In prior years, once the Breeder’s Cup Championships concluded the only thing left was to wait for the Eclipse Awards while the equine stars recovered from a grueling campaign, This year I hope the next step for California Chrome and Arrogate will be training for a rematch in the $12 million Pegasus World Cup at Gulfstream Park. California Chrome has committed to be there, and I really hope Arrogate will follow suit.
The Stronach Group and Gulfstream Park will be hosting the inaugural $12 million Pegasus World Cup on January 28th of 2017. A $12 million purse will be the largest prize in racing, surpassing the $10 million offered at the Dubai World Cup. It will be double the purse of the 2016 $6 million Breeder’s Cup Classic. The race will be run at the shorter distance of 1-1/8 mile over the dirt course.
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The financing format of the race is much different from your run of the mill graded stakes race. The race will be restricted to 12 starters and the connections of each must put up a $1 million stake. The purchaser of the stake will be able to sell, share, lease, race or contract the stake. Additionally, the entrants will not only be running for their share of a $12 million purse, the connections will also ALL share equally in the net profits from the pari-mutuel handle, media rights and sponsorship of the race. The 12 spots for the inaugural running were already fully subscribed back in May, with one of those spots purchased by California Chrome LLC.
This format is the equivalent of a financial option in racing. Owners can let the stake “expire” on race day, thus exercising their “option” and running their entrant, or they can sell the “option” to the highest bidder. Great for the multi-millionaire owners, but where does that leave the horseplayer?
When I first saw the $12 million dollar purse I feared that we were following the lead of Meydan Racecourse in Dubai and were just throwing money at the race. The biggest danger in this is that the money removes the alignment of the best interests between the horse owner and the horseplayer. This misalignment occurs when there is enough of a reward for not winning the race. In the Dubai World Cup the 2nd thru 6th place checks are substantial enough to attract horses that were just taking a shot. Taking home $500,000 for 4th in the Dubai World Cup is a lot of money for finishing out-of-the-money. The Stronach Group and the Pegasus Cup addresses this issue skillfully.
The unique purse distribution is what will make this contest a glorious event for the horseplayer. Instead of the standard 60% for the winner, 20% for second, 11% for third, 6% for fourth and 3% for fifth, this race will give 58% of the $12 million ($7,000,000) for the win, but a mere 14.59% ($1,750,000) for second, 8.3% ($1,000,000) for third and $250,000 for everybody else. The drop-off after third place says that the win-place-show is all that matters, with a heavy emphasis on the win. This is exactly what matters to the horseplayers. When owners have to put up a million to get in and the minor awards are reduced, the only windfall in the purse structure is the win. The interests of the owners become perfectly aligned with the interests of the gambler. Getting to the finish line 1st is all that matters.
If they would have stuck with a standard purse distribution in this $12 million race, the prize money would have been $7.2 million for 1st (60%), $2.4 million for 2nd (20%), $1.32 for 3rd (11%), $720,000 for 4th (6%) and $360,000 for 5th (3%). Way too much reward at the bottom of the list. (Note: in 2016 the $10 million Dubai World Cup paid the top six finishers at 60%, 20% 10%, 5%, 3% and 2%)
The next alignment is between the interests of the horsemen and the interests of the racetrack. Sharing in the net profits from the pari-mutuel handle, media rights and sponsorships puts the financial interests of the owners and the financial interests of the track in perfect alignment. Everybody makes money when the track makes money. Isn’t that what horsemen have always bargained for?
The stage has been set. California Chrome LLC has already put up the $1,000,000 and trainer Art Sherman has a plan for Chrome to train up to the Pegasus Cup. If Arrogate’s connections make the popular choice and decide to compete, Arrogate’s owners, Juddmonte Farms, will have to purchase or contract their entry from one of the other 11 early subscribers. From there, the rest of the field can hope for another battle of these titans up front with a chance to pick up the pieces. Maybe the field can get a little closer than they did at Santa Anita.
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There will always be naysayers and haters when a new concept is introduced. The time of year, the distance, track configuration, the purse, etc. are all being questioned by the usual message board trolls. Nothing is perfect and we can’t please everyone, but I think that the innovations of the Pegasus World Cup format are a big step forward for American racing. In this day and age the mantra of any business should be to “innovate or die”, and the business of horse racing is no exception. The industry has needed to give horses more reasons to return to the track instead of the breeding shed and the Pegasus World cup provides 12 million nice reasons.
