Oppenheim: The Pop-Up Pegasus

You've heard of course of one of the new features of contemporary life: the pop-up Event. I'm slightly altering the definition (which is somewhat hazy anyway) to suit our purposes, but essentially The Stronach Group's Jan. 28 GI Pegasus World Cup (the old GI Donn H.) at Gulfstream Park can be described as horse racing's first modern pop-up event. I happened to be able to be there because of some Breeders' Cup meetings the following week, and I can confirm the event was a big success. Ticket prices were high, but the crowd was manageable, i.e. you were able to move around without getting squashed, for the most part. It was a good day of racing, highlighted of course by Arrogate's impressive win. Given California Chrome wasn't really at the races, the form behind the winner looked good. Last year's GI Woodward S. winner Shaman Ghost (bred and owned by Adena Springs, so the 'House Horse') was a clear second, with up-and-coming Neolithic third and another previous Grade I winner, Keen Ice, fourth. The day's handle of $40 million was spectacular, breaking the previous record by $8 million (25%), and doubling last year's handle on the corresponding day (GI Donn H., Feb 6). TV ratings were also respectable. All in all, a big win–a very successful pop-up event.

In light of this success there is speculation that the Pegasus concept, whereby the owners put up all the prize money (or, in the case of the new Randwick initiative, most of it) can perhaps generate a new 'model' for horse racing. Of course, it wouldn't really be a new model: this is how modern horse racing started. Lord Salisbury and the Marquess of Buckingham put up £100 each for a match in 1622 between their horses (thanks to Kip McCreery for uncovering that factoid), and we have modern horse racing. So it's actually the oldest model for funding racing. The creation of racetracks introduced a middleman who could bring in (and ultimately charge) spectators, then we have regulated gambling, and off we went.

The Pegasus concept is of course far more complicated than when modern racing originated. But Gulfstream Park and its owners The Stronach Group performed two main roles: they provided the venue, and they did a huge amount of marketing–estimated to have been between $2-$3 million. In return for that, they won respect for having a novel idea and successfully carrying it off within the industry, and undoubtedly gained increased brand recognition in South Florida, nationally, and even internationally. The stakeholders each received $250,000 in prize money minimum, plus a share of any other revenues on the race from sponsorship, handle (big), and media rights (minimal, international only) which is estimated to amount to something in the low six figures.

But is this a new model? Doubtful. One interesting angle is that there was a certain amount of arbitrage surrounding the 12 slots. We're forever looking for new ways to engage potential new owners, and for those who thrive on arbitrage, that aspect of the concept–buying and selling your slot–was fun for them. But that is a limited audience, and racing needs to reach out in many more directions to attract new owners. Fundamentally prize money is the answer for anybody (which is just about everybody in North America) who wants to try and be financially responsible about owning racehorses, and in that respect, the Pegasus was great as a one-time event, of course. But hyper-purses are not going to attract new owners in sufficient numbers; something more like the emerging Australian model for A$100,000 purses for all metropolitan races in the biggest cities are more what is needed.

So kudos to Frank Stronach, Mike Rogers, the Executive VP for Racing, and The Stronach Group for spreading the word, attracting more 'eyes' to the game. But my take on it is that pop-up events like these (you could even argue the Breeders' Cup is a type of pop-up event, with a different funding mechanism) shine the light on horse racing, but then it's still up to us, all of us who put on the show, to revise existing models so that the next time the person we attracted through the Breeders' Cup or through Pegasus comes to the racetrack they have a fun, vibrant, interesting experience, and don't come into some dead, cold, boring simulcast parlor of a racetrack populated by gambling degenerates. That remains the real challenge, does it not?

One place where I do think the buy-in concept could also work, although again on a pop-up basis, is at smaller tracks, especially if not fuelled by slots money. Smaller, regional, 'country' racing–the Minor Leagues as opposed to the Majors, if you will–is really 'local' racing. Local sponsorship has to be a major part of the formula for local/regional racetracks, and I could envision a scenario where 10 local owners put up say $25,000 each to create a local $250,000 extravaganza. But for us, the takeaway from the Pegasus is not that this is a new model for day-to-day or even 'Saturday' racing, but that it is indeed a new and mainly laudable model for the application of Pop-Up events to our sport.

DRILLDOWN: APEX B & C RUNNERS

Consistency is usually a virtue, and in the world of thoroughbred stallions, there's a lot to be said for consistency. They can't all be superstars–class is a pyramid, after all–so for those which are not stars, it's better for their owners if they're at least earning something, and the more the better. The APEX ratings were developed for practical application by racehorse owners and breeders, and besides A Runners, which are the top 2% of the racing population each year, we also calculate 'B Runners', which are the next 2%, and 'C Runners', the next 4%; so when we do calculations or indices for the three categories combined, we call the combined group 'ABC Runners', which are the top 8% of runners in a year (or season). As you can see from the accompanying table, the earnings threshold for C Runners in North America in 2016 was $63,590; for B Runners $93,200; and for A Runners $133,000. The corresponding thresholds for the other jurisdictions (expressed in US$) are displayed in the table.

So it's good to know these things, both for assessing which well-known and expensive sires are showing the most consistency in siring what we call “break-even or better” racehorses, and for discovering little-known sires pushing their way up the ladder; those we discover more in the indexes. There were 616 North American and European sires which had 80 or more year-starters 2010-2016 (remember, one horse is one 'year-starter' every year it starts; also one A Runner every year it meets or exceeds the A Runner earnings threshold etc.). These lists show the top 30 in each of four categories: leaders in number of B Runners and by B Runner Index; and leaders by number of C Runners and by C Runner Index.

There are some familiar names among the leading NA-EU sires by number of B Runners: a certain Galileo leads the list, with 83, followed by Giant's Causeway (80), Candy Ride (74), and Tapit (72). Right away I would point out an interesting fact: though the percentage of runners in a year is exactly the same–2%–for A Runners and B Runners, the ceiling for the number of A Runners is much higher than for B Runners. They should be exactly the same, but they're not: five sires have more than 90 A Runners, yet none has more than 83 B Runners. We hypothesize this means the very top sires have such a class edge that their ratio of A Runners to B Runners, which should be 1:1, is actually tilted towards A Runners. So they're that good. It's an interesting exercise to compare a sire's number of A's to B's: the seven top sires of B Runners 2010-2016 are: Galileo (184 A Runners–83 B Runners, indicating a strong tilt toward the top; he also has far more Group 1 winners than Group 2 winners); Giant's Causeway (100-80); Candy Ride (65-74); Tapit (111-72); Distorted Humor (65-63); Dubawi (82-59); and Speightstown (92-59). A little further down the B Runner list we see the likes of Langfuhr (21-51) and Wildcat Heir (23-49), suggesting they were most effective–in these years anyway–at siring B Runners.

The same principle applies to the ratio of the number of C Runners (4%) to the number of A+B Runners (4%); a quick way to look at this is whether a sire's C Runners are more or less than half their number of ABC Runners (8%). So, looking at the top seven sires of C Runners, the leader in this category, Tapit, has a ratio of 183 A+B Runners to 130 C Runners, which is 58%. so even though he's the leading sire of C Runners (which is after all a lot better than not being among the top 8% of earners), we also know he's a whole lot more than that; the 183-130 ratio is one of the clues to that. Number two C Runner sire Speightstown has a ratio of 55% (151-126); Giant's Causeway 59% (180-124); City Zip 46% (102-118); Galileo 70% (267-115); Smart Strike 53% (127-114), virtually the same as Malibu Moon 53% (128-114). I wouldn't be using this statistic in place of anything else, because all these sires are good, it just does present an interesting insight into the issue of 'class'–the most important five-letter word in the horseman's vocabulary after 'horse'.

Sure enough, the top 30 sires by B Runner Index include a few names you've barely heard of as well as some you have. The number one sire by B Runner Index 2010-2016 is Shadwell Kentucky's Daaher (4.49), a son of Awesome Again who defeated Midnight Lute in the 2007 GI Cigar Mile but has had just 68 foals in his first six crops (first crop 2009). These include four Black-Type Winners (5.9%), including the speedy Grade II winner, Gypsy Robin. That looks good (2.25 A Index), but it's his eight B Runners which put him at the top of this list. Daaher's biggest crops of 30 each are 2-year-olds and yearlings this year, and he stands for just $5,000 at Shadwell. He displaces the former Canadian sire Niigon (3.86), a son of Unbridled who was clearly very good up there but died just about before anybody knew it. The remarkable Square Eddie (3.01 A Index, 3.83 B Index) is making a huge contribution to his owner Paul Reddam's California racing stable, with the obscure Virginia sire Rebellion (1 A Runner, 0.62 but 3.70 for B Runners) fourth.

The big-time sires in the top 15 by B Runner Index also include Twirling Candy (3.66), Ireland's Lope De Vega (2.72), France's Kendargent (2.69), California's Unusual Heat (2.60), Candy Ride (2.47), Curlin (2.45), and Europe's number two sire, Dubawi (2.39). The other 'regional' sires include: Ontario's Silent Name (3.01); California's Grazen (2.84); Weigelia (2.72), who stands in Pennsylvania; and Indy Wind (2.40), who stands in Ohio.

The C Runner Index figures are much tighter; the leading sire by C Runner Index is Maryland's Street Magician (2.13), who has only one A Runner and one B Runner, but eight C Runners from 94 year-starters. Canada's Niigon and Old Forester are tied for second with Germany's Soldier Hollow (2.08 each), followed by Curlin (2.05), Speightstown (2.04), Twirling Candy (2.03), and Ghostzapper (1.92). Deceased California sire Heatseeker (1.91), and former Juddmonte USA sire First Defence (1.89), now in Saudi Arabia, round out the top 10. Recent Kentucky import Kantharos and Girolamo (both 1.88) head up the second 10, ahead of Distorted Humor and Kendargent (each 1.87).

JAPAN: As mentioned before, though we use the same methodology to calculate APEX ratings for Japan as for Europe and North America, there are some significant differences in the racing setup there (big emphasis on 4-year-olds+ and the dominance of the Shadai group) which have led us to not mix Japanese results in with those from NA-EU. We have already noted that Shadai's Deep Impact (4.78) and King Kamehameha (3.16) are the two most dominant sires there. It's often difficult to read the runes on the younger stallions, but we think another Shadai stallion, 2011 G1 Dubai World Cup winner Victoire Pisa, who just had his first 3-year-olds, is one to keep an eye on. Click here to see an alphabetical list of 110 sires with APEX figures which stand in Japan, including a few like Eskendereya who are recent imports and have not yet had runners in Japan.

Contact Bill Oppenheim at [email protected] (cc [email protected]).