Newbie Guide to Steward-Bred Auctions

Original article written by Regina Moore posted 8 years 1 week ago

It's inevitable, every game year. There will be a Steward-bred auction that is open and taking bids, and I almost always get one or two newish players asking me, "Why are people bidding so much money for horses that haven't even been galloped or worked out, let alone raced?" And, most particularly, "Why are they bidding more money than is possible for a horse to earn back?"

What's more, in the final seconds of the auction, the bidding tends to get even crazier, as players frantically try to time their bids for the particular horse they want -- or any horse at all -- so that they're the highest bidder at the last possible second before the auction over.

This article is intended to answer the whys and wherefores regarding Steward-bred auctions.


WHAT IS A STEWARD-BRED?
The Steward, Emily Shields, runs the SIM. She isn't a player in the game (that would be an unfair advantage!), but she does breed Thoroughbreds. She puts the offspring in various auctions during the year. Traditionally, these have been a two-year-old auction at the beginning of each game year, and then two or three yearling auctions later in the game year. Used to be, one of the yearling auctions was "non-select" (ie, horses she felt weren't the best of her crop), but in recent years, they have all been "select" yearling sales. Some years, she doesn't follow this standard protocol, for various reasons. (This Year 42 is an example, as there wasn't a two year old sale, since last season she sold all her yearlings at one huge auction.)

The Steward owns a farm in Kentucky called Trial by Summer Stables. (You don't want to keep your horses there -- the board is the maximum of $200 per week!) So, her auctions have names like Trial by Summer Select Yearling Sale. When a horse she bred has been sold via her auctions, it will have a designation on its page, in the lower right box of his its info. As an example, if you look at my stallion Reithan (http://www.simhorseracing.com/horse.php?HorseID=384690), he has the notation "Sold at TBS 2yoT $4,872.000". I bought him for that price at the Trial By Summer 2yo sale as a youngster.

The purpose of Steward-bred auctions is to take money out of the game, which it's very successful at doing. Some players have an amazingly high bank balance -- in the tens of millions -- and the only thing they can spend money on is a potentially good horse.


WHAT'S SO SPECIAL ABOUT A STEWARD-BRED?
Many years ago, I think the figure computed was that The Steward breeds 75% stakes winners. I just now did some quick checking via the Search page, for Steward-bred foal crops 4yo-8yo, and I found a low of 49% stakes winners, and a high of 63% stakes winners. Let's call it 60%. While lower than in the distant past, it's surely far more stakes winners than any player breeds. So, one has a better chance of hitting upon a major stakes winner with a Steward-bred, than they do breeding their own horses, or buying homebreds from other players.

As I understand it, while The Steward can't create a specific quality of horse at will (for starters, her foals are subject to the random slide, just like everybody else), she can see the numbers of a horse, once it's born, and so knows ahead of time which ones are likely to be stars of their crop. Supposedly, she puts something in a future superstar's notes like "Jackpot!", so the successful bidder of the horse knows they've just purchased a future major contender. (I say supposedly, because, while I've probably been a successful bidder on more Steward-breds more than any other player, I've never gotten a horse with any such notation!)

Also, The Steward, of course, understands breeding better than any SIM player. So, while her horses are subject to the random slide, and sometimes stallions she thinks are going to be great actually are duds, etc., she still has, foal for foal, a far better chance of hitting upon The Big Horse, than most players.

So, that's why there's often a lot of player buzz and excitement surrounding a Steward-bred auction, and a willingness to spend a whole lot of money. Many players view such auctions as their only chance to hit upon the SIM's next superstar.

In short, think of Steward-bred auctions as being like the real-like Keeneland Summer Yearling auctions. In real life, bidders can only go off pedigree and conformation, in trying to determine if a yearling is going to be a great one, and how much it might be worth. In SIM, conformation isn't a factor, so all one has to go on is pedigree, and the trust that The Steward is trying to breed outstanding horses.


SUPERSTAR OR NOT, CAN THE HORSES EARN BACK THOSE EXTREME HIGH PRICES?
There are three ways one can earn money from a horse:
1. Purse earnings
2. Stud fee income
3. Re-selling the horse

The dirt route division has the richest purses for the top horses, since it includes the Triple Crown, Steward's Cup Classic, and Desert World Cup. Right now, there are 16 Thoroughbred dirt routers at stud that have earned $5 million or more, with the highest being Steward-bred Harry Potter, at $8.4 million. The latter sold for $25 million as a yearling, so despite his extreme success on the track, he only earned back about a third of his purchase price. But this is where stud fee income comes in. By doing a search on his offspring, and eliminating those bred by his owner, I come up with $39 million in stud fee income -- and that's a low figure, because he has stood for higher than his current $75,000 stud fee. So, between purse earnings and stud fee income, he's earned at least $46 million, which is a $21 million profit, despite his unusually high $25 million purchase price.

So, yes, a horse can be profitable, even when costing an enormous amount before it ever races.

However, the above is an extreme example. Horses like Harry Potter don't come along every day, even in Steward-bred auctions. Plus, fillies don't have the ability to earn stud fees (though there can be some lease fee income). Yet, at many auctions, fillies often comprise many of the highest prices. They generally don't have the purse earning potential of colts, and don't have the potential stud fee income. So, why would someone pay millions for a filly?

The answer is that there is nothing more valuable than a great broodmare, even though her worth can't be measured by dollars in the bank. I would think anyone in real life who breeds any kind of livestock, values a great dam more so than a great sire. One can find always find an outstanding stallion at stud. But where can one find a great mare? They are much more elusive. So, considering that The Steward understands bloodlines more than anyone in the SIM, the belief is that her fillies are going to be great broodmares. Frankly, they often aren't, but sometimes they are. Players are willing to spend big dollars in hopes of finding the one that will own up to the glory of being a Steward-bred.

The third way to get money from a horse is to resell it. Some players "pinhook" horses from Steward-bred auctions. Pinhooking is a term used to describe buying a horse at auction with the intent to resell it for profit. After a Steward-bred auction is over, there's usually a forum thread where players discuss their purchases, and there's often a few players who say they bought to pinhook, and they are now taking offers. Of course, they're looking to make a substantial profit, and they usually don't have trouble finding buyers.

For fillies that become broodmares, the fact that they are a Steward-bred often means that they hold some value, even as they age, and even if they haven't produced anything of note. While one may not get back their original purchase price from selling an aging Steward-bred mare, they can usually find buyers.


WHY BUY A GUARANTEED MONEY LOSER?
Still, despite all the above, the fact is that most Steward-bred horses cost a least a half million, and most aren't going to earn it back. From just doing a quick search on the 4yo-6yo Steward-bred crops, only 20-25% of the crops earned 500k or more on the track. For horses than earn less than seven figures, even if they stand stud, they aren't going to have much market appeal, since there's so much competition from the stallions that do have millions in earnings. So, stud fee income for those horses is pretty much a non-factor.

Most of us who buy from Steward-bred auctions already know we're unlikely to get our money back, but we buy, anyway. Here's three reasons why.

1. Though we have much greater odds of being high bidder on a money loser, than the SIM's next superstar, each Steward-bred auction is still a chance to hit that once-in-a-generation special horse. If we don't buy it from a Steward-bred auction, where else is that special horse supposed to come from? Ideally, we can breed our own. But it often doesn't work out that way, at least not crop after crop.

2. If one has a comfortable amount of SIM dollars in the bank, buying a money-loser is out-weighed by the enjoyment of having a chance at a stakes competitor, even if the horse isn't a major Grade 1 contender. Take the horse I mentioned earlier, turf router Reithan. He's, so far, the highest priced horse I've ever purchased -- Steward-bred or otherwise -- at nearly five million. He was a solid competitor, and probably his greatest races were when he was narrowly defeated by the best horses of his generation. (He scored a 92 figure when beaten a half length by Saved in the Grade 1 Brisbane Trophy.) Yet, the fact is, he retired with a mere 800k in earnings, and despite a fantastic pedigree, has seen few outside mares. So, he's been roughly a $4 million loser for my stable. Does that mean I'm sorry I bought him? Heck, no! I had a great deal of fun racing him. I certainly didn't have any turf route homebreds that were doing anywhere near that well.

3. When one just plain has a lot of SIM dollars, what else are they supposed to spend it on, besides outstanding horses, or potentially outstanding horses? The only high priced item in SIM is building a farm, which costs $2 million. Beyond that, there isn't any way wealthy players can spend their money. I mean, as someone who currently has over $30 million in my bank, it's not like I can take some of that money and pay off my real life mortgage. You know? So, the only thing one can purchase is good horses. Few good horse are put up for sale, except in the case of Steward-bred auctions. Steward-bred auctions are where wealthy players spend their money to excess, because there's nothing else to do with that money.


DOES THIS MEAN NEW/POOR PLAYERS SHOULD DISREGARD STEWARD-BRED AUCTIONS?
I feel that it's critically important that players struggling with having enough money to play SIM, focus on acquiring horses that are profitable. Spending more on horses than they can earn back is a recipe for bankruptcy. So, in general, I'd say to stay away from the insane purchase frenzy of Steward-bred auctions, until one has built up their bank balance to seven figures, or close to it.

However....

Steward-bred auctions are uniquely structured, because of the underbid situation. At Steward-bred auctions, players can bid on up to three horses at a time, but they can only win one horse. This creates a situation where horses can be won on a low underbid -- in rare cases to the point where a horse bid up to seven figures, actually ends up going to an early under-bidder for, say, $20,000, or even less. This doesn't happen every auction, but it can and does happen.

As an example, say that, at the end of the auction, I luck out in my timing, and am high bidder on my maximum of three horses. The computer is only going to give me one of those horses. The other two horses will go to the second highest bidders. But if those bidders were already awarded a horse, then the computer goes to the third highest bidders. And so on. It can happen that the computer gets down to an early bidder before it can award the horse, and that bidder gets the horse for the low price they bid early on.

So, this under-bid situation is how poorer players can still acquire a Steward-bred. If you want to try this at the next Steward-bred auction, it's important to bid on horses when the prices are low and you can afford to do so. Then, when someone out-bids you on one of your horses, immediately put in a bid on a different horse. The more horses you spread your bids around, the more the chances are that you can win one on an underbid. The worst thing you can do, with such a strategy, is to have your heart set on getting a particular horse. Not only is it unlikely that you'll win any horse at all (but the slim chance can make it worth the effort), but it's extremely unlikely that you'll end up with a horse you particularly want. Before long, the prices are going to get higher than you can afford, and you'll have to stop bidding altogether, and then wait until the end of the auction, to see if you won a horse on an underbid.

Once, a new player won a horse at a Steward-bred auction on an under-bid of a mere $3,000. The horse had been bid up to seven figures by the end of the auction. That player then re-sold the horse to another player for $4 million. That's one way a new player can build up their bank balance in a hurry!


CAVEATS
Steward-breds are a subject that most players find exciting to talk about. A lot of great horses in SIM have been Steward-breds. Still, it behooves one to not get too enamored of the idea of winning a horse at a Steward-bred auction, without being aware of some hard facts.

While breeding 60% stakes winners is phenomenal, that means that 40% of Steward-breds will never win a stakes race. So, while you're drooling over all the nicely-pedigreed horses at a Steward-bred auction, bear in mind that 4 out of 10 won't even be a stakes winner.

Of those that do win stakes races, most aren't going to be anything special. A hardy horse that wins a few stakes races and earns, say, 300k in its career, is still going to be a money loser if it cost more than 300k.

While Steward-bred fillies usually have some residual value, even if suffering a lackluster racing career, they tend to cost more than colts. Most of the lowest priced horses at Steward-bred auctions are colts.

If you're a SIMperior subscriber (something I highly, highly recommend), you're hopefully reading the weekly Edge newsletter. Each newsletter highlights a Steward-bred in an upcoming auction. Like anything else in SIM, nothing is guaranteed. I speak from much unfortunate experience when I say that just because a youngster is mentioned in the Edge doesn't automatically mean it's one of the better horses in the auction (though it might be).

Occasionally, newish players frustrated with their lack of financial ability to acquire a Steward-bred, suggest that there should be a small Steward-bred auction just for new players. Remember, the whole point of Steward-bred auctions is to take money out of the game. Having an auction for the SIM's poorest players isn't going to accomplish such. Instead of bemoaning the high prices of Steward-bred auctions, I suggest using those high prices as motivation to focus on building up your own bank balance with profitable horses. Players like me -- who have $30 million in the bank and can easily afford Steward-breds -- started out with the same 100k that you did. A big factor in building up my bank balance early on was not paying more for horses than they could earn back.


NOTHING IS GUARANTEED - NOR SHOULD IT BE
I remember, perhaps seven or eight game years ago, one of the SIM's top (and most wealthy) players, got on the forum to announce the Steward-bred filly he'd just purchased for $7 million was a mere "hard to tell" galloper (now known as "solid"). It happens.

I've bought a horse for $2 million that was a dud, and he ended up claimed from me for $25,000 at the end of his 4yo season. I also remember a 900k purchase, many years ago, that was completely worthless. He barely managed to break his maiden, and got claimed from me cheap in Alaska. At most Steward-bred auctions, I spend one to two million, and end up with a money-losing modest stakes winner. Sometimes, I do better, sometimes worse. Ultimately, I'm always hoping to hit on that special horse. So, I keep trying.

It sometimes happens that a Steward-bred only costs a few hundred thousand, and ends up earning a million or more. One of my biggest bargains, many years ago, was a turf sprinter that cost a mere 142k. While his profit on the track was only a modest 700k, he was still highly exciting for me, because he was a Grade 1 winner that won 10 of 17 starts. He got little interest at stud, but he was a wonderful "home" stallion, and sired quite a number of hardy 100k+ earners for my stable. He's been pensioned a few years now, but a couple of his daughters have produced stakes winners for me. Though he's not a big-dollar horse from any standpoint, he's been enormously important to the turf sprint division of my operation. It's stories like him that keeps me coming back, auction after auction.

Buying a Steward-bred is a risk, just like anything else, and just like real life. Most of the time, you're going to be disappointed in how the horse performs, relative to its cost, and it's important not to spend more than you can comfortably afford to lose.

Steward-bred auctions are also often a player's best chance at getting something special.

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