Marked Down - by Dan Liebman

Just a few weeks ago, this column opined that some stud fees were coming down in 2009, but it was not enough. They needed to be reduced more.

Since then, the Keeneland November sale has come and gone, the nearly 50% drop in gross clearly illustrating the global economic downturn has not only reached the Thoroughbred industry, but had a clear effect upon it.

There was no reason to think the insular world of Thoroughbred breeding and racing would be immune to economic pressures. With less expendable income, people are wagering less. With more stock market worries, people are wanting to pay less for racing and breeding stock. With lower returns at public auctions, breeders must decide if they should breed fewer mares and spend less on stud fees.

It should not have been hard for stallion managers to come to the realization that they would have to re-evaluate stud fees. Other than the cost of the mare, this is the biggest expense a breeder has every year. In a competitive business, where stallions that don’t attract mares don’t last long, it is imperative to price each stallion correctly.

The telltale sign for the owners of stallion farms has been the silence of the telephone. At a time when mare owners should be calling to secure seasons for the 2009 season, they are not doing so. Many have been quoted as saying they will postpone booking mares until January or February, with a longer wait for those not due to foal until late spring.
Things are happening very quickly in today’s economic climate, as evidenced by the bank failings, bankruptcy filings, and government bailouts. Things are happening quickly in the Thoroughbred industry as well.

On Nov. 4, Lane’s End Farm released its stud fees for 2009, keeping A.P. Indy, Smart Strike, and Kingmambo the same at $300,000, $150,000, and $250,000, respectively. Of the farm’s 20 stallions, one fee went up (Lemon Drop Kid), while six were lowered.

Just 20 days later, Lane’s End made another announcement, becoming the first farm to further reduce some advertised fees. A.P. Indy dropped to $250,000 and Smart Strike was lowered to $125,000. Eleven other stallions had their fees reduced, including six for the second time in three weeks.

Buying a season to all 20 Lane’s End stallions Nov. 4 would have cost a breeder $1,150,000, while that amount following the Nov. 24 announcement was 16% less, or $967,500. (Between the two press releases, it was announced Curlin would stand at Lane’s End in 2009 for $75,000.)

Lane’s End owner Will Farish had the courage to be the first stallion manager to react to the economic pressures affecting the breeding of Thoroughbreds. On Nov. 25, WinStar Farm announced Distorted Humor, who stood for $300,000 in 2008, would not stand for $225,000 as previously announced, but instead for $150,000. The following day, Taylor Made Farm announced the fee for Unbridled’s Song would drop from $150,000 to $125,000.

Farish understood it was not enough to drop a stallion like A.P. Indy, affordable to only a few breeders to begin with, but also to adjust the fee for a stallion such as Mineshaft, who stood last year for $75,000, was first announced as dropping to $40,000, and then saw another adjustment to $30,000.

For Mineshaft, when selling a yearling in 2011 and trying to get twice the stud fee, there is a big difference between needing the bidding to reach $60,000 rather than $80,000.
Of course, like every other farm owner that stands stallions, Farish is also a breeder, meaning he, too, is cognizant of the fees he will be paying to breed the mares he and his partners own.
Remember the old commercial: “When E.F. Hutton speaks, people listen?” WinStar and Taylor Made heard Farish, who is one of the leading owners, breeders, consignors, and stallion managers. Breeders now wait to hear if other stallion farms listened.


Leave a Comment:


These stallion fees have been overly inflated the past few years because the market has been so strong!  I am glad to see the stallion managers realize what is going on in the world around them!  I also like the idea of so many of farms going to payable when stands and nurses, saving breeders from tying up their cash income even longer!

02 Dec 2008 10:15 AM

while Farish did what NEEDED to be done, he did so for his own interest as well.  While Mineshaft's fee has dropped off a cliff from $75,000 to $30, might want to think about the breeders that have the distinct disadvantage of selling yearlings in 09 based on a $100,000 Stud fee!!!!!!  How would you like to be one of those breeders?  Thanks Mr. Farish!

02 Dec 2008 12:45 PM

Hello Dan...Your op-ed piece...again couched with precise accuracy.. quite obviously confirms the fact that the entire thoroughbred industry with all of its permutations is not impervious whatsoever to both domestic and global economic meltdowns as we are in the throes of now. There isn't any industry anywhere that is not reeling from this current erosion...Perhaps the only upside that can be gleaned from this until all market conditions commence their gradual uptick is that the thorughbred racing industry et al take note of itself and do some serious reflecting on how to start intelligently marketing and re-branding the sport..not only from an breeding aspect but also on how to generate and put those vital new and younger fans in the current empty seats at race tracks across the land.... There is no time like the present when hopefully all factions of the sport...embracing  every organization and association related to racing to sit down and really think this out..The timing here is propitious..When times are good out one even cares..Things however are not good everyone should sit down and spawn an new blueprint on how to save this great and THE BLOOD-HORSE should unquestionably lead the charge on this vital effort...Be an crusader for the sport...It desperately needs your insight..and leadership...Thank you always for your kind window..Regards..Steve Stone..East Hanover..New Jersey..

02 Dec 2008 2:19 PM

Someone needs to address the fact that there is little to no profitability for about 90% of breeders of yearlings when comparing stud fees, mare care, foal costs, vet bills and sales costs (prepping, sales commissions and fees).  This has been the case for several years.

Currently, though I have not analyzed it closely I would estimate this number has dropped to 1% of breeders.  Not only are stud fees still way to high considering a 50% drop in the market, sales companies (the narrow monopoly of which can remain unnamed because we all know who they are) who have made a killing off the unfortunate need to adjust their astronomical rates as well.

Finally, it bears addressing that breeders rely on statistical information provided by the Bloodhorse in the Stallion Register and those sales figures do not take into account RNA's nor do they take into account false sales/eg:  buy-backs that were not true sales.  It is misleading. For years breeders have been taking it on the chin relying on these statistics to make breeding choices.  And you wonder why the market has crashed?  Market participants can only take so many losses before they'll leave the market. It's time to take some responsibilty and make some changes.  

02 Dec 2008 6:53 PM

The fact is the market is down more then 50% and that’s for those who were fortunate

enough to have sold their horse. And this time it is pretty much  world wide.  So I don’t

think it would be unreasonable to expect a 50% drop in stud fees.  If not more on a lot of

stallions.  On average it cost around $30,000 from conception to drop of the hammer to

bring a yearling to market for someone who boards a mare at $25 per day.  That does not

take into consideration the cost of the mare and the stud fee.  So if someone was to breed

to Mineshaft with a $30,000 stud fee and  it sold for $60,000 the breeder would have lost

money. Though $60,000 does not sound like a huge number I still think the risk to return

makes it very tricky.  And that is just  to break even.  Personally I would like to see the

stallion owners share more of the risk.  I think a 60-40% split of net proceeds would be

more then fair.  In the above case that would translate into a small profit for the breeder,

$36,000 ($6,000 net) and $24,000 for the stallion owner a small loss. Conversely if the

selling horse brought a respectable $100,000.  That would be a respectable profit for both,

$60,000 ($30,000 net) and $40,000 around 34% premium.  But unless the breeders force

the issue not much will change.  In all fairness to stallion managers the market set the price

and the size of the book. Lanes End set precedent by dropping fees twice in a month.  I

guess the phone was not ringing.  I for one would like to see the industry set a maximum

for mares being bred. Being that water seeks its own level this may not be necessary.  I

think there are going to be a lot of hobby breeders leaving town.  And when the dust

settles hopefully the people that make their living at raising race horses will be able to

keep expenses and the market in perspective so we all can make a reasonably secure


04 Dec 2008 7:25 PM


I think you hit a great point; I know the BH is and has been picking our brains to find new innovative ways to do just that, bring in the common and younger race fans. I have been following the NTRA's efforts too and they are trying to think of some new things as well.

Please send any suggestions our way that you may have. We would welcome ideas.

Brainstorming and community is often where we feed off one another and get those handful of ideas that stick and make a change!

05 Dec 2008 10:25 AM

The Keenland sales in September and November have at the very least dropped 45 to 50 %. And that is if you look at the positive end of the market. If you also take into account the horses that did not seel and the ones that were taken out- the results are far more depressing.

The stallion owners at the very least consider cutting their stud fees by 50 % to show that they are aware of the market economics.

They have not done that and they have not talked about that.

The Blood Horse should have made this specific point rather than praising Bill Farish and Win Star farms for their miniscul and merely cosmetic reductions in the stud fees.

Breeders-( and I am one) will not breed their mares and that will have the same effect on the thoroughbred market as JOB Losses in the consumer market.

If you think that this is a one year phenomenon- think again as the economic depression has finally hit Dubai and the Sheikhs who have been the main pillar of strength and support in the upper ends of the market. With them reducing their buying sprees and everyone else becoming conservative- the upper end of the market will also peter out.

06 Dec 2008 12:11 PM

Stallion owners and managers must seriously think about double seasons for their better stallions, that is north and southern hemisphere, which will increase their rentability and allow for significant reduction of breeding fees.

Marc from Argentina

07 Dec 2008 10:25 AM

The expense involved with sending a stallion to stand in the SH is not trivial and is certainly stacked with risk. I'm not sure I'd risk sending my stallion that far in hopes of making more money in a global downturn.  

Additionally, while certainly not in the best interest of everyone who runs boarding facilities in Kentucky, Florida and California, I think we are rapidly approaching the time when A.I. is the potential salvation to the modern Thoroughbred.  While not cheap to prepare and send semen, it's a whole lot cheaper than spending $28 a day for basic care, plus varying regional vet fees, while you wait for your mare to get pregnant.  I can get the same care or better at my own place, hundreds or even thousands of miles away from the stallion.  I also get a better selection of new blood.  As a stallion owner, I gain the possibility of getting better mares than normally reside in my region.

I know others worry about over-breeding, but I think that won't be a problem with the economy as it is, or even when it recovers.  We could always limit books, like we used to and to which some have returned.

I think we seriously need to look into A.I. as a possible solution before we ruin our sport and the yearling market more than we already have.

08 Dec 2008 5:20 PM

A.I. always comes up in good times or bad. And though on face value it makes sense for a lot of reasons to small breeders.  You would have a very hard time indeed convincing Kentucky and Florida farm and stud owners. It would drastically change the  whole dynamics of those two breeding areas due to the fact that a lot of mares would not have to be sent there.  Farms would have to close.  Stud farms would only need a fraction of the land they own and developed. Massive layoffs. Land values dive.  Reduced tax revenue to local and state governments, etc.  It would take a rules change by the Jockey Club.  And being that the Jockey Club is run by a lot of the people that own or have a vested interested in the way things are. I don't see it happening or even be considered in my life time.

08 Dec 2008 6:14 PM

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