With the 2 year-old racing season fast approaching, I wanted to look at this year’s Freshman Sires and try to predict who will do well with his First Crop of 2 year-olds. My goal was to use only quantitative factors that I could measure, leaving aside subjective judgments that are difficult to prove. For this article the term Freshman Sire is used to mean any sire whose First Crop will be two year-olds of this year.

First Crop success seems to be of paramount importance in making the long-term career of a sire. The market tends to punish stallions that fail to produce good numbers with their first two-year-olds. Even if a stallion subsequently begins to produce good horses, he may still be perceived as a poor value.

In order to predict the success of the 2007 freshman class, I analyzed two years worth of data for 50 Freshman Sires. I looked to find out which factors, if any, would predict the success or failure of a sire’s First Crop. I singled out many factors that were quantifiable and that could be indicative of First Crop earning potential including:

(a) Running ability of the sire,
(b) Quality of mares bred,
(c) Number of foals produced in the First Crop,
(d) Initial stud fee, and
(e) Yearling average of their first yearlings.

In this article, I will examine each of these factors individually, collectively and then try to predict which sires are more likely to lead the First Crop Sire Charts this year. It must be noted that the goal of this article is only to study the performance of a sire’s First Crop of two year olds only and does not intend to give any conclusions on the long-term overall ability of the stallions in question.

a) Running Ability of the Sire

The data showed that there was no statistically significant relationship between either the sire’s ability as a racehorse or his running ability as a 2 year-old and his First Crop success.

The reason for this lies in the fact that most stallions for which I was able to compute data were very accomplished as racehorses. There just isn’t enough information from unsuccessful racehorses that are given a good opportunity at stud for comparative purposes.

b) Quality of Mares Bred

I was, however, a little surprised to find that there was also no statistically significant relationship between the quality of mares bred as measured by the Cumulative Index and First Crop success. As can be seen from the chart below, there is an obvious tendency of higher CI stallions to obtain higher earnings in their freshman crop but it is undermined by other high CI failures:

Horses like Monarchos with a CI of 2.85 and total First Crop earnings of $311,000 seriously undermined any statistical relationship. Came Home and Aptitude also had terrible First Crop earnings despite a very high CI.

c) Number of Foals

The number of foals that a stallion produces in his First Crop is statistically significant in predicting success with the First Crop, as can be seen in the chart below.

There is a clear trend that can be seen and as the number of foals increases, the earnings of their sire tend to increase as well. The best example of this is Johannesburg with a whopping 141 foals in his First Crop and consequently very high earnings of over $1.7 Million. But number of foals, of course, does not guarantee success; horses like Buddha with 121 foals only produced 7 winners and just had over $200,000 in earnings.

d) Initial Stud Fee

I also looked at how stud fee impacted the success of a stallion. I found a statistically significant relationship between stud fee and First Crop earnings.

Tiznow, Street Cry and Johannesburg all had stud fees of $30,000 and did very well in overall performance of their first corp. Meanwhile, Came Home, Aptitude, Monarchos and Red Bullet were all high stud fee flops – they all stood for $25,000 or more and none of them surpassed $350,000 in total First Crop earnings.

e) Yearling Average

Yearling Average was also a significant factor. Tiznow did well by buyers who believed enough in him to pay $134,000 for his First Crop of yearlings. He finished first in the Freshman Sire list in 2005. Also, both Street Cry and Johannesburg, who finished 1 and 2 respectively in 2006, had yearling averages of over $100,000.

High yearling prices alone do not guarantee success. A fact that is often ignored by buyers who keep spending inordinate amounts of money to purchase foals out of First Crop sires. There were three sires that had high yearling averages and yet had First Crop earnings of less than $350,000: Came Home was the biggest first year flop with a yearling average of over $105,000. Next was Monarchos with a yearling average of $86,000 and finally Buddha who sold for $67,000.

I suspect that there would be a strong correlation between two year-old sale average and First Crop earnings. However, I did not find enough data to adequately prove this relationship. First, some sires don’t sell horses at the two year-old in training sales and second, those that do sell foals, only sell a small number of them and thus the results may not be representative from a statistical standpoint.

f) Combination of Factors

I conducted regression analysis combining all of the significant factors I was able to identify. The factors I took into account were number of foals, stud fee and yearling average. I found a statistically significant correlation between these factors and subsequent earning for the stallions. The drawback was that the R2 (Simple Coefficient of Determination) for the relationship which defines how much of the earnings are predicted by these factors is only .48 which is a very low figure.

This means that only 48% of variations in Earnings can be explained by the Regression equation that takes into account all these factors. The remaining 52% of the variations are the effect of other variables or unknown factors. The very low R2 that can be obtained through measurable criteria underlines the inherent risks that purchasers and breeders face when betting on first year stallions.

No matter how good the race record, breeding, and quality of mares a stallion is able to obtain, his chances to succeed in his first year are not much better than a coin toss.

Handicapping the 2007 Champion Freshman Sire

I will now try to predict the outcome for this year’s Freshman Sire crop using only a selective sample of sires (since using all of the more than 100 sires that are retiring this year would prove too much so I hope that this sample can give the reader an idea of how the equations work). This year we have some very interesting sires in our Freshman Sire roster. This particular freshman class is showing record numbers in most of the categories we have examined.

First, four stallions will be standing for $50,000 or more including two for $100,000. We did not have any Freshman Sires that stood for more than $30,000 in 2005 (Tiznow) and none for more than $40,000 in 2006 (Came Home). This trend not only shows that there are more attractive sires this year than in years past but also that there is a stronger market for first year stallions.

Second, for the first time ever we have two sires with yearling averages of over $300,000 and five sires with an average of over $100,000. There was only one sire with an average above $100,000 in 2005 and three in 2006. This trend indicates both, the strength of the market and the illogical appetite of the market for the products of first year sires.

Third, we have a record for crop size in Hold that Tiger who managed to get 156 foals that will hit the track this year. In addition to him, five sires have more than 100 foals in their two year-old crop this year – an amazing number! There were only 3 sires in 2006 with a foal crop of above 100 and none in 2005.

Finally, there has never been such a high quality group of mares bred to unproven horses. Three of the stallions in the class, Empire Maker, Mineshaft and Vindication have a CI of over 4.5! In the previous two years only Tiznow managed to have a book with a CI greater than 3. This trend is very alarming. Just think of how many fantastic mares will be wasted on a failure if stallions like Mineshaft or Vindication prove to be no good.

Prediction: the predicted earnings are well worth studying and are significant in giving us a quantitative measure of just how probable it is that any given sire will succeed with their First Crop. The chart below shows the predicted earnings for that stallion based on the adjusted results of our regression equation. I am also giving for each sire the percentage of the total earnings that its earnings represent which is probably a good approximation of the odds of that sire leading the First Crop sire list.

It was expected that Vindication and Empire Maker would be at the top of the list. What is surprising is how far ahead Vindication is of Empire Maker and how far these two are from third place Mineshaft. Mineshaft’s position in the table is very close to horses like Sky Mesa and Harlan’s Holiday even though his stud fee was extremely high in comparison. Also of note was the fact that Aldebaran only made 13th on the list, a surprising result given his high stud fee.

Final Observations

Another interesting observation I was able to make by reviewing the data was that there was also a statistically significant relationship between First Crop earnings and Second Crop earnings. That by itself is very logical since we expect good stallions to continue to produce good horses and bad stallions to continue to produce not so good horses.

However, when I looked at the R2 for the regression it was only 26%! Which means that the success of a sire with his First Crop only explains 26% of the success of that stallion in the second crop charts. Being that the distributions for other factors such as number of foals, quality of mares, yearling average etc. remains relatively constant from the first year to the second year, it must follow that First Crop success is not a very important factor in assessing the overall quality of a sire at all!

Horses like Aptitude who finished 19th in the Freshman Sire list prove this by becoming the Champion Second Crop Sire. Many breeders, owners and very respectable journalists were quick to criticize Aptitude as a complete failure at stud.

One more example is Point Given who had a terrible first season finishing 33rd in the Freshman Sire list and subsequently finishing fourth in the Second Crop list; his AEI of 2.13 proves that he is a very useful sire.

Strategic Mission also illustrates this phenomenon, after a problematic start at stud that limited the number of mares he was able to cover, he was sent to New York for a discounted fee until he produced the great Showing Up one of only 9 runners for him in 2006.

Conclusion

I found that stud fee, number of two year-olds and yearling average are measurable factors that are statistically significant in predicting the success of a stallion with its first crop. These measurable variables that breeders’ and yearling buyers have at their disposal can actually give us a quantitative model for predicting success. However, I found out that these factors only explain about half of the variation of a sire’s earnings. The remaining variation cannot be explained quantitatively and underline the risk that is inherent in investing in unproven stock.

Every year millions of dollars are spent in the breeding shed and in the sales ring for progeny of unproven stallions. There are clear indications that each year the market overpays more and more for these horses and investors are not making rational decisions and demanding price discounts based on the amount of risk they undertake.

In addition, the market evaluates success with the First Crop as a critical factor in making the reputation of a sire. However, First Crop earnings are not the best indicator of long terms success.

Unfortunately, time and continuous support of stallions are the only way to find out their true value. Shrewd breeders and yearling buyers should take this advice to heart and invest in stallions they like even after their First Crop does not do as well as expected. They will be able to get steep discounts in stud fees or yearling prices and still get plenty of value for their money. Of course it may turn out that the stallion is worthless after all, but this gamble is better than paying the very high prices that a first year sire commands.