A lot of them get sold as hunter/jumpers, but if they fall into the wrong hands and then get.injured, they are sometimes sold to slaughter houses. This doesn't usually happen with horses that are that expensive though, because usually the people.who have the money to pay for those horses are able to take care of them. But yeah, hunter/jumper is the predominant post-racing discipline. You also see quite a few expensive ex-racehorse eventers, too.
Some of them never make it to the track. My friend picked up a young unraced filly who had great bloodlines- the sire's stud fee was $125,000. She paid $500. for her w/ papers. Without the papers, she was FREE.
A lot of times they still run, just not at the Graded Stakes level. The trainer will know when it is time to work them or sooner if they are not the great horse the owner hoped for and will run them at the appropriate level. In some cases that will be at a State-bred Stakes level, or Allowance. Of course they first have to go through thier conditions and most start out at Maiden Special Weight level and move up or down from there depending on how they perform.
If the horse stays sound, they normally will go from the Maiden Special Weights to either Allowance or Stakes, and then will drop down to Optional Claiming races if available and then into the Claiming ranks. They can race in high Claimers all the way down to the $5,000 Claimers as long as they are sound and the owner or trainer want to run them. Within those ranks are the "non-winners of a race in a lifetime" and other conditions...
Many times they are sold or Claimed in that timeframe as the original owner/buyer may not race at low levels and would cull them to cut their losses. Any owner who has been aound racing for long understands the risk that a high dollar baby will most likely never even make his purchase price back, let alone the training fees etc. It's a real crap shoot and you have to love the sport to invest so heavily in something with such risk.
IME, most do get sold or given away as riding horses. For the ones with excellent bloodlines who maybe suffered an injury before ever racing, they may end up in the breeding shed - more prevalent for mares than stallions. Some end up as Polo ponies, some do get shipped to slaughter, but that is less prevalent than it used to be.
I find it fascinating how many show horses were high $$ purchases at the various sales!
One ended up with me. . Timely Impulse sold as a yearling for$20K or $30K, can't remember, but sold as a 2 yo for $250,000. Trained and run by Rodney Jenkins, then claimed by a group in MD. Went to a woman in MD who gelded him and started him foxhunting at 6. I got him at 7. I found him on craigslist, $1K.
I have a friend with a million dollar horse! She got him for next to nothing. He brought $950k at Keeneland. He was pretty average. He did win a race at Belmont but was not stakes quality and folks buying $1m babies want to win stakes. He was dropped in for a $50k claiming tag and claimed and he ran for the new connections for a year or two. He left NY and ran in the midwest before being claimed for $20k at Churchill. From there he knocked around until he was eased for a $5k tag and his owner/trainer (who had no idea that he'd been a pricey baby) decided to stop on him and sent him out for retraining.
Most of the pricey ones get trained and unless they et hurt, they race. If they are slow, then get dropped down to find their level, either via claiming races or private sales. In many cases the "end user" lower level trainer has no idea that he has a million dollar baby in his shed. To him its just a $5k horse that they bought and hope to make some money with.
Most of the big outfits have a method of selling those that don't run to their standards. In the spring/summer in NY you see plenty of Zito/Pletcher/Asmussen 3yo's dropped in for $40-50k tags. They are cutting their losses and making room for the new 2yo's coming up. Many trainers have relationships with 2nd tier trainers who frequently purchase well bred stock from them. The horse that may be less than stakes quality in NY may do just fine at Ellis or Sam Houston.
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I had one-- sold as a 2yo in training at OBS for 1 mil... Won his first out, won a couple more, fell apart, got given to me, got EPM and foundered before we could ever see if he would make it as an eventer. We had to put him down. He was by Grand Slam.
The only difference between a runaway and a fast gallop is nothing but a SMILE
Most horses cross the Rainbow Bridge, but TEDDY JUMPED IT!!!
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Samtois, from what I see most people breed for size if they plan to sell as a weanling or yearling - buyers like to see a mature/precocious looking baby, so they like to see them larger rather than smaller. If it's too big though, that can be a problem as the 16.2 - 17h babies can tend to take longer to come together (a very general statement, only x-rays can tell if those joints are closed).
Any good breeder looks at soundness of the line, soundness of the stallion and soundness of the mare. That is also why conformation is so important as well. That said, if the cross has worked before, or the mare throws crooked but she is proven and her foals stand and race, then that conformation is not so much of an issue.