Time to re-evaluate business of breeding 

April, 30, 2010

"Moneyball" wasn't really about Billy Beane or the Oakland A's or on-base percentage. At least it wasn't just about those subjects. At its heart, "Moneyball" was about arbitrage: exploiting different prices in different markets, so that what look like fair trades actually result in huge gains for one side. For a good, long while, Beane and the A's were able to find hidden value and underpay for talent because most of the rest of the world didn't properly evaluate on-base percentage, thanks to a combination of tradition and faulty metrics. But those same forces can create arbitrage opportunities in any sport.

When it comes to Thoroughbred racing, more than 30,000 foals are born in the U.S. every year, eventually to compete in some 50,000 races annually -- a huge, far-flung, complicated business with this essential premise: Winners breed winners. Indeed, the real cash in racing isn't prize money -- it's stud fees. That might seem impossible, because the whole point of investing in a foal is to get back a thoroughbred who can win races, but it's true. Storm Cat, the greatest stud ever, sired horses who won a combined $114 million at the track from 1988 to 2008, which one trainer compared to winning the lottery every year. But in just the six years from 2002 to 2007, when he commanded $500,000 for every one of his hundreds of rolls in the hay with mares, Storm Cat earned $233 million for his owners. Like TV shows that cost a lot to produce, then make money in syndication, horses typically hit their peak earnings after they stop racing and start hooking up.

Peter Keating

ESPN Senior Writer
Peter Keating is a senior writer at ESPN The Magazine, where he covers investigative and statistical subjects. His column, The Numbers, appears in every issue.