- The Washington Times - Friday, May 18, 2001

BALTIMORE — The $100 million-plus he invested in horse racing was short money to Bob McNair. After all, he spent $700 million for an expansion football team.
The Houston Texans owner enters Congaree in tomorrows 126th Preakness Stakes at Pimlico Race Course. After co-breeding 2000 Kentucky Derby winner Fusaichi Pegasus, McNair quickly learned that thoroughbreds are like real estate — oceanfront sells better than swampland.
"If you work on the high-end quality side, you have a better chance of making a profit than on the cheap side," McNair said. "I had to first convince myself we could make money in it. When I became confident, I invested in it, but you cant let your emotions rule."
The Triple Crown races feature the million-dollar babies. They're the supermodels of horseflesh, the sons of bluebloods. Its like the Kennedy, Gates and Walton families of horse racing that rule the "Sport of Kings."
That doesnt mean they rule the crown, though. None of the four $1 million-plus colts in the Derby finished better than eighth; the winner Monarchos cost just $170,000.
For every son of a fashionable stallion that wins a Triple Crown race, there is a down-and-out story of some long shot from nowhere. Only three of the last 30 most expensive yearlings since 1982 later won the Derby, including Fusaichi Pegasus last year at a startling $4 million. However, five of the last 12 Derby victors cost less than $32,000.
"Theres always that American dream that it could happen to me," said New York trainer Joe Orseno, whose Red Bullet won the 2000 Preakness. "Thats what the racing business is about. Theres too many stories of your [1977 Triple Crown champion] Seattle Slews selling for $17,500. You can run the numbers. All the horses that brought $2 million or $3 million arent always the ones [in the Derby]."
Essentially, the gambling isnt confined to the mutuel windows. The appropriate racing axiom is, "Breed to the best and hope for the best."
"Youre gambling the horse grows into something," said former Washington Redskin Sam Huff, who has long bred and raced thoroughbreds in Middleburg, Va. "If he is special, people pay a lot for it."
The sales prices can be dizzying, especially in good economic times and with rich foreign buyers. Several Arab sheiks have more than $1 billion invested in horse racing and spend more than tens of millions of dollars at the annual Kentucky sales.
But its often a good investment, especially when it comes to buying the more expensive horses. The wife of former Duke basketball star Bobby Hurley hung up on him when he told her he had spent $1 million on Songandaprayer. But after winning the Fountain of Youth Stakes on Feb. 17, the 3-year-old colt easily will earn a profit as a stallion, where stud fees can reach $400,000 per mating. Louisville basketball coach Rick Pitinos A P Valentine enters the Preakness after a recent syndicated breeding deal for $15 million. Not a bad profit for a $475,000 purchase.
"The high end is the only place you can make money," Huff said. "If he wins a stakes, you can sell him for $30 million."
Said Orseno: "When they give big money for horses, they have bloodlines. You hope to have a great career. You win your share, but then you have something to fall back on ."
Although racehorses can be bought for as cheaply as $5,000, this is not an inexpensive business. The average thoroughbred costs at least $20,000 annually to train. Theres the groom, trainer, jockey, blacksmith, dentist and veterinarian, along with the food, transportation and entry fees.
No wonder less than half of horse owners make money. The key is smart management. Running the horse at the proper levels is essential; its better to be a favorite in a $50,000 race than 100-1 in a $1 million stakes. The Preakness costs $20,000 to enter, but the winner gets nearly $800,000. Even a fourth-place finisher earns more than $75,000.
"Any horse should make $25,000 a year. If you finish second or third a few races, you should make that," Orseno said. "If hes not a New York-caliber, theres plenty of other markets now. You dont have to go to a place where you run for no money. You might not get to see your horse run, but at least youre making money. It doesnt cost any more to keep a good horse than a bad horse. I dont charge any extra for stakes winner than I do for a claiming horse."
McNairs dream is to win a Triple Crown with a horse he has bred. During NFL meetings, he often chats with Buffalo Bills owner Ralph Wilson and Baltimore Ravens owner Art Modell, who also race thoroughbreds, about horses rather than football.
McNair sold his power company in Houston for $1.5 billion in 1999 and spent lavishly on racing. He bought 35 broodmares owned by the estate of Washington Redskins owner Jack Kent Cooke, a Kentucky horse farm and partial interests in leading stallions Deputy Minister, Seeking the Gold and Sky Classic. McNair has nearly 200 horses now, with Congaree the 5-2 second choice to win the Preakness.
For McNair, assembling a strong stable is like forming a football team.
"Its about getting quality athletes," he said. "Youre dealing with animals instead of human beings, but you still have to pick the ones with attention, good work ethic and attitude."
And, McNair says, there is an advantage to dealing with horses: "When they do well, they dont come back for a raise."
For many wealthy owners, horses are an investment that brings more enjoyment than real estate or stocks. Huff turned a free breeding session between a worthless stallion and a broodmare into a filly that later won $450,000. Today, Bursting Forth is in foal to a possible $1 million yearling.
"They call it the 'Sport of Kings because people who worked all their lives and accumulated money use it is an exciting way to spend their money," Huff said. "I can imagine how the parents of [Olympic gold-winning gymnast] Mary Lou Retton felt when she performed a perfect 10. Nothing is as exciting as a horse coming down the stretch with a chance to win a big race."
Many prominent owners say personal satisfaction often outweighs financial success.
"If youre doing it to make money, youre in the wrong business," said Maryland breeder Robert Meyerhoff, who pocketed $500,000 when his Include won the Pimlico Special on Saturday. "You have to be able to afford it. You can make money, but you have to know what youre doing."
Frank De Francis, the one-time Maryland Jockey Club president, often bred his horses to mediocre stallion Hail Emperor. Occasionally, one of the offspring would emerge as a low-level winner that sent the Pimlico track owner running to the winners circle.
Now MJC president Joe De Francis is following his father into ownership. Unfortunately, several of his horses have been injured while training for their first races. The bills pile up without even his getting a chance to see them compete.
"Now I feel the pain of ownership," he said.
But at least, De Francis still owns the tracks.

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