Pandemic Pricing - By Evan Hammonds

Not everyone likes to be first out of the box. Being first sometimes has its advantages while introducing a new product line or setting pricing, but being in front can also leave a business out in the cold.

Back in the formative days of the commercial bloodstock world, “Cousin” Leslie Combs II, master of Spendthrift Farm, wanted to be out front. James E. “Ted” Bassett told the tale several years ago of Combs’ not liking his spot in one year’s yearling catalog of the old Breeders’ Sales Co.

“All the consignors would draw straws to see who was going to sell on Monday, Tuesday, Wednesday, Thursday, or Friday,” Bassett regaled. “I think one year Les drew Friday, and he didn’t like it. Well, nobody liked it that drew on Friday. But he got up and said, ‘Just give me Monday. I want to sell the first day because I want to set the tone of this sale.’ And he did.”

More than a half-century later Spendthrift Farm has continued to push the industry forward while under the stewardship of B. Wayne Hughes. Hughes’ success in developing Public Storage gave him the wherewithal to purchase Spendthrift in 2004. Applying his aggressive business tactics to the Thoroughbred market through “Breed Secure” and “Share The Upside” programs he pushed the industry forward as it was coming out of the Great Recession.

The farm, having returned to a spot as a sizable stallion operation, has been out front in setting stud fees for the coming season. While usually setting prices in August in front of the Fasig-Tipton sales in upstate New York, this year it waited until last week, but was still the first in announcing its pricing.

“With the way things were going this year, with no Saratoga sale and not being sure how the September sale was going to go, it was a very odd year for us,” said Mark Toothaker, Spendthrift Farm’s stallion sales manager. “We would have already been hot and heavy into selling seasons, but we waited. We wanted to see what was going on—September is the barometer for the whole season.

“It was very unusual for us to wait that long. By waiting we didn’t know if we would be the first, but maybe some other farms were waiting to see what we were doing as well.”

Spendthrift’s roster sees lower fees for 15 of 21 stallions. Reduced revenues for 2021 places pressure on the farm and other stallion stations; however, it also offers a balm for breeders who have seen reduced revenues from the sale of their yearlings earlier this year.

The reductions, which have been echoed by many other farms as well, came from the Spendthrift team but were led by Hughes.

“We actually had three different prices as we went along,” Toothaker said. “We sat down and thought we had some good pricing. We talked to some of our breeders and got some feedback that we needed to be more aggressive than we were, so we sat down again and were trying to come up with a game plan to take to Wayne. He wants to go over every stallion, one by one, to make sure that we are getting where we need to be mare-wise. We told him we were going over it one more time before we got with him. He made our job easier, saying, ‘Listen, if you can go in there and set prices how you think I would want to set them, being as aggressive as possible, that is what I want you to do.’

“He took all of that pressure off of us,” he continued. “He said, ‘We have to keep our breeders in the game. If you think you are being aggressive, you are not being aggressive enough.’ When we did that and went through them one by one, he was happy, and we felt like our breeders would be happy with what we were doing.”

While every business is competitive, one of the many marvelous things about the Thoroughbred industry is that there is a collective spirit. After all, we’re all in the same game and have the same love of the horse. Our hopes and dreams offer a beacon in the dark—be it recession, depression, or even a pandemic.

“We have to be optimistic in this business or we wouldn’t be in it. This whole thing is about trying to keep our breeders in the game,” Toothaker said. “Our hope is we can get through the COVID situation, get through the election; let things settle into next year.

“By the time September rolls around next year, we’re hoping things have ‘normaled’ back out.”

That’s a tall order for sure…regardless of who goes first.

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