There has been much wailing and gnashing of teeth about the rotten economy during the recent Thoroughbred marketplace meltdown, but John Sikura of Hill ‘n' Dale Farms doesn't think the global financial crisis is the biggest reason for the sharp downturn in the auction business.
"I might be in the minority but I don't believe the economic crisis is the driving force behind this market adjustment," he said. "I think it's certainly a factor, but it's an easy excuse, and there are some other reasons that I think have a bigger effect."
In Sikura's opinion, the major problem involves purses and the expenses of owning a racehorse.
"A guy can't own a horse, win two races throughout the year, and pay his expenses," Sikura said. "Purses have lagged behind expenses to a point where there is such a gap that the person who would buy a $75,000 yearling or two each year has only a very few markets where he can race and think he has any chance to pay his bills. You can't entice people to enter an industry that loses money for everybody.
"We're unique as an industry because we have the affection for the horse and the camaraderie of going to the backside; we have some unique positives," he continued. "But in the end, the maiden races in New York need to be $80,000 at a minimum and they need to be the same at Keeneland. I'm not suggesting that everybody who owns a horse should make money -- in no business does everybody make money -- but a higher percentage of people who own racehorses need to have a chance to have to a profitable experience."
Also out of balance, according to Sikura, is the number of Thoroughbred sellers versus the number of Thoroughbred owners.
"We have to revert back, to a much larger degree, to an industry that raises horses to race instead of one that specifically raises horses to sell," Sikura said. "When our leading buyers have now become sellers, it makes it very tough to be in business as a breeder. Our job as racehorse breeders is to supply the demand in the marketplace, and if the people who we're selling to are now also sellers, who is going to pick up the slack? I think a lot of the owners have become sellers because of the lack of (economic) viability in owning racehorses. That's where it all starts."