Kentucky Horsepower - by Eric Mitchell

(Originally published in the February 1, 2013 issue of The Blood-Horse magazine. Feel free to share your own thoughts and opinions at the bottom of the column.

By Eric Mitchell - @BH_EMitchell on Twitter

By Eric Mitchell The conclusion of a recent National Agricultural Statistics Service economic survey reaffirmed what we’ve known for many years—horses are big business in Kentucky.


Released last week, the 2012 Kentucky Equine Survey pegged the value of the state’s equine and equine-related assets at $23.4 billion for the 2011 calendar year. The state’s horse industry accounts for more than 14% of Kentucky’s total economic output (as assessed in 2010) and is larger than either real estate ($14.9 billion), health care ($14 billion), or retail trade ($10.3 billion), according to the 2012 Kentucky Economic Development Guide produced by BusinessClimate.com.

Kentucky is home to an estimated 242,400 horses, ponies, mules, and donkeys worth $6.3 billion. The estimated value of equine-related assets (which include land, buildings, vehicles, equipment, feed, tack, and clothing) is another $17.1 billion, according to the equine survey.

“This may well be the most significant body of work ever undertaken to estimate the economic significance of horses to Kentucky,” said Norman Luba, executive director of the North American Equine Ranching Information Council. The statewide equine survey, the first of this magnitude since 1977, was done with assistance from the University of Kentucky College of Agriculture and the Kentucky Horse Council.

Thoroughbreds are the prevalent breed in Kentucky, accounting for 25% of the 216,300 light horses in the state. Racing was the sixth-leading primary use of horses, with an estimated 15,000 in training. Ahead of racing were trail/pleasure riding (79,500), broodmares (38,000), idle/not working (33,000), competition/show (24,500) and young horses—yearlings/weanlings/foals (23,000).

On the business side of the equation, the survey identified 35,000 equine operations and 1.1 million acres devoted to equine use. Equine-related expenditures by these operations totaled around $1.2 billion in 2011, of which $839 million were operating expenses. These expenses fueled the economies of boarding, farrier services, veterinary clinics, feed sales, travel, training, shipping, etc. About 77% of these operating expenses were spent in Kentucky.

Kentucky’s horse industry has such a large economic footprint because of the imposing mass of horses and support services here. The concentration is such that the state has been able to weather many years of stiff and increasing competition from other states, particularly racing states that have bolstered their purses and breeding incentive programs with casino gambling. The next body blow to Kentucky will be delivered later this year when Cincinnati’s new downtown Horseshoe Casino opens its doors. Further jabs are coming because the old River Downs is being replaced with a new racino and more racinos are coming—one at Thistledown and two new facilities near Dayton and Youngstown.

This competition is eroding Kentucky’s critical mass, particularly among Thoroughbreds.

The Kentucky Horse Council last released an economic impact statement on the state’s horse industry in 2002. This study was not as in-depth as the one done recently or in 1977, but it provided a good barometer of where the industry stood at the time. In the 2002 study, the state had an estimated Thoroughbred population of 67,000 excluding the horses stabled at racetracks. Assuming the racing population was about the same as reported in the 2012 study (though it was likely higher), the total Thoroughbred population would have been around 82,000. In the 2012 study, the total Thoroughbred population including racing stock is estimated to be 69,000, a drop of 16% in 10 years.

At the risk of stating the obvious, the economic value lost by a dwindling Thoroughbred population will not be recovered by an increase in pleasure and show horses. Equine-related sales and farm income totaled around $1.1 billion in 2011 of which $501.3 million (46% of the total) came from Thoroughbred auction sales.

So, Frankfort, are you paying attention? A major industry affecting tens of thousands of jobs, billions in economic expenditures, and an important steward of the land is being threatened. Either step up and protect this vital industry or watch it slide away into the welcoming arms of other states.  

6 Comments

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trackjack

Well done article and challenge, Eric.  

From a long-time racing enthusiast from the Buckeye state:  I am well versed with state politics (Columbus); where allengiances lie, whose putting money in whose pocket, whose writing laws for whose benefit and on and on.  I hope the legislators in Frankfort, who can't see the forest through the trees, begin to feel the pressure from the people.  "This is the way we've always done it," doesn't cut it anymore.  "There are none so blind as those who will not see."

Good luck and keep their feet to the fire.

29 Jan 2013 12:58 PM
Old Old Cat

A racehorse starts out as a foal, becomes a racehorse (hopefully), then graduates to breeding (stallions or broodmares) or pleasure.  In its 20 to 30 year life only 10% or 20% is devoted to racing.  From that scenerio I would expect no more than 10% of the horses would show up as racehorses.  What is paramount to Kentucky is the breeding.  That is the fuel that furnishes all the other categories.  The racetrack incentives help keep the breeding interests up, and help keep the racehorses in Kentucky.  Hopefully the results of the study will not diminish the overall importance of the breeding aspect.  

It's good to see a problem analyzed by a group of groups, in depth, rather than each conducting individual shallow studies.

30 Jan 2013 11:12 AM
judy burkhart

I hope the KY legislation reads this, or everyone will be shipping in to run in KY and a majority of the broodmares and studs will move to other states and KY will be the former Horse capital of the world.

30 Jan 2013 12:51 PM
John from Baltimore

When all is said and done it is thoroughbred racing that will have to save thoroughbred racing.  In the current climate of racing all the major players are gaming companies.  Churchill Downs and Deleware North don't even want to build a barn area for the new track in Dayton, and these are major players in the horse industry. It's a slippery slope to rely on these gaming companies and government officials to keep the horse industry alive.  It is time for a new national organization to promote racing, set up a tour for the good horses,and make racing drug free.  Time for the large breeders to step up with some ethics on stallions going to stud with six to ten starts.  The average horse can no longer do his job, which is race regularly, because they are not sound enough.  This leads to many break downs and unwanted horses.  If nothing changes in the end racing will shrink to be more like Europe and only the major players will be left,and a large part of the industry will be gone.  Who is in charge anyway? Go figure.

30 Jan 2013 7:06 PM
BlueHen

I agree with John from Baltimore.  Also, it seems to me that there will soon be a glut of casinos in the marketplace.  In NY State, where I live, the governor is seeking to have more casinos built.  Can all these be supported?  Who goes to casinos?  It strikes me (I live near Turning Stone) that it's mostly retirees.  This demographic is going to fade away, and the younger people coming up behind them don't have their kind of money.  From my generation (40s) downward, we just aren't going to have a lot of money to retire on.  I think it's a bad idea for the racing industry to get too tied into casinos.  A quick infusion of cash that enforces the status quo will not force racing to sit down and think over its issues and find good long-term solutions.  Racing by itself is a great thing -- it can long outlive the casino fad and be self-reliant if it plays its cards right.

31 Jan 2013 9:15 AM
John from Baltimore

Hate to post another comment on something before the ink is dry on my last comment but everyone in the horse business should take note of the article in this magazine on what is going on with contract talks at Delaware Park.  Looks like track management does not think that it was given slot revenue to help run a race track and wants money from the horsemen's purse account.  Time for the worthless National H.B.P.A. to do something productive and come up with a strategy to promote horse racing. Just another showing that these gaming companies would just as well get rid of racing.

31 Jan 2013 6:36 PM

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