The price for Fusaichi Pegasus is bound to exert upward pressure on the Thoroughbred market

Reality can be so annoying. And frustrating. In fact, downright infuriating. Here we were, enjoying the second coming of the good old days of the early 1980s without most of the annoying side effects, e.g. astronomical stud fees, huge risky bank loans, and the specter of a disastrous crash. Then along came Fusaichi Pegasus.

Okay, so a $4-million yearling is nothing as ridiculous as a $13.1-million one, Seattle Dancer in 1985. In fact, the $4-million to $5-million range for the top yearling of the year is entirely defensible given the overall economic structure of the Thoroughbred industry over the last ten years or so.

But the horse had the audacity to win the 2000 Kentucky Derby (G1), and all of a sudden owner Fusao Sekiguchi (and maybe a rumored co-owner, Shadai Farm) had a potential Powerball jackpot on their hands, if they knew how to exploit the opportunity. Sekiguchi is an entrepreneur who has twice made millions building venture capital firms. That is one of the riskiest businesses on the planet, one that requires a temperament for risk-taking and a rapacious desire to take the money and run whenever it appears on the table. He knows how to exploit opportunity.

In fact, Sekiguchi apparently had practice. According to some, the pony-tailed capitalist had orchestrated a minor private bidding war among Japanese stud masters over his 1996 Japanese Derby winner Fusaichi Concorde (by Caerleon out of Ballet Queen, by Sadler's Wells). His method was to ask contenders to submit bids by a certain date, thereby establishing a bottom-line value for the horse, and then to ask the 500-pound gorilla of the Japanese breeding industry, Shadai, to top it. They did. Fusaichi Concorde now stands at Shadai for a fee of 2-million yen (about $20,000).

Fusaichi Pegasus was obviously much more valuable than Fusaichi Concorde, but Sekiguchi's method was apparently almost identical. Coolmore plays the same role in the international breeding industry held by Shadai in Japan, and the result was analogous. That 500-pound gorilla is tough to beat.

Although no one representing Coolmore or Sekiguchi is, as yet, willing to go on record, the valuation of Fusaichi Pegasus is said to be based on 50 shares at $1.25-million per share. If true, that would place a value of $62.5-million on the horse. That is the kind of return that haunts the dreams of venture capitalists, no matter where they lay their heads.

Current consensus in the breeding industry is that the price for Fusaichi Pegasus, whatever it turns out to be, is a "one-off" that will bear little relationship to prices for other stallions to be retired in the next few years or to prices for yearlings at the coming July, August, and September yearling sales. Don't bet on it.

Potential syndication value was the original fuel that revved the engine of the bloodstock boom of the late 1970s. When the Maktoum brothers and other Arab owners threw Middle Eastern oil on the fire in the early 1980s, it created an unprecedented explosion that eventually created craters in Kentucky's Bluegrass that have only recently healed.

Humans are a greedy species. Thoroughbred racehorse owners are, by necessity, cockeyed optimists. It is a very safe bet that there are perhaps 30-maybe a few more-Thoroughbred owners who are already thinking, "If that guy with the ponytail and the geisha girls can do it, so can I."

As Coolmore's publicist Richard Henry said, Fusaichi Pegasus was the "holy grail" of the breeding industry-the top-priced yearling of his year, by the most coveted sire of sires of the era, and winner of the Kentucky Derby. He is absolutely right that that combination only comes along about once in a lifetime.

The point is that every buyer who plays at the top level of the Thoroughbred industry, those 30 willing to spend $1-million or more for a horse who has never had a saddle on his back, is in search of that same holy grail. One of the mental/emotional requirements for playing at that level is an honest belief that they are going to find it.

And that is why Fusaichi Pegasus is likely to have a dramatic effect on prices in the Thoroughbred industry.