Racehorse stallions command stud fees commensurate with their abilities to sire offspring who can get around a racetrack in the fastest time.

The sons and daughters of Afleet Alex and Ghostzapper have done well enough on the racetrack that these stallions fetch $20,000 for a breeding, which is about the same price charged in Texas for a vial of sperm from some highly-sought-after white-tailed deer sires.

Why would anyone pay such a lofty amount to breed a plentiful commodity like a doe to a stag or to buy a deer sire named Stickers for $650,000? The Wall Street Journal explained in a feature article that the coveted bucks have baroque antlers their progeny inherit, and hunters are willing to spend dearly to bag big-antlered trophies at high-fence ranches in Texas.

Like horse breeding in Kentucky, deer breeding in the Lone Star State is a substantial enterprise. Texas A & M University estimates that the legal side of the business is worth $650 million per year.

The Journal reports that a black market also operates because Texas law prohibits the importation of live deer into the state in order to curb the spread of disease. As a result, smuggling of semen from desirable big-antlered bucks from Northern states–like Fat Boy from Pennsylvania and Silver Storm from Indiana–goes on.

Authorities confiscated 1,300 vials of deer sperm, worth approximately $1 million, from one smuggler. The perpetrator was fined $1.5 million.

The aggregate monetary value of racehorse stallions depends on how much currency people are willing to bet on horse races. Similarly, the market value of bucks with ornate racks is contingent on the number of dollars hunters shell out for the chance to bring back deer sporting attractive antlers.

The market price for any offering is determined by what human beings need or think they want. Without a critical mass of people wagering on Thoroughbred racing, Bernardini would be just another stallion. Absent ample hunters, Stickers would be just another stag.

This reliance for subsistence on often-fickle consumer preferences and discretionary spending is what makes endeavors like horse breeding for racing and deer breeding for hunting especially risky propositions. Fewer people in the urban-oriented culture of the 21st century can relate to classic sports, with deep rural roots, and that’s the ongoing vulnerability for investors with skin in the game.

Copyright © 2012 Horse Racing Business

Originally published in the Blood-Horse. Used with permission.