June 4 (Bloomberg) -- Steve Coburn likes to recall how he was called a “dumb ass” for spending $8,000 on the mare who gave birth to California Chrome.
While Coburn and his partner, Perry Martin, did just that - - and proved to be shrewd investors with all that California Chrome has accomplished on the racetrack -- his horses’ pedigrees again are being devalued.
Martin and Coburn said they turned down an offer of $6 million for 51 percent of California Chrome before his win last month in the Kentucky Derby. His trainer, Art Sherman, said the chestnut colt was worth $30 million after he won the Preakness Stakes by 1 1/2 lengths on May 17.
Even if he wins the 1 1/2-mile (2.4-kilometer) Belmont Stakes on June 7 to become the first Triple Crown winner since Affirmed in 1978, his value may be closer to half that amount, breeders said, because of a less-than-royal bloodline and a consolidated horse-breeding industry.
“The top value on this horse is $15 million if he wins the Belmont and closer to $8 million if he doesn’t,” said Peter Bradley, founder of Bradley Thoroughbreds LLC in Lexington, Kentucky.
California Chrome’s pedigree is “minor league,” though his potential at stud will improve with his on-track success, according to pedigree consultant Bill Oppenheim.
“For now on, it’s a better pedigree,” Oppenheim said in a phone interview.
Valuations for stallions, who usually are able to cover 100 or more mares per year, generally are created by multiplying the stud fee by 300 to 400 times -- covering the length of time needed to learn whether the horse will produce strong runners -- and then adding an estimate of additional race winnings, according to Oppenheim.
“To me, $10 million right now, if the wheels came off tomorrow,” Oppenheim said about California Chrome’s value, estimating a stud fee of $20,000 to $25,000. “If he wins the Triple Crown, I think the figure doubles.”
Which still would be a nice return for Martin and Coburn, thoroughbred racing neophytes who call themselves Dumb Ass Partners, a name that grew out of the purchase of that mare. California Chrome was the first foal from the $8,000 mare Love the Chase, which was bred to sire Lucky Pulpit for $2,500, and the colt has already earned $3.2 million in purses. The winner of the Belmont, at Belmont Park in Elmont, New York, gets $800,000.
Doug Cauthen, who runs Doug Cauthen Thoroughbred Management LLC in Lexington, said California Chrome can get anywhere from a $20,000 to $50,000 stud fee if he takes the Belmont.
“I’d be in the 20-30 range, probably, but I’ve had plenty of people think more,” said Cauthen, whose brother Steve rode Affirmed to the Triple Crown 36 years ago. “His value as a racehorse, as America’s horse, could be more than his stud value.”
The owners may also benefit from endorsements. Two days ago, footwear company Skechers USA Inc. announced a deal to sponsor California Chrome as he contends in the Belmont.
Other companies that might be interested include the maker of the nasal strips used by the horse; Google Inc. for its “Chrome” Internet browser, and other makers of chrome products such as Kohler Co., said Bob Dorfman, executive creative director at Baker Street Advertising in San Francisco.
“I’d say maybe $1 million in endorsement opportunities for a Triple Crown-winning California Chrome,” Dorfman said in an e-mail.
Curlin, whose $10.5 million in purse earnings are a record for a North American thoroughbred, entered stud in 2009 at $75,000, according to Bloodhorse.com, making him a $30 million horse. The highest announced fee for an incoming stallion since Curlin was $35,000 this year for Animal Kingdom, the website said in December.
Jim Squires, a breeder who has written books on the horse industry, said he had trouble believing Dumb Ass Partners’ claim of a $6 million offer for 51 percent of California Chrome before the Kentucky Derby.
“Whoever did that was an idiot,” Squires said in a telephone interview.
California Chrome is worth $5 million to $10 million without the Belmont win and perhaps $15 million with it, Squires said. The horse’s pedigree isn’t as poor as others suggest, he said.
“If you look at the pedigrees of the past three Triple Crowns, this horse probably has a better one,” said Squires, who bred 2001 Kentucky Derby winner Monarchos out of a $13,000 mare and a $7,500 stud fee. “They didn’t have any better thoroughbred blood than he does.”
For California Chrome’s value to hit $30 million, top international operations such as Coolmore Stud in Ireland, or Darley Stud, owned by Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum, will have to show interest, Squires said.
“When Sheikh Mohammed and the Irish get involved in anything, it goes nuts,” he said. “If they decided they wanted this horse and started bidding on him, he could get to $30 million.”
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