Sport: Breeders, Place Your Bets

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A horse must still win races to acquire value. But the big payoff is now in the breeding barn. In the '50s a horse who won $1 million in purses was worth $1 million as a stallion. Today a million-dollar winner is worth $20 million at stud. One outstanding example is Northern Dancer, whose offspring Sangster often buys. Almost gelded because of his questionable conformation and rank temperament, the 1964 Kentucky Derby winner is now the world's greatest living superstud: 85 of his progeny (one in five) are stakes winners. His going rate is $300,000, but his 14 get at Keeneland were sold for an average of $888,571 each. The 21-year-old still covers 40 mares each season.

Even with a Northern Dancer in his bloodline, every yearling is a longshot. But Sangster can use his superstars to cover the losers. Moreover, his worldwide sources enable him to place what he delicately calls "the lesser horses" where they bring the best possible fees. One far-out deal: a stud standing in Tasmania.

Investors with less imposing assets can still take a shot at this high stakes venture. New York Agent Peggy Vandervoort has been putting together modest ($25,000 to $125,000 per share) horse-investment deals for years. Says she: "It's smart to pool your resources with a lot of other people. You can get in on eight or nine horses for the price of one." Every small-timer remembers that Triple Crown Winner Seattle Slew was bought by comparative newcomers for $17,500 and syndicated for $12 million. The Thoroughbred market of today, however, resembles the publishing industry: the blockbusters are fine, while the middling books are in trouble. The Wall Street Journal recently checked out 26 horse-investing partnerships formed in 1977-79. Twelve made a profit, nine lost and five broke even after taxes. Says Analyst Fierro: "The bottom of the market collapsed in November; the middle is experiencing some softening. If you don't like horses, don't come in." For those who love the smell of the liniment and the roar of the parimutuel, however, there is no investment that can match the thrill. Consider the dreary alternative: no one ever got to kiss a Krugerrand in the winner's circle.

— By J.D. Reed.

Reported by Jef McAllister/ Isle of Man and Janice C. Simpson/ Saratoga Springs