Bloomberg News

I’ll Have Another Win Would Turn $35,000 Into $10 Million

June 08, 2012

A win at the Belmont Stakes for I’ll Have Another to make him the first Triple Crown champion in 34 years might turn $35,000 into $10 million for his owners with even more money spread around the industry.

The colt, bought by J. Paul Reddam as a 2-year-old, would be able to command as much as $40,000 in stud fees or about $5.2 million annually in the first two years, said Baden P. “Buzz” Chace, a bloodstock agent who buys and sells horses for clients. Once his offspring prove their running ability, I’ll Have Another would become an even higher-priced stallion, Chace said.

Winning thoroughbred racing’s biggest prize means more money for everyone from the jockey, who gets more rides since he won a Triple Crown, to the owners of I’ll Have Another’s sire, who already have doubled his stud fee. Las Vegas sports books are expecting double the bets taken a year ago.

“There’s more riding on this than the purse,” said Nick Nicholson, 64, president and chief executive officer of Keeneland Association Inc., the largest horse-auction house. “The financial implications of his breeding career are much greater. He’s got the kind of pedigree that would give him a shot to reproduce himself.”

I’ll Have Another, winner of the Kentucky Derby and Preakness Stakes, will become the first Triple Crown winner since Affirmed in 1978 with a victory at the Belmont Stakes at Belmont Park in Elmont, New York, tomorrow. As the 4-5 morning- line favorite in the race for 3-year-olds, he leaves from the 11th gate in the 12-horse field.

“He doesn’t have the strongest bloodlines around, but people will offer to buy in for the breeding rights if he has won the Triple Crown,” said Chace, 70, who bought Unbridled’s Song for a client in 1994 for $200,000 and watched the horse’s value increase to $40 million because of a successful racing career and being sired by 1990 Kentucky Derby winner Unbridled. “He’ll be a superstar.”

Rising Price

Winning the Belmont means the horse “will start at $3 million, $4 million and could go up to $10 million,” Chace said. I’ll Have Another, then called Cheetos because of his chestnut coat, was initially bought for $11,000 in 2010 by Victor Davila, a lead rider at Eisaman’s Equine Service in Williston, Florida.

“The valuation will skyrocket from what it was two years ago,” Nicholson said. “It’s not unlike picking a stock. Then it was like getting, instead of a proven Apple or Berkshire, a young start-up.”

Case Clay, president of Three Chimneys Farm in Lexington, Kentucky, where I’ll Have Another’s sire, Flower Alley, stands, said he has spoken to Reddam several times. Although he said Reddam probably will continue to race the thoroughbred as long as he remains healthy, “we told him we love his horse.”

Horse’s Future

Reddam didn’t return a message left at CashCall Inc., his Anaheim, California, company that makes mortgage and short-term loans. The former philosophy professor made his fortune by selling subprime mortgage firm DiTech Mortgage Corp. to General Motors Co. in 1999 for $240 million.

Meanwhile, Flower Alley has doubled his fee to $15,000 since his offspring won the Preakness, said Clay, 38. The 10- year-old stallion has 138 mares scheduled, an addition of 63 since the Kentucky Derby as the breeding season winds down to the final month.

“He’s booked solid every day,” Clay said in a telephone interview.

The potential for revenue from breeding is almost limitless today, unlike when Affirmed began his breeding career three decades ago. At that time, the unofficial breeding limit was 40 mares.

“If you’ve got the money and got the mare, you get to the horse,” Nicholson said.

Championship Premium

Flower Alley’s stud fee probably will rise again in November when the new prices are set, although Clay said he couldn’t predict what the market will bear. Dynaformer, the sire of Barbaro who started his breeding career at $3,500 and died this year at the age of 27, commanded $150,000 a mare last season.

“I’m sure there will be some sort of Triple Crown premium,” he said. “A lot depends on what Flower Alley’s other horses do.”

I’ll Have Another has earned almost $2.7 million in purses with the potential to add $600,000 in the Belmont. As a stallion, he will mean “a payday for decades” for trainer Doug O’Neill and jockey Mario Gutierrez who historically each share in breeding rights, Nicholson said.

“Immediately, the quality of mares he gets and his father gets will dramatically get better and better, giving them a shot to produce athletes,” Nicholson said. “Undoubtedly, the largest potential is the breeding fees could go on for two decades.”

Jockey’s Cut

Guttierez, 25, earned $202,500 for winning the first two legs of the Triple Crown, 10 percent of the horse’s overall take, and will make an additional $60,000 if I’ll Have Another completes the Triple Crown sweep. In his career, the jockey’s purse earnings total over $12.7 million, according to the Daily Racing Forum.

“If he rides this horse to the Triple Crown, he’ll be a star, too, as long as he keeps his manners,” Chace said. “It will give him exposure in New York.”

In Las Vegas, Jimmy Vaccaro, the director of sports operations at Lucky’s Race and Sports Book, said the state’s sports books will double their bets from a non-Triple Crown year. Nevada gaming officials don’t track total wagers on the Belmont Stakes.

Endorsements aren’t usually in the works for race horses, said Bob Dorfman of Baker Street Advertising in San Francisco.

“It’s not like Tiger Woods who makes a few million for tournaments and tens of millions for endorsements,” Dorfman said. “It’s a different financial setup where money comes from breeding.”

Still, it depends on if the colt wins.

“Everything in this business is about potential,” Chace said. “Anything can happen.”

To contact the reporter on this story: Nancy Kercheval in Washington at nkercheval@bloomberg.net

To contact the editor responsible for this story: Michael Sillup at msillup@bloomberg.net


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