The Sale of the Flightline Share: 'It Will Be Like Buying a Picasso'

What will the share of Flightline, to be sold Nov. 7 at the Keeneland November sale, go for and what are the factors that will set that price? The TDN reached out to two experts to get their opinions.

Paul Manganaro is a horse owner who frequently buys stallion seasons and shares. He owns shares in 20 horses. His uncle, Anthony Manganaro, is among the owners of Flightline.

TDN: In general, what are the criteria involved when people try to evaluate what a stallion share is worth?

PM: Depending on the farm, people use different math and different equations. But, basically, the simple formula is when you take your stud fee with a first-year stallion you want to get your money out in his first four years. That's very difficult to do, especially with a quality prospect like a Flightline. As is the case with real estate, the good stuff, the top-of-market stuff, you're going to have to pay a premium. There's another formula farms use. Say they figure a stallion will produce 400 live foals in first four years, so whatever that stud fee is times the 400 foals, that's the value of the horse.

TDN: When you buy stallion shares, what are the factors you take into account?

PM: There are several major criteria you have to look at, starting with a horse's pedigree and race record. Then there's his conformation. People want to look at these horses and see how they match up. If they are a good-looking horse you will get more interest than if they are a not a well-conformed horse. Then they look at the syndicate structure. How many shares are there, 40 or 50? You'll get a bigger cut if there are only 40 shares compared to 50 shares. What's very important to most farms and to myself and others is: who are your partners? Are they strong breeders and can they support the horse with good mares? Who is the syndicate manager going to be? Lane's End is a well-established farm, a stallion-making farm. They have a strong clientele, a good advertising program and they price their horses right. So you know he's going to get the best opportunity. He ticks every single box. And like with any other business, it's about supply and demand. If there are five shares available and 200 people want one, then t thenhat drives up the price.

TDN: So, how much do you think the share will sell for?

PM: This such a unique situation. Usually when you go to buy a share a farm will call you up and say we have 40 shares at $300,000 each and do you want one? You evaluate all the criteria and you say yes or no. This is something I've never seen. They are offering one share to the whole wide world and through a bidding process. The market will dictate the price. If he dominates in the Breeders' Cup like he dominated in all his other races it could bring anything. It will be like buying a Picasso. Why is a Picasso worth $80 million or 100 million? It's just paint and oil on canvas. Why would anybody pay $100 million for that? It's because Picasso is famous and if you want one there is a limited supply. If the Flightline share brings $3 million does that mean the horse is worth $3 million times 40? No. Because you're not selling 40 of them, you're selling one. The market will dictate the value. But there will be a premium because we haven't seen a prospect like this in decades. The two horses recently sent to stud that had his charisma are American Pharoah and Justify, but they went to a farm that doesn't syndicate horses to the general public. They are held in house. So this is the rarest of rarest gems.

It's like with anything else. You want to buy a yearling and think the horse is worth $250,000 then two people want the horse and it goes for $600,000. Then that's what the horse is worth, $600,000.  If I think a horse is worth $200,000 and it sells for $500,000 I'm not saying the buyer is stupid. The number becomes $500,000 because that's what someone was willing to pay for it. People see things through different sets of glasses. It's the same with this. Whatever this sells for, that is what it is worth.

TDN: What if he loses the GI Breeders' Cup Classic? How will that affect the price?

PM: There will be an initial shock. But within 48 hours people will remember how special he was. Even the great Zenyatta lost a race. Muhammad Ali lost fights. The Dodgers got knocked out and everyone expected them to win the World Series. It's a horse race and he will be facing the best in the world. I don't think a loss would tarnish his reputation. He has five wins, all of them in tremendous fashion. People will still remember him as one of the most talented horses we've seen in the last 20 years. I don't think it will have any effect because he'll be moving on to a different career.

Fred W. Hertrich III is an owner, breeder and former chairman of the Breeders' Cup. He owns shares in numerous stallions.

TDN: Let's get right to it. What do you think the share in Flightline will sell for?

FH: It's going to bring more money than most people anticipate because of the thrill, the dream, the opportunity. That's what we sell every day in this business. We are all dreamers and this is the ultimate dream. The thrill of the horse and the dream. I am excited about it because it is such a positive thing and is so unique. Most often, with stallion syndications there is language in the agreement in which you must agree to not sell shares or seasons at public auction. They don't want to create a false market, good or bad. That's why this is an opportunity we have not seen before.

No one knows what it is worth until the last person bids, and if they do, they are Houdini . This going to give someone the opportunity to participate with one of the greatest horses we've seen in the last 10 years. If he runs next year, they'll be on the front line as an owner watching him race and there's a chance he could race around the world. How do you put a price on that thrill? It's kind of like when Elon Musk said who wants to bid on a seat to go to the moon? What is it worth? It's worth whatever someone is willing to pay for the thrill of being able to do that. The shareholders in the horse have put this opportunity out to the public and somebody is going to buy in and have the thrill of a lifetime. People have asked me what do you think this will bring. No one can predict that.

TDN: Could there be the type of bidding war that send this into the stratosphere?

FH: Absolutely. Maybe there's a wife out there who wants to give this to her husband for their 50th anniversary and can spend whatever she wants to spend to give her husband this once-in-a-lifetime opportunity and she's not going to stop until she gets the horse. What would that do to the price?

It's like when I sell a horse. I might think the horse will bring $200,000 and lo and behold nobody bids over $50,000. Then with the next one I think it will also sell for $200,000 and there are two people who really want it and it sells for $700,000. That's because both people really wanted the horse and they bid against one another.

TDN: Have you ever seen anything like this before?

FH: No, there's never been anything like this before. That's why it is so unique. Kudos to the people involved who are doing this. Kudos for them coming up with and how they are promoting it. They are selling the ultimate dream.

Editor's Note: Coolmore purchased Justify for a reported $75 million. Theoretically that would value his shares (even though he was never syndicated) at $1.875 million.