The Business of Making Money with Horses
By Don Blazer, taught by
Eleanor Blazer
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
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.
Non-racehorse
sales will also provide catalogs and the "black type system" will be
used. In the front of the catalog will
be an explanation of the system. An
example of the system used by the Ohio Quarter Horse Association's Congress
Super Sale is:
BOLD CAPITAL LETTERS
- World Champions, AQHA and APHA Champions, Superiors, National Cutting Horse
Association Bronze, Silver, Gold & Platinum awards, and or money earners of
more than $10,000.
Bold Upper/Lower Letters
- Reserve World Champions, PHBA, IBHA and ABRA World Champions, ROM earners,
NCHA & NRHA Certificates of Ability and/or money-earners of more than
$1,500.
All
other performers appear in regular 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.
Assignment:
1.
Construct a catalog page for this horse:
My
Kustom Kruzer: 2011 dun
Quarter Horse gelding, AQHA #5354357, ABRA #P-20261 (double registered), AQHA
Incentive Fund, NSBA Breeders Championship Futurity eligible
His
pedigree can be found at:
http://www.allbreedpedigree.com/my+kustom+kruzer
2. For what does this horse have potential based
on your research? (He is not bred for racing,
so do not apply racing terms to your report - determine his potential based on
his pedigree.)
Submit
your report to Eleanor Blazer elblazer@horsecoursesonline.com
(attach the catalog page to the email)
You
can fax it to