THE THOROUGHBRED INDUSTRY IN EVOLUTION

SOME NEW RULES
“Extract from the desk of Bill Oppenheim”

Some things have changed an awful lot in the last 20 years in this business, and in this week’s column I’d like to talk about a few of them: what has changed, why have they changed, and how the business has responded, and is responding, to these changes. Of course, some things haven’t changed much, and we’ll talk about one or two of those, too.

Those of us who were working in the business in the 1980’s have to remember that anybody born in 1970 or later - that’s 40 years old this year and younger - didn’t live through the first Golden Age of the Thoroughbred sales, nor the crash of 1986-1992. It isn’t important that they didn’t know about the ups and downs of the marketplace and business until about the middle of 2007. No, what it means is our business’ thirtysomethings have never seen a time when North American racing was dominated by the big stables of owner-breeders (unlike those of us from previous generations), nor were they around when the Europeans and Japanese bought hundreds of well-bred mares in Kentucky, decimating the North American broodmare band.

For today’s thirtysomethings, the North American breeding market has always been a commercial one, especially given the doubling of stallions’ book sizes and, to some extent, dual-hemisphere shuttling. When they hear our generation talk about “great families,” they must scratch their heads and wonder why these families - if they are so great - have been producing so few top horses for the last 20 years. The two things just about have to be connected, it seems to me: few owner/breeders in North America, fewer still new “great families.”

Things have changed a lot in Europe, too. From having a handful of the best stallions in North America and Europe, they now have half of the top 20 available. Plus, there are a number of large, active owner/breeders with broodmare bands in the hundreds: the Maktoum family, of course, including Darley, Shadwell and Rabbah (surely well over a thousand mares among them); Prince Khalid Abdullah’s Juddmonte Farms; the Aga Khan; and even Coolmore, though they are half commercial breeders, too, since their primary objective is to stock Ballydoyle and associates with maybe a hundred two-year-olds a year, including what they buy at the sales. Breeders love to buy at the annual culls, from the Aga Khan’s and Juddmonte operations in particular.

Still, even though these big operations have broodmare bands in the hundreds, it seems to me these days it’s not so much a case of there being one or more families in particular that turn out class horses as if from a gusher. Rather, it’s more a matter of them having so many class mares, they produce a certain number of top horses. Breeders tend to buy because it’s “an” Aga Khan family, or “a” Juddmonte family, rather than a particular family or families, which is more what we used to talk about - the Rough Shod family, the La Troienne family, and so on.

What Yearling Buyers Want…

During the first Golden Age of the Thoroughbred marketplace (1978-1985), yearling buyers would roughly weigh three factors of relatively equal importance: the sire, the dam’s side, and the yearling’s conformation. It wasn’t so much that they were weighted equally, but that any of the three factors could be a reason for throwing the horse out. Then came the crash of 1986-1992, when many top pedigrees went into private hands or were exported to Japan.

Coupled with the decline in owner/breeders in North America (which was then producing twice as many foals as Great Britain, Ireland and France combined), by the time we arrived at the Second Golden Age (1998-2007), the nature of one of the three factors had changed: there were fewer truly good first dams in yearling pedigrees. Over the last decade, buyers increasingly concentrated on the sire and conformation. Whereas previously the ratio of factors for “inclusion,” let us say, were 33-33-33, now they would be more like 40-20-40, the reduction coming in the importance of the first dam to yearling buyers relative to the other two factors. Yearling buyers, as a collective group, have made this abundantly clear over the past few years.

At the same time, within the context of its reduced influence, the pecking order on “the dam’s side of the page” also changed. A study carried out by Gary Hadden found that 29 percent of the dams of about 3,000 graded/group stakes winners in 1998-2003 were themselves black-type winners. When we compared those to the profile of racing fillies sired by two top broodmare sires of recent years, Alydar and Affirmed, we found that about 12 percent of their fillies were black-type winners. We have seen independent research which comes up with a similar 12-percent figure. So, the fact that as high as 29 percent of the dams of graded winners were themselves black-type winners looks pretty significant.

What does this all mean in English? It means, if you’re a commercial breeder contemplating buying a mare, your best bet is to buy a black-type winner. It doesn’t mean she should only be a black type winner; breeding history is replete with outfits that banked solely on black type to the exclusion of other pedigree considerations, such as the mare’s sire and the mare’s actual female family. But the research does tell us that black-type mares (black-type placed, too, though not as strongly as black type winners) have moved up the value scale, and non-black-type mares, no matter how good their pedigrees, have moved down the scale. A non-black-type mare is not worth as much as a producer of commercial yearlings as she used to be. So whether it’s actually a good idea, financially, to spend hundreds of thousands of dollars on mares who could not get black type must be more open to question now than was the case 20 years ago. This may appear to be less the case in Europe than in North America because of these other factors we’ve mentioned, but I’m not entirely sure that’s the case, either.

What Euros Want…

Another huge difference between the Thoroughbred market in the 1980’s and the market now is the level of participation by European buyers in the North American (essentially, Kentucky) market.

Though they still constitute a significant portion of especially the upper reaches of the North American market, there is a powerful layer of European buyers below the Maktoums and Coolmore who are not active in North America, whereas 20 or 30 years ago half of them would have mares in Kentucky and be breeding to Kentucky stallions.

Part of the explanation, of course, is that the ratio of top 20 stallions went from something like 80-20 in favor of Kentucky to 50-50. European breeders now have much a much better group stallions to breed to - certainly just as good as the group in Kentucky - for European racing. But there’s something else, too, and it’s something really fundamental to the value of horses in the marketplace: Europeans do not understand North American black type below the graded level and, as a consequence, they do not have the confidence to invest in American black type like they used to.

I don’t think it is possible to underestimate the true influence of black type. It was the invention of black type in the 1950’s that resulted in the creation of a scale of value in pedigrees which - refined by the introduction of the Pattern of Graded and Group Races in 1972 - provided the very framework for the growth of the auction sales. These peaked at over $1.8 billion annually in North America and Europe in 2006-2007. I’m not saying it wouldn’t exist; I’m saying the creation of black type provides the framework from which specific scales of value can evolve.

The Europeans are right to be confused, because as it has evolved, there is a huge anomaly in the qualification for black type in favor of North America. To put it in a nutshell, there are three kinds of black type: graded (in North America) or group (in Europe) - Pattern Races; then there are listed races; finally, non-listed black type races. The shocking truth is this: in the major European countries - Great Britain, Ireland, France, Germany and Italy - there are no black type races below listed standard, according to the International Cataloguing Standards booklet issued by the IFHA (International Federation of Horseracing Authorities) for the year 2008. In North America in 2008, there were 1,890 black-type races, and 1,148 of them, or 61 percent, were non-listed, black-type races - in other words, below listed class.

It’s no wonder Europeans can’t make head nor tail of American catalogues, and therefore lack the confidence to buy. Percentage of black-type races below listed class in Europe: zero; percentage of black-type races below listed standard in North America: 61 percent. In a racing population in Europe, if the top tier was 39 percent black-type, the tier below (which in North America is 61 percent of black-type horses) would be high-level handicappers, say horses with Official Ratings in Britain and Ireland of 100, maybe even 95. Europeans don’t consider these black-type horses because they’re below listed standard. But in America, about 1.5 times the number of horses which are listed standard and above are still black-type horses.

There is a devastatingly simple solution: instead of calling them listed races, change the name: call them Grade 4 in North America, and Group 4 in Europe. By adding the G4 option, we would all understand it much better. Europeans could simply see if black-type listings in a pedigree included any “G” designations; that would restore their confidence in the system. The Americans could continue to assign black type as they have, confident both that Europeans would understand North American black type much better, and that they themselves would, too. Of course, it would require a change, from Listed to Grade/Group 4, but all you’re doing is renaming a classification to make it more understandable for everyone.

One other matter cited by Europeans concerning their reluctance to buy in the U.S. is “the medication issue.” At least some European professionals harbor the view that racing on medication by definition signals a weakness in the breed, and therefore they are very wary of breeding to horses that have raced on medication. Since something like 99 percent of American horses now race on Lasix, it becomes a kind of “reducto ad absurdum” - an absurd argument - to ignore American breeding, which they already find confusing. But I would like to say this is a point of view which seems to me to have absolutely no evidence to support it.

For example, the following horses all raced on Lasix: Medaglia d’Oro (sire of two Group 1 two-year-olds in Europe last year); Elusive Quality (sire of Raven’s Pass and Elusive Pimpernel); Distorted Humor; Street Cry; Tale of the Cat; Lemon Drop Kid; and so on. There is one very good reason, even now, why Europeans should still be looking to the U.S. for horses to race in Europe: the success rate is high. America produces twice as many horses every year as the three top European countries combined, and a good many of them can run. The fact their parents raced on medication hasn’t changed things at all, as far as I can see; availability of sires and the pedigree issues I’ve discussed; might have. But the medication knock: can’t buy it. Not proven.

What Euros Got: Inbreeding to Northern Dancer…

This is an issue that seems to still be keeping bloggers, other pedigree buffs and professionals occupied: is there too much inbreeding generally, and is there too much inbreeding to Northern Dancer in particular? Brianne and I will be doing some further research on this in the next few weeks, when the new APEX numbers come out to include all 2009 racing, but in the meantime, I’ve been doing some work on the matter with a database of some 12,000 A Runners foaled 1996-2005, through racing of 2008.

These are very definitely limited measurements. We are measuring only within this population of 12,000, not taking into account what is called “opportunity in the general population.” This is a big thing with a lot of people now, how things ought to be measured against opportunity in the general population. I used to think it would be better if I could do that, but I don’t think so any more. As far as I’m concerned, the “general population” consists of 98 percent of horses that are not “A Runners” (top two percent earners), and two percent which are. I’m not sure I even believe it’s meaningful to compare one population to another essentially 50 times its size.

The other limitation on the information I analyzed is that the “inbreeding” is only “sire on damsire,” or what has also been called “first cross” data. Though this is the most frequently occurring form of inbreeding, there are many other combinations, especially involving the sire’s damsire and the second dam’s sire. I can’t count those - that’s a limitation of the system.

Even given those limitations, what I can count yields what seem to be to be impressive results. The incidence of “Northern Dancer over Northern Dancer” as a percentage of all Northern Dancer-line sired A Runners, by year foaled, 1996-2005, has increased from 13.2 percent among 380 Northern Dancer-line sired A Runners foaled in 1996 to 22.4 percent of the 566 Northern Dancer-line sired A Runners foaled in 2004, and 22.7 percent of the 409 Northern Dancer-line sired A Runners of 2005 (including just three-year-olds by the end of 2008, so the number of 2005-foaled A Runners will have increased significantly by the end of 2009). The percentage of “Northern Dancer over Northern Dancer” A Runners as a percentage of the entire population of A Runners foaled that year has increased from 4.3 percent (50) of the 1,151 A Runners foaled in 1996 to 9.3 percent (127) of the 1,371 A Runners foaled in 2004, and 9.6 percent (93) of the 967 A Runners (through the end of 2008) foaled in 2005.

Those trend lines tell us one thing: Whatever the theories, it is working. Is “Northern Dancer over Northern Dancer” nine or 10 percent of the whole population? I don’t know, and I don’t think I care. What I can see for sure is that, as a percentage of the annual population of new A Runners, the percentage has more than doubled in the last 10 years. How much faster could it possibly be expected to accelerate?

My conclusion: We shouldn’t even be discussing “Northern Dancer over Northern Dancer” any more, except as a sort of umbrella designation, like “Native Dancer” or “Nasrullah” are now used. Northern Dancer is so successful, so powerful, that it really has branched off into nine separate sire lines (in my classifications, one of those lines is actually “Nearctic other than Northern Dancer,” such as Explodent, Icecapade, and Wild Again. Even though it’s historically incorrect, because Nearctic was also Northern Dancer’s sire, that’s the way I classify it). Of the nine, Danzig, Sadler’s Wells, and Storm Cat/Storm Bird are the most active; Nureyev and Deputy Minister/Vice Regent may or may not survive as active sire lines. Nijinsky, Lyphard, Nearctic, and miscellaneous Northern Dancer (includes the likes of The Minstrel and, more recently, Dixieland Band) are very unlikely to survive as sire lines. In any case, it’s time to stop talking about Northern Dancer over Northern Dancer and start talking about, for example, Danzig over Sadler’s Wells - a cross that didn’t even exist in 1996, but had 39 A Runners through the end of 2008, including 11 foaled in 2004. The “cross index,” at that point, came out at 2.39, when 1.00 is average.

Well, I could keep going: the myth that a horse has to be a Grade/Group 1 winner to “really” count for something (Grade/Group 2 winners: Distorted Humor, Pulpit, Dansili); and what really hasn’t changed: prizemoney. The Irish figured out a couple of years ago that prizemoney could be funded by a two percent commission, ring-fenced for that purpose, on all bets, regardless of who placed them; how they were placed (what platform); and where. The endemic problem in this industry is still that the buzz is at the sales, not the racetrack: the tail is still wagging the dog. Ultimately, the industry can only grow by attracting new owners, and an obvious way to attract new owners is to improve prizemoney to the point where owners have a fighting chance, instead of having to accept a desultory return. But that’s another subject. In the meantime, I persist in believing the best strategy for success, or at least the best shot at success, in this business is to see things how they are, not how they used to be, or how we wish they would be. Happy New Year.

www.thoroughbreddailynews.com

THIS IS IRRESISTIBLE

GODOLPHIN ARABIAN

The world of racing is as well served in its intellectual contributors as any business in the world (if not better so), and we all have our favourites. Bill Oppenheim is the best commentator on sales and the stallion business known to us, Andrew Caulfield is an excellent pedigree analyst, and the man who pricks our fancy most of all when it comes to family matters, because he has a deep-seated passion and arguably one of the most attractive styles anywhere, is Tony Morris.

While this is quite a long story, his piece in the European Bloodstock News last week needs publishing. Read it; you’ll love it.

EARLY RETIREMENT NO BAR TO SUCCESS

It’s an ill wind that blows nobody any good, they say, and the annals of Thoroughbred breeding provide plenty of examples to illustrate the truth of the old maxim.

Was it really a fact that the Godolphin Arabian got to cover Roxana only because another stallion, Hobgoblin, for some reason did not fancy her? If the tale is not true, it ought to be, and I prefer to believe it. But for that mating, which resulted in the top class runner Lath, the Godolphin may never have become what we now know he was, namely, the most important horse ever imported to England.

Nearer our own time we know for certain that the only reason that Natalma was covered in 1960 was the injury that ended her racing career shortly before she had been due to contest the Kentucky Oaks. She was sent to Nearctic simply because her owner had that young stallion at home, and she was just the sort of well-bred mare who might help to promote him.

The result of that mating was, of course, Northern Dancer, and now that he has become almost ubiquitous in pedigrees throughout the world, we have to think that the damage to his mother’s knee, considered calamitous at the time, was both fortuitous and timely. It was a key moment in the development of the breed.

Hibaayeb, whose status was upgraded from maiden to Group 1 winner by virtue of her success in Ascot’s Fillies’ Mile on Saturday, is one of countless top-level performers with a pedigree in which Northern Dancer is doubly represented – in her case at the fourth generation through her sire’s paternal grandsire, Sadler’s Wells, and her dam’s maternal grandsire, Fabulous Dancer.

But another apparently ill wind that blew plenty of good is to be found in the filly’s tail-female line. In the normal course of events there would have been no mating in 1966 to result in the production of her fourth dam, Oh So Fair.

These days we do not often encounter the name of Graustark in pedigrees, and we do not even see much of his illustrious sire, the unbeaten and unbeatable Ribot, except in the descendants of Danehill, whose dam Razyana, ironically, was by Graustark’s far inferior full brother, His Majesty.

Ribot’s male line has been in eclipse for a while now, but that development was scarcely imaginable in the 1960’s and early 1970s, when he twice headed the sires’ table here and was routinely prominent in the North American list. He had an exceptional performer in Molvedo in his first crop, and a string of celebrities followed, among them Romulus, Ragusa, Prince Royal, Tom Rolfe, Ribocco, Ribero, Arts and Letters, Ribofilio and Boucher – all of them Classic winners or of Classic caliber.

Nobody could have guessed that, of those top-class sons, only Tom Rolfe would establish a branch of the male line – through Hoist the Flag – and that even that would seemingly be heading for oblivion within a couple of generations. And for some time there was another son, who, while he did not have the chance to fulfill apparently enormous potential at the track, was held in the highest regard as an athlete and afforded excellent opportunities at stud. He certainly had his moments as a sire, only to earn notoriety as a woeful sire of sires.

That horse was Graustark, and he was decidedly different from the vast majority of the Ribot production line. Most were hard bays and not precocious but, given time, were capable of top-class form over middle distances; essentially, they were stayers with a turn of foot.

Of the nine named above, two (Molvedo and Prince Royal) won the Prix de l’Arc de Triomphe, and four (Ragusa, Ribocco, Ribero and Boucher) won the St Leger. Tom Rolfe was a middle-distance performer, proficient on both dirt and grass, while Arts and Letters won at the top level from a mile (Metropolitan Handicap) to two miles (Jockey Club Gold Cup), with the mile and a half Belmont Stakes in between.

Ribofilio was notorious for being the beaten favourite in four Classics but he basically conformed to type, and really ought to have won the St Leger. Romulus was the odd man out, a miler who finished second in the 2,000 Guineas, but was later successful in the Sussex Stakes, Queen Elizabeth II Stakes and Prix du Moulin de Longchamp.

Graustark, a chestnut whose only marking was a faint star, was different again from Romulus – a flying machine from the outset whose morning work so excited the clockers that he started at odds of 1-5 on his debut. Next time out his victory was taken for granted, and no betting was allowed. His third run at two came in the Arch Ward Stakes at Arlington Park, and the supposedly tougher competition gave him no trouble; he trotted up by six lengths. But he came out of the race with sore shins and was not seen in action again until the new year.

Meanwhile he was named second-best of his crop on the Experimental Handicap, 2lb below Buckpasser.

In the spring of 1966, Braulio Baeza, regular rider of both Graustark and Buckpasser, declared the former to be the best three-year-old he had ever ridden. Who knows whether he was right?

In fact, things soon went wrong for the pair of them. Buckpasser picked up a quarter crack that prevented his starting in any of the Triple Crown events, but he did come back to dominate the rest of the season, winding up as champion three-year-old and Horse of the Year.

Graustark also failed to make the Triple Crown for, having extended his unbeaten sequence to seven and gone into the Blue Grass Stakes as hot favourite for the Kentucky Derby, he came out of it second by a nose to Abe’s Hope, and with a branch fracture of the coffin bone that brought his career to an abrupt and premature end.

Graustark stood 16.3 hands and was never entirely sound, but such was his reputation that he was promptly syndicated for stud duty at a world record valuation of $2,400,000. The price suggested that many saw him as a colt unluckily deprived of Triple Crown glory.

In the normal course of events, Graustark would have retired to Darby Dan Farm in 1967 or perhaps even 1968, but that hefty syndication price meant insurance implications, so when fit enough to cover after recuperation from his injury, he was given a couple of test mares to establish his fertility.

One of the mares selected for that purpose was the impeccably bred Chandelle, a daughter of Swaps out of Nasrullah’s full sister Malindi, and the outcome was the bay filly Oh So Fair, who won a ten-furlong maiden at Phoenix Park on her third and final start, having twice finished second as a juvenile.

That, of course, was no big deal, but at stud Oh So Fair produced a string of winners, beginning with the four-times Pattern winner Roussalka (Habitat) and peaking with Oh So Sharp (Kris), the last heroine of England’s distaff Triple Crown. There were also a couple of full sisters to Roussalka, one being the 1,000 Guineas runner-up Our Home and the other unraced Oh So Hot.

Roussalka was to become the third dam of Guineas heroine Ameerat (Mark of Esteem), while Oh So Sharp earned distinction as dam of Rosefinch (Blushing Groom), winner of a Prix Saint-Alary, and grand-dam of St Leger victor Shantou (Alleged).

Now Oh So Hot earns recognition as third dam of Hibaayeb, the latest prominent runner to emerge from a potent family branch which would not have existed, but for an event which seemed catastrophic when it occurred.

SHADAI FARM : The Legacy Of Another Genius

In a remarkable coincidence, at one of our morning management meetings (these take place every day at 6:45 am, and are attended by 16 of the farm’s management team, some of whom drive all the way from places as far afield as Pietermaritzburg, Howick, Estcourt etc, we were involved in a discussion about Japan’s Shadai Farm. It arose because of a correspondence between ourselves and Katsumi Yoshida, (son of the late, great Zenya). Katsumi Yoshida is the owner of Northern Farm, current Champion breeders in Japan, where Mick’s son, Chris has spent the past 2 ½ years. Katsumi is a friend of Summerhill’s, and he was so impressed with Mike de Kock’s famous victory with Eagle Mountain in the Hong Kong Cup (Gr.1) a fortnight ago, that he’s asked us to facilitate a visit to Mike’s South African stable, taking in Summerhill en-route.

As so often happens in these instances, we began to reflect on the achievements of the most famous of all Japanese breeders, Katsumi’s late father, Zenya Yoshida, founder of Shadai Farm. The conversation turned to the first really important stallion to stand in Japan, a son of Northern Dancer by the name of Northern Taste, and we proffered the suggestion that he couldn’t have been a terribly expensive horse, notwithstanding his bloodlines, because of the somewhat ghostly appearance of the horse’s face, whose white-splashed blaze eclipsed his left eye. Truth is, horses don’t run with their eyes, nor with their blazes, and Northern Taste was a stalwart in Europe, where his most famous victory included the Prix de la Foret (Gr.1) contested over the 1400 m of Longchamp’s fabled racecourse.

Northern Taste went on to secure ten National Sires titles in Japan in eleven years, and has been the perennial champion broodmare sire ever since. Just last weekend, the Arima Kinen (Gr.1), as important as any race in Japan outside the Japan Cup (Gr.1), was taken by Daiwa Scarlet, a granddaughter of the most famous of all Shadai stallions, Sunday Silence, from a Northern Taste mare, and this story was reported in the American Thoroughbred Daily News within hours of our conversation at the morning meeting. Coincidentally, the story of Northern Taste’s acquisition is revealed in full, and Andrew Caulfield, as good as they get in the pedigree field, felt compelled to share his thoughts on Daiwa Scarlet’s pedigree.

“Northern Taste, a son of Northern Dancer bred by Windfields Farm, raced in the colors of the late Zenya Yoshida after being bought as a yearling for $100,000 in 1972. This was a comparatively modest sum for a youngster whose sire was responsible for such as Nijinsky, Fanfreluche, One For All, True North, Northfields, Lauries Dancer and Alma North in his first few crops. I suspect that Northern Taste’s price might have been inhibited by his markings. His broad white face extended just beyond his left eye, and his flashiness also included two lengthy socks. Perhaps would be buyers also had qualms about his being inbred 3x2 to Lady Angela, even though this famous mare numbered Nearctic among her many winners.

Needless to say, Northern Taste proved an excellent buy, becoming a Group 3 winner at two before developing into a high-class performer at up to a mile at three, when he took the G1 Prix de la Foret. He also finished fifth in the Derby on one of the rare occasions he ventured beyond a mile, so it was no great surprise that he went on to sire winners of the Japanese Derby and Oaks and even of the two-mile Tenno Sho (Spring).

He was Japan’s champion sire 10 times in an 11-year period, and his success laid the foundations of the Shadai Farm empire which flourishes to this day.”