Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

Karen in Indiana — Wed, 28 Oct 2009 17:17:20 GMT

John, Cetewayo is an example of what you talked about in your article and your answer. By all rights, he should be doing much more business at stud than he is - good bloodlines, good race record, and racing for 6 years. But he's not fashionable so even though his produce would probably make very good racing prospects (he hasn't been bred to enough to know), they aren't going to pull the big bucks at the auctions so he doesn't get bred to. It's a vicious circle driven by breeders breeding to sell, not to race. Thank you for letting us know that you are involved in racing horses, not just breeding them. There are a couple of other big breeding corps. that also race, Three Chimneys and Adena Springs. Do most also race or is it the exception?

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

Stewart Armstorng — Wed, 28 Oct 2009 15:11:01 GMT

Smaller books will mean:

- the top stallions don't get such a large percent of the business.

- less popular stallions will get more mares.

- each stallion's offspring would be competing with fewer numbers at sales; both the yearling sale and the broodmare sale

- this will make the better offspring and retiring broodmare prospects by a particular stallion even more valuable and buyers less picky when vetting racing prospects (fewer to choose between)

- lesser stallion prospects will have more residual value on a relative basis to the best stallion prospects.

- fashion won't be allowed to dominate production

If this is what you mean by "trickle down" then we are in agreement.

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

small breeder — Wed, 28 Oct 2009 13:55:15 GMT

I am glad to see this discussion. I am a small breeder/owner, John Sikura has always been supportive of our kind of operation. I believe the #1 issue is the most obvious one - with a few exceptions, the racetracks look like Ghostowns! There is NO effort made to get new fans to the racetrack and recruit no owners. Just 20 years ago it was the sport with the most attendance. Today, the arenas are packed for Football, Baseball, Basketball, and Car Racing, with tickets going for $50-$200! How hard is it to get couples and families to the horse races for admissions of $5-10? When the crowds come back, the handles will rise. New owners will be recruited. Who wants to invest money for no return, especially in a dying sport? The racetracks, like the rest of corportate America, look only at today's balance sheet, not the long range prospects for the sport. They will make what money they can -- from online wagering and simulcasting, slots, etc. and "cut costs" by doing away with anything that makes the fans happy -- mutuel clerks, good food, comfortable seating, promotional expenses. Their ultimate bailout plan is to sell the land for development and get out.

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

Wanda — Wed, 28 Oct 2009 13:40:10 GMT

Mr. Sikura first let me apologize on behalf of the people who like to come on these blogs and cut down anyone in the business with an opinion. It seems that it has become the norm on this website.

I do agree with your statements regarding purses. I owned in partnership a horse who ran on the community circuit here in Alberta. He won 3 races and placed in others. Between the day money and the shoer etc we pretty well came out even. It seems to me that every time the economy slows down that the people writing the bills jack their fees up. You can't tell me that a shoer at the racetrack every day is spending that much more on gas and shoes to justify the 30% increase in his services. My husband and I trained our own and outside horses and NEVER charged extra except PC on a win to run a horse over and above day money. I got bills all summer that showed a percentage taken off for a horse that ran out of the money. Now before I get slammed I'm not talking about the PC for a win, this horse ran up the track and we got dinged for them throwing a bridle on and leading him over. This was over and above day money which in my opinion should cover the cost of race day as there is very little expense for the 3 days he walks after the race.

The point I'm trying to make is that no one holds the line and the owner sees his purse money shrink thru this. No wonder it's getting harder and harder to get new owners into this business.

I agree with another poster who commented on Woodbine's program and their Ontario sired program. You know what, THEY get it!

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

BELLWETHER — Wed, 28 Oct 2009 05:14:21 GMT

BREED MORE GELDINGS...

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

matt lomas — Wed, 28 Oct 2009 03:52:05 GMT

horse racing is a great sport. We no longer have a purse structure to encourage most people to own horses out right so lets face facts. vets have improved conception rates. there are too many horses. i think that the jockey club should impose a limit on the number or mares that can have registered foals by a given stallion in a hemisphere. 100 seems like a resonable number. then keep the stud fees where the market allows them to remain and let those who want out get the heck out. this used to be a sport for the elite, what is wrong with that? i dont here polo players crying about increased costs for grooms and vets.

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

LCM — Wed, 28 Oct 2009 03:01:27 GMT

John,

You asked where was I when Roman Ruler needed mares...well I was sending my mare to another first crop sire who NEEDED mares, because I felt the breeding suited my mare best. I knew it wasn't a "smart" decision based on the nature of the marketplace, but I'm willing to keep the foal and race it (do I hear a gasp). One other aspect that I want to mention is the perpetrators of this BIG BOOK mindset....COOLMORE...Just look at their American roster...it's power has dwindled every year. Most breeders I know are tired of being 1 of 50 yearlings at Keeneland...good luck being the 1 that stands out. On the other hand look at the miraculous recent rise of Gainesway's stallion roster!! Somehow poor little Birdstone is doing just fine and I'm certain all his entire foal crops combined don't equal one foal crop of the most "commercial" stallions at your barn, Coolmore's or Darley's. If a stallion is going to make he will. All the mares in the world can't make a bad stallion good....not for long anyway.

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

LCM — Wed, 28 Oct 2009 02:44:37 GMT

John,

Thanks for responding to my comments and questions. I realize the reasoning behind your decisions. They are "sound business" decisions regarding making a profit for yourself and your stallion shareholders, however, they do not in any way shape or form help this industry when it comes to overpopulation! While you may see setting stud fees at socalled "reasonable" amounts to attract a larger book, that does not create a better book. What ever happened to stallions that got over 10% stakes winners to foals? Now anything over 5% is considered "good"...how pitiful. You also failed to state the actual amount of mares those stallions mentioned bred. And as for the issue of breeders jumping from freshman sire to freshman sire, I actually prefer breeding to older, proven stallions. I know I'm not in the majority, but I don't prefer to turnover my mares the way most breeders do. I realize the nature of this beast when it comes to commercial breeding...that is the problem..the breeding is based almost solely on financial returns instead of doing what's best for the individual horse and in turn, the industry. Maybe this business does need to go back to being primarily run by the elite and super wealthy. Does anyone want to hear that...no, but it looks like it will eventually turn that way. Look at the sales in Europe for proof...the Arqana sale average was UP!!!! Now how did that happen...Simple it's a SPORT there..a sport for the truly wealthy that don't NEED to get their INVESTMENT back...because it's not an INVESTMENT...it's a PASSION. As one of the leading stallion managers in North America, I hope you make it clear to potential "customers" that there is no guarantee or even implied guarantee the the money that is put into this industry will be either returned or increased. I'm sure thats not the likely sales pitch given most newcomers by you or the majority of industry insiders. Everyone talks about the "homeruns", etc. It's not easy to entice someone with "hey want to spend a fortune and enjoy losing it?" Somehow it's working in France. Viva la difference...oh and one other thing..I was very sad to see that Shakespeare couldn't make it here in KY....He was my favorite horse in your stallion barn last year...what a shame.

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

sceptre — Wed, 28 Oct 2009 01:56:53 GMT

Dear Mr. Armstrong,

Firstly, I am aware of your name, and I also have been in this business for a very long time. By the way, more than a few years ago I had some interest in acquiring your Majestic Light mare...My purpose is not to debate back and forth with you, but your specific topic is worthy of a bit more analysis. It's likely that many feel similarly to you. Would you agree that reducing book sizes would not reduce total (thoroughbreds bred for racing) crop size? It would merely create substitutions to other stallions. As said before, reducing book sizes should inevitably somewhat raise the average value of untried offspring from those higher end stallions. It could also, however, cause those stallions' stud fees to rise (note Mr. Sikura's recent comments), or cause the "residual value" of high-end male retirees to decrease. Reducing book sizes seems not "to be integral to returning the breeding business to health at all levels", but rather, perhaps, might make it more "healthy" for just those at the high end. If you factor in the aforesaid potential rise in stud fees and/or relative loss of residual value to the elite male retirees, it could end up as a wash for even those at the high end. I'm not an advocate of excessively large books, but for reasons differing from your own. Large books prevent lesser known stallions from receiving sufficient numbers of mates to reasonably evaluate their genetic worth. The average breeder, even those at the high-end, are often not sufficiently versed in racing or breeding to make the proper decisions regarding the mating of their mares. They, therefore, tend to go along with the crowd, so if the vogue stallions are readily available to them, they look no further. This, in the long run, could prove detrimental to the breed, and may reduce somewhat genetic variability. All this, though, has little to do with the topic at hand. While you claim that your suggestion would be for the betterment of all, it should produce nothing positive for any except, perhaps, the high-end market breeders. Should I infer yours is a "trickle-down" logic (a la Reagan economics)?

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

Grerg R. — Wed, 28 Oct 2009 01:06:06 GMT

Hi John, I owe you an apology as you do have horses in training. As you know most stallion farms in Ky do not. I believe it is very important to limit books, but I think it is by being selective as to the mares accepted to stallions. Look at hip 466 in the OBS August yearling sale, sired by Macho Uno, not a runner in 4 generations. Where will this horse end up? Why would they accept that mare to him? GREED! Another horse headed for the killers most likely. There should be some criteria per the female family of the mare before allowing her to reproduce. While we own stakes fillies, we own mares that are maidens, but are half to big producers, solid stakes horses in the last 4 or 5 generations.

If you don't mind it would be fun to stable mail your runners, lets see how well you do. Once again please accept my apology, Greg Robertson

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

snow — Tue, 27 Oct 2009 23:28:36 GMT

Mr. Sikura,

Since the likelihood of increased purses is somewhat in doubt at least for the near term ( e.g. $80,000 maiden special weight and first condition allowance races in New York and California) what is your opinion on the industry putting pressure on or regulating racetrack vendors in an effort to lower the cost of owning and racing a thoroughbred?

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

JoeC — Tue, 27 Oct 2009 12:06:19 GMT

Great commentary. The real reason racing is spiraling downhill and the purses are too low is the 2.00 bet and 20% or so take. In the day the 2.00 bucks on a 2-1 shot paid for the day. Lunch, a train ride to and from and a program. Now it buys a slice of pizza. Want to fix racing and get new blood, make the minimum wager 5.00 or 10.00 on WPS and reduce the takeout to 10% and devise other props from the results. Take on the casinos with the product itself and leave slots out of it. In the end its all about the bettor experience.

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

john sikura — Tue, 27 Oct 2009 10:51:47 GMT

Dear LCM/ I answered you in my general response. But specific to your criticism i would ask if you are a breeder? If so you probably had 10 people call for a Candy Ride season last year. Do you breed to a stallion that has coming 2 year old's?. If you are like most breeders the answer is no. You will move your mare from freshmen sire to freshmen sire and shun older proven racehorse sires. You want reduced books without breeder loyalty and under market stud fees.It is a nice problem to have to much of what people want. Want to trade for a little of what nobody wants. Go sell a Medaglia D'Oro next to a stallion that just left for Ohio, I don't like your chances. Without a strong first book of mares a stallion has a limited opportunity for success. Additionally without significant number of live foals in the first crop a stallion owner cannot survive the lack of demand in the second and third year. Again I repeat my offer, we limit breeding 100 mares, breeders support the horse for the first four years at stud. That is a fair deal for both sides but not going to happen. We have reduced our books considering all of the factors above including the breeder. Just remember when i stand 12 stallions i cant sell seasons to the 3 horses in fashion. Had you supported Medaglia D'oro, Candy Ride and Stormy Atlantic i bet you would feel that you breeding at Hill'n' Dale was a good choice. The fee was more than fair and they welcomed my business when another competing farm thought my mare was not good enough. And by the way, the 2 year old i loved out of the mare just won a stake. I hear that alot, thats why people breed to our stallions to catch a rising star. You know there is a different approach employed by farms. The stallions stand for double what they should and breed half the mares. Might want to try that route. john g sikura

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

john sikura — Tue, 27 Oct 2009 10:11:33 GMT

Wow this group gets fired up. To answer a few of your points, I have 15 horses in training so I do support my point of view about a responsibility to breed to race. We do not race in Ky, as i find the purse structure in other jurisdictions to be more lucrative. Of course the legislature in Ky has failed us and both mares and stallions are leaving the state. With respect to the criticisms about the number of mares we breed I think the results of our stallion operation speak for themselves. Candy Ride, Medaglia D'Oro and Roman Ruler, Stormy Atlantic have all rewarded their supporters and become significant sires. Your point that we breed in excess of 200 mares is incorrect. We have never done so. We do subscribe to the theory of reasonable stud fees so that breeders can make money when selling their yearling. Ever thought thats why a stallion covers alot of mares because he is successful and stands below his market fee? The reality is that breeders want it both ways. Don't raise the price, limit the book but let me breed 6 mares to your sold out stallion. I have committed to limiting our books to 100 mares if breeders would agreed to support the stallion for the first 4 years at stud. You do realize that stallions are purchased and the return of the purchase price comes from selling seasons right? You also know that payment terms are now stands and nurses and that alot of fees are not being collected dont you?Lets make that deal, support the stallion until his 2 year olds run, not going to happen. You want the most popular stallion but won't breed to a stallion with coming 2 year olds and will move your mares from freshmen sire to freshmen sire. There is no breeder loyalty today. Its all about fashion.Roman Ruler bred 37 mares last year before his 2 year olds ran. Where were you when we needed you? Stallion owners and breeders need to be part of this solution. We are reducing our books and mare owners need to spread their mares around. Both sides are part of that solution. I make my living in this business and welcome reasonable criticisms as i want to do my job better. john g sikura

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

Greg R. — Tue, 27 Oct 2009 04:58:54 GMT

Dear LCM.. He (John) has no intention of answering our questions, mine or yours.. he is the problem..

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

mhm — Tue, 27 Oct 2009 04:01:29 GMT

There was a time when it was considered common sense to not be involved in agriculture unless you wanted to work in the field. The horse business is a hands-on business. If vet bills are so high, ask why; were you there at the time, taking the horse's pulse? Did the trainer actually get enought to cover his expenses? Was he asked to put in the time in order for an average horse to show that it was...average?

As for overproduction, no doubt that is true, but who will tell someone not to breed? Market forces are sorting themselves out, and those losing money will stay out.

The bettor drives the show from the windows, and advance deposit wagering isn't donating to purses. Takeout is far too high. Although it is the horse which we extol, our product is not competitive and is overtaxed. The owner doesn't stand a chance; ever notice how the day rate consumes all the purse money, everywhere? Everybody wants the big bucks; nobody wants to work. Such a fine mess...

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

Jim H. — Mon, 26 Oct 2009 23:36:25 GMT

John is certainly right that the game is not even remotely affordable for owners, but how do you improve that? You can't simply ask for higher purses when there already isn't enough money to go around. The best solution is to get the horses back to where they were 25 years ago, making twice as many starts. If owners magically had that overnight they would earn the same purse money but have only half the horses in the barn and half the expenses. An immediate improvement in economics. How do we get more starts? Ending race day medications such as Lasix and bute would be a good start.

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

Stewart Armstrong — Mon, 26 Oct 2009 20:51:50 GMT

Sceptre

While your points are well taken, the overarching problem, at the moment, is that virtually no one is making money. Yes the blame can be spread around, but a change needs to take place and it needs to happen fast. Probably the first thing that will change will be stud fees (as breeders either liquidate or press for very low prices). My concern is that low prices for matings combined with large books still leaves every breeder in a pickle. Reducing the book sizes is integral to returning the breeding business to health at all levels. Ultimately it should improve residual values, although more gradually (this is due to the tremendous inventory already in place of mares by every different stallion from the large books we have seen over recent years). In the short run, reduced stud book sizes will inspire more confidence on the part of all breeders to mate their mares rather than liquidate.

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

racing — Mon, 26 Oct 2009 20:24:49 GMT

John's points correct and valid. The most important issue that needs to be addressed is the purses. I feel less racing is the key, preferably three or four days a week without adding races per card. This would create larger fields, more handle and greater purses. The major racing jurisdictions would then have the ability to use stronger quality races.

As far as stallions that breed to large number of mares, that is called simply supply and demand. If the stallions are priced fairly their books have greater demand!

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

seb — Sun, 25 Oct 2009 21:31:27 GMT

Is this another one of those moments where horse racing insists on the absolute virtues of the free market (for example the right to card as many races as you can fill, restrict access to signals to try to maximize corporate advantage, book as many mares as you can manage at the price, etc.) until the system collapses from its own inflation and then, shock, it's time for welfare again? Where are the dollars to subsidize racehorse production? Why can't breeders continue to take a share of bettor's risks? Heck, let's get people to bet on other things and use the money from there (slots)! Racing is home to the craziest libertarian socialist arguments I've ever heard!

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

LCM — Sun, 25 Oct 2009 19:17:06 GMT

John,

How many mares did you breed to Candy Ride, Indygo Shiner, Roman Ruler, etc? Need I go on. I hope you'll answer this question for the readers of this blog. While I'm sure your concern for this industy is sincere, I can't help but be amazed that someone who has deliberately contributed to the incredible overpopulation of the breed would actually have to nerve to now be "concerned" about the lack of sustainability!! Where was your concern the last 10 years? Talk about too little, far too late!

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

sceptre — Sun, 25 Oct 2009 16:38:08 GMT

Mr. Armstrong-Yes, the fact that relatively few, when they're done racing have any "residual value" is a problem-and one not easily solved. Let's face it, racehorse retirees must compete with many other horses available. As to residual value in the racehorse breeding marketplace, it goes back to the fact that racehorse breeding/racing is essentially an unprofitable enterprise. Limiting the size of a stallion's book would do little to change any of this. This, in itself, should have no affect on the total number of horses bred. Yes, reducing the book size of the highly commercial stallions would raise the value of their untried get (not their "residual value"), but would do nothing to raise the value of the combined (untried) population. It's just too bad that those at the top of the market are now experiencing some of the hardships that the rest have suffered for so long. Welcome to the club.

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

Greg R. — Sun, 25 Oct 2009 04:13:19 GMT

John, I know you must have read the comments here, I ask a simple question, how many race horses do you own?

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

DDave F — Sat, 24 Oct 2009 17:15:19 GMT

Just a thought for the many elected officials who are supposed to represent the owners interest. Why don't you guys try getting UNIVERSAL HEALTH CARE for the horses. Maybe that would be a good start to increasing new ownership? The Vets are out of control.

re: Sikura: Bad Economy an 'Easy Excuse' for Market Downturn

lcm — Sat, 24 Oct 2009 17:09:02 GMT

ARE YOU KIDDING ME? THESE COMMENTS FROM STALLION MANAGER THAN ROUTINELY BOOKS HIS STALLIONS TO 200 MARES...OH THE HYPOCRISY!