THE SECRETS OF THOROUGHBRED SUCCESS

Thoroughbred horse investor Sol Kumin has enjoyed unrivaled success in only his first decade in the Sport of Kings, winning this year’s Pegasus World Cup as well as past Kentucky Derbies and even the legendary Triple Crown. Kumin’s introduction into Thoroughbred racing began on a whim when he and three friends pooled some cash, tapped trainer Chad Brown to select three horses and founded Madaket Stables. The nascent racing endeavor experienced uncanny luck right out of the starting gate: Lady Eli, named after Kumin’s wife, won her first race at Saratoga in 2014, and all three of three of their horses went on to race the Breeders Cup their first year.

“I didn’t even know what the Breeders Cup was, and then Lady Eli won that too,” he recalls excitedly. “We ended up going to Nobu Malibu with 80 people and ripping up all night; it was just one of those great days that we’ll never forget.” Inspired by their early success, and serendipitously between jobs in asset management at the time, Kumin dove deep into data mining, analyzing the numbers to discern exactly what variables he and his partners should look for in their horses. Call it sheer luck or research, the success Madaket Stables has experienced in its first decade of business is nothing short of stunning: winning 92 Grade One races, 12 Breeders Cups, the Preakness three times, the Kentucky Derby twice and even the Triple Crown.

For investors the temptation is clear: the sport holds great risk, but also great rewards. When a horse normally costs between $100 to $200K, winning a marquee race can be a boon. National Treasure’s Pegasus World Cup victory earned it about $1.8 million (60% of the $3 million purse) in just a single race. Just imagine the Saudi Cup’s $20 million purse, won by Señor Buscador this year. And while a massive haul, purse earnings barely scratch the surface. The real money come with breeding rights. Consider two horses of which Madaket Stables was part owners of: Monomoy Girl and Authentic. As a young filly Monomoy Girl was purchased for $100,000, and earned over $4.8 million in her career. Already a superlative return on investment, even when factoring in an annual upkeep of about $60K per horse. But with those superb genetics her breeding rights were sold for a staggering $9.5 million—one of the highest price tags ever notched for a female horse.

But those returns pale in comparison to stallions. Sure, Authentic cost $350,000 and earned $7.2 million in his career. A very healthy return. But when the winner of the 2020 Kentucky Derby and Breeders’ Cup Classic—where he set the track record—sold, he caught his owners a $35 million windfall. Then there’s the aforementioned Justify: while the world-class stallion initially sold for $60 million, after winning the Triple Crown a $15 million kicker pushed the total deal to a record-shattering $75 million.

The reason for this gender disparity being that males can “cover,” or breed, 200-plus mares a year, while mares can only bear one offspring per year. So while 99% of males have almost zero value, the top 1% are worth a fortune as they can charge upwards of $250,000 per mating.

“It’s kind of like venture capital,” Kumin explains of the investment philosophy. “We’ll buy 30 or 40 males a year, trying to find one or two that pays for all of them. Now for females it’s actually the opposite: almost 100% of females are worth something when they’re done, but they can never be worth what the males are worth because the males can breed for 15 to 20 years.” Needless to say, the investment has thus far paid off handsomely for Madaket Stables. But it has an eye always peering towards the future, and Kumin recognizes specifically what Belinda Stronach and her 1/ST team are doing with the Pegasus World Cup as instrumental to the sport. “I love what Belinda’s doing —she’s trying to bring young people in, which is the same thing we’re doing. She gets the aspect of fun, she understands how to throw a party,” Kumin notes. “We need more people like that in horse racing —the sport needs new people to be investing in it.”