Paint By Numbers - by Dan Liebman

Based on Reports of Mares Bred, The Jockey Club recently announced its projection of the foal crop of 2009 as 35,400, which would represent a 3.3% decline from the estimated 36,600 foals of 2008.

Many believe the foal crop should be much smaller.

Consider this quote from pinhooker Eddie Woods, speaking at the Ocala Breeders’ Sales Co.’s yearling sale, which Aug. 18-21 suffered major declines in business: “Basically, we’re seeing the results of the overproduction of mediocre stock…there are too many mares (in production).”

The size of the Thoroughbred foal crop grew dramatically in the 1980s, when auction prices boomed and everyone wanted a piece of the action. There were 35,679 foals in the first year of the decade, but by 1985, the number had soared to 50,433, peaked at 51,296 in 1986, and was 50,917 in 1987. In just a few years, the crop size had jumped nearly 44%.

What followed was pure economics. With high supply and low demand, prices fell and many limited investors fled. The foal crop was back to 35,341 in 1994 and has remained around that number ever since.

During the decade of the ’80s, there were 463,827 registered foals, a number that fell 19% to 375,302 in the ’90s. Based on crop totals and estimates for the ’00s, the decade will see 371,633 foals registered, a drop from decade to decade of less than 1%.

What makes it tough for breeders to scale back is the emphasis on the commercial market and the solid average price for yearlings sold throughout North America. In 2007, there were 10,159 yearlings sold at public auction for an average of $55,306. At the world’s largest shopping venue, Keeneland September, the average has been more than $100,000 each of the past three years.

For its 2008 sale, Keeneland has cataloged a record 5,555 youngsters, about 14% of the entire estimated foal crop.

A year ago, 4,901 yearlings went through the Keeneland sale ring over the course of 15 days, with 3,799 listed as sold. But only 1,235 yearlings, 25%, were profitable, based on stud fee returns, according to Blood-Horse calculations.

This is not to say many breeders are not making a profit. If you send 10 through the ring and two or three sell for enough to carry the others, the bottom line can wind up being positive.

But now comes a year in which breeders have higher stud fees and pinhookers have larger investments in yearlings. Combine that with a struggling economy, and there is plenty of reason for concern.

Many breeders/consignors have expressed a belief that they expect the first week of the Keeneland sale, when most of the better pedigreed and conformed horses are cataloged, to remain healthy, while the rest of the sale could experience significant downturns. At the OBS sale, the number sold was down 20.5%, the gross dropped 34.6%, and the average was off 17.7%.

With mares currently carrying what will be the final crop of this decade, breeders should again assess the size of the crop as it relates to the economics of the game. The crops of 2000-09 will drop only about 1% because of larger books and fewer stallions. That fewer stallions are standing at stud may not be such a bad thing, but larger books have pushed catalogs to record sizes. One need only look at the list of freshman sires in the Keeneland sale and the number of offspring representing each to see this at work.

There were 4,513 active stallions in the United States in 1998, though obviously only a small number were considered truly commercial. By 2006, when this crop of yearlings was conceived, there were 3,682.

Fewer stallions and more broodmares. As Woods so succinctly said, the overproduction of mediocre stock does no one any good. 

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