A Lot is Riding on Eskandereya

The sale of Eskandereya is one of the keys to Ahmed Zayat's reorganization plan that was filed in New Jersey federal bankruptcy court on April 16. The plan states that 100% of Eskandereya will be sold in 2010 although no projections were given for the income resulting from the sale.

Zayat's stable, which consists of more than 200 horses, has been in trouble for a while and one of the biggest creditors on its books is Keeneland, the Lexington sale company that sold him many of the horses in his stable. The question of why and how Keeneland would continue to do business with a man who owed them money is one that remains unanswered although one assumes it is tied up with the loans that Zayat received from Fifth Third Bank to pay for these purchases. It should be noted that Fifth Third, according to Bloodhorse.com, is owed almost $34 million, which should give you an idea of how leveraged Zayat was.

A larger question, at least to me, is why a bank would continue to loan money to a man to purchase race horses, surely one of the most costly and risky investments anyone can make. And yet, ironically, it seems to have almost paid off.

If Eskandereya, who is the early favorite for the Kentucky Derby, happens to win the race, he is worth at least as much as Zayat owes Keeneland ($2.4 million), or at least one would hope. His breeding (Giant's Causeway--Aldebaran Light, by Seattle Slew) would certainly suggest a hefty price tag, especially when combined with his impressive victories in the Grade I Wood Memorial and the Grade II Fountain of Youth. To date, the horse has earned $725,700.

Saved by a horse? Amazing but perhaps true that the biggest gamble of all just might pay off, but still an awfully risky roll of the dice to begin with, at least in my opinion.