Stud fees are going up next year, especially at the top end of the bloodstock market. The increases are going to make profitability for Thoroughbred breeders that much more challenging.
The Paulick Report looked at the 45 North American stallions that stood for live foal fees of $20,000 or higher in 2015 and have at least one crop of current-year runners. Of those 45 sires, fees for 14 of them are increasing in 2016. Five are dropping from their 2015 levels. The others remain the same.
The aggregate of one stud fee for each of those 45 stallions in 2016 will be $2,755,000 — up from an aggregate $2,380,000 in 2015. Their average fee of $61,222 will be 15.7 percent higher than the $52,889 average from the same group of stallions in 2015. The median is going up 14.3 percent, from $35,000 to $40,000.
Let's look at the increases another way. If each of these 45 stallions produces 100 live foals a year, the aggregate cost of stud fees will go from $238 million in 2015 to $275.5 million in 2016. That's an extra $37.5 million breeders will be paying in just one year.
How will they make up that $37.5 million?
The trends at Thoroughbred yearling sales are heading in the right direction, though not dramatically so. According to Bloodhorse.com, 6,244 yearlings have sold in 2015 for $425.5 million, an average price of $68,148. That's up just over $13 million in gross from 2014 and an increase of nearly $93 million since 2012.
But is the top of the market really doing that much better?
To examine that question, we looked at the Keeneland September Yearling Sale, generally accepted as the bellwether for the North American commercial Thoroughbred market.
In 2015, there were 900 yearlings that sold for $100,000 or more (including 11 for $1 million and up, 58 from $500,000 to $999,999, 252 from $250,000 to $499,999 and 579 from $100,000 to $249,999). Those 900 yearlings selling for $100,000 or more represented 21.61 percent of the 4,164 yearlings catalogued to the 2015 Keeneland September Yearling Sale.
In 2014, there were 858 Keeneland September yearlings selling for $100,000-plus, or 20.52 percent of the entire book of 4,182 yearlings.
In 2013, 866 sold for $100,000-plus, or 22.16 percent of the 3,908 catalogued to the Keeneland September Sale.
In 2012, 686 of 3,604 yearlings catalogued brought $100,000-plus, or 19.03 percent.
In 2011, 713 of 4,319 brought $100,000-plus, or 16.15 percent. (See accompanying table for details.)The largest jumps in stud fees belong to Pioneerof the Nile, sire of Triple Crown/Breeders' Cup Classic winner American Pharoah. His fee goes from $60,000 in 2015 to $125,000 in 2016. Two-time Horse of the Year Curlin – who has sired three Grade 1 winners this year, including Keen Ice, the only horse to beat American Pharoah in 2015 – goes from $35,000 to $100,000. Scat Daddy is also increasing from $35,000 to $100,000 on the strength of having 20 black-type stakes winners in the Northern Hemisphere so far in 2015.
The accompanying table shows how the offspring of those three and the other 42 sires that stood for $20,000 or more in 2015 are performing in the auction ring and racetrack. Median yearling prices are for all North American sales.
Commercial breeders who were lucky and wealthy enough to breed to War Front saw a very good return on investment, as his yearling median price was $500,000 in 2015. War Front offspring raced well, too, with 8.11 percent of his 2015 runners winning a black-type stakes race. His lifetime percentage of stakes winners to foals of racing age is a phenomenal 9.77 percent, exceeded on this list only by Speightstown (9.80 percent) and Distorted Humor (10.11 percent).
If you look at 2015 median yearling prices and compare them to 2015 stud fees, the sire with the highest median to stud fee ratio was Blame, whose $115,000 yearling median was 5.75 times his 2015 $20,000 stud fee. Flatter (4.63 ratio), Scat Daddy (4.29) and Uncle Mo (3.70), Curlin (3.43) and War Front (3.25) were next in line. Stud fees for all six are going up in 2016.
The highest percentage of black-type stakes winners from 2015 runners belongs to the leading freshman sire Uncle Mo, who is clicking at 10.77 percent from a relatively small sample size. Next in that category is Medaglia d'Oro, with 8.43 percent black-type stakes winners from 2015 runners.
Leading sire Tapit, whose progeny have earned nearly $17.9 million in 2015 (almost $5 million ahead of Medaglia d'Oro, his closest pursuer), is solid across the board. His 2015 yearling median of $475,000 was second only to War Front, and his percentage of 2015 stakes winners to runners (7.32 percent) and lifetime stakes winners to foals of racing age (8.11 percent) are both outstanding.
Tapit's fee, the highest in North America at $300,000, is unchanged from 2015 to 2016.
(Table below can also be accessed here)
New to the Paulick Report? Click here to sign up for our daily email newsletter to keep up on this and other stories happening in the Thoroughbred industry.
Copyright © 2018 Paulick Report.