore that any syndicate has a clear strategy.
Flat Racing Horses
As a general rule, we believe the end of a three-year-old career is the right age for owners to seriously consider whether to sell their a horse. In our experience, more times than not, the sensible decision is to sell. The value of racehorses, especially colts, are highest when their form is on an upward curve and they are considered not to have reached their full potential. A flat racing thoroughbred is generally thought to hit its peak at four years old and so selling as horse after a successful three year old season maximises its sale potential and still gives the owners a couple of years at the racecourse to enjoy the success of their horse. It also has the benefit of reducing the risk of a long term injury, which tends to happen as horses get older, particularly with the breeze up horses, who are pushed harder earlier in their careers than yearling purchases.
The situation is a little different with fillies, as their value can continue to rise as they get older, especially if they are well bred with plenty of black type in their page. Good performing, hardy fillies make perfect partners for the very best stallions and they don’t need to be superstar performers to substantially increase in value from their original purchase price. We would always discuss with the other owners whether to sell or keep a filly in training at the end of her three-year-old career, but it is fair to say that there is more justification for keeping a filly in training for an additional year, or even keeping her for breeding purposes. When buying a young racehorse, we always take into consideration the fact that well bred fillies have the potential to retain some residual value.
NH Horses
Typically, NH owners are in it for the long haul and are less inclined to be looking to make profit on their purchase. An obvious reason for this is that the vast majority of male horses are gelded and therefore have no stud value. However, equally important, is the fact that NH horses do not reach their peak in terms of racing ability until they are eight or nine years old. As most NH horses in a syndicate are likely to have been bought as a four or five year-old, this demands a more patient approach.
However, this does not mean a NH horse cannot make money and that the opportunity to sell a NH horse for a profit will never arise. For those with deep pockets, the opportunity to buy a young racehorse in training, who may be capable of winning a prestige event like the Cheltenham Gold Cup or the Grand National, provides the owners of a promising horse with the chance to profit from a sale.
The situation with NH mares is even more attractive for potential buyers because of the breeding potential. Anyone owning a mare with black type is in a privileged position and it is not unusual for a Cheltenham winning mare to fetch £250,000 - £500,000 at the sales. As yet, Surrey Racing has not sold a NH horse, but with Gran Luna showing such early promise and the Dawn Run Mare’s Novice Hurdle at the Cheltenham Festival the target for this season, the possibility of receiving a substantial offer is a real one. If that were to be the case there would likely be a very lively discussion between the owners on whether to go for further glory or cash in on a horse that cost £45,000 less than two years ago. What a nice decision to have to make!