Why American Pharaoh, the 1st Triple Crown Winner in 37 Years, Is Worth $48 Million

A stud in more ways than one. JL

Maggie McGrath reports in Forbes:

A horse’s value is calculated by multiplying his expected stud fee (the price to breed him to one mare). One-hundred and twenty mares a year for four years at a $100,000 stud fee gives Pharoah a $48 million value.
The drought has been broken. We have a Triple Crown winner.
In a wire-to-wire victory in the Belmont Stakes, American Pharoah has become the first horse to win the Triple Crown in 37 years. Not since Affirmed crossed the wire ahead of Alydar  in 1978 has this been done.
“[I knew we would win] in the first turn,” jockey Victor Espinoza said after the race. “I tell you, I had the best feeling ever when he crossed the first turn.”
The official margin of victory was five-and-a-half lengths. The 6-horse, Frosted, came in second. The 7-horse, Keen Ice, came in third. Rounding out the rest of the field (in order of finish) were Mubtaahij, Frammento, Madefromlucky, Tale of Verve, and Materiality.
“It’s very emotional. I was hoping it would happen,” trainer Bob Baffert said. “I just feel like I have a very special horse. He’s the one who won, it wasn’t me.”

It was a show-stopping race for a horse that, throughout his Triple Crown campaign, was consistently described as quiet, relaxed — and a horse that floats down the track. He certainly looked like he was floating Saturday evening, and it’s not a stretch to say that Pharoah was bred for this type of greatness: his father, or sire, is Pioneerof the Nile, a horse who placed second in the 2009 Kentucky Derby. His grand-sire is Empire Maker, the horse that won the 2003 Belmont Stakes and denied Funny Cide his Triple Crown victory.

Interesting, it’s this pedigree that could prove even more valuable than the $800,000 he just won by placing first in the Belmont and landing in horse racing history.

“The sire line is very stamina oriented, but the female line of descent — the dam, the second dam, the third dam — they’ve all been very speed oriented horses,” says Sid Fernando, president and CEO of thoroughbred research and consultant Werk Thoroughbred Consultants. “It’s a unique pedigree, in a way.”

Between that unique pedigree and his Triple Crown win, FORBES estimates that American Pharoah is worth nearly $50 million. Though his breeding rights were sold to Coolmore Ashford Stud in late 2014 for a reported $13.8 million, this figure does not account for Pharoah’s full value: for one, owner Ahmed Zayat retained 100% of Pharoah’s racing rights. For another, the deal was struck before Pharoah’s three-year-old season — so before he won the Derby, the Preakness, and now, the Belmont. (Coolmore did not respond to a FORBES request for comment.)

“His race record is sheer brilliance,” said David Ingordo, the bloodstock agent who helped Zayat buy American Pharoah back after selling him at auction in 2013. “He could be a $100,000 stud fee stallion pretty easily.”

The industry rule of thumb dictates that a horse’s value is calculated by multiplying his expected stud fee (the price to breed him to one mare) by 300 to 400. This math assumes the horse will “book” 100 mares per year over three to four years, though stellar stallions could conceivably book 120 to even 150 a year. The stud fee is due when the foal is born; as long as the foal survives, the breeders get the paycheck. And since Coolmore has farms in North America and Australia and could stand American Pharoah for breeding seasons in both locations, booking 120 mares is not outside the realm of possibility. One-hundred and twenty mares a year for four years at a $100,000 stud fee gives Pharoah a $48 million value.

Others put his value a bit below that eye-popping figure.

“I would not expect the Coolmore team to stand him at that price, but anything is possible,” said Peter Bradley, a Kentucky-based bloodstock agent. Bradley estimates Pharoah could stand at stud for $75,000, a fee that, multiplied by 120 mares over four years, puts his price tag closer to $36 million.

Glenye Cain Oakford, author of The Home Run Horse, a book about horses that become stallions after finding success on the racetrack, agrees that $75,000 is a realistic stud fee for Pharoah, but ultimately caps his value at $25 million. “I admit, I’m probably more conservative than some people, but then again, that Triple Crown can add a certain amount of charm that we’ve not seen in 37 years, so I don’t know what the market does with that,” she said.

“You almost start handicapping him again when he goes to stud. The genes he carries are crucial to the breeder’s decision as to whether he’s a worthy gamble as a sire,” Oakford added. “The race record is also important, but this horse has what appears to be an emerging pedigree.”

Oakford notes that because both Pharoah’s sire and dam are relatively young — his sire is only on his third crop of foals, and dam has produced just four foals, two of whom have raced and one of whom has turned into American Pharoah — Pharoah has helped his own pedigree. She and experts say that his sire, Pioneerof the Nile, could see his own stud value jump from its current $60,000 price tag to as much as $100,000.

This and other stud-fee hypotheses will be tested in the coming year. In the meantime, those who compared him to the likes of Affirmed and other thoroughbred greats can rejoice in knowing that American Pharoah has, indeed, become just the 12th horse ever to win the Triple Crown.

“Thirty-seven years we’ve waited for this but, you know what, this little horse deserves it,” Baffert said. “There’s something about this horse that he just brought it every time. He’s a joy to be around."