Iowans take 'Moneyball' approach to Kentucky Derby, and it's working

Jerry Crawford lurked in a crowd of thousands at the world's largest thoroughbred auction house.

The Des Moines attorney stood inside a door jamb at Keeneland's yearling auction in Lexington, Ky., in September 2013, avoiding glances from other prospective bidders.

Crawford, the front person of Iowa-based Donegal Racing, only wanted one person to notice him there. That person? A spotter who would put in his auction bid to claim what Crawford felt was a future Kentucky Derby race horse.

He had eyes for a high-spirited bay colt, who would be christened Keen Ice. His sire was Curlin, a Preakness Stakes and Breeders' Cup winner. But that horse's progeny was untested, making some potential buyers wary.

Donegal, which has more than 20 Iowa investors, is composed of "regular, middle class" people that have included a retired accountant and teenagers. The team didn't have a wallet isn't as deep as some in the crowd. But the partnership uses science and elaborate research to pick Derby-worthy horses.

"We're competing with people who spend hundreds of millions of dollars on horses," Crawford said.

Donegal's approach to horse buying? Think "Moneyball," with four-legged players.

Keen Ice, who will be in the No. 14 post at Saturday's Kentucky Derby, is the third entry in the race in six years.

Picking a winner

Several days before the auction, Donegal's experts did extensive research on Keen Ice. Five people, including Crawford, made a visual inspection of him. A veterinarian X-rayed the horse's joints; an equine cardiologist took a sonogram of his heart; a DNA specialist plucked a hair to get a look at 23 or 24 chromosomes that can be used to determine speed and stamina necessary to run 1¹/₄ miles at Derby-level speeds.

Testing can confirm or eliminate a potential purchase. The strategy is used by other teams, too — but to a budget buyer such as Donegal, it's a necessity to stay in this big-money game.

"They have a system that's proven (to have) success," said Max Hodge, vice president of client services for the international auction giant Fasig-Tipton.

In 2013, Keeneland sold 6,365 horses for $534 million. Crawford knew what he wanted and how much he could pay at this auction, perhaps $175,000 to $200,000 at most.

Three or four other bidders made offers on Keen Ice, but the action was not aggressive.

When the bidding settled, Crawford had a bargain $120,000 yearling. He had a photograph of Keen Ice shot and then emailed it to his partners.

At the Kentucky Derby, Keen Ice follows Donegal peers Paddy O'Prado and Dullahan — horses that both previously took third in the Derby.

Those finishes are no flukes, say horse racing experts.

"Nothing is lucky about repeating success at the racetrack," said Julie Cauthen, a bloodstock agent who helped the team get its start.

Keen Ice is a relative bargain in Saturday's Derby field. Compare his price tag to Carpe Diem, who is the most expensive horse in the race at $1.6 million.

That same horse Crawford so carefully picked will run in the Kentucky Derby as a 50-to-1 longshot. Donegal is just fine with those odds. Everything about Donegal Racing is about defying them.

Equine science

Before he became a Kentucky Derby horse owner, Crawford was simply a fan.

Crawford came no closer to the turf at Churchill Downs than thousands of other spectators. There were conversations between holes on Des Moines-area golf courses: "Wouldn't it be fun to own a horse in the Kentucky Derby?"

He gathered friends who shared his interest and would help with financing. But there were no billionaires or heirs to oil fortunes in this racing team.

Crawford formed a team with an Irish nickname — Donegal, after the county in Ireland where his family draws its roots.

There was plenty of homework and science with the operation to split the Secretariats from the slowpokes. His plan was to go after horses that were undervalued. Donegal, he knew, couldn't go toe-to-toe with the biggest bidders.

Inspection teams, such a vital part of Donegal's methodology, are not uncommon for buyers.

But the extent it's used by the Iowans is "a whole lot more than most people," Fasig-Tipton's Hodge said.

According to Hodge, there are many methods buyers use at auction to select thoroughbreds.

Some rely on biomedical inspections before the action starts, Hodge said. There are others who prefer more traditional methods, such as eyeballing physical attributes, digging into the horse's bloodline for breeding analysis, watching its gait and how it carries itself, he said.

"Different people look for different things," Hodge said from Friday's Kentucky Oaks.

In the wake of the 2008 financial crisis, Crawford couldn't have found a better time to arrive. He purchased eight horses, more than he imagined he could.

"I had $450,000 on those eight horses and I thought I'd have one or two," Crawford said.

30 PHOTOS: HATS OF THE KENTUCKY DERBY

Making the right selections set him on his way, said Cauthen, who is the sister-in-law of the last Triple Crown-winning jockey, Steve Cauthen. He rode Affirmed in 1978.

"He's built a great mousetrap," Cauthen said. "Being the most wealthy guy doesn't necessarily mean you can pick the winners. It's a battle of wits. You have to make smarter purchases to manage to get to the winner's circle."

Crawford was coached by Cauthen to be a humble, quiet auction player.

"We've gotten pretty good at flying under the radar," Crawford said.

Crawford returned to Iowa and raised the money. Donegal was on its way.

Defying the odds

Donegal's first big investment turned in a stunning reward.

One of those horses purchased at a 2008 yearling auction would be named Paddy O'Prado. At the auctioneer's hammer, Paddy went for $105,000, a modest price.

Two years later, the horse took third in the Kentucky Derby. He won $1.7 million in earnings before he retired.

"The partnership was seen as a novelty, or lucky, the first time," Cauthen said.

Horses are inspected, genetically and physically, to make the grade. But the strategy of outpicking the competition continued to bring new blood.

In 2010, Dullahan, purchased for $250,000, also took third in the Derby. Its career earnings: also $1.7 million.

The eye-rolling ceased.

"All of that went out the window when Dullahan came on the scene," Cauthen said. "They saw that coming and said, 'He's going to do it again.' This is not just luck, and this is not just happenstance."

The scientific approach, also used by some of the biggest thoroughbred buyers, has proven itself.

"That is a remarkable pattern," said Ed Bowen, a Kentucky-based race historian and author. "It is certainly an achievement, whether you're choosing your own or relying on experts without paying top dollar."

Of course, it also requires talented people.

Trainer Dale Romans will be handling his fifth Derby entry in Keen Ice. The jockey is Kent Desormeaux, a three-time Kentucky Derby champion who also rode Paddy O'Prado and Dullahan.

Keen Ice isn't the only Donegal horse racing this week. Puca, a filly, was entered in the Kentucky Oaks on Friday. A third horse, Finnegan's Wake, will race in Saturday's Woodford Reserve Turf Classic Stakes. That's the race immediately preceding the Derby.

"One thing separating the successful people from the others is to come up with a plan and not deviate from that," Cauthen said. "Jerry Crawford does that all the time."

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HOW DONEGAL'S DERBY IMPACT GRACES CHURCHILL DOWNS (AND IOWA)

Donegal will bring more than 150 fans to the Kentucky Derby. It's a crew that can be fun and social, starting with the traditional Wednesday night dinner at Pat's Steakhouse in Louisville.

"It's a more-the-merrier partnership," Cauthen said. "It's a partnership of people who enjoy their time together. It's a very social, fun group."

Donegal's ownership has 22 Iowans. There are even two teen girls that have a stake, which is held by their parents. The Iowans combined their resources to purchase and prepare horses for the Derby.

"These are thrills that none of us could have had by ourselves," Crawford said.

Iowans have adopted Donegal's horses, too.

In 2010, Derby betting at Prairie Meadows in Altoona reached $432,458, nearly doubling the racetrack's previous high.

When Dullahan ran in 2012, the tally reached $446,965 in bets wagered.

"When we've got an Iowan horse and someone as well known as Mr. Crawford, it definitely brings out the local interest," said Marty Pohlmeier, Simulcast director for Prairie Meadows. "Any time we know there's an Iowa connection to the biggest race in the country, people want to be a part of that."

How much Iowans will place at the betting windows this time is unknown. With Finnegan's Wake racing, too, that will provide an extra opportunity.

Prairie Meadows will run the entire Derby card for fans, even the $2 bettors.

"We know people who have never been here before," Pohlmeier said. "We want to show them a good time."

Keen Ice will have a challenge to overcome its longshot odds. But with Donegal's past success, the Iowans are feeling lucky.

"There will be green and yellow M&Ms in the suite," Crawford said, chuckling.

The Derby Field

• Post time: 5:34 p.m. Saturday at Churchill Downs.
• Purse: $2,203,800.
• Distance: 1 ¹/₄ miles.
• TV: NBC.

Derby Day at Prairie Meadows

• Early 4:15 p.m. post time for Prairie Meadows live racing
• Permanently disabled jockeys fund silent auction (until 7 p.m.)
• Derby Hat Contest with prizes. Registration 1 p.m. Judging at the Winner's Circle on the track apron approximately 4:20 p.m. following the first race

Note: Wagering on the Derby card started at noon Friday.