FRANKFORT — A judge has nixed a potential sale of one-fifth of Curlin, who was recently retired as the winningest racehorse in history.
Boone County Special Judge Roger Crittenden said Monday that, based on a $20 million valuation presented to the court two weeks ago, he thought the $4 million offer for 20 percent of the horse was fair.
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But he blocked the sale because of the objections by the minority owners, the disbarred Lexington attorneys William Gallion and Shirley Cunningham Jr., and a group of their former clients who later sued them.
"I am ending the process," Crittenden said.
Money from the sale of Curlin could have gone to those former clients to help satisfy a $42 million judgment against the attorneys.
Crittenden appointed a receiver in July to manage and maximize the assets of the attorneys' stable. Those assets might have to be sold to help pay off the judgment, and the judge subsequently approved a sealed-bid process for Curlin to test the market. The process failed to turn up any satisfactory bids.
The $4 million private offer was made by winemaker and Thoroughbred breeder Jess Jackson and his Stonestreet Stables. Jackson already owns 80 percent of the horse.
Richard Getty, Jackson's attorney, said Jackson does not intend to make another offer and has formally withdrawn the $4 million bid.
"I really believe they made a tremendous mistake," Getty said of the objections by Gallion, Cunningham and their former clients.
"If they are not smart enough to figure out that this is a very good deal in this market condition ... then I feel sorry for them," Getty told the court. "I don't believe this interest is worth (as much as) $4 million."
Curlin, the first horse to top $10 million in earnings, will stand at Lane's End Farm next year for a $75,000 stud fee.
Gallion and Cunningham, through a limited company called Tandy, will be responsible for a 20 percent share of the expenses and will reap 20 percent of the profits, according to Getty. He said those expenses, including advertising, are expected to top $1 million.
But further details about Curlin's future will be worked out somewhere else, Crittenden made clear. "As far as business discussions or business transactions ... that's going to be between the owners of the horse, Tandy and Stonestreet. They're the ones in business together," Crittenden said.
Crittenden also said that any more motions to force a sale of Curlin would have to come in another court.
Cunningham and Gallion have appealed the $42 million judgment. They were disbarred for misconduct in representing more than 400 plaintiffs who sued the maker of the diet drug fen-phen and face retrial on separate criminal charges in the case.
Angela Ford, the attorney for the fen-phen plaintiffs, said after Monday's hearing that she was pleased with Crittenden's decision. "We don't have sufficient information to analyze the offer, and based on the previous sale of the other interests in the horse, the valuation was extraordinarily low."
Andre Regard, attorney for Gallion and Cunningham, said they are "generally satisfied with the agreement reached in an arms' length transaction with Lane's End" and plan to "do whatever we can do to work with Lane's End to facilitate his successful stallion career."
His clients would consider offers for their share but think it is worth much more than the $4 million that Jackson offered.
Regard had prepared to present testimony from Lexington bloodstock agent Thomas Clark that valued Curlin in his entirety at $37.5 million, based on recent sale prices for stallion shares.
Regard said shares in young stallions have sold for 10 times their annual stud fee, with typically 50 shares in a syndication. By that math, Curlin would be worth nearly twice what was put forth two weeks ago by bloodstock expert Ric Waldman.
"The market will tell," Regard said.
Getty, Jackson's attorney, said Jackson has no plans to sell any portion of Curlin.
Sylvius von Saucken, an attorney for the court-appointed receiver who requested that the sale be approved, said they also were happy with the outcome. "The receiver's satisfied that we've done our job, which was to preserve or protect the market value of Tandy," von Saucken said. "It was the right thing to do to bring the proposed sale to the court."
The receiver still could have some role to play in presenting offers regarding Tandy's other assets, which include Einstein, who won the Clark Handicap last week at Churchill Downs.