The $50,000 question
by Trey Nosrac
“Want to bankroll me?” I asked my pal Shoes Hughes as I drove him home from the airport.
He raised an eyebrow, “For what? Another crazy horse idea?”
“Of course, and don’t be so dismissive. Most crazy ideas look crazy at first glance.”
“Unfortunately, your ideas look crazy at the second, third, and fourth glance.”
I ignored him, “Attempting to select the eventual winners from the various yearling sales is a sport unto itself. We study yearling sales catalogs looking for trotters and pacers that fall through the cracks into our price point. Every year we are surprised when we see the hammer fall way above or below market value on a yearling.”
He held up his hand and said, “Whoa, stop right there. Hundreds, perhaps thousands of potential customers have studied those yearling sales catalogs. Many eyes, brains, even computers, and experts have analyzed the prospects and pedigrees. Then the yearlings are sold at public auction. When you say sold below market value, you mean below YOUR opinion of market value.”
I raised my index finger. “Please stop interrupting my free-flowing drivel with factual observations.”
He continued, “A large auction is where you learn the market price.”
“I know, I know, sheesh, lighten up. Let me try another approach. Yearling auctions are fun. The time between purchase and when your horse proves less than great is nirvana for horse owners. Almost every winning bidder on a trotter or pacer leaves the sales area believing they made a wise selection.”
He mumbled something like, “Emotionally, temporarily, I agree. However, the final numbers don’t lie. The average yearling price and the average earnings will prove that.”
I continued to ignore my pal, “I need a participant to help me fund an experiment. I plan to start the fall yearling sales season with a budget of fifty thousand for three yearlings.”
“How much are you short?”
He laughed, “That’s not a participant. That’s a benefactor. In your case, it’s a contribution to the delinquency of an adult. Hypothetically, what would you do with them in your experiment?”
“Market them and attempt resale.”
“A few weeks, certainly before Christmas.”
“Let me get this straight. Your customer base will be people who passed on these horses at the auction price the first time?”
“Yes and no. You see, when we go to the sale with a shortlist of yearlings, we have no control of the sales sequence. This sequencing can be frustrating. We sit in the crowd or watch the computer screen and silently scream, ‘Oh no, HIP number 41 is hanging at $12,000. But if I raise my hand, I can’t get number 106 or 108.”
He picked up on my theme, “If you buy the early one, you can’t buy a later one that you like better.”
“Exactly. Bidders can get shut. If you have got gobs of money, you buy what you want. If you don’t have gobs of money, you can come home from the sales with nothing, and you regret not bidding on a yearling. Honestly, there have been times when I felt like approaching the winning bidder who bought a yearling that I craved to drop a compliment on their brilliant selection. I have even thought about saying if I did not find something I liked, maybe we could talk.”
He said, “I’m sure this purchase for a resale concept is not new.”
“Probably not, but you know the old saying about never fishing in the same waters twice. That is true in the yearling market. In 1997, the Internet was not a factor. Bidders did not have videos and algorithms. People could not take out an ad in HRU. People could not sell at OnGait.”
“That’s interesting. But most likely, you will get stuck with $50,000 worth of horses you cannot afford to train.”
“That is the doomsday scenario, but it is still not tragic. I still have yearlings that I saw value in.”
He said, “Your resale market would be minimal.”
“The market only needs to be one if they meet my price. Besides, other buyers might be interested in my resale offering.”
“I call it my “second look’ market. When offering resale, I can ask customers to take a second look at the yearling and show them some information they were unaware of in the hustle and bustle of the horse auction. I can give potential customers time to shop slowly without the pressure of a sales auction.”
I showed him a screenshot on my phone, “Imagine that a simple advertisement like this appeared in HRU”-
Second Look Sale
Yearling HIP #1212, was purchased at the Black Book Sale for $11,000. I was pleasantly surprised the hammer fell at this price. I can race this filly, and I may. However, PA is not my home state.
You can probably read a catalog page and inspect a yearling better than me. However, at this point, the filly is in harness, jogging, and looking good (see video link).
Before sending this horse to a trainer, allow me to address a couple of factors that are not obvious in the pedigree page.
The full sister of this filly did not race, a red flag for buyers. The sister did not go to market as a yearling due to complications from OCD surgery that rendered her untraceable.
The previous four from the mare all raced at three, but there is minimal two-year-old earnings. This Feb 22 foal will be a full two months older than any other two-year-old sibling.
The firm resale price is $20,000. Should you take a second look and have an interest, please email.
He read it and said, “So you believe that there will be a market for selling yearlings you believe fell through the cracks, and you could make a profit on a $50,000 investment?”
“Yes, will you bankroll me?”
“Is that a firm no?”
I spread my hands and said, “Where’s the downside?”
“I’m not sure, but you would find it.”