Taking Stock: Justify Sale Significant for WinStar and Coolmore

This year's Triple Crown winner Justify (Scat Daddy–Stage Magic, by Ghostzapper) was moved from WinStar Farm to Coolmore's Ashford Stud on Monday after it was announced that the big chestnut had been sold by a WinStar-led partnership to John Magnier's Irish-based powerhouse, which also stands 2015 Triple Crown winner American Pharoah. Rumors of a pending sale of Justify's breeding rights had been floating since the Preakness, when Darren Rovell of ESPN was the first to write about it and the dollars involved, which he reported over the summer as $60 million for the rights and an additional $15-million bonus for sweeping all three Classics. If Rovell is correct, the $75 million valuation would be the highest for a horse entering stud.

The transaction represents different strategies for the buyers and sellers, all of whom are high-stakes players and competitors in an increasingly global game that's centered around the development and control of international sire power.

Justify's breeding rights were owned by Kenny Troutt's WinStar (60%), China Horse Club (25%), and SF Bloodstock (15%). WinStar stands 22 stallions, including American Pharoah's sire Pioneerof the Nile, and it was an unusual move for a stud farm of the magnitude of WinStar to sell one of the most attractive stallion prospects in the world to a competitor.

WinStar CEO Elliott Walden explained the farm's position the other day. “It was an extremely difficult decision,” he said. “You know, he was a horse owned by a multiple ownership group, with SF and China Horse Club, and it was something we had worked on for a while. It was a hard decision because we do want to stand those types of horses, but it was a business decision that we made because we felt that it would be able to move us forward from a standpoint of where we are in the stage of the farm, and from a security standpoint of being able to reinvest in more and better bloodstock and to invest in our facilities here at WinStar.”

Walden did say that the partners would retain breeding rights in Justify. “Coolmore's been great to work with. All the owners are going to be able to breed to the horse,” which was another consideration in selling to Coolmore, he said, instead of to a Japanese syndicate that made several offers for the horse. I was told of the Japanese overtures by a source from Japan who requested anonymity to discuss the deal.

“It wasn't the obvious guys, like Shadai or Big Red or JBBA. it was an investment team,” my source said. “You know, like the way it happens in New York now, you have those entities like SF Bloodstock and those kinds of groups–investment teams. This was an investment team. It was a serious group from Japan. They kept going, they kept trying, but in the end they gave up. The sellers were not willing sellers. The Japanese team stopped because every time they made an offer, it was rejected.”

The price of the bids was not enough to convince the owners to sell, as money wasn't the only consideration. Walden confirmed this. “It was the offers,” he said, “and [it was] also the ability to breed to the horse here that made a big difference.”

Coolmore Connections

At Ashford, Coolmore essentially developed the line of sires that led to Justify, so its interest in the latest Triple Crown winner runs deeper than the acquisition of an iconic horse. The physically impressive Justify was bred by the successful boutique operation of John and Tanya Gunther's Glennwood Farm and was among the highest-rated yearlings at Keeneland in 2016 for Coolmore's buying team of Paul Shanahan and M.V. Magnier. They passed on the colt only because he'd failed the vet, and the WinStar group landed him for $500,000. The New York Times reported this year that the colt had surgery on a stifle for OCD lesions. At the same sale, however, Coolmore paid the top price of $3 million for Mendelssohn, another Grade l-winning son of Scat Daddy who appears likely to stand at Ashford as well.

When it comes to identifying and developing global sires and sire lines, Coolmore is without peer, especially with stallions that trace to Northern Dancer. Sadler's Wells (Northern Dancer) and his sons Galileo and Montjeu are dynastic in Europe, and Coolmore has played a major hand in the international development of Danehill (Danzig), Storm Cat (Storm Bird), and War Front (Danzig). They are banking on Scat Daddy's sons carrying on for him in a similar manner.

“When Scat Daddy's first crop were yearlings, I remember meeting renowned [Irish] judge Willie Browne of Mocklershill Stables at the sales in Kentucky,” Shanahan recalled. “He said they looked like real European horses–quality, great movers, slick. So the Americans didn't go for him initially and the perception of him as a turf sire continued until his stock hit the racetrack and began to prove successful on dirt. As with American Pharoah, I am totally convinced that elite dirt horses like Justify can work in Europe. Like American Pharoah, he has terrific movement, so I see no reason why he won't sire successful grass horses as well as dirt horses.”

Walden agreed. “I personally think–and Bob [Baffert] and I have talked about this–that Justify could have won at Royal Ascot. He could have won the St. James's Palace if we went that direction. He's so talented. But take one look at him, and he looks like a dirt horse. The strength that he has, the balance, and he's out of a Ghostzapper mare.”

Coolmore spokesman Richard Henry noted that with the purchase of Justify, the stud farm now owns Scat Daddy's five Grade l/Group 1-winning Northern Hemisphere sons–No Nay Never, Caravaggio, and Sioux Nation, in addition to Justify and Mendelssohn–and said that “it's highly unlikely any of them would be for sale.” He added: “If Scat Daddy were alive, he'd now stand for as much as the most expensive stallion in the States,” and in that he's not wrong.

Anatomy of Storm Bird Line

“My grandfather M.V. O'Brien built Ballydoyle off the backs of some brilliant American Classic horses. In Justify and American Pharoah we now have two all-time greats, so we couldn't be more optimistic about the future,” said M.V. Magnier, John Magnier's son. He could have strictly limited the discussion to Kentucky Derby winner Northern Dancer, whose sons were so instrumental for Vincent O'Brien, Ballydoyle, Robert Sangster, and Coolmore. O'Brien trained such Northern Dancer Classic winners as Nijinsky, El Gran Senor, The Minstrel, and Sadler's Wells, among others.

The genesis of Scat Daddy begins in the early 1980s when the European-raced Storm Bird (Northern Dancer), a champion 2-year-old colt for Sangster and O'Brien, entered stud at Ashford, which was developed and owned at the time by Dr. Bill Lockridge and his partner Robert Hefner. Dr. Lockridge was an advisor to W.T. Young, co-owner with Ashford of the Secretariat mare Terlingua, who was bred to Storm Bird in 1982. When Dr. Lockridge and Hefner experienced financial troubles that year, Young bought out his partners in Terlingua, and he was the sole owner and breeder when she produced Storm Cat the following season.

Like his sire Storm Bird, Storm Cat was precocious, and he proved to be a good 2-year-old for Young. By the mid-1980s, as Storm Cat was starting off his stud career at Young's Overbrook Farm, Coolmore owner John Magnier had purchased Ashford, and he and his associates paid close attention, patronizing Storm Cat heavily once he started exhibiting talent as a sire. Storm Cat made his name initially with dirt horses in the U.S. until Coolmore introduced him to Europe, where he widened his appeal. Recently deceased Giant's Causeway (Storm Cat) was an iconic homebred European champion for Coolmore and later a flagship sire at Ashford. Other sons of Storm Cat recruited to stand at the farm included, among others, Tale of the Cat, who's still there, and the W.T. Young-bred Hennessy.

Similar to his sire and grandsire, Hennessy was a top juvenile. In fact, all three were Grade l or Group 1 winners at two and, notably, barely raced at three, but this didn't stop them from succeeding at stud with high-class 3-year-olds. Top racing performance at two is still Coolmore's modus operandus for Ashford-based prospects, and recent examples of this are juvenile champions Uncle Mo and American Pharoah. The stud rights for the latter had been tied up by the farm in the January of his 3-year-old season because of his 2-year-old record, and the Triple Crown turned out to be a bonus.

Hennessy's champion son Johannesburg also fit the pattern. He was an exceptional European 2-year-old for Coolmore in 2001, undefeated in seven starts and a four-time Group 1 winner. Like Arazi a decade earlier, he came to the U.S. to win the Gl Breeders' Cup Juvenile. In three starts at three, however, he was winless. That made the sequence of Storm Bird/Storm Cat/Hennessy/Johannesburg startlingly similar.

Johannesburg entered stud at Ashford in 2003 and got Scat Daddy in his first crop. True to the sire line, Scat Daddy was an accomplished 2-year-old. Coolmore associate Michael Tabor bought into the partnership that owned the colt before his second-place finish in the Gl Hopeful S. in his third lifetime start, and was co-owner of Scat Daddy with James Scatuorchio when he won the Gl Champagne S. in his next race.

But in a departure from the immediate sires that preceded him, Scat Daddy was also successful at three, winning the Gll Fountain of Youth S. and the Gl Florida Derby before a tendon injury in the Kentucky Derby ended his career. By this time, Coolmore associate Derrick Smith had also bought into the horse. The sophomore-year success made him a special prospect from this line of sires for Coolmore when he entered stud at Ashford in 2008.

Just a year later, his sire Johannesburg was jettisoned to Japan (where he's still servicing mares). Hennessy had died in Argentina in 2007 at age 14, so Scat Daddy was asked to carry this branch of Storm Cat into the future for Coolmore, and he did so remarkably, both here, in Europe, and in Chile, until he unexpectedly dropped dead in his paddock at Ashford in December of 2015 at age 11. This was a massive loss for the farm, just as he was scheduled to finally join the elite six-figure club at a $100,000 fee in a few months.

Post Scat Daddy

Ironically, Justify became the first Kentucky Derby winner since Apollo in 1882 not to race at two, though he descends from a line of five sires going back to Storm Bird that were notable for their Grade I-winning two-year-old form. But with his combination of speed and stamina and the constitution to withstand the demands of the Triple Crown, he brings together, in an exceptional physical package, all the aptitudes of his sire, who was known for brilliant European sprinters, nine-furlong dirt horses, and 10-furlong-plus turf runners in the Americas, and this makes him a special stallion prospect for a shrinking global marketplace.

Coolmore already has an early return on its Scat Daddy bets with Irish-based No Nay Never, a multiple Group 1-winning sprinter on turf. With his first runners this year, No Nay Never has begun auspiciously with Group 2 winner Landforce, Group 3 winner Ten Sovereigns, and two Listed winners to his credit, along with four other stakes horses, three of them group placed. One of his stakes winners, the filly Mae Never No (Ire), is with Wesley Ward in the U.S., and she has only raced on dirt. “Wesley believes that his filly is better on dirt than she is on turf–and he has a fair idea,” Shanahan said.

In the case of No Nay Never, Scat Daddy appears to be passing along his traits for quality on dirt and turf, and Coolmore has banked heavily on this with Justify, a horse with far bigger stature. “The U.S. is in dire need of sires whose stock can operate around the globe, and I think we might be lucky enough to have two of them,” Shanahan said, referencing both Triple Crown winners at Ashford.

“Justify is a physical beauty, and he will suit a wide range of mares in both Europe and North America,” Shanahan said.

If he's right–and Coolmore has had an uncanny knack for developing breed-shaping sires–the Irish farm's record-priced gamble may look like money well spent down the road. But it's money that will reload WinStar now and put Troutt's farm in a better position to compete for the next big prospect.

And so goes world of elite stud farms, where one big-dollar deal could prove beneficial for both farms.

Sid Fernando is president and CEO of Werk Thoroughbred Consultants, Inc., originator of the Werk Nick Rating and eNicks.