Frankel's Stud Fee Announced...
- Thread starter PNkt
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Press Statement:
"Philip Mitchell, Juddmonte Farms’ general manager at its Banstead Manor Stud, said: “We believe our stallion roster is the best we have been able to offer breeders – and we are very excited with both of our new arrivals.
“The fee for FRANKEL reflects his merits as being perhaps the greatest racehorse we have ever witnessed. He is by Galileo, who is now recognised as the best sire in the world, and out of Kind, a winner of six races (from five to seven furlongs) and herself a daughter of one of the most influential stallions in the history of thoroughbred breeding, Danehill."
"Philip Mitchell, Juddmonte Farms’ general manager at its Banstead Manor Stud, said: “We believe our stallion roster is the best we have been able to offer breeders – and we are very excited with both of our new arrivals.
“The fee for FRANKEL reflects his merits as being perhaps the greatest racehorse we have ever witnessed. He is by Galileo, who is now recognised as the best sire in the world, and out of Kind, a winner of six races (from five to seven furlongs) and herself a daughter of one of the most influential stallions in the history of thoroughbred breeding, Danehill."
Contrary to what is being reported in the press, Frankel will not be earning £12million a year at stud.
It is far more likely that he will earn around half that amount:
Let's assume he covers 120 mares, of these around 50 will be Juddmonte's own mares so no fee will be payable.
So that's 70 mares @ £125,000. But, of these we can only reasonably expect 70% of these mares to produce a foal next year, so that's only 49 paying customers.
49 x £125,000 = £6,125,000
Of course this is not a figure to be sniffed at, but it is some way short of the "£12 million" being bandied about at the moment.
It is far more likely that he will earn around half that amount:
Let's assume he covers 120 mares, of these around 50 will be Juddmonte's own mares so no fee will be payable.
So that's 70 mares @ £125,000. But, of these we can only reasonably expect 70% of these mares to produce a foal next year, so that's only 49 paying customers.
49 x £125,000 = £6,125,000
Of course this is not a figure to be sniffed at, but it is some way short of the "£12 million" being bandied about at the moment.
But pN this is business and so you have not added in the Net Realisable Value factor. I don't think you can say that Juddmonte (or Frankel) earn nothing from the 50 nominations that are used by the stud. Going on your workings I'd say that the value to Juddmonte is an extra 50 x 0.70 X 125,000, so I make that a further 4,375,000, which gives a bigger total of 10.5million.
I don't think the tax office (or someone like KPMG) would allow Juddmonte to say that their 50 (or 35) mares (or foals) have no increased value because of being in foal to one of their own stallions. So all that increased value or capital is flowing from somewhere and that somewhere is Frankel. Maybe not 12million but with 80% fertility it is.
I should think the accounting world must have a field day with the Net Realisable Values of mares and young stock.
I don't think the tax office (or someone like KPMG) would allow Juddmonte to say that their 50 (or 35) mares (or foals) have no increased value because of being in foal to one of their own stallions. So all that increased value or capital is flowing from somewhere and that somewhere is Frankel. Maybe not 12million but with 80% fertility it is.
I should think the accounting world must have a field day with the Net Realisable Values of mares and young stock.
Bustino, I'm talking about the actual income from stud fees. No money will change hands when Juddmonte mares are sent to Frankel. The value of the individual mares may well rise, but I am not versed in the complexities of bloodstock valuation so can't comment on that.
Money may not have changed hands but Frankel has increased the value of the stock. If you send the mares to Rail Link they will not have the same value.
That difference in value is realisable at some point, and must be accounted for. The value of that realisable revenue is attributable to Frankel. At the end of the day in a Profit and Loss statement that is income and Frankel will have earned it.
To say it's not would be like a winemaker/grower saying that it only costs him when he buys in grapes and not when he makes wine from his own grapes because no money changes hands.
Stallion fees ideally should be based on the realisable value of the foals that could be sold.
That difference in value is realisable at some point, and must be accounted for. The value of that realisable revenue is attributable to Frankel. At the end of the day in a Profit and Loss statement that is income and Frankel will have earned it.
To say it's not would be like a winemaker/grower saying that it only costs him when he buys in grapes and not when he makes wine from his own grapes because no money changes hands.
Stallion fees ideally should be based on the realisable value of the foals that could be sold.