Econ 101 - By Dan Liebman

The day off from selling at the Keeneland September yearling sale provides consignors and buyers alike a chance to catch their breath after the first four days of the auction while preparing for the remaining days of the two-week long sale.

The harsh reality of the severity of the drop in the market had set in (for the first four days, the gross was down 42.5%, the average decreased 31.6%, and the median was off 38.9%), and as consignors showed horses Sept. 18, they universally agreed the law of supply and demand dictated they were in for more of the same.

Oh, not just more of the same for the remainder of the sale, but more of the same for years to come. Markets don’t correct themselves overnight, especially ones like for Thoroughbred horses that take a long time to bring the product to the buyers.

It is tough to admit when the market problem you encounter is caused by none other than yourself, but breeders and consignors recognize they are paying dearly now for years of sending too many mares to the breeding shed. They couldn’t resist temptation to take the money off the table in the short term during a lengthy up market which has caused harm to the breed in the long term.

The economic downturn has certainly exacerbated the current market correction, but in this case, too many horses and too few buyers, as one breeder/consignor said, “is Econ 101 no matter what the product is.”

As they discussed the market conditions, and the situations that caused them, on this day of non-selling, most breeders were not singing the blues, but rather offering solutions for the future. Breeders are a resilient group, and as business people, are good thinkers about why things happen and what can be done to change them. That they were not hanging their collective heads and preaching gloom and doom is a positive sign. More than anything else, they appear to be looking for leadership as they face the recovery period in their industry.

One breeder/consignor, who also stands stallions, wants The Jockey Club to limit the size of stallion books to 110 mares, starting with next breeding season. “The breed registry is responsible for the breed, plain and simple,” he said. “They have the power to do this; this action is what is best for the overall health of the breed.”

Asked about the inevitability of a lawsuit claiming restraint of trade, this horseman was even more pointed in his remarks. “They should anticipate it and budget for it. They have regulations now to ensure the integrity of the breed and the sustainability of the breed. They are the only organization that can do this. They have the power to do what is right.”

A second-generation horseman, whose family breeds and consigns horses and stands stallions, is looking to the American Graded Stakes Committee for a policy he thinks will help the industry.

“Let’s make Saturday the big day at the races,” he said. “The (American) Graded Stakes Committee can inform tracks that if they get a race graded, on that card they cannot run any state-bred races or any claiming races. That card has to consist of some of the best races the track offers. Fans will understand that on Saturday, racing is offering its best product.”

A third-generation horseman, again a breeder, consignor, and person who stands stallions, wants to see far fewer racing dates, and wants the NTRA to lead the way in working with racetracks on a fair and equitable schedule.
“No one wants to watch a baseball game the day after the World Series ends,” he said.

While a few months off is certainly good for the horses, it also could mean fatter purses, which would help incentivize new owners to enter the business. Attracting new owners should be the goal of everyone in the industry.


Leave a Comment:

steve s

I like that Saturday idea

22 Sep 2009 3:23 PM

Excellent recommendations.  Now, let's see whether the industry is serious about making the necessary corrections or whether it will be business as usual.

22 Sep 2009 4:55 PM
Shawn P

While the Saturday idea SOUNDS good, in the long run it's harmful to the tracks that can't fill the card anyway. To fill the races with ONLY the best quality horses even at SARATOGA the premier meet with at least one Graded Stakes race every Saturday (almost every day there)must run at least optional claimers and state bred races to have a full card.

That breeder? Guess he figures they're all too greedy to set the rules themselves and want a JC mandated ruling so Joe Smith doesn't breed more mares than they do? Pretty bad when you admit that you can't control your own greed.

The buyers are finally taking control of the market themselves. We'll pay for the good ones, just not the highway robbery of the past for untried, untested and unproven especially yearlings.

snow, it isn't business as usual on the buyers who intend to race them, end. The gravy train is over for now, pinhookers getting rich off of one horse are a thing of the past.

22 Sep 2009 6:41 PM

Shawn P,

Michael Douglas in the movie Wall Street said that "greed is good."  However, greed is not good for the long term sustainability of this industry.  Some may call it maximizing profit while others call it greed.  However you slice it the industry must impose regulations that harness the few for the benefit of the many.

22 Sep 2009 7:48 PM
Shawn P

snow, I see what you're saying. We breed but almost never sell ours, we race them, and we do buy a lot of horses too.

My point is what the breeder/consignor's take was. Until people learn to step up and do what's right on their own? There always seems to be a way to get around it. If they were only breeding the best horses and not just for sheer numbers to prey on a lot of the buyers? It'd be a lot better for those buyers.

Still we need horses that AREN'T million dollar babies or the game will be only for the richest of the rich and will die even faster. Still kind of nice to have those mid-low level priced horses to keep the rest of us in the game somewhat.

22 Sep 2009 8:26 PM

To not run any claiming or worse, State Bred, races on the card forgets the fact you need to let newer fans see the level that maybe they can get involved, if they dare...

Racing will always have a harder time attracting even active horsepeople (and there's millions of us) from other disciplines because of: (A.) excessive whipping e.g. 21 times by CB on RA or 20-30 times on a sore, low level claimer (B). Throwaway mindset toward relatively young horses (and leaving it to rescues). (C.) Same day race meds that dehydrate, leach calcium, help mask drugs and allow a horse to run sore or injured.

It's tough, I think you need to figure that your base is in gambling and that the perception of racing won't change and work out what's best with what you have...that way, if you do gain some new fans it will be a plus...

23 Sep 2009 8:44 AM

all this sounds foolish too me. imagine saratoga not running ny bred races almost everyday,or claimers either. those types of races are the bread and butter of all tracks and most trainers. ask linda rice what she won most of her races with.i'll bet it wasn't

graded stake horses!

23 Sep 2009 10:11 AM

how long will it take for our "highly intelligent" breeders to figure out the role that eliminating tracks and race dates plays in the phenomenon of "no buyers", two owners in the entire state of Texas, etc..  Yah. Let's reduce the product down to a few rich guys. Get rid of all the tracks except 4.  that ought to help demand.

23 Sep 2009 12:20 PM
steve s

ON SATURDAY at least get rid of STATE BRED RACES


23 Sep 2009 2:55 PM
Karin C-C

If The Jockey Club wants to limit the number of mares a stallion can be bred to, but wants to avoid the Restraint of Trade lawsuit, why not have a sliding schedule of registration fees based on book size?  Anything over 100 mares in the book, and it will cost $5000 to register the stallion's foals.  Anything over 150 mares, the registration fee rises to $10,000.  

Personally, I would rather see the probem of overproduction addressed by raising all registration fees:  if The Jockey Club charged $5,000 to register a foal within one calendar year of foaling, it will cut back on the number of marginal mares being bred.  If breeder doesn't intend to race the resultant foal and doesn't feel it will bring at least $5,000 at a sale, he'd be crazy to breed the mare.  And The Jockey Club could dedicate some portion of the registration fee to go towards rescue/rehoming of racehorses at the end of their careers.

It's also true that a great part of the problem with getting new fans to come to the races is the perception that people involved in Thoroughbred racing are a bunch of money-grubbers who don't care how the horses are abused as long as they can make a buck.  Racing has to deal with this issue head-on.  IMO, this means eliminating race-day medications altogether.  It's pretty hard to argue that people care about the horses when virtually every runner on most race cards is on Salix or Bute or some other drug.  Trainers in the UK and Europe race without drugs, I don't see why we can't do that in the USA.

We also need to reduce the incidence of catastrophic breakdowns on tracks to the point where they're almost unknown events.  People look at breakdowns of horses like Barbaro or Eight Belles, and they figure if this is what happens to the horses at the top of the sport, what about the horses at the bottom?

If I had my way, I'd eliminate two-year-old racing before August, and I wouldn't allow two-year-olds to race without a comprehensive vet check to start with, and further vet checks before each additional race.  

However, given that trying to get racing's "leadership" to all pull together is like harnessing a bunch of cats to a wagon and expecting them to pull it, I expect we'll see more of the same-old same-old:  each man for himself, each segment of the industry looking out only for its own interests, and the slide of the sport into oblivion will continue.

23 Sep 2009 6:22 PM
greedy owners/incompetent stewards

The biggest problem of all is that the owners don t give a dam about the betting public, JUST LOOK AT WOODBINE AND THE NUMBER OF INQUIRIES THEY HAVE HAD WHERE THROUGH A OWNERS APPEAL you end up with two outcomes from one race, one that was fixed by the stewardsfor the betting public and one that reinstates the way it was run on the racetrack for the owners. The truth is they are stealing money from those in the betting public who made the right bet and you people wonder why you need subsidies from slot machines to finance purses.lm sorry but this has happened just two many times at woodbinme to ever trust that racetrack with my money  ever again!

23 Sep 2009 8:30 PM
Shawn P

That's rich. Greedy owners? The guys who are paying through the nose for the horse, costs before they can even start earning, up to $100/day rate, plus all the additional fees?

Most owners do it because they love the challenge, love the animals and the game. Show me an owner who makes money off of their racing stable-few and far between.

To be greedy there must be something to gain from it.

You sound pretty uneducated or just a plant frankly.

24 Sep 2009 11:20 AM

I'm with da3hoss on the three things that prevent horsepeople from other disciplines from crossing over.  They are a natural audience and those three items are all voiced repeatedly by all my friends.  In the show world, we are not allowed to walk, trot or canter with small levels of Bute, let alone run at 35 mph.  If I hit my jumber 21 times, I would be banned!

24 Sep 2009 3:11 PM

Face it, most of the big time owners use horse racing as a tax write off. Let's see, I can walk around Saratoga like I own the place or give more money to the IRS.  

As far as reducing the number of race dates, that an excellent idea.There's too many scrub tracks running scrub horses over and over every week.

Slots will be death of horse racing.5,000 claimers running for 10,000 or 15,000 dollars is a joke. Places where they have slots and horse racing makes it look like horse racing is just another way to get your money. People should go to the track to see races not stare at some machine hoping it will give you some money.

As far as the Keeneland sales are concerned-it's a great year for the small timers to buy, buy buy.  

24 Sep 2009 4:01 PM
Shawn P

Actually the small time buyer benefited somewhat but with the high % of RNA's? Not really.

As far as tax breaks?

“In order to take your losses, you have to be involved in that activity as a business and you have to be involved in it on a material basis—at least 500 hours a year." Considering the status of MOST horse owners? Businessmen who don't have that kind of time to devote.

Read about it here and it explains the stimulus available this year.

Tripper I think you're tripping, sound pretty anti. Think I hear the pitter patter of activists on here.

24 Sep 2009 5:04 PM

In order to bring interest back to racing i think we have to get "the good ol'boys clubs" off the various racing boards.And for everyone to stop fighting publicly.Lets be serious ,until now "the good ol'boys" looked down on the small breeder.They wined and dined the big breeder,but nothing for the small breeder.Now small breeders have sold ,gave away the stock they had. They will never come back to a industry that they threw a ton of money to and in return they were treated like dirt.

24 Sep 2009 10:58 PM

I don't see why the Jockey Club can't limit the amount of horses they REGISTER every year by a certain stallion.  It's not limiting how much the stallion can breed, they're just saying "WE have the right to register X amount of horses by a stallion" and limit them all to 110.  Would it still be restraint of trade?  Because they're not telling them "you can't breed your horse to this many mares - stallion owners could still book as they wanted, but they would have no choice but to limit books since nobody wants an unregistered TB they can't do anything with.

25 Sep 2009 9:29 AM

No Claiming or State Bred races on a Saturday when a GR Stakes is on the card? Do my eyes deceive me when I read that? What kind of an idiot came up with that idea anyway?

What would they do at Prairie Meadows for example? A small hick track like this would have to card 8 or 9 other races with substantialy higher than avg. purses the same day? Slots or not It doesn't take a financial genius to figure out that's alot to ask of a venue that size.

On top of that (let's call it a hunch) I would assume the majority of their patrons come from the cities and cornfields of Iowa. If you want to promote the product why would you dictate to any track that on their biggest days with the largest crowds they are not allowed to feature any state bred races? Iowegians for the most part blindly support their Hawkeyes for lack of anything else to cheer for in the state. The point is the Iowa brand on anything carries alot of weight to these people. They want to see horses that carry that Iowa brand run on the biggest days too.

FYI: Penn State will hand the Hawks their jockstraps this Saturday!! Go Nittany Lions!!!!!!

25 Sep 2009 11:47 AM
Brian Williamson

Racing must lower cost of owners to race horses.  Trainers dont get it that cost is killing owners, I have not seen day rates go down once in the last 10 years.  Purses are going down, expenses need to go down also.  Ban on all medication would get rid of 90% of the vet bill, that would be a start.

25 Sep 2009 2:30 PM
Asst. Hotwalker

The day has arrived, where we need an A circuit, and a B circuit. The A tracks cannot allow the minor tracks to fail. Without them, a horse running for less than $10,000 would have no place to go. And how long would the public stand for that. It would put us where the Greyhounds were 15 years ago. By reduces the simulcast cost, or outright grants, the A tracks can help the sport back to health.

25 Sep 2009 3:49 PM

 Watched the Keenland sales the last few days , I think Im seeing the END of Horse Breeding , I saw Yearlings that would have Sold for  Low 6 figures 3 or 4 years ago go for $15,000 or $20,000 , There where horses that went for $1,000 2,000 or 3,000. that would have brought $50,000 a few years ago. It costs the owners of most of those yearlings MUCH more to produce and get to them to the  sale then they were able to sell them for ,, I'll bet 90% of the breeders lost money on those horses. All the work sweat tears and then You Have to sell for a huge loss , I dont see many of those people staying in the Business do You ?? replys invited

27 Sep 2009 6:25 PM

Perhaps we could realize that in a sport of kings it is tuff to be the little guy.  However, good money or" modest" money can be made in this business.  Lets bring the stud fees to a realistic number.  A proven stallion is worthy of higher fees, and a new stallion has yet to show what he can produce. Mare owners will not be breeding mares this year knowing they will not get back the stud fee..not to mention the mare care and vet work that goes into getting that weanling or yearling to the sales ring.  Also, the breeders need to be responsible and should be approving mares before they breed, any old thing that walks into the shed.  This would help improve the quality of horses sold at auctions.

28 Sep 2009 1:38 PM
Greg R

At the same time as they limit stallion books, they can approve A. I., this stallion book limit ensures regardless of the type of cover A I wil not weaken the genetic pool, in fact it will strengthen it as breeders can breed to european of southern hemisphere stallions where out crosses are available. A breeder can keep the mare at home, decresing the expense, the mare is safer..

Next the enforces of the drug policies can actually ban for life the big offenders instead of handing out eclipse awards to them, but public opinion is strong, we might be way to late..  

28 Sep 2009 4:44 PM

I like your idea Greg. It can be very difficult to transport Mares with foals out of state to be bred.  Its nerve bending and expensive. Some mare owners are breeding good mares to lesser and closer to home stallions because " in this market " its a logistic nightmare. I like your ideas.

29 Sep 2009 12:06 PM

Does anyone know details of spills at Woodbine over the last few days? Is Todd Kabel ok?? Thanks for any info.

31 Oct 2009 11:00 PM

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