JC / Railbird

Valuing Curlin

From a November 3, 2007 Courier-Journal article by Greg Hall assessing Curlin’s potential value:

“If I had to guess, an educated guess, I would think somewhere between $60 and $70 million,” [Rick Porter, owner of Hard Spun] said. “All I know is what some of his competitors sold for, and he sort of towered over all of them when it was all said and done.”

Louisville native Jack Wolf, a partner who sold 2004 Kentucky Oaks and Breeders’ Cup Distaff winner Ashado for $9 million at auction, said he guessed Curlin could be worth $45 million.

Ric Waldman, an adviser to Overbrook Farm where Storm Cat stands, declined to give a figure, saying he had done some work for Jackson.

But “it would be extremely large numbers when you take into account that there is a racing future for the horse,” he said.

The same Ric Waldman, hired as an expert witness by the court-appointed receiver overseeing the 20% interest in Curlin not owned by Jess Jackson, testified in court today that,

he initially valued the horse in August at $30 million [for the receiver or another party?], but because of thoroughbred market downturns and the economy, he reduced that to $20 million.

Quite a difference a year makes. Jackson “agreed with Waldman’s assessment by bidding $4 million” for the remaining interest in the reigning Horse of the Year. Sounds like a bargain, especially for a stallion who is expected to stand for $75,000 to start.

Update: Matt Hegarty has more on the cross-examination of Waldman, in which he stuck to his figures, but did question the possible $75K stud fee given current market conditions.


12 Comments

Bargain of the year.

I have a lot of problems with the way the “market was tested” and the horse was “valued.” I don’t know how much support they’ll find for the $20 million figure. At any rate, Tandy’s attorney and the phen fen plaintiffs’ attorney will raise hue and cry Dec. 1. Unfortunately I will be in class, or I’d be there.

Posted by Kerry on November 17, 2008 @ 5:45 pm

Hi Jessica.

I am quite surprised to see this mega valuation of Curlin. I am no expert in how valuations are made but one thing lingers in my mind.

Curlin is a dirt bred horse and dirt tracks are beginning to diminish slowly but surely. The prizes will begin to depart from dirt tracks and maybe i’ll guess in 5 years time the AW and turf breds will gain an ascendency.

Santa Anita (Oaktree) was i think a promise of things to come and it comes round for a second go next time. Who therefore may wish to buy a dirt bred horse out of Curlin or his ilk?

Posted by Bill Milburn on November 17, 2008 @ 6:03 pm

I’d love to see someone (who’s better at math than me) do a comparison of what Curlin would have been worth had he retired last year vs. now, factoring in his earnings this year + expenses.

And then of course I’d love it even more if it showed that it can be just a lucrative, if not more so (a girl can dream!) to keep the top 3yo colts in training (if no harm befalls them and perform well).

Posted by dana on November 17, 2008 @ 8:26 pm

Through the do-it-all influence of Mr. Prospector and terrific turf genes via the late Maryland stallion Smarten, Curlin’s sire Smart Strike produces abundant winners on all surfaces (a deserved bow to Deputy Minister has not been forgotten). While likely not as formidable as he is on dirt, Curlin certainly can run his tail off on the turf. Losing to Grand Couturier, who won major turf stakes races after their meeting this year, is no disgrace. According to statistics in Bill Finley’s new book “Betting Synthetic Surfaces,” Smart Strike wins with 14.14 percent of his first-time synthetic track starters with 39.39 percent in the money and a fat $3.00 ROI. His overall record through 2007 shows a 15.92 percent win rate on the stuff with 41.40 percent in the money and a $2.59 ROI. Play against those numbers at your own risk. These days, the word “ilk” is used in a derogatory manner, and I would suggest that Curlin and others like him, that would pass on characteristics of dirt runners, will find an eager market for their babies as long as they run fast.

p.s. — Dirt racing isn’t going anywhere; bank on it.

p.p.s. — Why couldn’t Finley have posted his lengthy stallion list in alphabetical order, where it would have been useful for on-the-fly handicapping. As is, it’s as if every stallion was named “Waldo.”

Posted by John S. on November 17, 2008 @ 10:18 pm

A couple-few things.

1) Bill: As long as the Kentucky Derby and to a lesser extent the Preakness Stakes and Belmont Stakes are all on dirt, then dirt breeding will never be out of vogue even if every other track in the country went synthetic.

2) As for Dana’s comment, Ric Waldman testified that Curlin had been appraised in August at $30-million but that the economy hurt his value since then despite two Grade 1 wins.

3) To point 2, I think Ric’s testimony indicates what a “house of cards” stallion valuation can be. Big Brown was valued at $50-million based on what Three Chimneys paid for its share, but he’s standing for $65,000 (obviously he lost value too just as Curlin did). Curlin is valued at $20-million and the same person who made that appraisal said that he could stand for $75,000.

4) As John already pointed out, Smart Strike is incredibly versatile. English Channel anyone?

5) As John already pointed out, Finley’s book is great, but the way he sorted the stallions was just beyond silly. It’s hardly a useful tool now.

Posted by EJXD2 on November 18, 2008 @ 9:14 am

Housekeeping: John, Ed, made a couple edits to your comments. No problem with the fixes, I hope.

Kerry, terrific point about the market breakdown in your post Monday.

Bill, John and Ed make the points I would have, but better. About all I can add is that in addition to versatility and speed, Curlin offers breeders soundness and durability. He came back from Dubai to win, and I can’t remember an instance over two years in which he missed a race or any training due to injury.

Dana, are you asking how much was gained or lost over a year of racing as opposed to breeding? If so, I think Jackson almost certainly lost money this year. If we assume $75K for 120 matings (Waldman’s figures, consistent with estimated 2007 numbers in the first article cited), Curlin would have made $9M in the breeding shed this year. Instead, he made $5.2M in purses (if he had won the BC Classic, that would have been closer to $7M), against which would have to be subtracted insurance and training expenses. Unfortunately, without bonuses and bigger purses for older horses, for a colt like Curlin it would have made more financial sense to retire at the end of the last year. (Thanks, Jackson, for not doing that.)

Posted by Jessica on November 18, 2008 @ 10:42 am

What edits did you make?

Also, Jessica, are you sure Jackson “almost certainly lost money this year”? If Curlin made $5.2 million in purses, I’d say he probably made money, just not as much as he might have in the breeding shed. This is the logic killing the newspaper industry: Even though a lot of papers make a profit, it’s not ENOUGH profit for Wall Street, so critical staff winds up getting the axe to up profits that are already healthy. A digression, I know, but you can’t say Jackson lost money with Curlin, or am I missing something.

Posted by John S. on November 18, 2008 @ 11:48 am

Thanks Jessica, that’s what I assumed.

Although I’m still not clear on Waldman’s assessment of $75k @ 120 matings being based on what Curlin is worth this year or what he would have been valued at last year had he not raced this year. Not that I’m expert in these matters but last year Street Sense was $75k and Hard Spun was $50k… would Curlin have been the same price as Street Sense or somewhere in between the two?

Not that it would have mattered that much. Let’s say last year he would have been $60k @ 120… he would have earned $7.2M in the shed. Had he won the Classic this year that’s about even until you subtract insurance, training, shipping, entry fees, etc. If nothing else it’s a compelling case for more financial incentives to keep 4yo colts in training.

Posted by dana on November 18, 2008 @ 12:02 pm

PSS to PPS, deleted Ed’s pet peeve re: PSS.

I guess it all hinges on what Jackson paid for insurance, since that would have been the biggest expense to keeping Curlin in training this year, right? (Where’s Patrick when he could be helpful? He actually had a conversation a couple months ago with Jackson’s attorney re: the cost of the colt running in 2008.) Still, you’re both probably on to something in that Curlin possibly not only recouped expenses but made money with his earnings and that there’s a case to be made for creating incentives to race older horses.

Posted by Jessica on November 18, 2008 @ 12:48 pm

I think it’s safe to say that Curlin would cover 120 mares, but not all those mares would bring revenue.

Jackson would breed some of his mares to Curlin and then you’d have other arrangements such as syndicate mares, foal shares, etc.

Jackson estimated the cost of standing Curlin at Stonestreet would be $1.1-million. Ric Waldman said that was high, so for the sake of argument, let’s call is $750,000.

Of the 120 mares that go to Curlin, let’s say that half pay the stud fee of $75,000. That gets us to $4.5-million in revenue less $750,000 in expenses and the profit is about $3.75-million.

Now, obviously, there are other benefits. Jackson’s assets increase in value while his mares are in foal to Curlin, etc., but I just wanted to stress that it’s not as simple as “mares times stud fee”

Posted by EJXD2 on November 18, 2008 @ 2:15 pm

Thanks, Ed. I figured it couldn’t be as simple as mares x fee, but didn’t know what all was involved. That info is very helpful.

Posted by Jessica on November 18, 2008 @ 3:00 pm

20 million. Wow. They valued me at a case of Budweiser. 20 million? Wow. I thought the 1 case was good. I shoulda had a better agent, shucks.

Posted by pete on November 19, 2008 @ 9:07 pm