Why money will SAVE horse racing

You read that right. Big-money interests, the red-white-and-blue-blooded pursuit of the almighty dollar, the Gordon Gecko Greed Is Good mania will save--not kill--horse racing.

Let's be clear about three things. One, while money is going to save horse racing, moneyed interests are stupid. (That's why they're going to save the sport, but we'll get to that soon.) Listen to nearly any group of horse-racing industry participants, from jockeys to trainers to observers to anyone with any skin in the game, and they answer questions about the ethical treatment of thoroughbred horses in cliches about the conditions in which horses live (unquestionably lavish) and the common-sense odds of a life-threatening accident occurring to any animal on a farm, in a home or in the wild. Lindsay Campbell of MobLogic puts the question to those very people:



And to an extent, they aren't wrong. They are, however, ignoring the fact that to live the life of a well-paid stud horse, the animal must actually live through his racing career and be worth breeding to another horse (see this New York Times article for what can happen to those who don't meet the latter qualification), but even during that career, horses are well-treated. Because why wouldn't they be? They're an investment, and if they don't win and can't breed, they will earn their owners no money.

Two, though money will save horse racing, it will try as often as there appears to be incremental money made on a horse with no more investment in the purchase, care or training of said horse to prostitute that horse in ways that have nothing to do with breeding. (See #1 above.) Consider, for example, the ubiquitous presence of UPS (the corporate Big Brown) at the Belmont, including UPS jackets on the stewards and "What Can Brown Do For You?" plastered over the starting gate. Never mind that there were nine OTHER horses in that gate, all of whom finished ahead of Big Brown. In Pat Forde's schadenfreude-flavored excoriation of Rick Dutrow, he alludes to a potential Big Brown-Hooters tie-up that the Belmont folks (mostly) forbade as a step too far.

And three, money, though it will save horse racing, will only do so because it has nearly killed it. There was a great article in The Wall Street Journal just before the Derby about how most every horse in the Derby was related to Native Dancer. This graphic shows how Derby place horse Eight Belles, who was euthanized ON THE TRACK after the Derby, and several other Derby horses were inbred to the same two stud horses, Native Dancer and Nasrullah. Why? Because the progeny of those horses are built to win, and by breeding them back against each other for four decades you wind up with a horse that can be relied upon by its owners to win and breed more horses to win.

Why take the risk of breeding outside that pedigree when so much money (last year's Keeneland sale grossed more than $340 million) is on the line? There's only one answer: you take that risk when that pedigree begins to threaten all that money.

You're already seeing some sign of this. The Wall Street Journal says that a new thoroughbred investment fund (similar to Big Brown owners IAEH) wants to raise $125 million with which to build a 100-horse stable in three years. Most of the available stock of horses that this fund will buy is going to be of Native Dancer's strain, but the fund already seems to have learned what many stock-market investors forget. Just because it's a good company, that doesn't mean it's a good stock. That is, just because a horse has a vaunted pedigree, that doesn't mean its owners will make any money from it. The fund will focus on horses it can by relatively inexpensively and train into winners. That will lower costs and potentially juice returns.

(Of course, the fund, like all good investment funds, will levy a 2% management fee--that's $2.5 million per year, at least, if you're keeping score at home--and help itself to 20% of the profits. Now some of that is going to pay the fund's three trainers, D. Wayne Lukas, Nick Zito and Bob Baffert, without whom, admittedly, this "train-'em-up" plan doesn't work. Still, they're going to have to do really well for investors to see any return.)

The next big money to be made in horse racing will come from similarly off-the-beaten path ideas, the most obvious of which is, literally, new blood. Note that I did not say "should" come from new blood, as if by some moral imperative investors will look away from Native Dancer. They won't, because money is stupid. It wants only to find more money. In that regard, it will have to look elsewhere, because, economically at least, the risk of breeding with Native Dancer's offspring is rising nearer and nearer to the risk of NOT breeding with them. And once you prove you can win and breed consistently without Native Dancer's genes, investors will have a whole new bloodline to inbreed over three decades. Hopefully, they'll breed it against Native Dancer et al., but money is stupid. Perhaps one new bloodline per four decades is about the best to hope for.

Either way, it will be a paean to greed that saves horse racing in our lifetime. It's kind of chilling, isn't it?