In the market for two-year-old thoroughbreds the five-month season now coming to an end has been tremendous. The animal spirits are back―among the humans, that is. Auction prices paid for the fledgling racehorses are up perhaps 40% on average and are setting records. The biggest sale of all was run by the Fasig-Tipton auction house in February at the Calder racetrack near Miami. Also accounted huge successes were later sales by the Keeneland Association in Kentucky and Barretts Equine in California. At Newmarket in Britain, Tattersalls' April sale attracted several contingents of Japanese buyers, one of whom paid $450,000 for a granddaughter of Seattle Slew, in the process pushing prices to European records. A funny thing about all this is that nobody is quite sure why it's happening. The fact that the rich have long found racing an agreeable way to create useful tax losses is only part of the answer. The economics of owning and breeding Thoroughbreds is ugly. Why would smart guys put money into investments that are highly likely to be losers, and why would they bid most feverishly at the top end, where the losses are likely to be the greatest?
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