The Power of One:

Our Emblem illustrates the dangers of paying excessive stud fees based on the performance of one runner.  Similar phenomenon may be at work this year

with Giant's Causeway.

     It was the fall of 2001 and Claiborne Farm had all but given up on the regally-bred Our Emblem as a viable prospect for the upcoming 2002 breeding season.  Though highly-touted upon his retirement as a grade one racehorse with                 Our Emblem

an impeccable pedigree (he was sired by the legendary Mr. Prospector and was out of Breeder’s Cup champion and Broodmare of the Year Personal Ensign), Our Emblem had struggled early as a sire and showed no signs of making a turnaround.  The only thing lower than his percentage of stakes horses from foals was the demand that Claiborne anticipated for his services in 2002.  Accordingly, Our Emblem was exiled out of Central Kentucky to the welcome arms of Maryland breeders.

                                                                                                Giant's Causeway

     Fast forward to June of 2002. Our Emblem’s atypical son, War Emblem, had captured two legs of the Triple

"... how many investors did the market

lose as a result of shelling out $30,000

for a sire who's yearlings averaged

$14,983 at the 2004 sales?"

Crown and were it not for an infamous stumble at the start of the Belmont, very likely would have been the first Triple Crown winner since 1978.  Although Our Emblem’s numbers hadn’t improved when examined collectively, he had accomplished something even more important: He had sired a headline grabber, stirring the emotions of mare owners who quickly generalized War Emblem’s success onto the remaining progeny of Our Emblem.

     Our Emblem was whisked back to Kentucky prior to the 2003 breeding season, this time under the tutelage of Taylor Made Farm and Win Star Farm.  Now commanding a $30,000 stud fee (he had stood for just $4,000 in Maryland), Our Emblem attracted a book of 92 mares.

     Unfortunately for those who made the $30,000 investment in 2003, War Emblem was retired and the luster surrounding Our Emblem quickly faded.  His percentage of stakes winners from starters remains conspicuously low (4.4% as of this writing) and his 2004 yearling average was less than $15,000, resulting in a 2005 advertised fee of $10,000, though his seasons are being traded publicly through agent’s web sites for as little as $5,500.  It certainly doesn’t take an economist to understand the trap that 92 mare owners fell into during the 2003 breeding season. Just as important, how many investors did the market lose as a result of shelling out $30,000 for a sire who's yearlings averaged $14,983 at the 2004 sales?

     The story of Our Emblem illustrates the importance of perspective and how mare owners can so easily fall prey to the hype generated by a single runner.  In this case, simply understanding that War Emblem was the exception, and not the norm, could have prevented the enormous losses that breeders are sure to realize when they take Our Emblem yearlings conceived in 2003 to the yearling sales this summer.

     Mare owners may be in the midst of a similar situation this year with Giant’s Causeway.  Already raised once this year from $135,000 to $150,000, Ashford has again raised his fee, this time to $200,000 after Noble Causeway’s impressive second-place finish in the Florida Derby.  A further look reveals an eerie likeness to the Our Emblem debacle.

     Even with an undefeated European juvenile champion and a promising American three year old, Giant’s Causeway has a long way to go before he can be a legitimate contender at the $200,000 level.  From 84 starters, he has just 4 stakes winners (4.7%), which is especially alarming since many of Giant’s Causeway’s progeny have been campaigned in Europe where there is a disproportionately high number of stakes opportunities.  Most alarming however, is that the median earnings for Giant’s Causeway’s progeny are a paltry $2,787 per runner.  Think about it.. from his first 84 starters, 42 of them have bankrolled $2,787 or less.  Even when taking lower European purses into account, this is a disturbing and potentially prophetic figure. 

     On a much smaller scale, we saw the same phenomenon this year with Claiborne’s management of Out of Place.  On the heels of Sort It Out’s Whirlaway victory and potential pursuit of the spring classics, Claiborne quietly began advertising their son of Cox’s Ridge at $10,000, up from the $7,500 he had begun the 2005 breeding season.  Sort It Out quickly faltered, and Out of Place is again being advertised at $7,500. 

     California breeders are also witnessing this phenomenon as mare owners line up in droves to breed their mares to Atticus, a sire with abysmal overall numbers who is fortunate enough to be the sire of leading Kentucky Derby candidate High Fly.  In a recent interview, Atticus’ connections said they expect to breed 80+ mares to him this season, no doubt many of them being booked after High Fly began grabbing headlines.

     It’s important here that we refrain from demonizing the stallion farms.  In this country, we operate in an open market, and stallion managers have the right and a responsibility to their shareholders to capitalize on whatever the market is willing to pay.  The rest of us adhere to the same economic policy every day, whether we’re selling stocks, or a used car. Seldom do any of us walk away from a higher price based on principle, and neither should stallion farms.  If we’re to point a finger, it should be pointed at the self-appointed experts who advise their clients down a similar path.  It is the responsibility of these experts to provide that crucial perspective and help their clients make decisions based on an entire set of data, not a single headline.