Bold you are dead wrong, completely wrong.
Any contract done on a horse who isn't doen racing yet includes bonuses.
I can tell you this for a fact.
Its the only way the deals get done.
Noone would sell breeding rights before the horse was done racing without them.
When you work on one of these deals, gimme a ring.

It's simply a matter of timing ... when negotiattions take place toward the end of the year ... it's usually known if the stallion prospect has already earned HOTY ... so the actual award makes little difference.

If negotiations take place early in the year ... there'll be a bonus clause. If the horse doesn't earn HOTY ... there's no bonus. If he does earn HOTY ... the bonus applies ... but ... the owner probably would have done just as well without the bonus if he had waited 'til the end of the racing season.

yeah he would got a bump up. Fact is that you get three free years of stud fees before anyone finds out how good the horses offspring are Zieg.
Works like this, 110 x3 is the accepted formula. If the horse gets a grade one lets say, after the deal is done. the bonus is generally one mill.
Both sides are extremely happy. Seller bumps the fee 5 g's. 5,000 x 330, well you do the math. even after paying the bonus the buyer still makes out better.
Trust me, you guys are sitting there trying to find examples where it woudnt have made sense, but thats not reality.
The reality is that bonuses are all included in stud deals. Don't you guys get it? WHy do you think these thinsg take so long to settle? If the deals just went to teh highets bidder, they would take 3 days. When a horse who is still racing has a stud deal done, 1/2 the paperwork is about the bonuses.
Ask Lansdon about his two biggies and the potential they had.

'but thats not reality'

bah, reality. lol

i guess i was mostly just thinking long term...

LOL!!
Long term in sire deals is 3 years.
Zieg heres the deal. They wnat to insure that if the sire is a total bust that they don't get killed.
Take the horses stud fee, multiply it by 330. Thats about what they paid(a little more, but usually no more than 25% more).
Lets take rock hard ten and St Liam. Both entered stud at 50 g's. They paid about 15-20 mill for those sires. Thats how it works.
Now lets take a horse we have heard about what they paid for him.
Lets take Smarty Jones.
he stands for 100 g's. Thats 33 million(and was announced at what? 36 mill-40 mill). You see Zieg?
This is ain't magic or random numbers that they set. Its based on a math formula.
The reason that deals take a while is trying to estimate what a grade one, or two grade one wins, or a championship, or a BC win, or a championship means in terms of resid. Yo have to get both sides to agree what those events occurring theoretically would mean.

yeah, i know about the stud fee and all the math....

let's put it this way..

smarty was syndicated well before the end of the year. stud fee announced. had he ended up winning hoy, they can't raise the fee--do they raise the book to make the difference if they have to pay a bonus?? breed to 110 rather than 100 so they don't lose money on that part of it?

You're right ...

... and so am I ... see Post #22.

Zieg you are incorrect.
Smarty was done after the TC was over. It was already a given that he would be 3Yo champ. Would there have beena bonus paid had he won HOY? You bet your ass. because they woulda bumped it up 25 g's.
Look at the Zapper. His fee went way up after he won the BC and got HOY.

You really aren't.
There are lots more clauses than just HOY.
In some cases:
Win a grade one(assuming the horse hasn't won on yet)- one mill
every additional grade one- 1 mill
wins championship- 1-3 mill
wins HOY- 1-5 mill

Thats how these deals are done.
Bonus clauses became popular because farms wanted to gamble on a prospect who had upside. Owners didn't wanna lose all that possible upside and would wait until the horse was done racing to do a deal.
On these clauses, they way they are designed, believe me the last words spoken by the farm that buys the rights are "Man, I sure hope I get to send you another 5 million". Seller "me too!!"

no, that's what i mean, if he got HOTY....everybody knew he had 3 yo champ wrapped up...and i know there would be a bonus...what i'm asking is how the farm recoups THAT bonus if the stud fee is announced before they win HOTY. or do they just go up and hope those already committed understand the rise in fee?? it's not as tho the farm is going to take a hit if they pay out an extra incentive. that's what i'm wondering about...if a deal is made, broodmares lining up like single mommas at the wic counter....how do the breeders cover that other bonus they now have to pay?

Zieg,
I understand now what you are asking.
But go ahead and look. Find me ONE example where the stud fee was announced before the horse was offically retired. Happy Hunting. You'll be searching for a needle in a haystack. Trust me, those fees ain't announced until the fat lady sings.

Winning HOY was huge for Saint Liam. It made his value much greater and that deal was made late in the year. After he won the BC Classic, it was a foregone conclusion that he would win HOY. I don't know if there was any clause in the contract about the terms changing if he somehow didn't win HOY. I can tell you that winning HOY always makes a difference in the value of the horse. Winning HOY is a big deal.

I don't think that Kurt's question was a dumb question at all. I have been in the business for a long time and didn't even know the answer of that question until last year. I actually asked one of my trainers who has been involved in many syndications deal that same question. I asked him if HOY meant anything. He told me it makes the horse's value for breeding go way up. He said winning HOY is a huge deal monetarily.

but officially retired isn't necessarily after the bc, or after eclipse awards. that's why i was asking.

And you are saying that a horse with even a shot at an eclipse wont officially retire until the eclipse awards are announced?

I really am ...

... if a horse runs well enough to earn all the bonuses ... his owner would probably have gotten about the same if he waited until the racing season was over to talk turkey.

If the horse doesn't run well enough to earn any bonuses ... well ... there are no bonuses ... so the owner doesn't get any more money.

In either case ... the owner winds up with about the same amount of money ... if he syndicates early in the year ... or if he waits 'til the end of the year.

Early season + Bonus(es) = Late season without bonus(es)

Chisled in stone for a good reason.

Zieg,
the money is deposited upon official announcement. The stud fees are based on a "pretty good idea" of what will occur. If there is a question in the voting. The stud fee will be announced with the fee that would be justified with the winning of the award. If the award is lost on the vote, word goes out to interested parties that they can get to the horse "a little cheaper".

No,
but at the point there is usually a high degree of certainty about what will transpire at the awards ceremony.
Read my explanation to Zieg on how that situation is dealt with.
Dala the fees are never set to low, always too high. You can always tell folks that they can get to one cheaper. This is commonplace. Horses are often available at lower stud fees than advertised in the first few years. especially if the the mare you bring is suitable and they want her in the book.

Thanks for the info. Very interesting.

wow, this turned out to be a great read. very informative, just wanted to say thanks.