The $1,000 horse just generated $1.86 million by winning the Kentucky Derby, and the earnings are far from over.
Saturday’s Kentucky Derby saw wagers of more than $230 million as bettors flocked to try to defy the odds and predict which of the 19 horses running at Churchill Downs would prevail in the first leg of the 2021 Triple Crown.
Picking ponies is a tricky proposition, but it’s not even a fraction as difficult as it is for a thoroughbred owner to achieve a positive return on investment. With less than 5% of racehorses ultimately generating a profit, it’s clear that there are plenty of far safer investments out there. However, if you end up with the right horse, there’s far more than just prize money to look forward to.
This year’s Kentucky Derby winner, Medina Spirit, was given 13-1 odds to take home the winner’s purse of $1.86 million. But looking back at this horse’s beginnings, even reaching the Kentucky Derby at all feels like something of a miracle. Purchased by Christy Whitman as a yearling for the minimum $1,000 at a thoroughbred auction in Ocala, Florida in 2019, Medina Spirit was one of more than 400 sold at that event — and he received just one single bid.
A year later, the horse sold to Gary Young on behalf of Amr Zedan for $35,000. That’s a pretty serious ROI for a $1,000 purchase — 3,400%, to be exact — though not a big deal in championship thoroughbred circles.
But now, Medina Spirit is on a path that could lead to nine figures in career earnings.
On the 48th anniversary of Secretariat’s all-time record-setting win at Churchill Downs, let’s dive into how that could be possible.
By winning the Kentucky Derby, Medina Spirit earned owner Zedan more than 53 times the $35,000 he paid last year (and a full 1,860 times the previous owner’s $1,000 investment), but in the world of horse breeding, that is just the tip of the iceberg. Medina Spirit is still young and technically has more than a year of racing left in him. A victory at the Preakness stakes would mean a $600,000 payout. The Belmont Stakes? Upwards of $800,000.
All told, a Triple Crown win amounts to approximately $3.26 million in prize money. That would be 3,260 times (325,900% ROI) what original buyer Christy Whitman paid, and more than 93 times (9,214.29% ROI) what Zedan paid.
But even when his racing days are done, he’s likely to become an even bigger cash cow – or more accurately, a “gift horse” – for his lucky owner.
With every thoroughbred owner under the sun looking to get four legs up on the competition, plenty are willing to pay six figures for each foal a champion horse provides in hopes that the winning bloodline carries on. Now that he’s solidified himself as a champion, Medina Spirit’s owners will likely command $100,000 or more for each of the colt’s offspring.
With horses being able to mate between 100-200 times per year, that means Medina Spirit may be able to generate $10 million or even as much as $20 million annually for Zedan even after his days on the track are over.
Most racehorses hang up their racing shoes by the time they’re five to six years old, and are subsequently valuable as sires (fathers) or dams (mothers) for the next decade. With this in mind, it is easy to see how a horse like Medina Spirit could end up being worth $50 million in estimated total value even before the starting gun at the Preakness on May 15.
For context, the return on investment for Medina Spirit’s owners would be roughly similar to purchasing Bitcoin for $1 in 2011 or a PSA 10 Michael Jordan rookie card for $15 at a garage sale.
Let’s put it all together and estimate that Medina Spirit earns about $2.5 million in career prize money and subsequently generates $10 million worth of stud fees and foals every year for a decade. That’s $102.5 million of value, or 2,929 times what Amr Zedan paid in 2020 and 102,500 times the $1,000 Christy Whitman paid in 2019.
For Zedan, that would mean a final return on investment of 29,185.71%.
And if Whitman had held onto the horse? 1,024,900%.
Read that again. Over one million percent ROI.
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This doesn’t mean we all should go down to Ocala and swoop in on the cheapest available thoroughbreds up for auction, however. Underdog stories like these just don’t happen too often. As the Action Network’s Darren Rovell notes, the most recent horse to boast a comparable return on investment was 2009 Kentucky Derby champion Mine that Bird, who was purchased for $9,500.
Despite Medina Spirit’s lack of championship bloodline and humble origin story, racehorse owners will be absolutely willing to pay six figures for the offspring of the most recent winner of a Triple Crown race. While investors tend to bet on genetics as a predictor for success on the track, one has to wonder what an underdog story like Medina Spirit’s will do to alter the approach for racehorse investors in the long term.
Numbers that massive just don’t lie.
