Posts Tagged ‘thoroughbred daily news’
Tuesday, February 16th, 2010
This rumor, making the rounds for a few weeks, was confirmed in a press release and reported today at Bloodhorse.com: Bradley Weisbord, son of the bloodstock investor/adviser and Thoroughbred Daily News publisher Barry Weisbord, has been named finance and stallion general manager for Ahmed Zayat’s Zayat Stables, which filed for Chapter 11 bankruptcy recently after being sued by Fifth Third Bank.
The elder Weisbord is a shareholder in numerous stallions and is a close associate of Richard Santulli, the former NetJets chairman who has even more substantial bloodstock holdings. Weisbord also served as a trustee in the bankruptcy case involving horseman Tom Gentry nearly 20 years ago.
The question some inquiring minds in the bloodstock world are asking about the appointment of 2007 University of Wisconsin college graduate Bradley Weisbord to such a position of influence at Zayat Stables is whether or not some of Zayat’s bloodstock assets will wind up being bought by Barry Weisbord or Santulli if the bankruptcy results in a full or partial dispersal. But like Roseanne Roseannadanna used to tell Richard Feder of Fort Lee, N.J., on Saturday Night Live, "You sure do ask a lotta stupid questions for a guy from New Jersey."
Read it at bloodhorse.com.
Then come back to the Paulick Report and let us know what you think. – Ray Paulick
Tags: ahmed zayat, Barry Weisbord, bradley weisbord, Paulick Report, Ray Paulick, richard santulli, tdn, thoroughbred daily news, tom gentry, zayat bankruptcy, zayat stables
Posted in People, Stallions, Thoroughbred Business | 4 Comments »
Tuesday, September 8th, 2009
Commercial breeder Rob Whiteley addresses the issue of older broodmares and the bias that some yearling buyers have against foals out of aged mares in a piece that originally ran in the Thoroughbred Daily News. As always, we appreciate TDN’s Sue Finley giving us permission  to re-publish Whiteley’s article as the Keeneland September yearling sale approaches. Whiteley, who formerly operated Foxfields for Carl Icahn, runs Liberation Farm and can be contacted at liberationfarm@yahoo.com. — Ray PaulickLet’s examine the facts, starting with my personal experience. In the mid-1990s, I purchased Blush With Pride and Rokeby Rose as older mares for Foxfield with the intention of breeding them to Deputy Minister and Silver Deputy, respectively. Those matings produced Better Than Honour when Blush With Pride was 17, and Silverbulletday when Rokeby Rose was 19. Better Than Honour became a graded stakes winner, produced consecutive Belmont winners (Jazil and Rags To Riches), and sold recently for a world-record $14 million. Two-time champion Silverbulletday won 13 graded stakes, bankrolled over $3 million in earnings, and was inducted into racing’s Hall of Fame this year. Although these fabulous horses are the creme de la creme of my adventures with aging broodmares, they are exceptional only in their superiority. Many other stakes winners have been produced by other older ladies I have been blessed to own over the years.
My experience is not unique. High-level success from older mares is commonplace. Grade I winners produced by other breeders from older mares reads like a Who’s Who of the American turf. Buyers who dismiss foals out of older mares would have walked past Secretariat, 15 Breeders’ Cup champions (including Go for Wand, Capote, Ouija Board, Miss Alleged, Royal Academy, Artie Schiller, etc.), and a very long line of major stakes winners. (For a more detailed accounting, please read the CBA booklet Buying Sales Yearlings: Plain and Simple at www.consignorsandbreeders.com or www.liberationfarm.com.
Nor is consistent high-level success by foals out of older mares merely a North American occurrence. Andrew Caulfield recently authored an article titled, “Breeders dismiss elderly mares at their peril.” (Thoroughbred Owner and Breeder/Pacemaker, August 2009). Andrew’s feature could also be titled, “Buyers dismiss foals out of elderly mares at their peril.” The subtitle reads: “Oaks and other Group 1 races recently are evidence that mares who produce in their 20s are still capable of delivering top-class winners.”
The subtitle turns out to be an understatement when we digest the stunning fact that six of the last 12 winners of Epsom Downs’ historic Oaks have been fillies out of older mares. Ramruna’s dam was 21. Eswarah, Ouija Board and Shoutoush all had mothers who were 19. Imagine’s and Light Shift’s dams were 17 and 16, respectively. In addition, Dar Re Mi automatically qualified for this year’s Breeders’ Cup Filly and Mare Turf with a decisive victory for John Gosden in the recent Yorkshire Oaks. Dar Re Mi’s dam, Darara, was 22 when Dar Re Mi was foaled.
Evidence is overwhelming that the stigma against foals out of older mares is without merit. My guess is that the mistaken belief is somehow a result of confusion caused by the fact that pregnancy and foaling rates are lower for older mares. (Broodmares as a group will be empty or otherwise unproductive approximately 30 percent of the time over their careers, and more “missing” years occur in later years). Therefore, because mares’ reproductive reliability generally declines with age, some people may incorrectly assume that the viability of the resulting foals will be automatically diminished. This is simply not the case. Just as with humans, mares age at different rates according to a mix of genetic and environmental factors, and wide-ranging individual differences exist. Some mares will develop compromised reproductive environments relatively early, while others will remain normally functional and productive well into their 20s.
Evaluation of an older mare’s status as a producer of quality stock is relatively simple. Older mares will tell you when they are no longer getting it done. True horsemen can see it when they look at the foal.
In short, if an older mare is “over the hill,” the resulting foal will show it. Therefore, if the foal (or yearling) in front of you looks the part, remember that a horse’s genetic make-up does not change over time, and rest assured that its potential has not been compromised.
I am continually and recently reminded of this fact whenever I think of my mare Tipsy Girl (now co-owned with Chris Elia of Oratis Thoroughbreds), who has produced six stakes horses, including two who have won or placed in the last two weeks. Greeley’s Conquest won the Remington Park Sprint Cup Aug. 22, and two-year-old filly Never Quicker placed in Monmouth Park’s Junior Champion Stakes in her very first start Aug. 29. Tipsy Girl, now 23, was a stakes performer until the age of six, has amazingly given me 16 foals, including a sharp 2009 Stormy Atlantic filly, and is back in-foal to sprint champion Midnight Lute. Her athletic yearling colt by Grand Slam will be at Keeneland in September as further proof for all to see that Tipsy Girl is still getting it done, despite being in her 20s.
In spite of the overwhelming evidence, however, some people will still argue studies show that younger mares produce a higher percentage of stakes winners than older mares. This is true in general; however, please look more closely at what it actually means. David Dink performed the most comprehensive multiyear study of stakes winners from foals by age of mares and found that younger mares do in fact produce a slightly higher percentage of stakes winners. Dink’s large group of subject mares produced 137,184 foals and 4,804 stakes winners, or 3.5 percent. Mares aged four through 10 produced 3.87 percent stakes winners. Mares aged 11-15 produced 3.32 percent stakes winners (although it is interesting to note that the 15 year olds, at 3.66 percent, came in higher than the average for all mares and higher than those aged 11 to 14). Mares 16-20 produced 2.33 percent stakes winners. The overall trend is obvious, but the conclusion is not.
In order to accurately interpret Dink’s data, three important observations must be made: (1) The small percentage differences between age groups may be statistically significant in a technical sense, but the differences are so negligible (less than a percentage point) that they are not useful for decision making; (2) group statistics have nothing useful to say about evaluating a specific yearling; group data cannot describe the quality, athleticism, heart, or potential of any individual horse; and (3) the trivial group performance differences between younger and older mares can be easily explained by differences in opportunity. For example, if a thorough study were performed relating average stud fee and age of mare, it would clearly show that younger mares are generally bred to higher-class stallions (as measured by stud fee), and therefore would be expected to have better results simply based on an opportunity advantage related to which stallions they were bred to.
False beliefs die slowly in our business. Yet, in the current marketplace, savvy horsemen have an edge because they realize that a well made, athletic looking yearling out of an older mare has virtually the same success as one out of a younger mare. The challenge for us, therefore, is to discard the baseless hearsay and bogus baggage that floats around the sales year after year and, instead, develop the confidence to look clearly at the individual before us and see it for what it is. Sherlock Holmes said, “I have trained myself to notice what I see.” We need to do the same.
Copyright (c) 2009, Thoroughbred Daily News
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By Rob Whiteley
Riddle: What do Sea the Stars and my sister, Sherry, have in common? On the surface, not much, although both have demonstrated precocity and great talent, and both are achievers at the highest level.
Sea the Stars is the top-rated horse in the world with four Group 1 wins this year. He is the first horse since Nashwan in 1989 to accomplish the 2000 Guineas/Epsom Derby/Eclipse Stakes triple. And his recent wins in the Juddmonte International and Irish Champion Stakes add to his candidacy as one of the great racehorses of the modern era.
Sherry Whiteley is senior vice president of human resources for Intuit Corporation, which brings us financial software such as QuickBooks and TurboTax. Intuit receives high marks each year as one of the best companies in the nation to work for, and Sherry’s ministrations to approximately 8,000 employees has a lot to do with the high quality corporate culture and overall employee satisfaction and well-being.
So, here is the answer to the riddle. Both are out of older mares. Sea the Stars’ dam, Urban Sea, was 17 when she delivered the top horse in the world. My mother was 48 when she delivered Sherry, the star of our family. Worlds apart, they each provide hard evidence that older can be better.
Nonetheless, the puzzling stigma against offspring of older mares persists on the Thoroughbred sales scene without any rational basis. Some buyers quickly dismiss an individual simply because it is “out of an older mare.” Some buyers won’t even look at foals or yearlings out of older mares. This attitude or belief is simply wrong.
It is a result of misinformation, perpetuated by the offhand mouthing of a baseless perception, from one poorly informed person to the next.
Tags: Paulick Report, rob whiteley, sea the stars, sherry whiteley, tdn, Thoroughbred breeding, thoroughbred daily news
Posted in Breeding, Thoroughbred Auctions, Thoroughbred Business | 5 Comments »
Tuesday, June 2nd, 2009
By Ray Paulick
“What kills a company is not competition, but arrogance. We control our fate.” So said Eric Schmidt, the chairman and CEO of online giant Google in an article in the New Yorker magazine last year.
Stacy Bearse, the president and publisher of Blood-Horse Publications, apparently doesn’t share that belief. In a staggering show of arrogance, Bearse recently sent a letter to members of the board of trustees of the Thoroughbred Owners and Breeders Association, which owns the company, urging them to shift their advertising dollars away from Blood-Horse’s competition, specifically Thoroughbred Times and Thoroughbred Daily News, and spend their money with him. He made a similar plea to undermine his competition during a TOBA board meeting in Lexington in April. (Click here to read his recent letter.)
(Fortunately, he didn’t tell TOBA trustees, many of whom are associated with major stallion farms that make up the bulk of the advertising market, not to advertise with the Paulick Report, the horse industry’s fastest-growing web site. Please feel free to contact us to learn more about our cost-effective advertising opportunities!)
“The market is simply not large enough to support two profitable weeklies,” Bearse wrote to the TOBA trustees. “There’s a very good chance that one won’t survive this downturn. It may come down to who runs out of cash first.”
I contacted Joe Morris, publisher of Thoroughbred Times, to see if he had any comment about Bearse’s assertion. Morris disagreed that the market couldn’t support two magazines but said he wasn’t going to get caught up in a fight and instead chose to "go out and sell something."
Bearse said declines in advertising revenue have caused Blood-Horse to reduce the company’s workforce and cut salaries and benefits. Among those let go in the most recent round of layoffs were writers Amanda Duckworth, the inaugural Joe Hirsch Scholarship winner and a graduate of the University of Kentucky’s journalism school, and Ryan Conley, a top-notch reporter with extensive industry experience, knowledge and contacts. Both were dedicated professionals, but many other good people have lost their jobs at the company in the last 18 months. Thoroughbred Times and Thoroughbred Daily News have not had to take such drastic measures.
“My job is to ensure that your magazine – The Blood-Horse – is the last one standing, and that it emerges from this dark period strong and successful,” Bearse wrote.
That’s good news, I thought, as I read the letter to the TOBA trustees. My old boss (I was Blood-Horse editor from 1992-2007) surely must have a plan to improve the efficiency of the staff or make the product more timely, interesting or relevant to readers. The last thing I want to see are more of my former colleagues out of work, and less coverage of Thoroughbred racing and breeding, whether in print or in digital form. The Paulick Report believes competition is good for any business.
Apparently, that isn’t the case with Stacy Bearse: his plan is to kneecap the competition.
“But for us to succeed,” he wrote to the TOBA trustees. “I need your support. If you advertise in TDN or Thoroughbred Times, consider shifting your dollars to The Blood-Horse. If you divide your advertising, consider consolidating your investment in The Blood-Horse. If you board your mares or own a controlling interest in a stallion, encourage the farm manager to support The Blood-Horse.”
Then came Bearse’s most chilling comment: “You don’t need two weeklies to cover this market.”
That is exactly why the Paulick Report was launched, to prevent the consolidation of news and analysis for this industry into one, Pravda-like, party-line publication, and to ensure that it has an independent voice.
As someone else pointed out to me, Blood-Horse and the Thoroughbred Record (now merged into the Thoroughbred Times) both survived the Great Depression and the Times and Blood-Horse made it through the severe horse industry slump from 1985-92. Following that same logic, would the horse industry be better off with just one large stallion station instead of all the competing farms, or one auction house?
I think Eric Schmidt was right: It’s not the competition that kills a business.
Copyright © 2009, The Paulick Report
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Tags: blood-horse, bloodhorse, Paulick Report, Ray Paulick, stacy bearse, tdn, thoroughbred daily news, Thoroughbred Owners and Breeders Association, thoroughbred times, TOBA
Posted in Racing Media, bloodhorse | 36 Comments »
Wednesday, May 13th, 2009
I’ve always been surprised at the habits of many buyers at yearling sales…they sometimes remind me of lemmings marching to the sea, making decisions without logic or rationality. I once asked a leading buyer why he often spent so much money on yearlings by unproven first-year sires, a practice that is common enough to inflate the yearling average for those new sires. His response was simple: “They haven’t failed yet.”
That philosophy makes no sense to me, for it would seem far more pragmatic to look for undervalued proven stallions than to roll the dice on a group of newcomers whose chance of succeeding are somewhere between 5-10%.
Another unexplainable practice of yearling buyers is their disdain of foals born in the month of May. On average, it would make sense that May foals would be smaller than their January-April counterparts, so perhaps buyers at summer or fall yearling sales are simply unable to project how that smaller horse might look as a 2- or 3-year-old.
Some years ago, statistics accompanying an article I wrote for Bloodhorse’s MarketWatch newsletter, showed that May foals were only marginally behind earlier season foals in performance standards (stakes wins, money won), but their average yearling prices were much, much lower. Where I come from, that makes May foals a bargain.
Rob Whiteley, who operates the successful Liberation Farm breeding operation, came to the same conclusion in an article he wrote this week for the Thoroughbred Daily News. From the winning Kentucky Derby exacta of May foals Mine That Bird and Pioneerof the Nile to a review of May foals that have won Breeders’ Cup races, Whiteley makes a compelling argument that buyers should pay far more attention to May foals than they traditionally have. We’d like to thank Sue Finley of TDN for granting reprint rights of Whiteley’s article. – Ray Paulick
By Rob Whiteley
As a populist horseman, it makes me smile when a relatively obscure horse comes out of the hinterlands and beats up on a bunch of fashionably bred horses who are sired by generally over-priced, over-hyped, and over-bred stallions. And it turns my smile into a broad grin to observe that Mine That Bird is a mid-May foal.
To be fair, the valiant runner-up, Pioneerof the Nile, is regally bred and fully deserving of his cost of production. His bloodlines and hefty stud fee came through in a brave display of talent and determination, and those who played him unsuccessfully in the exotics only have themselves to blame for not taking home a big piece of the track. Like the item we look past in the front of the refrigerator, it was right there to see. Pioneerof the Nile is also a May foal, and if you had played a May foal exacta, you would have received $2,074.80 for a $2 exacta box.
(Ed. Note: A $2 exacta box with all of the May foals in the Derby would’ve cost $40. Atomic Rain (Smart Strike), Regal Ransom (Distorted Humor) and third-place finisher Musket Man (Yonaguska) are all May foals as well. A $1 triple box on the quintet would’ve set you back just $60, and returned $20,750.30)
In light of the continuous racing success achieved by May foals year after year, I am at a loss to rationally understand how that success fails to translate into the sales scene where May foals, as a group, bring approximately 35 percent less than their counterparts. For some in-grained reason, rooted in hearsay and perpetuated by the typical word of mouth momentum that spreads other horse industry falsehoods and myths, May foals get a bad rap at the sales, and are often discounted accordingly in the ring. This is such nonsense. The stigma on May foals that floats around on the winds of ignorance has no basis in fact.
It can even be persuasively argued that May foals actually have a slight advantage over other foals, as May foals are born according to a horse’s innate and natural spring-time predispositions, and with the most favorable environmental conditions.
Savvy buyers who keep up with the details of racing know that May foals, as a group, race as successfully as foals born in other months, and better than foals born in January. And the sharpest horsemen and pinhookers know that a few days or even weeks generally make little difference in a horse’s early development.
The most important factors in a horse’s ability to perform early involve genetically based precocity, balance, athleticism, and mental maturity, not date of birth. Each horse has its own genetically wound clock, and horses have wide-ranging differences in the rate that they develop, no matter which month they might be born in. Like foals born in January or February or any month, some May foals may be forward enough to zip along at two-year-old sales, while others may not be mature enough to race effectively until the middle of their three-year-old years, or later. Horses, like humans and other mammals, follow their own genetic blueprint.
When it is their time to perform, however, May foals truly hold their own, even as two-year-olds.
Except for the month of January, the fewest number of foals are born in May, yet they account for 10 percent of Breeders’ Cup Juvenile colt and filly champions. Furthermore, as May foals mature, their success rate in certain top level venues can be jaw-dropping. May foals have won a stunning 50 percent of the last 10 Breeders’ Cup Distaffs (including, Azeri, Round Pond, Spain, and Escena). And May foals have won over 25 percent of all Breeders’ Cup Mile races.
Despite the impressive frequency with which May foals find the winner’s circle in big races, however, a May foal may not win the Preakness this year. Instead, a magnificent January foal named Rachel Alexandra may be brilliant enough to outrun the boys, no matter when they were born (if she can adjust to a new groom, a new trainer, and new routines). But the Belmont, please take note, is entirely a different matter because of the extraordinary potency of the May foal factor.
The May foal factor is the strongest available predictor of Belmont success–far stronger than the most sophisticated figs or Beyer numbers–because May foals, incredibly, have won nearly 40 percent of the last 15 runnings of the Belmont (including, Afleet Alex, Lemon Drop Kid, Thunder Gulch, Touch Gold, Victory Gallop, and Mine That Bird’s own daddy, Birdstone). Therefore, given the historical dominance by May foals in this mile-and-a-half event, and given the Bird’s paternal family connection and the probable presence of steadfast Pioneerof the Nile, we could even be looking at the same May foal quinella we witnessed in the Derby. In any event, it is time we give May foals the respect they deserve, at the sales and on the track.
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Tags: afleet alex, Atomic Rain, Birdstone, distorted humor, Lemon Drop Kid, May foals, mine that bird, musket man, Pioneerof The Nile, Rachel Alexandra, Regal Ransom, rob whiteley, smart strike, thoroughbred daily news, Thunder Gulch, Touch Gold, Victory Gallop, Yonaguska
Posted in Breeding, Pinhooking | 7 Comments »
Sunday, December 14th, 2008
By Ray Paulick
Friday’s Paulick Report article on the increasingly sad state of affairs at Bloodhorse magazine was not easy for me to write, having worked hard to help grow the company over a 15-year period and feeling tremendous sadness that many of my former Bloodhorse colleagues are now without jobs. It’s a very stressful time for those who remain employed there as they deal with changing readership habits, stronger competition and challenging economic circumstances that have brought many traditional print publishers to their knees.
This morning, I was enjoying a cup of tea in preparation for Christmas tree shopping with my daughter when an email of great interest came across my inbox from an old friend at the Bloodhorse. The email’s subject was ‘Bloodhorse (sic) Staff Cut 10%’ penned by company president Stacy Bearse. I didn’t realize how stressful things had gotten until I received this email from the man who hired me as editor in chief of the magazine in 1992 and fired me in 2007. The email, shown below in its entirety, was typed in big, bold face letters:
You wrote a truly shitty column on your alma mater, Crack Pipe. As usual, you got your facts all wrong (Purple Haze?). The more you embarrass yourself with this type of drivel, the more I realize the tragedy of a life and career wasted.
Stacy
Immediately, I checked the email address assuming it must be from a dummy account by an enemy of Stacy trying to frame him. After all, he couldn’t possibly have such terrible judgment as to send me something so vicious and mean-spirited. Alas, it was from sbearse@bloodhorse.com, his business email account.
My first and strongest reaction to these highly personal attacks from him was sadness. When I entered a recovery program in 2004 to deal with a personal issue, one of the spiritual principles I learned was to pray for those who may want to hurt you, in hopes that they can learn to see you in a different light. I’ll say my prayers tonight for Mr. Bearse, who is quite obviously going through a difficult period in his professional tenure at Bloodhorse Publications.
It is also troubling that a man who holds such a prestigious position in our industry would stoop to the level of a sideshow like Ed Musselman, the publisher of the Indian Charlie newsletter. The rants and vicious personal attacks of Indian Charlie are par for the course, but Bearse represents a far more respectable organization and I have always held him to a higher level of accountability.
Earlier this week, Bearse wrote a letter to the Thoroughbred advertising community explaining the company’s current difficulties that led to a $1.5 million budget cut and what he said was termination of 10% of the staff. It was written in a much softer tone than he exhibited with me but one with thinly veiled attacks on the company’s publishing competitors, presumably the Thoroughbred Daily News and Thoroughbred Times, two outfits that so far have weathered the economic storm without having to take the drastic measures that Bloodhorse has.
“First, we never compete with you. Unlike other media properties, we own neither seasons nor shares in stallions that may compete with your business.” This seems to be a reference to the Thoroughbred Daily News, a purely online publication produced by Barry Weisbord, who is an active Thoroughbred owner and breeder. So while this claim may be true, why does it matter? To my knowledge, Weisbord has been completely fair to any and all advertisers and this would explain why they have such a full booking of ads each and every day. Additionally, Bearse several years ago was involved in weanling-to-yearling pinhooking partnerships, so his assertion rings a bit hollow.
But perhaps most confusing is their contention that giving ‘special discounts’ to ‘special people’ on advertising is a bad thing. Assuming this dagger must be intended for the Thoroughbred Times, I still don’t understand the message. Isn’t it a good thing to thank loyal customers by offering them discounts or perks for their consistent business? I believe that’s the psychology behind the personal shopper cards at grocery stores, the reason I get a free bag of dog food after I buy 12 at Feeder’s Supply (it’s for my dog, not me), and how I am about to be named the next U.S. Senator of Illinois by Gov. Rod Blagojevich (the check’s in the mail, Rod!).
The Thoroughbred industry is facing tough times ahead. It’s a competitive business, whether it’s your horse racing against someone else’s or your magazine or web site trying to win advertising support over your rival. The Paulick Report will continue to provide unfiltered coverage on the business in ways that may not always please everyone.
One thing I believe we all can agree to is a wish for the Thoroughbred industry to regain its legs in 2009 and carry us all to a higher plateau.
Copyright © 2008, The Paulick Report
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Tags: Barry Weisbord, blood-horse, bloodhorse magazine, ed musselman, indian charlie, Paulick Report, Ray Paulick, stacy bearse, tdn, thoroughbred daily news, thoroughbred times
Posted in People, Racing Media, Ray Paulick, bloodhorse | 46 Comments »
Monday, October 6th, 2008
By Ray Paulick
When Rob Whiteley managed the Foxfield commercial breeding operation for corporate raider Carl Icahn, he had to justify every dollar on the ledger sheets for the real-life Gordon Gekko. You couldn’t pull the wool over Icahn’s eyes on fiscal matters.
Today, free from Icahn, Whiteley runs his own operation, Liberation Farm, breeding and selling Thoroughbreds for the commercial market. He applies many of the lessons and disciplines he learned from his old boss. Coming out of the recent Keeneland September yearling sale, the most important marketplace for commercial breeders, Whiteley examined the profitability of the business he has dedicated himself to since leaving academia 25 years ago (his pre-racing resume includes Stanford, Rutgers, Harvard and the University of California at Berkeley).
The resulting article was published in the Thoroughbred Daily News last Friday, Oct. 3. If you haven’t read it, and you have any interest in the future of this business, Whiteley’s analysis is a must-read. (The TDN is a subscription-only site, but there is no charge for an online subscription.)
What Whiteley found may have been shocking to some, though not necessarily surprising to the many small, blue-collar breeding operations scattered across the rural landscape of Central Kentucky: breeders are bleeding red ink. Many of them face uncertain futures, even without the greater financial crisis brought on by tighter credit markets from the Wall Street/banking meltdown.
Whiteley found that fewer than one in five yearlings catalogued to the Keeneland September sale led to a break-even or profitable result for its breeder. He detailed the example of how a yearling produced through a $20,000 stud fee and selling for $70,000 at public auction (3.5 times the stud fee) does not cover all the expenses associated over the 30 months it took to plan, produce, raise and bring the horse to market.
The most profitable days of the September sale, of course, came at the front end, when not quite two of five yearlings catalogued (38% on days one and three, 37% on day two) broke even or sold for a profit. After the first eight sessions of the 15-day sale (in other words, all of the second half), profits were as thin as a Parisian runway model – the high was 14% of horses catalogued on day nine and the low 0% on day 15.
Worse, Whiteley’s expense assumptions in his profit-loss formula may be on the conservative side. He doesn’t factor in the general and administrative expenses that most businesses absorb or the three in 10 chance that a mare will have a non-productive year (barren, slipped or dead foal).
The problems breeders face are mounting. The price of hay, feed, fencing and vanning are quickly accelerating. Auction prices are retreating, and there is little being done on the national level to bring new end-users (horse owners) into racing. The industry is retracting on many fronts.
Not all breeders are affected equally. For those operations that are secondary businesses or hobbies for multi-millionaires or billionaires who inherited their money or made it in other industries, the losses may be used to write-off profits made elsewhere. Major breeders who stand high-end stallions have that lucrative end of their business to hold them up.
But where this hits especially hard is the backbone of the industry, the small mom-and-pop operations that may own a half-dozen mares, sell their best yearlings and race the rest. They don’t have income from other industries or trust funds to balance their spreadsheets, but they do, collectively, have a huge impact on the overall infrastructure of the horse industry.
Whiteley isn’t whining, and no one put to a gun to his head to buy all those mares he now owns (or co-owns with a bank). He also understands that free-market economics, and the laws of supply and demand, need to run their course. He didn’t publish his complaints without also coming up with what he believes is a short-term solution.
The article describes the industry’s “big three” as sale companies, the veterinary community and stallion owners, and suggests they will be the next group to suffer if the economics for breeders do not improve, and they are forced out of the industry. Fewer breeders will result in lower demand for stallion and veterinary services, and certainly lower profits for Keeneland and Fasig-Tipton.
Whiteley calls for an economic stimulus plan to be borne by the big three: for 2009 only, a 50% reduction in stud fees, a 50% reduction in the cost of services (and medication markup) provided by veterinarians and a 50% reduction in the commission collected by sale companies.
Of course the chances of this actually happening are somewhere between slim and none. Stallion owners will say their fees are based on demand, and veterinarians will cite their rising costs and the investments they’ve made in equipment and education. Sale companies will say they’ve got to making a living, too.
Something, somewhere has to give, or we will see a major exodus from the industry of small businesses. That won’t be good for anyone.
MORE BAD NEWS ON THE RACING FRONT. Turfway Park closed its fall meeting with significant declines in business, both on and off-track, where handle fell 18% and 20%, respectively. There were circumstances to the numbers being so far down (aren’t there always?), but they add yet another chapter to a very troubling sequence of bad economic news for the pari-mutuel side of the Thoroughbred industry.
Keeneland did a very good thing when it purchased Turfway Park and perhaps kept it from being developed for commercial use, though I’m not sure why it is necessary for the cash-rich company to have a partner in Turfway that has no interest in the success of horse racing (a casino company). Many blue-collar Kentucky breeders race their horses at Turfway Park, and the decline of the track since its purchase by Keeneland and partners has been yet another blow to those breeders, who are now shipping their horses to race out of state in increasing numbers to places like West Virginia and Pennsylvania.
Turfway needs an injection of capital and creative or intellectual investment that Keeneland so far is not providing. Investing in Turfway is one way of helping Kentucky’s breeders.
Copyright © 2008, The Paulick Report
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Posted in Breeding, Keeneland, Thoroughbred Auctions, Thoroughbred Business, fasig-tipton | 6 Comments »
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