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PR Special Keeneland September: How Canadian Consignors Are Navigating Uncertain Times

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It's opening day of the bellwether Keeneland September Yearling Sale, and the Paulick Report has the insight and analysis you need in today's edition of the PR Special newsletter.

In this edition, bloodstock editor Joe Nevills checks in with Canadian-based consignors Bernard McCormack and David Anderson to see how the restrictions surrounding COVID-19 have affected how they'll sell horses during the September sales and beyond.

This issue's Stallion Spotlight features Mark Toothaker of Spendthrift Farm discussing Cross Traffic, the leading freshman sire of his class. Dr. Bart Barber of Rood and Riddle Equine Hospital offers his opinion on the medication policies implemented by sale companies in Ask Your Veterinarian, and we look at the young sires already making an impression in the prestigious Book 1 of the Keeneland September Sale in Young Sire Watch.

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Thanks as always to the advertisers who made this issue of the PR Special possible:

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An Authentic Milestone in the Hughes Adventure

Revolutions start in the street. But it’s only once they have taken over the citadels, and adapt to the trappings and opportunities of power, that you can judge their ultimate success.

In transforming the stallion business from the bottom up, B. Wayne Hughes was aptly faithful to his own origins. The son of an Oklahoma sharecropper, he remembers a Grapes Of Wrath migration from the Dust Bowl to California with a mattress strapped to the family jalopy. He also remembers local hostility to the incomers: not least because the “Okies,” being there to work, would give full value for a day’s wage. And it was pretty much the same when he shook up the Kentucky breeding industry with radical incentive schemes for Spendthrift clients. Rival farms complained that matching his concessions would be unsustainable; would take them beyond the brink.

But Hughes felt he only needed to strike gold once, on a proliferating roster of blue-collar sires, to redeem the cost of giving them all a chance. And he promptly hit a truly historic seam. Last week, Into Mischief answered the last remaining question about his prowess: would better mares stretch his trademark speed sufficiently for him to become a bona fide Classic influence?

The signs had been promising. His cheaper books had produced Owendale and Audible (out of a Gilded Time mare) to finish strongly for Classic podiums. And remember that even Authentic, who has now set a spectacular seal on his rise, graduates from one conceived at $45,000. In the meantime, of course, Into Mischief has received giddy annual hikes to $75,000, $100,000, $150,000 and $175,000, in step with his elevation through ranks 35, 13, four and one in the general sires’ championship.

But if Authentic’s Derby is another momentous chapter in the epic Hughes tale, not least in his evangelical embrace of a mass ownership syndicate, then the course of the narrative was already clear. Before last year’s Derby, remember, Hughes had done much the same as he did this time round, with Authentic: he had booked a place at Spendthrift for the fastest colt on the Classic trail. In the event, Omaha Beach (War Front) was a late scratch as Derby favorite and instead won two Grade I sprints. But he was able to start at $45,000, the highest for any new stallion since Hughes bought the farm in 2004.

Spendthrift’s other recruits for 2020 included Breeders’ Cup winners Vino Rosso (Curlin) and Mitole (Eskendereya), at $30,000 and $25,000 respectively. Only two other farms managed to launch a stallion at Mitole’s fee (Audible at WinStar; Catholic Boy (More Than Ready) at Claiborne). In other words, you could have paid the three highest fees in the intake without leaving Spendthrift.

We’ll see what their remaining track endeavors can do to protect Authentic and also Vekoma (Candy Ride {Arg}), from the icy economic winds that must surely curl up stallion fees in 2021. But Vekoma is the third winner of the stallion-making GI Met Mile to arrive at the farm in four years. The next phase of the Hughes revolution, then, seems plain for all to see: he appears convinced that a model developed with cheaper stallions is going to prove no less effective at the top of the market.

Back in 2010, nine lucky breeders signed a Share The Upside contract for Into Mischief when–needing traction in his second season, just as the last recession was biting–an investment of $13,000 across two seasons secured a lifetime breeding right. Two years later, when Spendthrift started seven new stallions on a roster of 15, Malibu Moon still stood apart at $70,000; the average fee for the rest worked out at $9,250. By 2016, Malibu Moon was up to $95,000 and Into Mischief to $45,000; and the 23 other sires now on the roster averaged $6,900.

Young stallions were being launched with discounts and incentives on such a scale that by 2018 one prominent farm owner confided that he felt it no longer viable to stand a stallion for $10,000 or less in Kentucky. How, then, will this gentleman feel about Spendthrift rounding up so many top-class prospects?

Doubtless he has hitherto been among those who had pictured Nashua and Raise A Native turning in their graves as their “pile-’em-high” successors went to market. In the meantime, however, other commercial farms in Kentucky have meanwhile been eager to imitate the iconoclast, in the process creating precisely the kind of trading environment Hughes sought for people he views as the backbone of the industry; people he felt were previously being taken for a ride. Now he is extending opportunity–the key concept for his stallions and clients alike-right across the market.

Hughes loves to plow his own furrow; and certainly doesn’t mind ruffling Establishment feathers. His original appeal was to the kind of small-time player he had once been himself: both in his business life, where he and a partner put up $25,000 apiece to found a storage firm eventually valued at $40 billion; and in his initial explorations of the Turf. Hughes cheerfully declares that he knows nothing about breeding. He can leave that to the estimable Ned Toffey and his team. But he does know business; and he also understands human nature, by no means an unrelated attribute. In the long term, settling for a smaller profit made business sense: give his clients a piece of the action, and they would keep coming back.

Hughes challenged the sport whether it was really going to persist in trying to resuscitate some Golden Age, when the top horses were shared by a handful of plutocrats. Hence his engagement, now, with MyRacehorse. And hence, also, the upgrading of his breeding shed.

In the end, he vows, even those farms defending the very pinnacle of the traditional market will be forced to emulate his example. “You pay a bunch of money for a stallion, it’s got the best chance,” he told me once. “But his chances aren’t 100 percent. And another guy’s chance isn’t zero… Some of the horses we put in are going to end up there. It’s happening.”

That was two or three years ago, and now perhaps we can say that “it” has happened. Last year, nine other farms tried for Omaha Beach. And now, at last, a tenth Kentucky Derby winner will soon be standing at Spendthrift.

Omaha Beach will certainly have covered over 200 mares in his first season. A soaring fee, after all, did not prevent Into Mischief covering 486 mares through 2018 and 2019. Obviously that landscape is beginning to shift, with the impending 140-mare limit. From Spendthrift’s point of view, it doubtless feels as though the old guard is circling its wagons. Personally, I’d be as concerned as The Jockey Club by the potential legacy, for the breed, of so many unproven, ostensibly “commercial” stallions commanding such huge books. For every Into Mischief, clearly, there will duds by the dozen.

Whatever your views, however, we could all tip our hats to Mr. Hughes last Saturday. He is an authentic pioneer. With a nod to the source of his fortune, you might well say that he thinks “outside the box.” And now, having changed our whole industry, he is changing the complexion of his own business. He is cornering stallions that would be a perfectly good fit for a venerable rival such as Claiborne. At the same time, he is parlaying those trademark principles of accessibility and inclusion to racehorse ownership.

Can we ever have too much of a good thing? Even if you’re as smart as Hughes, it’s in the nature of the Thoroughbred that we are unlikely ever to find out. But it’s interesting, and on many levels admirable, to see someone trying to find out.

The post An Authentic Milestone in the Hughes Adventure appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

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Taking Stock: Nyquist Off the Grade I Mark

Spendthrift purchased the breeding rights to Authentic before the Grade l Santa Anita Derby, and the $9 million kicker it agreed to pay Authentic’s former ownership group for winning the Gl Kentucky Derby is indicative of the premium that’s placed on a stallion prospect with North America’s most prestigious Classic on his resume. A front-running colt, Authentic has the right type of sire behind him as well. He’s by Spendthrift’s flagship stallion Into Mischief (Harlan’s Holiday), who cranks out graded stakes winners like nobody’s business, particularly sprinters and milers that are deadly up to a mile and a sixteenth. The stallion led the North American general sire list in 2019 and stood for $175,000 this year, and one of his first top sons to go to stud, Grade l winner Goldencents, also at Spendthrift, has started his career well enough–he was represented by Gll Alysheba S. winner By My Standards on the Derby undercard– to suggest that even brighter beginnings are in store for Authentic, his sire’s best racing son.

Stud farms want their prized first-crop horses to fly out of the gates early with 2-year-old winners and black-type runners and end their first seasons with a Grade l winner or two atop the freshman sire list. Darley’s Nyquist (Uncle Mo), who won the Derby in 2016, is on his way, currently leading all N.A. first-crop sires by progeny earnings after his daughter Vequist won the Gl Spinaway S. at Saratoga Sunday by 9 1/2 lengths. Another daughter, Lady Lilly, was third in the race. Before them, the Nyquist colt Gretzky the Great had won the Soaring Free S. at Woodbine in late August, putting Nyquist at the top of the list by number of black-type winners, too.

Like Authentic, Nyquist was also a fast colt who was probably better at shorter distances than a mile and a quarter, and he was more precocious than Authentic, who won his lone start last year. Nyquist, in contrast, won each of his five races at two, including three Grade l races: the Del Mar Futurity; FrontRunner S.; and Breeders’ Cup Juvenile. At year’s end, he was named the champion 2-year-old colt.

He carried his form into the spring, winning the seven-furlong Gll San Vicente S. at Santa Anita in a rapid 1:20.71 before taking the Gl Florida Derby at Gulfstream, which has turned into a better “sire-making race” than the Kentucky Derby itself. Since 1990, graduates of the race include proven and promising sires Unbridled, Unbridled’s Song, Harlan’s Holiday, Empire Maker, Scat Daddy, Quality Road, Dialed In, Take Charge Indy, and Constitution. In contrast, Street Sense and American Pharoah are the only Kentucky Derby winners who didn’t win the Florida Derby during this span that are comparable, but note that American Pharoah, despite a bunch of graded winners already, is still searching for his first Grade l winner with his first crop now three.

Nyquist won the Kentucky Derby next, and in retrospect, he had some fine horses behind him that day, including subsequent Classic winners Exaggerator (2nd; Preakness) and Creator (13th, Belmont S.), Horse of the Year Gun Runner (3rd; Breeders’ Cup Classic). Also included among Derby also-rans that day, Mohaymen (4th), Brody’s Cause (7th), Mor Spirit (10th), Outwork (14th), and Whitmore (19th), among others.

Note that both Brody’s Cause (Giant’s Causeway), now at Spendthrift, and Outwork (Uncle Mo), at WinStar, were represented by black-type winners over the weekend as well, Brody’s Cause with Glll Iroquois S. winner Sittin On Go at Churchill on the Derby undercard and Outwork with Samborella in the $150,000 Seeking the Ante S. at Saratoga a day earlier.

Arrogate, the colt who would be crowned champion 3-year-old of that year, was notably absent from the Derby field. In fact, on the day Nyquist won the Derby, Arrogate had made only one start, a third-place finish in a maiden special at Los Alamitos, and the careers of these two champions are studies in contrast. One was a fast and early developing colt whose career peaked as an undefeated Kentucky Derby winner of eight races, while the other made his name in 10-furlong races through the second half of his 3-year-old season and as an early 4-year-old before retiring as the leading N. American money earner. His first yearlings are selling now.

The Derby was the apex in Nyquist’s career. He had three more starts, never won again, and retired to Darley for the 2017 breeding season with a record of eight wins from 11 starts and $5,189,200 in earnings, and he brought plenty of cachet to the table for commercial breeders at $40,000 as a champion 2-year-old, early spring 3-year-old, and Kentucky Derby winner–exactly the race form both breeders and buyers look for. And like Authentic, he’s by the right kind of sire.

UNCLE MO

Nyquist was a member of Ashford-based Uncle Mo’s first crop and led a group of seven black-type winners for Uncle Mo that made him the leading freshman sire of 2015. That remarkable crop would eventually yield 25 black-type winners from 157 named foals, an exceptional 16%, and four Grade l winners, including Gomo, Unbridled Mo, and Outwork in addition to Nyquist.

To date, Uncle Mo is represented by eight Grade 1 winners through six crops of racing age (including 2-year-olds of 2020) versus seven for Into Mischief through nine crops, though in fairness to the latter, his first four crops contained only a total of 140 named foals.

Both stallions are clicking in high gear now, and this year Into Mischief is comfortably atop the general sire list, with Uncle Mo in third place. Into Mischief leads all stallions with 24 black-type winners, but Uncle Mo leads by number of graded stakes winners, with 12. Uncle Mo stood for $125,000 this spring.

Like Into Mischief with Goldencents, Uncle Mo’s sons are showing early life as stallions. Aside from Nyquist, with seven winners through Thursday afternoon, Outwork also has seven winners and a black-type winner and is in fifth place on the freshman list, and Uncle Mo’s less-heralded New York-based son at Sequel, Laoban, is in 12th with four winners and a black-type winner as well.

Uncle Mo was an exceptional 2-year-old, a man among boys both in physique and race class. He was a champion at two, winning the Gl Champagne S. by almost five lengths in 1:34.51 and the Breeders’ Cup Juvenile by a little over four lengths. Unlike Nyquist, he wasn’t able to make the Derby and had a spotty record at three in an abbreviated campaign, but his subsequent success as a stallion has repaired his reputation as a racehorse and put him among the best stallions in the country.

Nyquist, therefore, has quite a bit going for him, and yearling buyers responded to the Darley stallion at the sales last year, making him the leading first-crop sire with an average price of $225,061–more than five times his stud fee–for 49 sold from 66 offered.

Thirteen of those 66 yearlings, or about 20%, were from A.P. Indy-line mares, and so far Nyquist’s three stakes horses are from this group. Gretzky the Great, a $295,000 RNA, is from a Bernardini mare; Vequist, a $120,000 RNA, is from a Mineshaft mare; and Lady Lilly, a $280,000 sale, is out of a Pulpit mare. Uncle Mo himself has sired seven stakes winners on the cross, including Grade I winner Mo Town and two Grade II winners from Bernardini mares.

Because Darley also stands Bernardini, an exceptional broodmare sire for his age, this is a cross we’re likely to see more of in the future, because, believe it or not, Gretzky the Great is so far the only foal of racing age by Nyquist from a Bernardini mare.

The title for leading freshman sire will probably come down to the Breeders’ Cup races, as I noted in this space discussing Taylor Made’s Not This Time two weeks ago. His daughter Princess Noor also became a Grade l winner Sunday, winning the Del Mar Debutante like an exceptional filly, and the matchup with Vequist will be highly anticipated.

Of course, between now and then a lot can and will happen, but Nyquist couldn’t be in a better spot as the freshmen sires turn into the homestretch. He’s leading.

Sid Fernando is president and CEO of Werk Thoroughbred Consultants, Inc., originator of the Werk Nick Rating and eNicks.

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MyRacehorse Founder Michael Behrens Joins TDN Writers’ Room

As far as marketing for a nascent, unorthodox racehorse ownership venture goes, you couldn’t do much better than a horse carrying your silks into the Churchill Downs infield as the GI Kentucky Derby winner. That’s what Michael Behrens experienced Saturday, as Authentic (Into Mischief), bought into by his MyRacehorse microshare partnership in June, fought off favored Tiz the Law (Constitution) past the Twin Spires to earn the garland of roses. Wednesday, Behrens joined the TDN Writers’ Room podcast presented by Keeneland as the Green Group Guest of the Week to explain MyRacehorse’s business model and how the startup came to own one-eighth of a Derby winner.

“I am not from the racing world, I’ve been in ad tech and marketing my whole career,” Behrens said of his background. “Growing up in Southern California, Santa Anita was 15 minutes away and that’s where we went to decompress after crazy stressful weeks. Go out there with friends, have a couple of drinks and bet a few races. I just loved it as a sport, but was always very intrigued about how we can get more fan engagement. I started looking around and [found that] people who really were energized and excited about our sport were those that had some kind of interest in ownership, either through friends or a partnership, whatever it may be. And I just left that was where we could scale, where we could get mass adoption to appreciate the sport.”

MyRacehorse, which started as a pilot program in California, went national only last July. The company sells .001% microshares in Thoroughbreds with multiple shares available and returns that are deposited into owners’ accounts and can be withdrawn via its app. Previously acquiring stakes in Grade I winner Street Band (Istan) and graded stakes winner Lazy Daisy (Paynter), MyRacehorse stepped into the deep end when buying 12.5% of Authentic after the colt finished second in the GI Runhappy Santa Anita Derby. Behrens credits co-owner Spendthrift Farm’s B. Wayne Hughes with opening the door to that partnership.

“When I wrote the original business plan for this, I looked at the industry to try to figure out who had the personality, the DNA [for the idea],” he said. “B. Wayne Hughes, with his success in business and his innovation with breeding, I just loved his disruptive nature. I actually used to do marketing for Public Storage, one of his companies. I came out and took [Spendthrift General Manager] Ned [Toffey] through the idea. The next day, Mr. Hughes called me back in and we started talking. He wants the sport to continue to thrive and grow, so he loved the concept. We started partnering on a couple of deals and that relationship has only gotten stronger and stronger over time. Now he’s come in as one of our partners. Our relationship with Spendthrift and Mr. Hughes has been critical.”

Elsewhere on the show, the writers reacted to all angles of the Derby, GI Kentucky Oaks and the many impressive undercard and juvenile performances we saw this week. Plus, in the West Point Thoroughbreds news segment, they discuss the bankruptcy filing of Ahmed Zayat and wonder how it went south so quickly for the owner of the first Triple Crown winner in 37 years. Click here to watch the podcast; click here for the audio-only version.

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