As the November mixed sales approach and mares start getting booked to stallions, practically all of North America's significant stud farms have released their advertised fees for the 2021 breeding season.
Each advertised fee is the end result of a decision-making process that can vary from farm to farm, whether a stallion's fee is being decided for the first time, if it's being raised or lowered, or if it's holding steady from the previous year.
There are few concrete “sliding scale” indicators when it comes to setting or moving a stallion's fee. They certainly help, but a Grade 1 victory on the racetrack or a fashionable pedigree are no guarantee of a sky-high introductory fee. The only hard and fast rule is that supply and demand should guide the ship, or else it might take on water.
For Bill Farish of Lane's End, setting fees means an extended series of feedback, starting with internal meetings, then picking up the phone to hear from outside breeders.
“I try to keep it pretty open in our organization,” he said. “Jill McCully, Levana Capria, Chance Timm, David Ingordo, we all talk about it pretty extensively, and then come up with it. I make the decision, but it's a collaborative effort, because if everyone's not comfortable with it, it's not going to work.
“We try to get a good feeling internally where we all are,” Farish continued. “We talk to a lot of people that breed with us and get a feel for where they are, and to make sure we're not way off with our thinking. You want to touch base with those that are going to be buying seasons. Generally, we're in the same ballpark with them, anyway, but we do have informal polling with them.”
Setting fees for incoming stallions presented a unique challenge for the 2021 breeding season. An increasingly fickle marketplace still responds positively toward first-crop sires at auction, giving them a unique premium in that first book of mares.
However, the bloodstock industry has been rattled by the shrinking foal crop and economic uncertainty inside and outside of the Thoroughbred business. Practically all of Kentucky's stallions except for the ones on meteoric rises saw decreased fees for the upcoming season. Most stallions will never stand for a fee as high as they do in their first season, but in a year where the purse strings stand to be especially tight, setting that price too high might turn breeders off.
With four first-season stallions expected to enter to the breeding shed in 2021, WinStar Farm has had to walk that tightrope on a large scale.
“You look at their race record and pedigree,” WinStar Farm's Elliott Walden said. “It's a bit of an art, it's not a science to get it right. There's quite a bit of comparative analysis with horses that have had a similar body of work that have gone to stud in the past, or this year.”
The intention behind a stallion's direction can also factor in the decision on an initial stud fee and beyond.
A syndicate built with “breed to race” operations who plan to wait on the foals to prove themselves on the racetrack might be less swayed by the whims of the marketplace, as opposed to syndicates comprised of commercial breeders.
This will also affect the types of mares sent to a particular stallion, both by syndicate breeders and outsiders.
“The commercial market is a driver, but it's not the main driver for me,” said Mill Ridge Farm's Headley Bell, who manages the syndicate for stallion Oscar Performance. “That's where the syndicate fell into place. We made the price of the shares attractive enough to get a really good syndicate. That's the foundation of the horse. Then, I think the market ends up seeing that and it provides them confidence, as well.
“We're not just sitting there relying on a commercial market that's going to be there the first year, and then they're going to leave you,” he continued. “This is a long-term project, so we try to manage him accordingly, as far as his fee goes, and the number of mares. We've tried to put the horse first in what we're doing.”
Because of the long-term strategy behind Oscar Performance's syndicate, the stallion's fee has not changed drastically over his first three seasons. He debuted at $20,000 in 2019, and his fee was unchanged in his second season when many others in his class see at least a mild drop. In his third season, typically a difficult one to drum up interest, Oscar Performance was lowered to $15,000.
Moving a stallion's fee up or down can be a delicate process. For one on the rise, it signifies a ringing public endorsement, but one that has to be tempered so as not to scare potential breeders away. For ones going down, the line has to be tiptoed between correcting supply and demand while still protecting the commercial reputation of the stallion and the investment of breeders.
“If it's a horse that's in the process of making it, you don't want to go too high and snuff out the positive demand,” Farish said. “If it's one that's on the fence and not really making it, it's a tough decision because you don't want to cut them too much and hurt them in the eyes of the breeders. There were a bunch of mares that were bred at a higher fee on those kinds of horses, so you don't want to drop them too far, because that goes into it, as well.”
Walden expanded on that point, noting that even lowering a stud fee contains a certain degree of gatekeeping to keep the number of unhappy customers to a minimum.
“Raising or lowering – That's the trickiest, I think,” he said. “There is a very interesting dynamic between supply and demand. Obviously, you want good demand. You want people to want your stallions, and you need to meet the supply. But, you also don't want to have 500 applications and have to turn a bunch of people away. You want to get it right where you have more demand than supply, but not to an extreme amount.”
Whether it's a newcomer or a veteran stallion, the ideal outcome of a Thoroughbred mating has changed ever so slightly in recent years due to The Jockey Club's 140-mare limit for stallions born in 2020 or later. No stallion standing today will see their books limited in any way going forward, but the foals they conceive will be born with that ceiling, should they warrant stallion careers in the future, which could be perceived as a limit on how much money a potential colt could make in his lifetime.
Realistically, only a sliver of any given foal crop is retired to stud, and an even smaller sliver of that group would be enough of a commercial success to threaten the stud book limit. Of all the factors that do go into a stallion's fee, Farish said the stud book cap on the ensuing foals was not on the list.
“Not in the slightest,” he said.
As if balancing a stallion's public value in his own ecosystem wasn't harrowing enough, there can be the issue of how the stallion and his fee interacts with those around him. At many larger Kentucky farms, veteran stallions will have sons or grandsons on the same roster, or farms will double down on horses by the same sires or similar female families.
Presumably, these stallions would be drawing from a similar pool of mares that match their general pedigrees and physicals, which could create some tough decisions for both the breeders and stud farms.
In some instances, the pricing system can offer breeders entry into a particular sire line at different price points.
For example, Lane's End stands cornerstone sire Candy Ride for $75,000. His son Twirling Candy stands at the same farm for $40,000, while newcomer Game Winner, also by Candy Ride, enters stud for $30,000. Fellow Candy Ride son Unified is advertised for $10,000, while Gift Box, a grandson of Candy Ride through sire Twirling Candy, will also stand for $10,000.
“You don't want one to hurt the other, so you try to price them to where they'd benefit from being in the same place,” Farish said. “Occasionally, they do get into each other's way, but that can be tricky.”
Bret Jones of Airdrie Stud said he preferred to price horses with similar pedigrees based on their individual merits, even if the price points are close, and let the breeders decide which option works best for them.
“At the end of the day, I don't know that you can get too caught up in that when it comes to standing a similar-bred stallion,” he said. “The Portland Trailblazers passed on Michael Jordan because they already had Clyde Drexler, so I think you can outthink yourself sometimes when it comes to stallions with similar pedigrees. I think you have to believe in the stallion on their individual merit, and price them however you think you can generate business.”
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