The dismantling of Zayat Stables' equine stock in order to pay off a multi-million dollar trail of debt has spanned months of public and private transactions, and the latest stop on that road once again proved that the perception of value can vary wildly between a seller and the marketplace.
Six horses under Zayat ownership were offered Monday at the Fasig-Tipton July Horses of Racing Age Sale, bringing a combined $337,000.
The same group of six horses were valued at a combined $3.5 million in an assessment of owner Ahmed Zayat's equine holdings submitted to creditor MGG Investments in mid-December 2019 as a liquidation plan to pay off a $23-million loan and stave off a lawsuit. MGG ultimately filed suit in late January over allegations that Zayat had defaulted on the loan, and Zayat's equine operations were placed in the hands of a third-party receiver to maximize income for paying off creditors through racetrack earnings and liquidation of the stable.
A lot can happen in seven months to fluctuate the value of a Thoroughbred, and assigning valuation to a horse is far from an exact science, but bringing in 9.62 percent of assessed value through the sale ring is a remarkably wide gap in opinion.
In comparison, six Zayat horses were offered in February at this year's Fasig-Tipton Kentucky Winter Mixed Sale with an estimated value of $1.9 million, and just four of the six finished above reserve for a combined $366,000 – about 19 percent of the estimated total. One mare, offered in-foal to American Pharoah, accounted for $310,000 of that total amount.
Though the chasm between hopeful assessment and market reality for the July offerings was Grand Canyon-sized, the explanation for the far-flung differences goes far beyond the extremely generous valuations.
First, there is the issue of timing. One method of assessing value to a Thoroughbred is through income projection – basing their worth on their opportunities to achieve in the future as much as what they already have achieved.
This is the most apparent among the July offerings in Salow and Zyramid, a pair of colts who were 2-year-olds at the time of the assessment. Both colts are well-bred, meaning a stallion career would be easily attainable with a few graded stakes wins, especially on the Triple Crown trail or in the Triple Crown races themselves. Every 2-year-old in December is a potential lottery ticket with a few fortunate bounces, and their respective seven-figure values reflect that potential.
Fast-forward to July, and many of the doors that were open seven months ago are now closed, as many of the elite 3-year-old races have been run. Even with the Kentucky Derby and Preakness Stakes pushed back into the fall due to COVID-19, the opportunity to become a Triple Crown winner already left the station without either horse even in the gate for the race, and past form suggests a monumental jump in form would be needed to join the elite in their class.
Salow, a 3-year-old son of Distorted Humor, was ultimately the centerpiece of the Zayat slate at the July sale, going for $175,000 after winning on debut in a Gulfstream Park turf race on July 3. Zyramid, on the other hand, has been winless since last year's Saratoga meet and sold for $20,000, tied for the lowest of the group.
Though his value took a hit due to the opportunities that are no longer available to him, Salow was the rare horse in the Zayat dispersal to offer some semblance of blue sky on his resume, with his 2 3/4-length debut win.
This brings about the second point toward the price gap in the dispersal offerings – the horses didn't do much to help themselves in the time between the assessment and the sales.
None of the horses were stars before or after the December assessment, but just 27.6 percent of the six horses' combined $199,545 in career earnings at sale time came after the assessment. This is with two of the horses being unraced at the time of the valuation, and another two having raced just once. Four of the six entered the sale as maidens. Whether an assessor is basing their valuation on comparative value with other horses with similar resumes or by earning potential, the projection is going to take a dive as the spring rolls into summer.
This was most apparent in the case of Super Sol, a 5-year-old Awesome Again horse who was valued at $500,000 in the December assessment. It was a generous figure for a horse with no black type whose only start of 2019 came on Jan. 6, and he just made his 2020 debut during the recent Keeneland summer meet, where he finished last in an optional claiming race.
Working in his favor was a bit of back class. The horse won two races in a row in Southern California during his 3-year-old season, breaking his maiden by four lengths and taking a Los Alamitos Thoroughbred meet optional claimer by three lengths.
Super Sol went on to sell for $30,000.
Zyramid also had one of the longer resumes of the group, winning once and making 88 percent of his lifetime earnings before the December assessment. He was tried in the Grade 2 Saratoga Special Stakes and G3 Iroquois Stakes, but finished well off the board on both occasions. His 3-year-old season started with a distant third in an Oaklawn Park allowance, followed by far-back out-of-the-money tries at Oaklawn and Lone Star Park.
Salow was the only horse in the group to earn five figures post-assessment, making $24,000 for his maiden score. That victory alone made the colt the fourth-highest earner for the Zayat Stables operation in 2020.
Rounding out the group were Mony, Perlman, and Paynted, a trio of 4-year-old lifetime maidens who were valued from $300,000 to $400,000 in December, and sold at a high point of $60,000 (Mony) and a low of $20,000 (Paynted).
Mony, a son of Scat Daddy, has shown the most upside of the group. In addition to being a son of Scat Daddy, whose foals have become increasingly scarce and sought after following the sire's untimely death and the Triple Crown success of son Justify, Mony most recently finished a gaining second in a Gulfstream turf maiden special weight on July 5.
One final factor that's important to note in the review of the dispersal against its original valuation is intent.
Several of the horses pointed for the July sale in the December assessment have since been sold privately, including River Boyne, who found new owners after winning the G2 San Gabriel Stakes in January. He was valued at $750,000 in the assessment, at which point, River Boyne had never won a graded stakes race.
There is a strong likelihood that the horses that were pointed toward the July sale and made it all the way to the ring were ones where attempts to move on from them privately were unsuccessful. In that case, the open market becomes the most efficient way to turn the horses into cash, even if it's for pennies on the dollar from where they were appraised.
The post Analysis: Fasig-Tipton Racing Age Sale Marked Latest Chapter Of Lengthy Zayat Stables Dispersal appeared first on Horse Racing News | Paulick Report.
