Derby Favorite Scratched 24 Hours After Breeding Rights Sold For $22 Million

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Twenty-Four hours after Spendthrift Farm acquired the breeding rights to Kentucky Derby morning-line favorite (4-1) Omaha Beach for $22 million, the horse was scratched from the 145th run for the roses. Trainer Richard Mandellas raised concerns about the 3-year old’s health on Wednesday morning after the horse began coughing. An examination discovered that Omaha Beach has entrapped epiglottis, a condition “that compromises a horse’s ability to breathe during exercise.” It’s unclear if Spendthrift Farm was aware of the medical condition before finalizing the deal for Omaha Beach’s career at stud earlier in the week. While the ailment is not expected to be career ending (expected recovery time: 2-3 weeks), the timing of it is unfortunate; all 3 Triple Crown races will take place over the next 5 weeks. Game Winner has since been installed as a 9-2 favorite in tomorrow’s (5.5) race.

Howie Long-Short: It’s not atypical for breeding rights to be sold before a horse is retired, but it is odd that a deal would be consummated so close to the running of the Kentucky Derby – transactions typically occur before a horse’s 3rd year (those deals include contingencies for future wins) or once an owner has gained the leverage of a Triple Crown victory. Ahmed Zayat sold the breeding rights to ’15 Triple Crown winner American Pharaoh before the horse began running as a 3-year-old; bonuses in that deal brought its total value to $35 million by the time Pharaoh went out to stud. Last year, WinStar Farms waited until Justify captured both the Kentucky Derby and Preakness Stakes to sell the horse’s breeding rights; Coolmore Stud ultimately paid $75 million, including a $15 million escalator once Justify became just the 13th horse to capture the Triple Crown of Thoroughbred Racing. It’s worth noting that the price of stud rights to an elite race horse have actually declined over the last 20 years; Coolmore Stud paid $70 million ($103 million in 2019 dollars) to control the breeding career of Kentucky Derby winner Fusaichi Pegasus – after the Belmont Stakes (horse did not race) – back in 2000.

The Action Network’s Darren Rovell reported that a victory in the Kentucky Derby would boost a horse’s value at stud by “at least $15 million”, so even if Omaha Beach were to return to form in time for the Belmont Stakes (with surgery imminent he’s going to miss the Preakness Stakes in 2 weeks) the opportunity lost this weekend is significant. As for owner Rick Porter, he’ll miss out on the chance to capture the richest purse ($3 million) in Derby history. The $3 million that will be paid out is $1 million more than last year’s purse and twice as much as the Preakness Stakes or Belmont Stakes ponied up (pun intended) last year. Early returns from Churchill Downs’ (CHDN) investment in historical racing machines (think: slots with outcomes based on completed races) enabled the publicly traded racetrack and casino to “pump more than $10 million into its spring purses in the first year of operation.”

Fan Marino: This will come as a shock to many of you, but horse racing is popular with Gen-Zs (those who have been to Saratoga, Monmouth Park or Del Mar recently can confirm). It’s not the action on the dirt (or turf) that is drawing them in though – it’s the “craving for Instagram-able experiences” that is leading Gen-Zs to spend a day at the track. Mark Beal, the author of Decoding Gen-Z, said the demographic “loves the venues. They love the excitement. They love that they can dress up and socialize, but most importantly they love that they can capture it all in video and in photos and share it.”

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Author: John Wall Street

At the intersection of sports & finance.

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