$4 million bid for 20% Curlin share

FRANKFORT — Winemaker and Thoroughbred breeder Jess Jackson is offering $4 million for the one-fifth of champion racehorse Curlin that he doesn't already own.

That bid, made by Jackson and his wife, Barbara Banke, through J&B Equine Interests, would put the value of the soon-to-be-retired reigning Horse of the Year at $20 million. But an attorney for his minority owners contends the horse's insurance value is closer to $60 million.

The sale of the 20 percent share of Curlin, the first horse to top $10 million in earnings, was proposed to help satisfy a $42 million judgment against minority owners Shirley Cunningham Jr. and William Gallion. The two lawyers were recently disbarred over their misconduct in representing more than 400 plaintiffs who sued the maker of the diet drug fen-phen.

A receiver last week asked the court to approve the sale. A previous request for sealed bids produced no acceptable offers.

Bloodstock expert Ric Waldman, who managed the most expensive sire of all time, Storm Cat, testified to Judge Roger Crittenden on Monday that the $4 million offer is fair.

Waldman said the offer "is greater than what I believe is likely to be paid out" after the first four years of stallion duty.

He said he valued Curlin at $30 million in August, but in the last two weeks, he dropped the value by a third, to $20 million.

Waldman said the horse's value dropped because of the decline in the bloodstock market, as evidenced by the 45.6 percent drop in gross at the just-concluded Keeneland November Breeding Stock Sale.

Curlin's value also has been hurt by his late entry into the potential stallion ranks, he said. Many breeders already have made plans for the breeding season, which begins in mid-February. "He's missed out on opportunities to breed some good mares," Waldman said.

Waldman estimated the 20 percent share of Curlin would net $1.5 million to $3.2 million in his first four years at stud.

Arguments against the sale will be heard Dec. 1 in Frankfort. Crittenden could rule that day. Cunningham and Gallion or their former clients could appeal if Crittenden approves the sale.

Andre Regard, the attorney for Cunningham and Gallion, said his clients want to receive fair market value but would prefer to hold on to their share at this point.

"We believe the horse has a higher value than their offer," Regard said afterward. He plans to have expert testimony to support that at the Dec. 1 hearing.

Regard introduced e-mails showing his clients have recently raised the insurance on their portion from $3 million to $12 million, which he said would indicate insurers put a full value of Curlin at $60 million.

Any ruling should not stand in the way of Jackson's plans, announced this weekend, to leave Curlin in training for now but have him stand at stud next spring.

Jackson's 80 percent interest allows him to move forward whether or not he is successful in his attempt to purchase the remaining 20 percent. Jackson has not said where Curlin would stand.

New details emerged at the hearing Monday about the sealed bids made earlier this month.

Sylvius H. von Saucken, an attorney with court-appointed receiver Matthew Garretson, said that two bids were received. One, from what von Saucken called a major breeding farm, contained a limited-time offer that could not be met; the other, from Jackson, was not high enough.

The present $4 million offer is more than either of those bids, von Saucken said.

He said they also received an expression of interest, but not a bid with a price, from a third party outside the equine industry. The interest was communicated to Stonestreet, and Jackson had no desire to pursue the offer, he said.

The receiver judged the bids against the valuation prepared by hired experts, including Waldman, who recommended the sealed bidding process to test market interest without jeopardizing the value of the horse.

Waldman told the court that his conservative valuation was based on an initial stud fee of $75,000 and a book of 120 mares for the first year. Both the fee and the number of mares most likely would drop in the next three years, until Curlin's first crop of foals race.

The more optimistic end of Waldman's estimation was based on an initial stud fee of $100,000 and a first-year book of up to 160 mares.

Waldman said he doesn't think Curlin or any first-year stallion would be able to start off in this economic climate at $100,000. He said one representative of a significant stallion farm said that "if he had Curlin today, he would stand for $50,000 his first year."

By comparison, 2008 Kentucky Derby and Preakness winner Big Brown will begin his stud career at $65,000; Raven's Pass, who beat fourth-place finisher Curlin in the Breeders' Cup Classic last month, will start for about $50,000 in Ireland.