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Nuances for Newbies - Pricing the Horse of Racing Age
Original article written by Regina Moore posted 13 years 0 weeks agoI’m going to present an argument that only under rare circumstances should one ever pay more than $15,000 for an experienced racehorse.
For many, it can be a giddy feeling to buy a horse that once won a Grade 2 $100,000 stakes. But if the horse is a 5yo and that stakes victory happened when he was a 3yo, then it really doesn’t matter that he was once a stakes winner. What matters is what the horse can do for you *now*. I know this can be a difficult idea to grasp, because most of us would like to think that we can return such a horse to its prior stakes winning form with some tender loving care.
Racehorses are athletes. Just like people, age takes its toll. The aged horse can still win races, but they’re likely to be much lower quality races than what they once were able to win.
On the main sales page, players will sometimes put horses up for sale for roughly the same price as their earnings. Say, a 6yo that has won $80,000 will have an asking price of $75,000. Such pricing is ludicrous. Even if the horse has some gas left in the tank, it’s highly unlikely that they are going to win anywhere near as much money from age 6 thru 9 as they did from ages 2 thru 5.
For most horses, I look at it this way: It’s probably reasonable to expect an average, everyday horse to win one race a year. Mostly likely, that’ll be a claimer or an allowance race. If the purse was a modest $15,000 (some are lower, some are higher), then the horse will earn $7500 for the victory. With placings in other races, let’s say the horse can be expected to earn $12,000 in the upcoming year. With that figure in mind, $12,000 is too much to pay for such a horse, because all you’re doing is breaking even (actually, losing a little, when considering board and shipping expenses). If you pay $10,000, you might make a tiny profit. If you paid $5,000, now that horse is an asset for your stable. If you paid only $1,000 for the horse, he’s downright valuable to you.
So, even if the above horse won a $100,000 stakes race in his distant past, I wouldn’t want to pay $10,000+ for him if he’s five or six now. Of course, if his *recent* record has shown that he can sometimes place in stakes, you might be willing to pay a little more, with the expectation that the horse will continue to earn purse money in occasional stakes. Just be careful of assuming too much, because any horse can suddenly reach the end of his earnings potential and go downhill fast.
Here’s another way of looking at the above: Most average, everyday horses can cover their racing expenses (board, shipping, etc.) with purse earnings, because expenses in SIM aren’t as high as in real life. Therefore, whether you make money or lose money with a horse is usually going to come down to how much you paid for it in the first place. The more you spent to simply obtain the horse, the less likely you’ll make a profit. The less you spent to obtain the horse, the easier it will be for that horse to pay for itself and then start being a genuine money maker for your barn.
For as long as I’ve been in SIM, it has been a buyer’s market, because there’s far, far more horses for sale than there are buyers that want them. Therefore, buyers have every right to expect to see horses priced at an amount that leaves them room to make a profit. With the sales list, you can sort by seller. I would bypass any seller that has experienced racehorses priced equal to, or above, what the horse is likely to earn in its next full racing year.
Or, you can try negotiating the price, and that subject is in another article.