American Pharoah’s win will spark breeding gold rush – for his sire

NEW YORK – American Pharoah’s Triple Crown win might mean millions in future earnings for owner Ahmed Zayat because of a different horse in his stable.

American Pharoah made history Saturday at the Belmont Stakes, becoming the first horse since Affirmed in 1978 to win all three Triple Crown races. In those 37 years, 12 horses unsuccessfully ran the Belmont with a Triple Crown on the line.

While Zayat will profit off the race, he’s already sold American Pharoah’s breeding rights. Thanks to what he called dumb luck, he does, however, still own 75 percent of American Pharoah’s father, Pioneerof the Nile, which might turn out to be more profitable.

“If you asked most breeders if they’d rather breed to a Triple Crown winner, or breed to the sire of a Triple Crown winner, the majority would take the latter,” said Rommy Faversham, a pedigree analyst and contributor to the 2004 book “Racehorse Breeding Theories.”

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A horse’s racing performance doesn’t directly correlate to success at stud – the price generally grows once a stallion’s offspring show success on the track. Tapit, the most expensive stud in the U.S., for example, started at $15,000 and his fee is now $300,000.

So while American Pharoah’s stud fees will start high because of his success – in the neighborhood of $75,000 according to Faversham – that number is partially pegged on speculation. Pioneerof the Nile, by contrast, a 9-year-old who was runner-up in the 2009 Kentucky Derby, is proven.

That Zayat still owns 75 percent of the horse is a fortunate coincidence, according to the owner. When he syndicates his stallions, or sells a part of them, Zayat said he typically only stays in for 25 percent, but the market was soft when Pioneerof the Nile was shopped.

“Sometimes it’s better to be lucky than smart,” he said.

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Pioneerof the Nile stands at WinStar Farm in Versailles, Kentucky, where he’s been since Vinery Stud closed two years ago. His stud fees tripled this year to $60,000, and probably will rise again to more than $100,000 in 2016 depending on results the rest of the year, according to Darren Fox, director of the stallion breeding season at WinStar.

American Pharoah’s year comes at a perfect time for Pioneerof the Nile, who already had success with his first batch of 3-year-olds. That includes Social Inclusion, who finished third in the Preakness in 2014. Owners of top-level mares tend to prefer first-season stallions rather than go to one that had a less-than-successful crop of offspring.

“Typically the fee reduces and the quality goes down,” Fox said in a telephone interview. “Getting this in the second crop shows he’s a sire of note.”

Horse racing has seen plenty of thoroughbreds who had success on the track go the other way. For example, 1948 Triple Crown winner Citation, the first horse to win over $1 million in prize money, was “one of the biggest stud failures of all time,” according to Faversham.

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Pioneerof the Nile is the son of Empire Maker, who spoiled Funny Cide’s Triple Crown bid at the 2003 Belmont. During the season he breeds twice a day and three times every other day, according to the New York Times. Stallions typically father around 125-150 healthy foals a year, Fox said.

Zayat announced in May that he sold American Pharoah’s breeding rights to the U.S. arm of Ireland’s Coolmore Stud. While terms of the sale weren’t disclosed, Zayat said there was an escalator in the contract should the colt win the Triple Crown or other races later in the season.

The breeding rights are now probably worth around $30 million, according to Bill Oppenheim a horse racing analyst and columnist for Thoroughbred Daily News.

Zayat will continue full ownership of the horse for the rest of its racing career, and said Saturday that he would like to keep running this year, though Coolmore will be included in that decision after the Belmont win. It’s undecided if he will race as a 4-year-old or start breeding next year.

Zayat’s road to the Triple Crown podium came after putting Zayat Stables in bankruptcy in 2010, which allowed him to shield $37 million worth of horses, including Pioneerof the Nile, from creditors. He ultimately settled with the bank by restructuring his loan, which cleared the way for American Pharoah to be born into his possession two years later.

When asked Saturday about Pioneerof the Nile, Zayat said it was “mind-boggling” how important the horse has been to his stables.

Faversham said it was a savvy business move by Zayat to sell off American Pharoah’s breeding rights while retaining a large part of the syndicate that owns Pioneerof the Nile. Before the race, American Pharaoh trainer Bob Baffert praised Zayat’s business approach.

“At the end of the day he has to sell these horses,” Baffert said. “You have to sell in order to stay with it.”

His stake in Pioneerof the Nile will help as well. The stallion’s relative youth also means he has fewer living sons, which likely boosts the value of his yearling colts as they go through the sales ring.

“There’s scarcity value to the Pioneerof the Nile line,” Fox said. “It insures that he and his sons remain in high demand.”