What determs how commercial a stallion will be.. I've been looking at:
[1] Albert The Great. Winner of more than $3 million with a stud fee of $7,500 and an average sales price for his 2 YO at $14k on 2006 and $16.2k in 2007
[2] Mizzen Mast winner of $554k with a stud fee of $15,000 and an average 2 yo sales price of $182k//
Why does a stallion with a far less impressive race record demand twice the fee and why does his get sell for 10 times as much ?
I'm sure there are many other examples of this but decided to stay with these two
griff
Commercial Stallions
Moderators: Roguelet, WaveMaster, madelyn
Commercial Stallions
"We has met the enemy and he is us" [Pogo]
Hi Griff,
“Now you’ve gone and done it!” (Sharon Stone in Total Recall when Arnold Schwarzenegger realizes that he’s been set-up by her.
This is a can of worms
, but a worthy question.
Two adjectives, Perception and Hope, drive the commercial market.
It’s not just the race record, but how, where and when the winning was done (to the tune of Subterranean Homesick Blues, by Bob Dylan, Highway 61 Revisited). Winning early, at big tracks, impressively (and or) by large margins and with gaudy speed numbers has value that’s amplified by pedigree and conformation to create commercial appeal.
The sire line is a large factor in setting stud fees especially when there’s the perception that the stallion’s get will have residual value in the breeding shed. Success in getting 2yos quality winners is a large amplifier. If a stallion prospect’s racing aptitude agrees with expectations then it will be seen as a positive.
Albert The Great hit his racing potential later in his 3yo year and that’s not precocious enough for commercial breeding and his sire line has lost most of its’ commercial appeal since Pleasant Colony died. Mizzen Mast was a bit unusual for his sire line, stakes placed at 2, ability on turf and dirt, with sprinter speed that he could carry a route. Their conformation, pedigree and the way that their foals look all add to the equation.
The old rule of thumb was to take the stallion’s yearling sales average, subtract $5,000 (or $10,000) and divide by 2 for the stud fee. Thus a $50,000 sales average would be @$20,000. This doesn’t seem to be the case any longer but it makes the point that stud fees are generally based (once foals are of saleable age) on sales success.
Stallion prospects are evaluated for the fee that it’s felt that they can support along with share prices that are usually based on the fee that is set.
The performance element of a sire comes later but many of the conditions that set their fee either higher or lower will still affect their fees even after they’re established.
Hope that helps.
Regards,
Pete
“Now you’ve gone and done it!” (Sharon Stone in Total Recall when Arnold Schwarzenegger realizes that he’s been set-up by her.
This is a can of worms
, but a worthy question.
Two adjectives, Perception and Hope, drive the commercial market.
It’s not just the race record, but how, where and when the winning was done (to the tune of Subterranean Homesick Blues, by Bob Dylan, Highway 61 Revisited). Winning early, at big tracks, impressively (and or) by large margins and with gaudy speed numbers has value that’s amplified by pedigree and conformation to create commercial appeal.
The sire line is a large factor in setting stud fees especially when there’s the perception that the stallion’s get will have residual value in the breeding shed. Success in getting 2yos quality winners is a large amplifier. If a stallion prospect’s racing aptitude agrees with expectations then it will be seen as a positive.
Albert The Great hit his racing potential later in his 3yo year and that’s not precocious enough for commercial breeding and his sire line has lost most of its’ commercial appeal since Pleasant Colony died. Mizzen Mast was a bit unusual for his sire line, stakes placed at 2, ability on turf and dirt, with sprinter speed that he could carry a route. Their conformation, pedigree and the way that their foals look all add to the equation.
The old rule of thumb was to take the stallion’s yearling sales average, subtract $5,000 (or $10,000) and divide by 2 for the stud fee. Thus a $50,000 sales average would be @$20,000. This doesn’t seem to be the case any longer but it makes the point that stud fees are generally based (once foals are of saleable age) on sales success.
Stallion prospects are evaluated for the fee that it’s felt that they can support along with share prices that are usually based on the fee that is set.
The performance element of a sire comes later but many of the conditions that set their fee either higher or lower will still affect their fees even after they’re established.
Hope that helps.
Regards,
Pete
Has a palomino jean that pop up some.
This stallion is DNA ... all foal can be MBNA inrolled.
Horses like their credit cards. - Four Forty Farms
This stallion is DNA ... all foal can be MBNA inrolled.
Horses like their credit cards. - Four Forty Farms
Thanks Pete.
I actually understand your stud fee calculation but I still can't figure out what determines what buyers will pay for a first crop 2 YO..
Fir example Yankee Gentleman has a $10k fee and did not do anything until he was three and then only had a 10/4/1/0 with $202k in winnings. Yet his avearge sales for 2 YO is $140k while a $3 million winner and sire of Nobiz like Showbiz has a 2 YO average of $16k..
It can not all be Storm Cat bleed through, or can it.
griff
I actually understand your stud fee calculation but I still can't figure out what determines what buyers will pay for a first crop 2 YO..
Fir example Yankee Gentleman has a $10k fee and did not do anything until he was three and then only had a 10/4/1/0 with $202k in winnings. Yet his avearge sales for 2 YO is $140k while a $3 million winner and sire of Nobiz like Showbiz has a 2 YO average of $16k..
It can not all be Storm Cat bleed through, or can it.
griff
"We has met the enemy and he is us" [Pogo]
With Mizzen Mast, he comes from a superior female family who has produced stallions, was himself a very versatile runner, and more importantly, is throwing foals that look terrific.
Even though he was stakes-placed at 2, most buyers are waiting for them to do their best at 3. As 3 year old's, he now has his first stakes winner, Moonee Ponds, who I was the under-bidder on.
I expect very good things from Mizzen Mast. He's actually been more commercial than I expected him to be.
Even though he was stakes-placed at 2, most buyers are waiting for them to do their best at 3. As 3 year old's, he now has his first stakes winner, Moonee Ponds, who I was the under-bidder on.
I expect very good things from Mizzen Mast. He's actually been more commercial than I expected him to be.
Stud Fees and how prices are initially set always gets me shaking my head. Sometimes I think about the stallion business like the stock market and apply pricing logic in the same manner. Everybody wants in on a hyped IPO, but not for the long term investment. Stock prices are established by companies, but the value of a stock is quickly set by buyers. Two comparable companies can offer a similar product, but one is favored because of Ownership, Management, Geographic location, and a host of other factors. There is also this giant thing called "wall street" and when the "wall street " machine gets down on a stock there is no bottom low enough and when "wall street" supports a stock the sky is the limit.
If you have been watching whats happening in the LA stallion market you've probably noticed a sharp increase stud fees. The LA State TB incentives have driven up the cost of a stud fee.
So study the market, hook up with your financial advisor, and make sound investments for your short or long term goals.
If you have been watching whats happening in the LA stallion market you've probably noticed a sharp increase stud fees. The LA State TB incentives have driven up the cost of a stud fee.
So study the market, hook up with your financial advisor, and make sound investments for your short or long term goals.
habitat
I'm not that familar with the LABRED stallion incentatives but the WVBRED STALLION INCENTIVES ACTUALLY INCOURAGE PROPLE TO BRING IN GODD STALLIONS AND STAND THEM AT VERY REASONABLE FEES.
I think the PABRED program is offering similar stallion incentives which should encourahe more good stallions to be brought into that state; i.e., it can be very rewarding for a stallion to produce say 50 runners and recieve 10%+ of their winnings year after year after year.
griff
I'm not that familar with the LABRED stallion incentatives but the WVBRED STALLION INCENTIVES ACTUALLY INCOURAGE PROPLE TO BRING IN GODD STALLIONS AND STAND THEM AT VERY REASONABLE FEES.
I think the PABRED program is offering similar stallion incentives which should encourahe more good stallions to be brought into that state; i.e., it can be very rewarding for a stallion to produce say 50 runners and recieve 10%+ of their winnings year after year after year.
griff
"We has met the enemy and he is us" [Pogo]
Grif
This is a great question. Some additional food for thought:
Stallion Ave EPS Median AEI CI
Mizzen Mast 25370 10097 0.95 1.58
Albert the Great 32334 15288 1.17 1.29
Many studies of thoroughbred pricing include a factor for Kentucky bred in the equation. http://www.agecon.uga.edu/~jab/Library/f01-06.pdf
It would be interesting to hear everyone's opinion about what this factor actual involves but suffice it to say that it exists. In many ways the regional market, which lacks the dominating influence of 10%'ers so prevalent in KY, operates much more rationally.
My $0.02
Chuck
This is a great question. Some additional food for thought:
Stallion Ave EPS Median AEI CI
Mizzen Mast 25370 10097 0.95 1.58
Albert the Great 32334 15288 1.17 1.29
Many studies of thoroughbred pricing include a factor for Kentucky bred in the equation. http://www.agecon.uga.edu/~jab/Library/f01-06.pdf
It would be interesting to hear everyone's opinion about what this factor actual involves but suffice it to say that it exists. In many ways the regional market, which lacks the dominating influence of 10%'ers so prevalent in KY, operates much more rationally.
My $0.02
Chuck
Griff,
Initially you may be right, but eventually lucrative state programs will raise the value of the Stud fee in that state for the stallions you really want to breed with.
For Example, LA is attracting stallions as the plan hopes will happen. Lion Tamer will now stand in LA for 5K. Afternoon Deelites the long time leading sire in the state raised its fee from 4K (?) last year to 5K by 9/1 and 5.5K when live foal is born. Without the LAbred program would Lion Tamer have ended up in LA? Would his fee be 5k? Would Afternoon's fee have been raised anyway? I am just speculating but this is my opinion of what's happening.
Initially you may be right, but eventually lucrative state programs will raise the value of the Stud fee in that state for the stallions you really want to breed with.
For Example, LA is attracting stallions as the plan hopes will happen. Lion Tamer will now stand in LA for 5K. Afternoon Deelites the long time leading sire in the state raised its fee from 4K (?) last year to 5K by 9/1 and 5.5K when live foal is born. Without the LAbred program would Lion Tamer have ended up in LA? Would his fee be 5k? Would Afternoon's fee have been raised anyway? I am just speculating but this is my opinion of what's happening.
The KY program only affects mare owners who keep their mares entirely in Kentucky. Unlike other state programs, it offers no stallion incentive funds.
It is interesting that they strove to keep mares in Kentucky, with no move to keep the stallions here.. perhaps the farms felt they had enough power and/or incentive to do that themselves.
But the KBIF WILL shake out the trees and the stallions whose offspring run and win will get the share of the mares from KY breeders, while the also-covers will be like fallen apples. My belief is that Rocking Trick will throw runners, so I thank the KBIF folks for making it possible for him to get the chance.
It is interesting that they strove to keep mares in Kentucky, with no move to keep the stallions here.. perhaps the farms felt they had enough power and/or incentive to do that themselves.
But the KBIF WILL shake out the trees and the stallions whose offspring run and win will get the share of the mares from KY breeders, while the also-covers will be like fallen apples. My belief is that Rocking Trick will throw runners, so I thank the KBIF folks for making it possible for him to get the chance.
So Run for the Roses, as fast as you can.....
WOW!!
You have to be careful when you ask for infomation on this board.. That www.agecon,edu-jab/Library/fo1-05.pdf article is way above my head. .
Thanks Cewright. I don't have a PhD bit I'll give it a couple of more trys.
griff
You have to be careful when you ask for infomation on this board.. That www.agecon,edu-jab/Library/fo1-05.pdf article is way above my head. .
Thanks Cewright. I don't have a PhD bit I'll give it a couple of more trys.
griff
"We has met the enemy and he is us" [Pogo]
Hi Habitat,
Nice post that reflects many of the qualities that shape stallion price AND success.
Farms build a history that can give you an idea of their past performance in making stallions.
Chuck, thanks for the link to the Steve's (Vickner and Kocj) paper on Hedonic Pricing, it was very entertaining but I think you could have made the same points in fewer words.
There's a bottom line, logic isn't very important in the setting of stud fees. Initial stud fees are based, like any other product, on what is believed to be the market demand.
Regards,
Pete
Nice post that reflects many of the qualities that shape stallion price AND success.
Farms build a history that can give you an idea of their past performance in making stallions.
Chuck, thanks for the link to the Steve's (Vickner and Kocj) paper on Hedonic Pricing, it was very entertaining but I think you could have made the same points in fewer words.
There's a bottom line, logic isn't very important in the setting of stud fees. Initial stud fees are based, like any other product, on what is believed to be the market demand.
Regards,
Pete
Has a palomino jean that pop up some.
This stallion is DNA ... all foal can be MBNA inrolled.
Horses like their credit cards. - Four Forty Farms
This stallion is DNA ... all foal can be MBNA inrolled.
Horses like their credit cards. - Four Forty Farms