(Originally published in the December 11, 2010 issue of The
Blood-Horse magazine. Feel free to share your own thoughts and
the bottom of the column.)
By Eric Mitchell - @EJMitchellKy on Twitter
First-year sires used to be the darlings of the Thoroughbred breeding industry. The owners of graded stakes-winning colts, especially grade I winners, only needed to sit back and wait for farms to call. Now, they are the ones doing the calling.
“In the past it was a fairly passive thing,” said Jack Wolf, a principal for Starlight Racing, whose previous racehorses-turned-sires include successes Harlan’s Holiday and Purge. Farms wanted these sires because auction buyers really wanted their offspring. Without any progeny performance records to spoil the mood, the progeny of first-crop and second-crop sires had sold at a premium, in part fed by the excitement the sire himself generated on the racetrack and in part because buyers thought they were getting in early on a good thing.
Recent and lingering economic calamity, however, has since turned this segment of the stallion market upside down. Breeders and buyers want proven sires first. After that, a stallion prospect better be among the top 3% of graded stakes performers or he has a slim chance of finding a home in a breeding shed.
“It is difficult even to place a multiple grade I winner. These farms are struggling to book the horses they have now; does it make sense to take on a new one?” Wolf said. He knows all too well because he’s spent months looking for a farm to stand Take the Points, a 4-year-old son of Even the Score out of Ginger Ginger, by Fred Astaire, who won the Secretariat Stakes (gr. IT) and the Jamaica H. (gr. IT) in 2009. Unfortunately, the colt has an injury that ended his racing career.
From a farm’s viewpoint most new stallions today are not worthwhile investments.
“It is a tough time to start stallions, probably the toughest I’ve ever seen,” said Nathan Fox, who started Richland Hills (then Wafare Farm) in 1998 and has started several top-notch stallions including Dynaformer and Glitterman. Fox was offered an opportunity to stand a grade I-winning son of leading sire Giant’s Causeway. The owner would pay all the expenses and give Fox half the proceeds. Fox still had to take a pass.
“You can take a grade I winner and if you stand him for $10,000-$15,000, then you have to give seasons away. I’ve been close to closing a deal on seasons and had people call me back and say, ‘Well, I got a free season from someone else.’ How do you make a business plan based on that?”
For Fox, his business plan focuses on the three young stallions—Purim, Sightseeing, and Cougar Cat—in which he has already invested a substantial amount of time and money and whose first crops of runners hit the track next year.
“Most of the work has been done, so now we wait to see if we’ll hit one out of the park,” he said.
The owners of many other farms with stallions in the middle and lower ranges are shying away from new acquisitions and building instead on what they’ve got. To be competitive, they have to be flexible and creative, with incentive and rewards programs, diversification, and tapping into regional markets all in the mix.
Ro Parra’s Millennium Farms, a relatively new operation, entered the stallion market at the lower end, acquiring young sires in the $5,000-$15,000 range. When that market became shaky, Millennium instituted a rewards program to foster loyalty to the farm and its stallions. The program works much like an airline frequent flyer or affinity program with the accrual of points for breedings and for the performance of the progeny at the sales and the racetrack. “Customers with a lot of points breed for free,” Parra said. “It works.”
Millennium also lowered its day rate from the high $20s to $24, resulting in an increase in part-time and full-time boarders. At the same time Millennium has reduced the number of its own mares from 100% to about 30% of the farm’s population. As part of its focus on boarding, Millennium recently began a consignment program, which Parra said is another way customers can save money.
“You have to be creative,” he said. “Breeders are having a difficult time making money. At the same time we also have to pay for our stallions.”
Fewer stallions are going to stud, fewer mares are being bred, and foal crops will continue to drop for several years to come.
What’s a stallion manager to do? Wait, if you can, say many owners and breeders.
“We just all need to remember this is a cyclical industry, and we were fortunate for many years to sell some horses for good money,” Wolf said.