Got an extra million dollars lying around?By Bernard Kroviak, CDC Gaming ReportsOctober 20, 2018 at 3:00 amLast month, there were two horse sales of great significance, one held in England and the other in Kentucky. Both sales dealt with yearlings – horses who had not yet reached age two. It should be noted – although you might already know this – that all thoroughbreds have the same birthday, the first of January every year, no matter on what date they were actually born.Thus, for example, when the Kentucky Derby rolls around every year, all the horses who run in that race are three years old, per the race requirements, but some are technically months older than others, based on when they hit the ground, so to speak. It’s kind of like 8th grade basketball players: they all are in the same grade, but some might well be more mature than others, simply based on the date of their birth.Since the gestation of a horse is roughly 48 weeks – 11 months and a week, give or take – it is optimal for foals to be born as soon after January 1st as possible, since it will be then one of the oldest in its age group to race when the time comes two years later. The trick for breeders, then, is to plan their equine births for as close to January 1st as possible – although certainly not before it, because foals born in December officially turn a year old on January 1, barely a month – in some cases much less – from their actual birthdates. Considering the importance of the foaling date, the breeding season starts in February, roughly around Valentine’s Day, which practically ensures a birthdate after January 1st of the following year.Horses are usually born in the spring, because Mother Nature brings mares into heat during that period. Thus, the following year, most pastures are teeming with babies running, nursing, and grazing at the side of their moms. Several months later, after being separated (weaned) from their mothers, these young horses are referred to as “weanlings,” and are then free to romp alone with other babies like themselves without the backup of their moms. In the fall of that year, weanling sales are held, which provide buyers the opportunity to purchase youngsters, who could turn out to be champions, at a much lesser price than they might sell for a year or so later as they grow into training age.Following their initial January birthday, the young horses are then called “yearlings”, as I mentioned above. One year after that, fittingly, they will be two year olds, ready for the opportunity to actually race. Two year old races are different than other races, because even though the horse might be two, based on the universal January date, some have, naturally, not been alive for that long. To protect them, racing rules dictate that they are not allowed to run a race until they have officially reached two years of age as measured from their actual foaling date.Why all this discussion about horses’ ages? Because my venture into the business, and I’m sure many others’, centered on the cost and (presumed) value of the horses I was investing in, and those values are, of course, largely based on the horses’ ages. The two sales I mentioned at the outset were for yearlings, or horses who will begin racing in 2019, and hopefully in the big races for three year olds the following year, for example the 2020 Kentucky Derby. (As an aside, when you see the word “derby” attached to any race, it means that it is a stake for three year olds only.) These two yearling sales are important because they have traditionally sold many horses who have gone on to be champions, stallions, and/or millionaires.So what do buyers look for when they go to purchase a young horse who has never run? Certainly conformation, appearance, attitude, and demeanor are important factors. Combined with those aspects, the all important component of breeding, will, in the end, establish these young horses’ true value to bidders.If you were to gamble, say, a million dollars on which of those aforementioned 8th-grade basketball players would make it to the NBA, which criteria would you use to select the most likely? Would it be how tall or quick he is now, or would you pick the biggest, strongest guy? Would it be important if he is intelligent, or particularly mature for an 8th grader? What if he was only medium in height, but was a legacy – in other words, had a brother or brothers who’d played in the NBA, or was the son of an ex-NBA player? Would that be a bigger factor than his current physical attributes?Transpose this sort of thinking to the race game, and you get a clearer sense of the situation. One’s judgement, priorities, and bank account lead many buyers to either be successful, or not, when bidding at horse sales. Welcome to the world of buying yearlings.Last month in England, one of the world’s largest racing operations, Coolmore, purchased a yearling for a record $4.6 million. At the Keeneland sales in Kentucky, the top selling yearling went for $2.4 million, and 26 other yearlings sold for a million dollars or more. Beyond the seven-figure sales, an additional 18 sold at Keeneland for amounts ranging from $782,000 to $999,999. Of course, most of the horses commanding these tremendous fees were sired by the likes of such American stallions as Triple Crown winner American Pharoah, leading sires War Front, Tapit, Medagila d’Oro, Curlin, and, in England, top sire Galileo. All these stallions stand for a single cover fee between $100,000 and $300,000; considering the amounts some of their progeny brought at these sales, you can see why.People are willing to risk a lot of money on young horses. Like playing the stock market, sometimes their value goes up, sometimes the value goes down. Sometimes, way down. No discussion of the risk involved in horse sales is complete without a mention of the most expensive two year old ever bought at auction, The Green Monkey. Descended from a line including both Northern Dancer and Secretariat, the Monkey was purchased for a still-record $16 million as a two-year-old in 2006 but only ran 3 times, earning a meager $10,440. After being retired in early 2008, he went on to a stud career, where he stood for only $15,000 and covered only 40 mares his first year. None of his progeny ever amounted to much, and as the years passed his fee was dropped $5,000. Even at that reduced rate, he covered fewer than 15 mares a year. The poor Green Monkey has to always be on the mind of people who buy horses at such a high level.But the thrill of the game is what makes these purchases so very intriguing even considering the risks involved. Thus it makes sense that investors, breeders, and fans follow the results of these sales so intently. Kind of like the bottle of wine that I saw sold at auction the other day for over $400,000: one never knows what the future will bring.So there you have a little background on the costs of buying top-end racing prospects. I have written previously about the costs associated with owning and buying horses privately, which was the route I took with my new partners that I’ll detail in coming weeks.By the way, the amount we paid for our pair of two-year-olds was somewhere between $2,999 and $3 million each. I’ll leave it to you to guess the actual price!