Empire State: New York Breeding Goes From ‘Darkest Days’ To Banner Year

by | 07.07.2015 | 2:23pm
Dayatthespa was among a trio of Grade 1-winning New York-breds in 2014 -- and a year-end champion

Jeff Cannizzo became executive director of New York Thoroughbred Breeders, Inc. at the worst possible moment. Or perhaps it was just the right time. Depends on how you look at it. When he took the job in July, 2008, the state's breeding industry had hit a low point and was about to plunge even further thanks to a recession of historic proportions. But after a couple of years, New York's fortunes began to swing, starting with the building of the Resorts World Casino at Aqueduct. For his part, Cannizzo, a former corporate management consultant whose family has been involved with New York racing for decades, kept the pressure on legislators to support the state's breeders and horsemen.

In the second part of our summer series, Empire State, Cannizzo shares his thoughts about the dramatic shift in New York's Thoroughbred industry.

What has this journey been like for you personally?
Breeding was in its darkest days my first few years here. Through some time, and a lot of effort from many different people, Aqueduct came on line with Resorts World and we got in gear with what was supposed to take place for over a decade. In the last three to four years, we've seen the progression that's happened because of that. I've seen the ups and downs and the in-betweens and many different political landscapes involved with New York state, and it's very nice to see where we are today and where we can be tomorrow.

How would you describe the state of New York breeding and racing right now?
It's honestly never been better for New York breds in the state, and we have the largest purse structure, the largest incentive program, our numbers are continuing to grow year over year. And when you talk about racing, the performances have been speaking for themselves, last year being a record, banner year for quality performances of our state-bred horses.

We had several records set in 2014. We had an Eclipse Award winner in Dayatthespa, who also won a Breeders' Cup Grade 1 race. There were 10 other New York breds, a record, that started in the Breeders' Cup, two Kentucky Derby runners, 20 graded stakes wins last year, so there were many accomplishments that happened on the racetrack.

How do you explain that? What was the major force that resulted in such a big year?
It's been a progression, a slow and steady progression, which I think is important when you talk about stability and longevity. It's based on purse structure, the largest purses in the country collectively. And because of that, you've seen people migrate to New York from an owner's perspective, which is creating a demand for New York breds and that's changed the supply side of this for breeders. People are moving their mares here, they're foaling out in New York state, people are buying these horses via auction, and they're racing them, again back to the purse structure.

What exactly is the purse structure and what are the other incentives available?
There's roughly $185 million, all in, available for purses at the four tracks here in the state between the Finger Lakes and the NYRA facilities. Of that $185 million, roughly $45 million is set aside for restricted state-bred races for eligible, registered New York-bred horses. Of that $45 million, about $8.5 million is restricted stakes money. There are 800 or so restricted races across those four tracks, and that's all on the purse side via the racetrack.

The other side of this is the incentives for breeders and owners through the state breeding development fund, which is about $20 million annually that's distributed in terms of awards. There are breeders' awards, owners' awards for horses that race in open company, and stallion awards paid to people who own stallions standing here at stud that have progeny performing on the racetrack.

How long has the breeding development fund been around, and how has it grown since that time?
Since 1973. It was one of the first of its kind across the country in terms of establishing a fund or a program incentivizing people to breed regionally, and obviously we've seen it replicated across many other states since that time.

That fund has increased by over a hundred percent in the last three years, and it's solely due to the Resorts World Casino at Aqueduct and the funding that's coming through VLT machines there.

How much of the recent success in the breeding program would you attribute to purses and how much to the incentives?
All of this is driven off of the purse structure. We could have the greatest state breeding fund available to us, but if there's no racing structure set up beside it based on purses, then it would really be irrelevant.

At the end of the day, people breed to sell primarily, and if there's no value in owning a New York bred, people aren't going to buy them, which means no one is going to breed them. It's kind of a cohesive gel that exists between all of these different platforms, and what we've seen is that over the last three to four years, all of those pieces have come together, and that's why we're seeing the performances on the racetrack, and that's why you're seeing the sales figures at auction.

The number of yearlings offered and their prices have gone up dramatically since 2010 at Fasig-Tipton's New York-bred sale. It seems buyers are making a connection between the purses and incentives and their decision of where to purchase a horse.
You have a program in New York where a horse can go through his restricted conditions, earn over $200,000 in those restricted races, then turn to open company and win the same purses via open conditions, so there's a ton of earning potential with owning a New York bred. Couple that with racing opportunity, which I think really separates New York from other states in terms of state-bred programs. As I said, there are 800-plus restricted races available, so you add that opportunity, and that's what changes the landscape for an owner looking to buy a horse and potentially turn a profit very easily.

There's long been a stigma attached to state-bred events in terms of quality. How do you rate the quality of New York's restricted races?
There's a stereotype that goes with restricted races, as well as restricting the horse pool that can go into these races, so what kind of quality are you getting out this? And that's certainly been true for many years for many different state-bred programs. I think the difference in New York, if you look at the pedigrees, look at the times and speed figures, and every other statistic you can pull out, if you were to really contrast on a day-to-day basis restricted racing in New York versus restricted racing elsewhere, it's not comparable. I'd love to see a study done because a lot of people would find the results shocking to them, based on the prior stereotypes.

With respect to pedigrees, can you discuss the impact of legislation allowing Thoroughbreds conceived elsewhere but foaled in New York to qualify as New York breds?
I think that's the biggest difference between New York and some of the states that are enclosed to their borders. The gene pool isn't changing that way. Here, you can have access to different stallions, which has only helped the pedigrees here, and from a commercial standpoint being able to sell those foals as well.

Cannizzo: "Last year, the horses did all the talking for our program, and they did it at the highest level."

Cannizzo: “Last year, the horses did all the talking for our program, and they did it at the highest level.”

It's a common thing now. It used to be over 60% New York-sired vs out-of-state-sired. Now it's much closer to 50-50. So roughly half the people are taking advantage of that, and the other half, there's an advantage to being New York-sired. The award system is double if you're breeding to a New York state sire, so the incentive is there to stay at home. You're also seeing the stallion pool change dramatically in New York. Some of the largest commercial operations are in New York state now.

The stallion awards are incredible. You have some of the leading sires in New York state that are earning $250,000 to $300,000 every year just in stallion awards based on their progeny's performance on the racetrack. No other state is giving out that kind of money to have stallions located within their borders.

On the stallion side, what are some of the recent developments you're most proud of?
There are quite a few, actually. You look at Darley, it's obviously one that stands out from a marketability standpoint, to say that Darley is standing stallions in New York under their own advertising brand and umbrella. It's impressive. WinStar's been involved. Spendthrift is another major name that's continued to be more prominent as the years have gone by. All of those marquee names, Adena Springs, the names that are nationally or internationally known, that means something. For them to take a risk to be involved in New York says a lot about where we're going and where we hope to be in the years ahead.

So, where do you hope to be in the years ahead?
For me, where we're going from here is losing that “regional” stigma that's affiliated with it and just breeding based on quality. That's determined by the racing performances, and when we have a year like we did last year, the horses did all the talking for our program, and they did it at the highest level. Long term, it's maintaining the funding system that we have in place and offering stability to breeders and owners in the state. Our job is to educate Albany, the capital, on what our industry means to the state. It's a $4.2 billion effect on the state's GDP, the entire equine industry.

NYRA and Finger Lakes, they have contracts in place with the state. There are further legal protections that New York has that differentiates us from some of the other places where you've seen turnover and change with funding systems from casinos.

What is the biggest challenge you face, then?
At the end of the day, we need strong racing, and we need racing facilities that are set up to be successful for the long run. I'd like to see NYRA in a position where they have a future that's planned versus a clouded forecast. Investing in capital at our racing facilities, people need to feel welcome — that it's 2015, not 1955. We need to build on the experience of our customer set, which is the bettors and the owners. We talk about it, yet the focus is far too often not on those aspects. We need to embrace the fact that this is based on wagering, that's our growth potential — that is our only future's hope at turning the corner for our industry nationally — and not just embrace horseplayers but develop new ones.

And from an owner's perspective, you need programs like this state-bred program where you can give an owner an easy out at not losing their shirt right off the bat with their first experience of owning a racehorse, which is far too often the case. If we're doing the same types of promotional programs nationally to develop horseplayers, we should be doing the same exact thing for developing new owners. It's by far the largest drop-off in our sport of the last three decades, and if we're able to bring people into the game, where they have the opportunity to potentially actually make some money in addition to having a good time, the longevity associated with them will be much better.

How would you contrast the landscape between 2003, when Funny Cide became the first New York bred to win the Kentucky Derby, and now?
The whole landscape in New York was different. At the time, Funny Cide was somewhat of an anomaly. He was a New York bred by an out-of-state sire who was on his way to the Triple Crown. He was by far the biggest marketing tool that this state-bred program ever had. But the landscape wasn't such that New York breds were winning graded stakes every weekend across the country. Now, every single weekend we have those Saturday horses. That's the biggest difference from then until now. We're expecting those horses every single weekend.

  • Ed

    I’ve said it before and will say it again it’s only a matter of time until this man runs NYRA. If he had more grey hair he’d already be doing so. Open minded and understands all aspects of this sport and more importantly the people behind it like us. Thanks for all that you do for us NY breeders.

    Ed

  • Chris Lowe

    We shall see in a few years from now if field size increases at NYRA tracks and Finger Lakes because the situation now borders on unplayable, especially dirt races.

    • Ed

      Exactly, the dreadful field sizes are a direct result of NYRA and FL current management! They are doing zero to attract horses for everyday racing. Everything is about the big day scheme. If you speak to anyone in NY they’d tell you such. They need to go.

  • Alex

    Maryland Horse Breeders please take note. Many many many state bred restricted races equal success .

  • c. biscuit

    Let’s stop patting ourselves on the back…..the ONLY thing saving NY racing / breeding is slot $$$.

    • Ed

      Appears your not in NY, but isn’t the entire point of this repeated several times here, the VLTs have revived the scene. Regardless, we’d be ignorant to think for a second groups like this in NY didn’t influence this situation to come to fruition. I attended the rally’s, horses at the Capitol and all else done. If I recall Nycotb went bankrupt during this time and crushed the same people and funding.

      As someone breeding in NY I can assure you that more legislation, promotion, Stallions laws, fund spending, etc. have happened because of these people under their watch.

  • Figless

    Hope he is ready for the inevitable fight when NYRA proposes winter closure and eventually closing AQU altogether because that will set the program back substantially.
    This should have been his answer to the “biggest challenge” question.

    • Figless

      Another huge challenge is the possibility of Finger Lakes closing due to the approved nearby full fledged Casino.

  • bruce alexander

    SLOT REVENUE SAVED NYRA AND THE BREEDING PROGRAM,NOTHING ELSE. THE TRUTH IS .STATUE MANDATED THAT ALL NY BRED RACES HAD TO BE 25% HIGHER IN PURSE FUNDING THAN OPEN RACES.THE BREEDERS UNDER CANIZZO GAVE THAT UP WILLINGLY. THE OTHER THING IS DROPPING THE ALTERNATING BREED BACK RULE THAT IF UNCHANGED WOULD HAVE PUT MANY MORE HIGH END STALLIONS IN THE STATE. IT WOULD MAKE MORE SINCE TO OWN A NON NY BRED RACING IN NYRA FOR A LARGER PURSE AND A SMALLER FIELD SIZE.

    • Ed

      Bruce, for someone who’s trained horses a longtime in NY its amazing how blatantly incorrect you are with your facts and history. here’s how wrong your are:

      1. As mentioned 1000x how the hell do you think NYS got VLTs? Who lobbied for them? If you think the state just forked money over to horsemen and racing your crazy.

      2. There has never been NOTHING in the statute of NY racing law requiring NYRA to boost restricted purses by 25%! Never. Ironically and quite comical, NYRAs purses are in fact 35% higher for NYbreds since VLT revenue has come on board. Sorry buddy.

      3. Cannizzo has been at NYTB since 2008 as this article says, how the hell did he “give it up” when the law was created, passed, and signed in 2001? He’s 7 years after the fact. That’s just ridiculous to say.

      4. And finally, the breed back rule was done in the 1990s! Again how the hell is that relevant to today? It’s 25 years ago man. Besides, if NY had a breed back rule you would have an inferior program than what it is today. There would be no mares in the state and the biggest draw back would be that NYbreds would have zero commercial value under only NYsires. People are buying six figure mares to go to the stallions in state, sorry. Essentially, NY would be just like Lousiana, an closed door society for breeding. No marketplace.

      Some other thoughts, NYTB has changed the stallion lease laws to get news stallions in state, they increased the percent of breeders awards money that can go annually to breeders, they have funded an economic study and lobbied to save the revenues in place each year.

      Lastly, just this year I’ve been reading how they have introduced legislation which would keep Finger Lakes purses held harmless and protected from the casino in Tyre NY! You should be well aware of all this Bruce!

      • bruce alexander

        I guess I don’t know what I am talking about despite being a board member during the time period slot legislation was introduced The 25% over open purses applied long before slot machines but was forfeited in 2009 and as far as lobbying my owner Paul Seckel made several trips to Albany as the hbpa presidentand I personally recruited more pledges for our PAC than any one else at finger lakes. I knew our lobbyist and spoke to them several times and the main reason the state relented to giving tracks / horsemen money was the term existing parimutuel facilities which allowed for easier passage

        • Ed

          Bruce, you are very confused. We are talking about NYTB (Breeders) not the FLHBPA! Two completely different groups. I have no idea what the FLHBPA did for Finger Lakes purses.

          However, the VLT legislation HAS NOT CHANGED since it was signed in 2001. NOTHING was done in 2009 with the statute for NYRA, breeders or purses. So I have no idea what your talking about. Ironically purse at NYRA for NYbred races are up 33% since 2012 when VLTs at Genting came online.

          Again if your talking about FL thats an entirely different story between the FLHBPA and Delaware North. Not the breeders.

          • bruce alexander

            I am not confused ,you continue to mention slot revenue and this statue was in place before there was even a thought of slots supporting racing . My comment was the breeders willing gave up that provision under canizzos tenure.You must be very involved yourself ,I am curious breeder,owner trainer work for the fund? I would be willing to back my statement with a cash bet if you would like as they say put your money where your mouth is.PS I haven’t been at finger lakes since 2002 I have been at Monmouth since 2004 .

          • Ed

            Bruce, your not even remotely accurate and I will bet you every cent you got! This is how we can prove it, in Ray’s next interview on this topic (he
            stated its a series, we will simply have him ask the question directly
            to NYTB on record.) Or we can have him do a little homework on law changes in NY, which I am sure he will do.

            Again, you clearly are not comprehending: the statute HAS NOT changed whatsoever since 2008 relating to NYbred purses and guarantees. Sorry your wrong buddy. And AGAIN, its so ignorant given that NY-bred purses are now 30% and more than what they were prior to VLTs, so again your point is irrelevant.

          • Ed

            BruceyBruce,

            I just read your jargon over again, and what is evidently very clear: your historic timeline is way off for NY. You said above “…this statute was in place before there was even a thought of slots.” Given the VLT law was put in place in 2001 that would put your suggestion pre-2000 or circa 1990s. Again, Cannizzo didn’t start at NYTB until 2008. So how the hell is he relevant to your NYbred 25% purse increase bogus? Which I check the laws today and never existed. You simply make no sense.

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