Kentucky Derby: Wheeling and dealing in search of the big score

On Dec. 31, Verrazano was an unstarted maiden. A little more than six weeks later, following two impressive victories at Gulfstream Park, he was the shortest-priced individual entry in Pool 1 of the Kentucky Derby Future Wager.

His popularity, though, extends well beyond the bounds of Kentucky Derby bettors.

Verrazano is one of two leading contenders for the May 4 Derby – the other being 2-year-old champion Shanghai Bobby – who have had investors buy into the colts, hoping their hot stock keeps rising. The transactions are very similar. In both cases, the original owners – both from financial backgrounds – were looking to make a tidy profit for themselves and their original partners, and they found the same new investor in mighty Coolmore Stud.

The other common denominator is Todd Pletcher, who trains both Verrazano and Shanghai Bobby. In both cases, the original owners of both colts got offers they felt made sense, while taking on a partner with whom they were familiar because of everyone’s association with Pletcher.

“It just fit,” said Bryan Sullivan, the co-managing member, along with Kevin Scatuorchio, of the Let’s Go Stable which bought Verrazano as a yearling for $250,000. “We’re familiar with these guys, so that took that part of the equation out. We’re very comfortable with them.”

Scatuorchio is the son of Jim Scatuorchio, who is part of the Verrazano partnership and has had previous stallion dealings with Coolmore, notably with Scat Daddy, who stands at Coolmore’s United States entity, Ashford Stud.

“After his first race, we heard from a couple people,” Sullivan said. “But after his second race, I don’t think there’s anybody who didn’t contact us.”

This is a dance that goes on every spring. Those willing to sell often get a premium, because the valuation of a hot 3-year-old prior to the Kentucky Derby might never get higher.

“The multiples are very attractive,” said Sullivan, 36, who previously worked on Wall Street.

But as a result, buyers must pay a premium. In the case of Coolmore, though, the play is both short- and long-term. The immediate gratification would be a Kentucky Derby victory, but Coolmore is also looking to develop stallions.

“Our horse is by More Than Ready, who is a dual-hemisphere stallion, so he’s got that allure,” Sullivan said.

While the Let’s Go partnership is relatively new, having been founded in 2006, the Starlight Racing partnership which owns Shanghai Bobby has campaigned prominent 3-year-olds for years, beginning with Shanghai Bobby’s sire, Harlan’s Holiday, who was favored in the 2002 Derby.

Despite getting offers to sell, Starlight held on to Harlan’s Holiday.

“I was stupid and green back then,” Jack Wolf, one of the principals in Starlight along with Don Lucarelli, said in a telephone interview on Wednesday.

Although Harlan’s Holiday disappointed in the Derby, it worked out long-term, with Harlan’s Holiday becoming a successful stallion.

“It turned out to be the right decision, but if I had to do it all over again, I would probably not make that decision,” Wolf said.

Since that experience, Starlight has sold all of a Derby prospect (Minefield), kept Derby prospects (Keyed Entry, Algorithms), and, in the case of Shanghai Bobby, sold a 50 percent interest in a prospect.

Wolf said he brought Coolmore aboard as a partner because, “We’re comfortable with each other, and they came with a price we thought was fair for us and our partners.

“There are a handful of original partners on Shanghai Bobby, and before we pulled the trigger with Coolmore, we talked to all of them, and all of them were on the same page.

“Nine out of 10 times, it makes sense to sell if you get a significant offer and you can take money off the table,” said Wolf, who like Sullivan spent his career in the financial world before owning horses. “At some point, it becomes a matter of price. By the same token, if you’re afraid to go forward, you’re in the wrong business. When you do a deal like this, you want it to work out for both sides.”

The year Harlan’s Holiday ran in the Derby, the race was won by War Emblem, perhaps the best known recent example of a successful acquisition prior to the Derby. Soon after his upset victory in the Illinois Derby, War Emblem was sold to The Thoroughbred Corporation of Prince Ahmed bin Salman of Saudi Arabia. He then won both the Derby and the Preakness.

Along with the late Salman and Coolmore, Sheikh Mohammed bin Rashid al-Maktoum of Dubai has been the most prominent owner seeking ready-made Derby prospects the past 20 years, his private purchases including the likes of Arazi (eighth in 1992) and Worldly Manner (seventh in 1999).

Since acquiring the former Jonabell Farm in Kentucky and renaming it Darley USA, Sheikh Mohammed has bought fewer ready-made 3-year-olds, preferring homebreds and yearling purchases, this year including Fortify, a homebred.

But there are always new entities seeking a top Derby prospect. California-based Little Red Feather Racing, for instance, bought a portion of Mudflats with the hope of developing him into a Derby contender with last year’s Derby-winning trainer, Doug O’Neill.

“In talking to our clients, we had a number who said they’d like to jump into the Derby scene if we could find the right horse,” said Gary Fenton, a managing partner in Little Red Feather.

Though Mudflats disappointed in New York in his first start after the sale, he will get a second chance on Sunday in the San Vicente Stakes at Santa Anita.

“This is a big race,” Fenton said Wednesday. “His first race wasn’t what we expected. We knew with him being a gelding he had had some attitude problems, but we didn’t think it would come up in his last race. Doug said, ‘Let’s get him home and straighten him out.’ We’re looking to see him turn the corner on Sunday.”