The Business of Making Money with Horses
By
Don Blazer
Copyright
© 2002
Lesson
Two
Know
exactly what you are buying.
There are many breeds of horses.
As reported earlier, there are at least 142 active breed registries in
the
If you are already committed to a certain breed, fine. Stick to it. That breed can undoubtedly make you a great
deal of money, and richer still in other ways.
The price of Arabians once soared as if by magic. Maybe it was.
It is not the same today, but there is still plenty of profit in
Arabians. Morgans
are on a popularity roll. Peruvian Paso
imports and resale prices staggered the imagination a few years ago. Trakehners and warmbloods (imports of almost any kind) are very hot.
Opportunities abound!
Select any breed, and by following the advice outlined for most facets of
the horse business under consideration, you’ll make plenty of money.
However, it would be nearly impossible to gather and compile recent
statistics for each breed, since the data is overwhelming. Therefore, for the purposes
of this course, and because I follow my own good advice (go where the money and
information are most plentiful), I will use race horse (Quarter Horse and
Thoroughbred) statistics most often.
This doesn’t mean there aren’t other racing horses. Standardbreds are a
very big business indeed. Appaloosas are
running, and so are Paints, Arabians and mules.
And this does not mean this course pertains only
to race horses. You choose the breed;
the rules for making money with horses remain the same.
But as much as you might like a non-racing or other breed, and as much
as you might wish it weren’t true, it is true—the greatest flow of cash is in
Thoroughbreds and Quarter Horses. These
two breeds command huge prices as race horses.
In addition, they are extremely popular as show horses, trail horses and
sport horses.
I deal in Thoroughbreds and Quarter Horses because I like lots of money,
and I like it fast, and I like it easy!
The greatest number of public and private sales are
for Thoroughbreds and Quarter Horses.
The largest racing purses are for Thoroughbreds and Quarter Horses. The biggest prizes are for jumpers, cutting
horses, reining and western pleasure futurity horses, all dominated by
Thoroughbreds and Quarter Horses.
A word to the wise. Horses can make you a lot of money, and
always a lot faster when you ride them among the high rollers and free
spenders. (No matter
what breed or facet of the business you choose, never think cheap! The money is there, ask for it.)
I said you must choose the breed you like
best. So don’t despair. If you choose to stick with any breed other
than a Thoroughbred or Quarter Horse, the game—except for racing—is the same.
There is plenty of money to be made buying and selling weanlings of any
breed. There is money to be made owning
and standing a stallion of any breed.
There is money to be made owning and breeding broodmares of any breed. There is money to be make training horses of
any breed. There are riches to be made
trading all breeds.
The information offered in the following lessons is as applicable to one
breed as it is to another. So stick with
what you like best; you’ll be happier, therefore, eventually richer.
From this point forward, the statistics, the figures, the dollar
amounts, the samples all pertain to Thoroughbreds or Quarter Horses because
they are the easiest statistics to gather and the easiest to verify. (As I told you before, there are no made up
examples in the course; you can check the accuracy of the figures if you’ve a
mind to.) As long as the discussion is
not about racing, you need simply make a mental conversion from Thoroughbreds
and Quarter Horses to the breed you’ve chosen.
Inevitably ALL facets of
the horse business, just as all other businesses, involve BUYING
and SELLING.
Before you can buy and sell horses wisely, you must fully understand
that POTENTIAL is the only thing which makes
a horse valuable. The potential to make money
by winning purses, the potential joy of winning horse shows, or simply the
potential for pleasure found in owning a horse; that is what buyers buy.
Absolute nothing other than potential is important if horses are going
to make you money.
Once you have decided to concentrate your efforts on a particular breed,
you will want to become knowledgeable about the bloodlines, events, activities
and sales associated with that breed.
You must know what is “hot” and what is “not” within the breed
industry. You must know the factors
which create “potential.”
After the horse’s “eye-appeal”, the most important tool for recognizing
a horse’s potential to make money is THE CATALOG.
Every registered or purebred horse, even if he is standing in a backyard
in some out-of-the-way place, has a “catalog page.” The catalog page reports all the facts about
the horse’s family and accomplishments in a particular way. It is your responsibility to understand the
meaning, the sizzle, the weaknesses and the strengths indicated by the
information on that page. You, and you alone, must assess the page and make the final
decision on the horse’s potential to make you money. The people who make money can read “Money” in
the catalog page.
The more you know about a catalog page and the more information on that
page, the better the chances your decision will be profitable.
If you are buying a horse from a
private party, and no catalog page is offered, it is your responsibility to
contact the breed registry and dig out the needed information, then construct
your own catalog page for appraisal and later sales material. Do not buy until you have constructed a
catalog page. In some cases, an offered
catalog page may only be a sentence or two about the horse’s training or
talents. That is not enough. Only by knowing all about the horse’s
pedigree can you determine all the potential areas for profit. And don’t trust a catalog page which can’t be
verified. You can’t verify the
statement: “a sound gelding which will make anyone a wonderful trail
horse.” What you want to see is a list
of accomplishments—such as—won the All Around
Championship, Western World Show, 2002.
Before you buy any horse as part of your businesses, construct a catalog
page so you know exactly what potential you are purchasing.
If you don’t construct a catalog page for every horse you purchase,
you’ll be missing opportunities to make sales, which means missed opportunities
to make money. If you don’t construct a
catalog page for every horse you purchase, you’ll be missing opportunities to
make sales, which means missed opportunities to make money. If you don’t construct a catalog page for
every horse you buy or own, don’t blame me for your losses. It takes time, but you
must develop a catalog page for every horse you buy and every horse you plan to
sell.
While there is nothing wrong with buying a horse from a ranch or
breeding farm, there is usually a greater margin for profit when purchasing the
horse through a sale. For one thing, it
is much less costly to you to have a number of horses to choose from in a
central location. Second, you have no
personal expense in constructing a catalog page. Third, you must be more astute when buying
privately, since you are relying entirely on your own knowledge and
judgment. Most owners and breeders
overestimate the value of their horses, and consequently ask more for them than
they would bring at a sale. At a sale,
you also have the consensus of opinion to back up your appraisal, and that is a
major plus. Seldom will 20 or more other
professional horsemen overbid a horse.
When the bidding stops, that’s about what the horse is worth.
Approximately 20 per cent of the foals born each year, as well as many
older horses, are sold at auction through sales sponsored by private parties,
racing associations, breeder associations, individual breeders, show organizers
or companies exclusively in the horse sale business.
While horses purchased in sales do not necessarily perform any better
than those not in sales, you do have advantages by purchasing at auction.
Many of the sales are “select.”
Select sales require the horses being offered to have been inspected for
conformation and/or to meet some established criteria before acceptance. There are special sales for all breeds and
for various performance talents. In the
case of some yearling sales, the term “select” is almost a guarantee you won’t
get a bad horse. But it is also
practically a guarantee you will have to pay an inflated price. Why do “select” sales create higher
prices? Because the term “select” says
“more potential,” and potential is what buyers buy.
Don’t be afraid of the price of a horse with potential. A high-priced horse with potential will
resell at a still higher price, and a greater profit
for you.
For the best profit margins, it is best to buy at
sales and sell privately.
Catalogs are usually available
several weeks prior to the sale date.
You should obtain your catalog and study it thoroughly. Estimate the selling price of each horse
listed, mark it on the catalog page, and then compare it to the actual selling
price. Good buyers don’t miss by
much. Making a good buy is as important,
maybe more so, than making a good sale.
Studying the catalog carefully will facilitate your inspection of the
horses which interest you. In most
cases, the horses will be on the sale grounds a day or two in advance. In any case, you’ll have a chance to see the
horses hours before they go into the auction ring.
You should have each horse that appeals to you brought from his stall,
walked away from you and back to you, turned and trotted. Determine for yourself if the horse is lame
or travels sound. Ask the handler all
the questions you have concerning the horse’s health, training, disposition,
and his behavior since arriving at the sale.
Don’t believe much of what you are told, but ask! It is too late for questions after the hammer
falls. It is also surprising how much
you can learn from the idle chatter; listen carefully.
And give careful consideration to what you are not told. Most handlers will have a difficult time
lying to you, but remember, they are usually quite
good at not telling the complete story.
If it is a performance horse sale, make sure you attend the
demonstration session.
An auctioneer will often let a horse sell well below its true value, but
smart buyers—and there will be plenty—will seldom let a horse sell way above
its potential for profit.
Buying correctly at sales requires
experience.
You have to be attentive. Many
items on the catalog page may have been corrected, added to or deleted. It is your responsibility to get the
“updates.”
You should know when to start bidding on the horse you want and when to
stop. Don’t be the first to bid; let
other establish the early lower offers.
And stop bidding when the bidding reaches your estimated/acceptable
price. You can’t pay the full price of
the horse’s potential as you see it, or there won’t be room for your profit
margin. You should study how some buyers
“shut out” another bidder, and you should learn to catch sellers “running up”
bidders. Consignors often bid on their
own horses and quite frequently buy them back.
Don’t overpay by being caught in the excitement trap, or by allowing
your desire to get started now overshadow your business sense.
Many sales will have a medication list.
This reports all medications given to any horse in the sale. Be sure you check the list to see if horses
you are interested in have been given medication. If the sale does not have such a list, check
the “conditions of sale” in the front of the catalog to see what rights you
have in case you discover a horse you have purchased has been given a
medication.
Attend some sales just for practice before you actually start buying and
selling.
The sample catalog page which follows is typical of the form used in
major sales. Catalogs prepared in the
manner shown instantly give you an idea of the quality of the horse
offered. Some catalog pages are much
more difficult to read due to their organization.
Naturally, the wording in the sale catalog is contrived to present the
best picture of the horse’s pedigree and performance record. Understanding what is not mentioned in the
catalog, and learning to read between the lines will result in an even greater
competitive edge than simply reading what is shown.
You absolutely must understand what the omissions mean.
The catalog normally starts with a title page offering the date and
place of the sale. Several pages follow
which list the conditions of the sale, officials, a map of the sale location
and barns, a credit application, an agent authorization form, consignors,
sires, dams, reference sires, applicable state laws, and other pertinent information
particular to that sale.
Horses to be sold are listed one to a page. To insure fairness in positioning a horse in
the catalog, most sales maintain a certain order, changing each year or each sale. Fasig-Tipton, one
of the nation’s largest sales companies, lists the horses alphabetically by the
dam’s name, each year starting with a different letter of the alphabet.
The sample catalog page lists a Timeto Thinkrich yearling.
(1) The Hip No. refers to the horse’s position
of selling. Number 17 means that this
horse
was to sell
in the 17th position. But don’t count on
it. If you go out for coffee while the
14th hip is selling,
you may find you’ve missed Hip 17 because Hip 15 and Hip 16 were
scratched or
“outs” (taken out of the sale).
(2) The owner, consignor, or agent.
(3) The name of the horse, if named, and the
color, sex, and birth date. If a name
has
been asked for,
but not yet approved, the statement, “Applied For” will appear instead
of the name. When a name has not been applied for, the
color and sex will be
moved up
above the birth date and the horse will be identified as “Brown Colt.”
(4) The name of the colt repeated along with
the registry number, and the pedigree of the
horse
always listed on top, the dam beneath.
The registry number of the sire and dam
will also
be listed, unless one is a Thoroughbred, in which case “TB” will be
stated. The
American Quarter Horse Association
has a complicated system of registration.
Sometimes an owner neglects to apply
for registration, which may cause complications
when buying
from a private party. But in a sale you
can be sure the horse would not
have been
accepted if the registration was not in order.
In the case of unnamed foals,
or older
“appendix” horses, no registration number will appear.
If an asterisk appears in the
pedigree, it means the horse was foreign bred.
Along with the registration system goes a grading system. Most breed associations award points or
titles to competitive horses. For Quarter Horses there may be some combination of “A’s”, or
awards, such as Register of Merit (ROM), or speed index (S.I.). Such designations will immediately follow the
names of horses earning ratings or special awards.
In discussions of pedigrees, there are certain rules which must be
followed. A foal is always “by” a sire,
and “out of” a mare, never the reverse.
Dams, granddams, great-granddams,
always refer to mares in direct descent through the female. They always appear on the bottom line of each
generation, thus sometimes referred to as the “bottom line”, or more correctly,
the “tail-female”.
The top line of each generation, on
the mother’s side, is referred to as the “tail-male”.
Numerical ordering is reserved for successive female sides, the tail-females. Thus the “first dam” is the horse’s
mother. The “second dam” is the
grandmother (the dam’s mother), and the “third dam” is the great-grandmother
(the second dam’s mother).
While the sire’s mother is also the horse’s grandmother, she is never
called that; instead, she is the “sire’s dam”.
It is common to hear a horseman say, “This colt is by Timeto Thinkrich, out of Chic Pat
Go, by Go Clabber.” Thus your attention
is always drawn to the female side of the pedigree. Seldom does a novice investigate the dam of
the sire of a prospective purchase. Such
investigation should always be made as it can be extremely revealing as to
potential, that all-important concept for making money.
(5) A brief summary of the sire’s racing accomplishments,
his foaling date, and his
performance
at stud. Note that this summary is in
bold face type. A great deal more
information
is desirable and available about the sire than can be contained in one
paragraph,
but you will have to research it yourself, and you should.
You
should be well enough versed in your chosen field to know which sires produce
high-priced offspring and which do not.
You should know the stud fee of the sire, and have a good idea of the
annual average selling price of his yearling colts and fillies. You should be aware of colts and
fillies. You should be aware of
performance ability and the disposition of the sire’s offspring.
Remember, the sire, if older, may have sired many good foals, but with
limited space, it is nearly impossible to give more than a short report on his
performance at stud.
The mare most likely will not have a produce record of more than 10
foals, so her entire record can be reported.
You will constantly hear the expression
“black type”. It is an extremely
important part of buying potential.
There are two rules. A stakes
winner’s name will be capitalized in bold face (very black) type. A stakes placed horse’s name will be in bold
face type, but not capitals. If you are
purchasing horses other than race bred horses, the produce record of the bottom
line remains just as important. Mares
which produce outstanding performers in any field have great profit potential,
and so do their offspring. The foals, if
good, will have awards and accomplishments as important as black type.
Even though the sire’s paragraph record is short, much can be
deduced. The principle of listing the
best first is followed. The line “stakes
winner of 15 races, $615,858, All American Futurity,” etc. tells much more than
it says. You can conclude he won more
than one stakes race, but only one of major importance, or it would also have
been listed. At the time of this sale,
The Fortune Hunter was his best foal, and his victory in the Moon Deck Stakes
and his third place finish in the Golden State Futurity carried more importance
than did the Kansas Futurity Consolation placing of Denim N Diamonds. (Of course, Denim N Diamonds later became a
World Champion and a much more important offspring to Timeto
Thinkrich. The
future held more profit potential for Gothinkrich.)
(6) The first dam starts the summary of the
“tail-female” or “bottom line”, giving the
birth date
so you will know the mare’s age. The
dam’s name will be listed in
capitals,
but in light face type unless she is a stakes winner or stakes placed.
If the latter then it will be lower
case letters, but bold face, or “black type”.
In
this case,
the first dam is a stakes winner, so her name is listed in both capitals
and bold
face. Her sire’s name is listed, then
the number of races she won, the
number of
years she raced, that is from two-years-old to eight-years-old,
and the
amount of money she won. You can tell
she won only two stakes, because
two are
listed, then a second place finish in a stakes is reported. If she had won
more than
two stakes, all would have been listed.
The second place finish would
have been
dropped if space for stakes wins was needed.
The catalog then states the horse being offered for sale is this mare’s
first foal. This is important, for not only
must all foals be accounted for, but you must also account for all foal-bearing
years. If a mare has many barren years,
you want to know why. In this case we
know she raced until she was eight (1978), so the mathematics work out. This is the
first possible year that under normal circumstances, she could have a yearling.
A word about the race comment following the mare’s
name. If she raced, the record
will be given. If she was unraced, it
will say so. Only if the mare raced and
was unplaced will no comment be made.
This is virtually true of non-racing horses also. If a mare has performed even fairly well, the
catalog will list even minor awards. If
the mare has not distinguished herself in any field, there will be no
comment. Another case of the un-said
providing needed decision-making information.
The catalog shows Chic Pat Go has
lots of potential.
(7) The second dam offers the highlights of
the female family, but not all the details.
Miss Bar Chick, as you can see
immediately, has not won or placed in a stakes
event
because her name is in light face type.
Money won is also important, but no matter how much she won—it could be
in the hundreds of thousands—she could not earn “black type”. In this case, she had two wins, but only
earned $2,721. This tells you her races
were not quality races, the purses being under $3,000. Purse distribution varies at each race track,
but the winner normally gets about 55 per cent of the purse. Miss Bar Chick was not running for much
money, and her races were won at weak racing locations. You do know she earned a Triple A rating, and this is a minor plus in terms of her
value. With non-racing horses, you must
know what events are considered high quality and what awards create potential
for prospective purchase.
The
next comment is tricky. “Dam of eight
foals to race, six winners…” The catalog
does not tell you how many foals she had, or why they didn’t get to the
races. But it does tell you she had more
than eight foals, and that for sure she had two which did race, but couldn’t
win. Furthermore, as only five foals are
listed, the sixth one to race definitely wasn’t much.
You
should also know the value potential of stakes races or the importance of other
competition.
A
weak stakes win or a victory at a very small show doesn’t carry much value
potential. Any other accomplishment
which does have dollar value will be listed, even if the event is relatively
small.
(8) The third dam, Lucky V. Chick, is reported to have produced five
other foals, four to
race. The five other foals reported do not include Gothinkrich’s second dam, Miss Bar
Chick.
The
catalog only lists three of Lucky V Chick’s foals. Of course, some omissions are necessary due
to limited space, but in this case, Chic Bar Go never won, yet is still
listed. Consequently, you can be sure
the unlisted foal was worse than Chic Bar Go.
Sometimes
after a mare’s name and record, the statement “producer” will be made. This means the mare had produced at least one
winner. It always means just that, no
more, no less.
(9) Fourth dam. If a catalog includes the fourth and fifth
dams, then it is an indication the
previous
dams were not outstanding. Or it may
mean the fourth and fifth dams were
exceptional,
as in this sample. Then too, the fourth
and fifth dams are older and have
time to
produce good foals. Here, the first dam
has had only one foal, so extra space is
available
for the fourth dam, which has produced lots of black type.
You must weigh all the factors in deciding why a fourth or fifth dam has
been included. Personally, I prefer so
much black type or listing of awards and achievements in the first three dams
that there is no room for the fourth dam.
What is “up close,” meaning the “immediate family”, is what has profit
potential.
(10) Here the catalog entries will change
according to whether the horse to be sold is a mare,
a horse, a
weanling or a yearling.
A yearling, and in some cases a weanling, will have “engagements”
listed, telling you to which important races or shows (futurities) the nomination
fees have been paid. Engagements are
usually indicators of profit potential.
A broodmare will have a race record, a produce record, and if she has a
foal by her side, the foal’s birth date and sire’s name. Finally, if the mare has been bred, a
pregnancy status is reported. The words,
“believed to be in foal” are no guarantee the mare is in foal. If you are buying potential for profit, have
the mare pregnancy tested prior to purchase at your own expense. The breeding date and the sire to which the
mare has been bred should be listed.
If the mare was not bred, the catalog
should state, “not bred,” or “open.”
In the case of two-year-olds or older, the training status or race
status should be given, such as “unraced”, “placed twice in four starts”,
“galloped 45 days”. Comments for horses
not intended for racing might include “halter prospect”, “finished in top 10 at
first show”, “loads well”, or “prospective jumper”.
With horses, there is a special
terminology applied to relatives.
Because a sire can have so many offspring, while a mare has only one
foal a year, horses are never referred to as half-brothers or half-sisters
unless they are out of the same mare, but by different sires.
If the horses are by the same sire and out of the same mare, then they
are full brothers, brother and sister, or full sisters.
A foal by the same sire, but out of a different mare, is never a half brother
or sister, but is called a foal “by the same sire.”
A final comment about the catalog page you construct or are given. Black type, awards, and permanent record
achievements never become less than shown, but can constantly be added to by
members of the family.
Hip No. 17 is by a young sire, out of a young mare. (Always potential, as nothing bad has been
proven.) Both have the potential to add
more and better black type or awards to their records. (The sire certainly did.) This may make Gothinkrich
more valuable to some extent at a later date if he remains a colt. (More sales sizzle.) And similarly, his good performance will
positively increase his dam’s value and the value of her subsequent foals.