This year's batch–three Yale undergrads studying economics, electrical engineering and political science–were tasked with a data-driven analysis of the economics of the national horse racing biz over the past 20 years.

Harboring no previous relationship with the industry, the three undergrads came in free of prejudice and preconceptions.

The result is a 33-page paper weaving piercing and worrying insights into the state of racehorse ownership, racetrack management and training in the country alongside findings that give tentative cause for optimism.

It's also the sort of detailed analysis of horse racing's economic foundation stones that's done all too infrequently for an industry of this size and scope.

“We've been a sport that traditionally makes decisions either around general 'chat around the pub,' or just whatever the richest guy in the room thinks,” said Joe Appelbaum, NYTHA president and an advisor on the study.

“Neither is usually a good one to make good economic decisions from,” he added.

Among the areas the three researchers focused in on were owner, trainer and horse participation; purse and handle trends; the bloodstock market; along with a side-by-side economic analysis of horse racing and other national sports.

They break their key findings down the following way:

• That the 2008 global financial meltdown significantly hastened the decline in trainer numbers, owner interest numbers and participating racehorses.

• That two areas–bloodstock prices and per-capita purse distribution–showed surprising resilience during that time.

• More pointedly, with fewer horses competing for increased purses per race, individual owner entities have generally been doing slightly better financially over the last 20 years.

• Despite areas of improved economic value for owners, costs remain high while the entertainment value of the sport appears to be declining due in part to horses racing less and working more.

• The economic divide between the bigger and smaller trainers remained unchanged over the past 20 years. That said, such a divide is a characteristic of other national professional sports.

• A consolidation of quality horses among fewer and fewer of the nation's largest stables has also triggered growing inequality among the top trainers.

• At the end of the day, the not-for-profit model of certain racetracks coupled with the “capitalist nature” of Kentucky's breeding market could serve as models for other areas of the industry.

The detailed analysis warrants a much closer look at some of the statistics woven through it, several of which mirror the TDN's own prior dives into similar topics.

PARTICIPATION

The past 20 years has seen a decrease of nearly 40% in total horses that raced, a decrease of nearly 55% in total trainers that had at least one horse make a start, and a decrease of just over 42% in the number of owners who owned at least one horse.

Interestingly, the sharp drop in trainer numbers has been reflected in the TDN's own examination of California's trainer colony. Between 2007 and 2020, California witnessed a 46.4% decrease in the number of individual trainers making at least one start: from 573 in 2007 to 307 in 2020.

Hastening the speed of these declines was the 2008 global financial meltdown.

As the researchers write, “it accelerated the declines among horses and owners, and although trainers were already leaving the industry at a significant rate prior to the recession, trainers were still impacted by the economic crisis as they rely on owners to give them their horses.”

Since the COVID-19 pandemic, however, there have been tentative signs of plateauing declines in the number of participating owner interests and competing horses.

In what will prove a surprise to no careful observer of the sport, the last 20 years has also witnessed a 37% drop in the number of races run nationally, and a 45% drop in the number of individual starts.

“The landscape of the horse racing industry has changed a lot over the past 20 years as it has lost close to half its existing participants and 37% of its total races,” the researchers write.

“As the number of races, owners, and trainers continues to decrease across the country,” they warn, “the survival of horse racing is threatened.”

PURSE DISTRIBUTION

An inflation-adjusted look at purse levels show that total purses declined by nearly 25% between 2003 and 2023.

However, declines in the number of overall races run nationally over that same period has led to a situation of improved per-race, per-start economics for owners and trainers.

Indeed, inflation-adjusted purse-per-race numbers increased nearly 18% during that time, while inflation-adjusted purse-per-start numbers increased nearly 30%.

In another similarly themed section, the researchers took a stab at quantifying the cost of owning a horse, using numbers shared by one of the nation's “leading racing operations,” which remained unnamed.

Calculating typical training costs, the average days a horse is in training, farm costs, predicted jockey fees, and stable fees, the researchers estimated that the average annual earnings by a horse required to break even for its owner in 2022 was around $66,500.

In 2003, a horse had to win more than $41,810 for the owner to profit, they found.

The findings suggest that the number of horses “breaking even” for their owners over the past 20 years grew from below 8% in 2003 to over 11% in 2022.

Unsurprisingly, there were precipitous drops in the numbers of “breaking even” horses during the 2008 economic collapse and during the worst impacts from COVID-19.

The reason for this overall increase, the researchers write, is twofold.

“There are fewer horses racing, which is an effect of the decrease in the supply of foal crop,” they wrote. “And there is a higher amount of money available due to the alternative revenue provided through the casinos at the tracks.”

FOAL CROP AND SALES

The sales rings provided the researchers with another area for optimism.

“As the economy in general and horse racing in particular emerged from the Great Recession,” they write, “one area of clear strength has been the increasing value of bloodstock at all levels.”

Indeed, the inflation-adjusted average price of weanlings, yearlings and 2-year-olds increased over the past 20 years by just over $14,500. The same goes for median prices.

Since a recession-led low back in 2009, the median sales price increased 48% to a level of $30,000 in 2022.

“This upward trend in the median price indicates that a wide range of bloodstock assets, not only just the high-end ones, have experienced value appreciation,” the researchers write.

Why is this? The researchers contend that simple supply and demand is at play as the national foal crop has declined nearly 50% over the past 20 years.

“As the supply of horses eligible to be auctioned decreased due to the lower foal crop, breeders and sellers found themselves with fewer horses. Notably, the demand for these horses remained relatively constant, or in some cases, may even have increased,” the researchers write.

The combination of reduced supply and stable demand has led to an “upward pressure on prices,” they add.

SUPER TRAINERS

The researchers also tackle one of the bete-noirs of the industry–the issue of so-called “super trainers.”

Over the last 20 years, the industry has lost nearly 55% of its trainers. Most have been “micro-trainers” and “midsize” trainers–in other words, those with between 1-10 discreet horses, and between 11-40 discreet horses respectively.

Fewer races, horses, and owners invariably lead to fewer trainers, the researchers reasonably deduce. At the same time, existing stables have consolidated size.

The average horse-per-trainer ratio has grown from 8.2 horses per trainer in 2003 to 11.1 in 2022.

“With owners preferring trainers with more horses, the micro-trainers are losing out on potential clients and struggling to maintain a sustainable business,” the researchers warn. “Many of them may have decided to exit the industry altogether due to the diminishing demand for their services.”

At the opposite end of the scale are “super trainers” who operate stables with 80 or more horses.

The number of super trainers has stayed relatively constant in the midst of declining trainer numbers. In 2003 there were 123 super trainers, and in 2022 there were 114.

These findings mirror the TDN's own analysis of the training colony in California. While the number of active trainers in California almost halved between 2007 and 2020, the number of trainers with 100-plus horses making starts stayed fairly constant.

At the same time, the Yale researchers found that the nation's super trainers have significantly increased their percentage share of total available winnings over 20 years, from 27% in 2003 to 41% in 2022.

This means that last year, 114 “super trainers”–just 3% of the total number of active trainers–accrued 41% of the total available winnings.

Intriguingly, the researchers argue that this yawning disparity between racing's select few top-tier trainers and the rest is mirrored in other professional sports, like golf and football.

“Horse racing is a unique sport as it does not have many similarities to popular sports in the country, but so is golf, and despite being unique, they are both sports that have similar issues that must be overcome to participate,” the researchers write.

“Neither is easy to stay in, especially if you are not in the top percent,” they add. “It is hard to win, hard to profit, and hard to compete, but that is exactly what makes them both sports in the first place.”

WHAT TO DO?

The report has other intriguing findings, including how the income disparity seen among trainers is reflected between racetracks, with only a select few tracks thriving and offering competitive purses.

Ultimately, said Appelbaum, the report could and perhaps should trigger a couple of key industry responses.

One would be to decrease the regulatory burden “as much as possible,” especially when it comes to the Horseracing Integrity and Safety Act and to sports wagering.

“The current regulatory regime both in New York and around the country is really a bit redundant and not in step with the current sports wagering environment,” he said.

The other would be to regionalize circuits of racing to provide for “better planning of races between tracks and jurisdictions,” he said.

At the end of the day, the report should also spur more of these in-depth analyses into the economic building blocks of the sport.

“Why is it three college-age interns are doing this?” Appelbaum added. “Why aren't we doing more of this ourselves?”

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Though a couple of minor catalogues remain to be processed in Europe, the overall value of yearling trade in North America and Europe has already advanced $63,996,667 (6.8%) on the 2021 tally of $937,533,161 to smash a symbolic barrier at $1,001,529,828.

Even in a marketplace currently inuring us to records, with one auction after another achieving new high-water marks, it's pretty staggering to register a first-ever crop of “billion dollar babies”.

This figure, moreover, crushes very strong internal growth in the European market under the weight of a dollar that has been leaning heavily on other currencies in general, and sterling in particular.

That's perfectly valid, in that the upper tier of the European market is dominated by international rather than domestic investment. For those who count their wealth in dollars–the kind of people buying Mr. Allen's Klimts and Cezannes–the quaint old “guinea” has proved an especially congenial means of conducting business this year.

So while turnover and averages at Tattersalls and elsewhere have been soaring giddily, year on year, dollar conversion actually confines the value of the European market to a degree that would astonish its indigenous participants. In those terms, it has actually shed 2.4% this year, down to $391,241,817 from $400,981,400 in 2021. While we naturally pass over the COVID-warped turnover of 2020 (weighed in at $328,852,326), the European market this year was virtually identical to 2019, at the prevailing dollar rate, and down 4.8% on $410,789,647 in 2018. That's a chastening correction of perspective, for any Europeans attributing a booming export market to the sheer quality of their product.

Consider Europe's premier yearling catalogue through the prism of a fluctuating exchange rate. In October 2014, when £1 would get you $1.59, the average Book I yearling at Tattersalls realized $393,893. After the Brexit referendum in 2016, sterling having slumped to $1.22, the same book averaged $292,168. And this year, with sterling bumping along the floor at $1.12, a “record” average for the sale converted to just $280,080. So while the average guinea cost of a Book I yearling has gained 26.6% since 2014, the average dollar cost has meanwhile come down by 28.9%. (Jolly well done, Brexit supporters!)

Of course, the pinhooker who buys and sells within the European market, or the breeder who pays a covering fee there, will also buy their bread and milk in the same currency. So their sense that business is booming is perfectly legitimate, and its suppression within these figures–unprecedented as they are–only goes to show how remarkably potent is the current bull run in international bloodstock.

The flattening of European growth by dollar conversion leaves the average cost of a 2022 yearling, either side of the Atlantic, virtually unchanged at $94,851. In North America, however, we have reached a landmark every bit as stunning as the $1-billion overall market. In 2022, the average American yearling broke six figures, up from $98,558 last year to $106,806.

Once again, then, we renew our perplexity about this market's peculiar immunity to rampant geopolitical and economic maladies out there in the real world. We know that its most affluent contributors were never asked to furl the cash umbrellas they were issued after the banking crisis, and many have now separated themselves altogether from the exposure being experienced by the rest of society. Yet after a decade of spending stimulus, interest rates have finally been dusted off to tackle such forgotten inflationary horrors as plague and invasion. And somehow this market is still humming along.

The demand is real. Forget aggregate turnover, look at the astounding clearance rate. This has historically been less robust in America, but whereas 75% of those entering the ring here in 2018 found a new home–and that was a better clip than in the three preceding years–in the last two years the tally has climbed to 83 and 82% respectively. In Europe, similarly, the 2018 clearance of 78% has been moved up to as high as 86 and 85%.

Fasig-Tipton photo

So how does this all hold together? The stallion farms certainly appear to be taking their cue. Some of their fees for next spring arguably (and understandably) claim a piece of the action. Several elite stallions are getting steep hikes, on both sides of the water, in some cases at a time of life when their quality has been long established. But the organic connection between yearling values and covering fees entitles farm accountants to seize the day.

Over the past week, moreover, we have also seen how some unusually glamorous new stallions are stimulating demand for the most eligible mares. And while the gentleman who gave $4.6 million for 2.5% of Flightline can comfort himself that the underbidders set standards in the astute calculation of bloodstock values, this horse has reminded us–despite the notorious brevity of his first career–of the economic potential of sheer fan power.

That's significant, because for now there's limited crossover between those spending at Keeneland this week, and those spending in the same ring back in September. It's heartening that so many people want to buy racehorses; and especially that many are doing so because viability on the track, in some parts of the country, feels increasingly feasible. But the circle still needs to be completed. If demand is so high, then why is supply diminishing? Why is the North American foal crop still to revive after its post-2008 collapse?

After the banking crisis, we soaked up four consecutive crop drops between 5.9 % and 12.7%. There followed three years of stability before numbers began to ebb again, down 4.4% in 2018 even as the market was booming. Obviously we've since had a big COVID-shaped punch to the belly, but the projected crop for 2023 is again down.

As we know, the racing program–notably its black-type tier–has not sufficiently matched that contraction to remain competitive, and therefore stimulating to handicappers. The legal wagering menu is expanding all the time, and our own demographic is ageing.

Demand is high, but foal crops are decreasing | Eclipse Sportswire

It is true that crop sizes little different from today (c.18,000) serviced the American sport adequately in the era when it still retained a mass following. And the huge leap in the Thoroughbred population actually came after that heyday, from the mid-1960s to the mid-1980s, instead being driven by a revolution in the commercial breeding environment.

In this latest cycle of demand, however, we see no corresponding rise in supply. We've had a bull run for several years now, even riding out the pandemic with surprising resilience, yet the foal crop has meanwhile stagnated at best.

Doubtless there are many different reasons for that. But one big difference between now and the couple of decades leading to the peak of 1986 (over North American 50,000 foals) is the failure of the export market. Those years of revolution owed significant impetus to European stables. (And rightly so, as things turned out: the result was a game-changing regeneration of the European Thoroughbred.)

Now I'm not going bother with an umpteenth rebuke for the disastrous modern schism between the two gene pools, and therefore the two markets. Nowadays, after all, I consider that more of an opportunity than a problem: if I'm right, then those who share my views will cash in; and if I'm wrong, then there's no need to gnash any teeth.

Nonetheless one or two collective responsibilities do need to be embraced. How, for instance, to retrieve that European faith? Many of the prejudices that have stifled investment are actually thoroughly misguided. Nonetheless reconciliation could be a valuable incidental benefit from the earnest embrace of HISA.

In the domestic market, meanwhile, how do we excite all these people buying racehorses with the idea of breeding them? As things stand, this buoyancy at the sales ring does not yet fit any coherently virtuous circle of engagement.

You couldn't say that Californian racing is thriving simply because it has produced nearly all the recent champions most likely to engage new fans: Zenyatta, California Chrome, American Pharoah, Justify, Flightline. Yet while other local barometers remain dispiriting, notably purses and fields, at least its leaders have made the tough decisions necessary to secure a more sustainable footing for any other progress that can be made. They have started from the ground up, literally, with their racing surfaces–and have done such a good job that they might yet prove able to turn round some of their other issues.

By the same token, just because horsemen elsewhere are making plenty of dough, whether in the ring or on the track, that doesn't mean they can be complacent that everything else is in place. For a time, remember, the price of silver told Bunker Hunt that he had just about nailed his attempt to corner the market. Let's be cautious, then, before deciding that all the glister on our Thoroughbreds must be gold.

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Weatherbys' recently published Return of Mares shows that Starman's stable-mate Mehmas (Ire) was sent 249 mares, the same number as Coolmore resident Wootton Bassett (GB), while the most active sire in Britain was Overbury Stud's Ardad (Ire), who covered 205. The only other British-based stallion in the top ten on numbers was the champion sire Frankel (GB), who was sent 188 mares.

The number of foals born in Britain and Ireland in 2022 has again risen slightly, according to figures published by Weatherbys including returns to September 30. The number of live foals registered to that date is 13,275, compared to 12,920 in 2021 and 12,778 in 2020.

That figure breaks down to 4,518 foals born in Britain, which is a rise of 6% from 4,282 in 2021. Ten years ago the British crop had dropped to 4,227, but it had climbed gradually to a recent high of 4,726 in 2018.

In Ireland, 8,757 foals were registered, a 1% rise from 8,638 last year, from a 2017 high point of 9,044.

The number of broodmares at stud rose accordingly, with 22,832 registered in 2022. In Britain, 6,610 mares were covered (82% of those reported at stud), while in Ireland that number was 11,398 (77%).

The numbers of stallions standing in Ireland has remained constant at 187, while in Britain there were 14 fewer in 2022, with a total of 125 at stud. Some of the National Hunt brigade traditionally cover large books and the busiest stallion overall was the Whytemount Stud resident Affinisea (Ire), a Sea The Stars (Ire) half-brother to Soldier Of Fortune (Ire), who covered 374 mares. Another son of Sea The Stars standing under the National Hunt banner, Crystal Ocean (GB), covered 338.

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The Jockey Club estimated that the number of live foals reported so far is 85-90% complete.

In total, 1,303 stallions covered 29,065 mares, according to statistics compiled through Oct. 6. The number of stallions declined from the 1,447 that were active in the preceding year, a drop of 10%, and the number of mares bred declined by 2.1%.

Kentucky was once again the runaway leader when it comes to Thoroughbred breeding activity, accounting for 57.8% of the mares reported to be bred in North America and 61.6 % of the live foals.  A total of 16,796 mares were bred to 207 different Kentucky-based stallions, producing 11,460 live foals, for a 0.7% decrease over figures from the previous year. However, the number of mares bred to Kentucky stallions showed a slight increase of 1.9%.

Among the 10 states and provinces that were among the top 10 in terms of mares covered, four–California, Ontario, Oklahoma and Indiana–produced more live foals in 2022 than in 2021. Indiana had the biggest gain, with the number of live foals reported going up by 20.3%.

Outside of Kentucky, California was the leader in number of mares bred with 1,939. Florida was next with 1,617.

The Coolmore stallion Practical Joke (Into Mischief) led all stallions in the category of mares bred. He was bred to 231 mares. Second on the list was Goldencents (Into Mischief) at 230. Showing the popularity of sons of Into Mischief, Authentic (Into Mischief), in what will be his first crop, was next at 229 mares. Vekoma (Candy Ride {Arg}), also a first-crop sire, came in fourth, having been bred to 222 mares. Maclean's Music (Distorted Humor) was next at 221, making a remarkable jump after being bred to 57 mares the prior year.

Still another son of Into Mischief (Honest Mischief) led the way in the category of non-Kentucky-based sires. Standing in New York, he was bred to 127 mares.

Twelve stallions were bred to 200 or more mares and 43 were bred to 140 or mares, which exceeds the cap The Jockey Club had attempted to impose to encourage diversity in the breed.

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The high-water mark of 51,296 was reached in 1986. The crop has declined every year since then with the exception of 2015.

Additional foal crop information is available in TJC's online fact book.

The foal crop projection is computed by using Reports of Mares Bred (RMBs) received to date for the 2022 breeding season. RMBs are to be filed by Aug. 1 of each breeding season. TJC is encouraging stallion owners who have not returned their RMBs for the 2022 breeding season to do so as soon as possible; it can be done online at registry.jockeyclub.com.

The 2020 foal crop, at 20,500, was the last time 20,000 foals were surpassed in a single year. Click here to download a historical table dating back to 1900.

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The bloodstock market of 2021 seemed as though it would be easier to forecast compared with the unprecedented turbulence of the prior year, but no one could have foreseen the level of gusto with which certain sections of the market would bounce back.

A starving buying bench took auction returns to record highs last year, while Gun Runner's freshman class of runners put their sire in the history books. Pleasant surprises can be hard to come by in the Thoroughbred business, and last year was full of them.

After a year that went better than expected for many, will that momentum keep up the pace, or will it stall? Which stallions will see their stocks rise and fall in the coming year? I try to answer those questions with five predictions for how the year will play out in the bloodstock market.

1. Into Mischief Will Repeat As Leading General Sire…Again

You can't hit the Pick 5 without getting the first leg, so we'll start off with a safe one.

For a second consecutive year, the Spendthrift Farm resident set North America's single-season record for progeny earnings. The $24.4 million his runners earned in 2021 was more than $8.1 million higher than next-closest Ghostzapper at $16.2 million. If that $8.1-million difference were an actual stallion, it would have finished in the top 20 on the general list. That's quite the chasm for any horse to overcome.

In 2020, Into Mischief reached the top of the heap on the strength of Horse of the Year Authentic's Kentucky Derby and Breeders' Cup Classic triumphs, and the success of champion sprinter Gamine. Last year, Gamine was back to add a pair of Grade 1 wins and $851,900 to the pot, joined by a pair of electric 3-year-olds in Grade 1 Haskell Stakes winner and Kentucky Derby runner-up (at the time of publishing) Mandaloun and Breeders' Cup Dirt Mile winner Life Is Good. G1 Carter Handicap winner Mischevious Alex completed Into Mischief's quartet of Grade 1 winners in 2021 and highlighted his 13 graded or group stakes winners on the year.

The reason why Into Mischief is my pick to repeat again as leading general sire is the same one I had last year, and the same one I'll use every year for the foreseeable future: he's got the pipeline set for life.

The commercial market is firmly in Into Mischief's corner, putting him on the conveyor belt of success that includes sending him big-time mares, which produce expensive sale horses that have proven to become serious runners, and the cycle begins again. Once that conveyor belt gets going, it tends to only pick up momentum, as it has here. When one set of elite horses leaves the racetrack, another generation quickly takes its place, and perhaps goes even farther.

Into Mischief is perennially one of North America's most active stallions by mares bred, meaning he'll have a unique foundation of blue-collar earners to support the flashy graded stakes horses, the likes of which few of his rivals can muster. Looking to the future, Into Mischief has 195 newly-turned 2-year-olds of 2022; once again from the strongest book of mares he'd seen to date. They'll be given every shot to take home lucrative maiden special weight purses at the country's biggest meets, then become the next class of major stakes winners to keep their sire at the top of the list for years to come.

Get comfortable. The top of the list doesn't look to be changing anytime soon.

2. The North American Foal Crop Will Rise In 2023

This might seem out of place on a list of predictions for 2022, but stay with me, here.

Many pearls have been clutched over North America's shrinking foal crop, and it's certainly harrowing to see that number get slashed by more than half from 44,000 in 1990 to a projected 18,700 in 2022. Assuming The Jockey Club's projections for 2021 and 2022 hold true, the foal crop will have posted a decline in seven consecutive seasons, and the last time it grew by more than one percent was 2005.

However, this is a business that loves to chase a trend, and after an auction season that saw incredible depth and record-setting returns, it's not hard to imagine present and potential breeders eyeing that landscape and seeking out their own piece of it. The November breeding stock sales were strong to the last day, suggesting there is a commercial craving for broodmares that might not yet be quenched by the sale ring. If there is demand, the supply will catch up, whether that means bringing mares back into production that might have gotten time off or retiring fillies from the racetrack to enter the breeding shed. This is not a business of people who happily accept not getting what they want.

Assuming that demand is met with enough horseflesh, one would assume more mares would be bred than in previous years, with the hope that the market will remain just as electric when the ensuing foals enter the commercial space a few years down the road. Since the foals would be conceived in 2022 and born in 2023, this is a long-term prediction that hinges on the short-term.

With all of that being said, I don't expect the 2022 Report of Mares Bred to be bursting at the seams like it's the 1980s again, or even the post-recession upturn of the mid-2010s. Even if breeders are as enthusiastic as they've been in years, there are only so many mares out there to be bred. Save for a mass exodus of broodmares from other countries, any rise in the foal crop is going to have to be a gradual crawl by design. A percentage point or two of growth, though, would be a giant morale boost for an industry that desperately needs horses to fill starting gates around the country.

3. Justify Will Be The Leading Freshman Sire By Earnings

The 2018 Triple Crown winner tied with fellow Ashford Stud Mendelssohn as North America's most active stallion of the 2019 breeding season with 252 mares bred, and he attracted an absolute murderer's row of mares to fill his first book. There is little excuse for anyone but Justify to finish at the top of the freshman sire list.

If he is successful in that assignment, Justify will take a familiar path to the top employed by Ashford Stud to get the likes of Uncle Mo and American Pharoah to the head of the freshman list: Get as many foals on the ground and into the starting gates as possible, and use the deep class from that first book of mares to propel the foals into the biggest races. It's the plan that every stallion manager draws up for their rookies, but only a chosen few are able to execute it to perfection.

The commercial market seems willing to go on this ride with Justify. He finished fourth among North American-based sires by average yearling sale price ($357,387) and second by yearling gross ($26,804,000). We'll learn more about whether those looks and pages can run when we get into this year's juvenile sale season, but that kind of early endorsement is critical for a stallion with expectations as big as Justify's.

If Justify is somehow unable to get the job done, the logical next guess would be Lane's End resident City of Light. The stallion himself is a specimen, and his yearlings were received astoundingly well during last year's sales. I get the impression the City of Lights (Cities of Light?) are going to do their best work around two turns, which might preclude them from the early prizes on the juvenile stakes calendar, but I thought the same of Gun Runner, and we all saw how that turned out.

4. Arrogate Rebounds From His Rough Freshman Season

One of the biggest surprises of last year's sire races was the highly-touted champion Arrogate finishing out of the top 10 by earnings among freshman sires. After his brilliant racing career, strong debut book of mares, and fevered support at auction – hastened by his untimely demise – the dominoes appeared to be set for him to contend for the top spot, but his first crop left more questions than answers.

The late resident of Juddmonte Farms finished the year in 12th on the freshman earnings list, and without a North American stakes winner. His first winner didn't come until September at the tail end of the Saratoga meet, and his only stakes-placed runner on the year ran second in a restricted stakes at Delaware Park. Arrogate's freshman season might not have been a worst-case scenario when put up against his lofty expectations, but it certainly teetered on the edge of it.

A year earlier, we were saying a lot of the same things about Runhappy, a much-hyped stallion who limped to a 15th-place finish on the freshman sire chart in 2020 without a stakes winner to his name. A year changed a lot for Runhappy, who leapt to fourth among second-crop sires by earnings in 2021, powered by Grade 2 winners Following Sea and Smile Happy.

Runhappy rewarded patience during his own on-track career, not truly hitting his stride until the summer of his 3-year-old campaign. Arrogate had a similar trajectory, vaulting himself into graded stakes competition during the Saratoga meet of his 3-year-old season, and winning the world's most expensive races later that year and into age four. He didn't even make his first start until April of his sophomore year, so we still don't have an apples-to-apples comparison of what the Arrogates should be doing at this stage based on their sire's own racing career.

The Arrogate foals always had the two-turn look to them as young horses, suggesting they might relish the opportunities to go longer that will be afforded to them as they get older. Any runners that make noise on the Triple Crown trail would be late to the party, but the longer races later in the spring and beyond should play to their advantage if they have the talent to match their pedigrees. One or two of those could change the entire trajectory of a stud career cut short.

The tide has already started to turn for Arrogate, who picked up his first stakes winner on Jan. 1 when Alittleloveandluck took the Ginger Brew Stakes on the turf at Gulfstream Park. Arrogate left himself a lot of ground to make up on the leaders in his class, but he fits the profile of a stallion that's got it in him to pull it off.

5. The Auction Market Cools Off A Bit

I never felt like I got an acceptable answer for the question I kept asking throughout a cracking 2021 auction season: “Why is the market THIS good?”

Were people with gobs of money excited to spend it and blow off some COVID-related steam? I'm sure they were. Are purses up at some of the sport's biggest meets, making it more appealing to race horses? Definitely. Were there some other forces in play? Probably. Even so, it's hard to fathom how even a combination of these factors led major buyers to stick around until Books 5 and 6 of the Keeneland September sale when they'd have normally been home for days.

Personally, I think a lot of key players held on to their money and horses during the 2020 auction season, and once it was clear there was going to be a Thoroughbred industry to come back to in 2021, they had more capital than they normally would. With more money in reserve, that pushed everyone down a book or two in order to buy horses in their price range.

If I'm right about that, it means the end users out there might have spent a big chunk of their surplus in 2021, and they might enter this year's auctions with budgets closer to a typical year.

When a good thing appears suddenly, it can vanish just as quickly. However, the Thoroughbred industry is not known for suddenness, barring some kind of global-scale economic event. I don't expect the market to grow from the fever-dream season it saw in 2021, but I don't expect it to plummet, either.

Record paces are hard to keep up, but a slight downturn can still result in an all-time renewal of a particular sale. That's where I see us headed in 2022, probably for reasons as scattered as the ones that got us here in the first place.

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The Jockey Club estimates that the number of live foals reported so far is 85-90 percent complete. The reporting of live foals of 2021 is down 3.3 percent from last year at this time when The Jockey Club had received reports for 19,677 live foals of 2020.

In addition to the 19,021 live foals of 2021 reported through Oct. 4, The Jockey Club also received 2,195 No Foal Reports for the 2021 foaling season. Ultimately, the 2021 registered foal crop is projected to reach 19,200.

The number of stallions declined 6.8 percent from the 1,552 reported for 2019 at this time last year, while the number of mares bred declined 4.8 percent from the 31,198 reported for 2019.

The 2020 breeding statistics are available alphabetically by stallion name through the Resources – Fact Book link on The Jockey Club homepage at jockeyclub.com.

Kentucky annually leads all states and provinces in terms of Thoroughbred breeding activity. Kentucky-based stallions accounted for 55.5 percent of the mares reported bred in North America in 2020 and 60.6 percent of the live foals reported for 2021.

The 16,485 mares reported bred to 212 Kentucky stallions in 2020 have produced 11,535 live foals, a 2.7 percent decrease on the 11,851 Kentucky-sired live foals of 2020 reported at this time last year. The number of mares reported bred to Kentucky stallions in 2020 decreased 4.4 percent compared to the 17,240 reported for 2019 at this time last year.

Among the 10 states and provinces with the most mares covered in 2020, three produced more live foals in 2021 than in 2020 as reported at this time last year: Maryland, Ontario, and New Mexico. The following table shows the top 10 states and provinces ranked by number of state/province-sired live foals of 2021 reported through October 4, 2021.

The statistics include 243 progeny of stallions standing in North America but foaled abroad, as reported by foreign stud book authorities at the time of publication.

The report also includes 64 mares bred to 23 stallions in North America on Southern Hemisphere time; the majority of these mares have not foaled.

As customary, a report listing the number of mares bred in 2021 will be released later this month.

The post North American Foal Crop Declines 3.3 Percent In 2021 appeared first on Horse Racing News | Paulick Report.

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For a generation, the commercial market has been pummeling breeders whose stock ranks below the median in auction sales. Typically, the prices for those foals and yearlings do not even cover the cost of on-farm production, without even considering ancillary expenses or the cost of money tied up in non-productive assets.

As a result, the number of foals that breeders are willing to produce has hit a noteworthy low point.

The last time the North American foal crop of Thoroughbreds came this low was 66 years ago in 1965 when the foal crop was 18,846, and only five years before that, in 1960, the foal crop was 12,901. So in the span of half a decade, the foal crop increased by nearly 50 percent, but the decades of the 1960s and 1970s featured exponential growth in Thoroughbred racing, and especially in breeding, with the expansion of breeding programs outside of Kentucky, Florida, and California.

Now, those regional programs are nearly dead. Many breeders are pensioning stallions, selling off mares, and not breeding for those specialty markets.

In contrast to the present trend, the foal-production boom peaked in 1986 with a foal crop of 51,296, just in time for the tax act that changed the rules for breeders and sent the market into a panic and decline. By 1995, the selloff had bottomed out with a foal crop of 34,983, more than 16,300 foals fewer than only nine years earlier.

Since then, the foal crops remained remarkably stable around the 35,000 level until 2010, when the foal crop dropped below 30,000 for the first time since the 1970s. Crop numbers have been drawing down, slowly but steadily to the present level, and one of the great factors for this direction is the continuing negative pressure from buyers.

Despite the tone of the foregoing information, there is a good market for Thoroughbreds, but it is a good market, consistent and profitable, only for premium foals and yearlings. Nobody wants an average one. Or what is perceived to be an average yearling, because every year there are graded stakes winners from every book and every session of the September sale. Perception of average-ness is not the same as being average (or below average).

At the same time that breeders are stuck with half or thereabouts of their annual foal crop in the “below-average” section of sales, the same breeders are consistently being prodded to spend more for stud fees and other services, then to accept less at the sales, because what other choice would they have.

The situation is sufficiently trying to make one wonder “what if”: what if breeders made different decisions; what if breeders formed cooperatives (or a single cooperative) to improve their economic and political impact; what if a group or several groups collectively hired trainers to train the horses that were not “sales types?” These and other choices are out there, apparently waiting for someone or a group of someones to latch onto them and bring them into operation.

By these and other avenues, there are ways out of the financial quandary breeders find themselves in, but it may not be the path that brought them here. We have, for more than 20 years, been breeding stallions to as many mares as breeders will present and as many as the horse can (hopefully) handle.

This approach, in hindsight, might be considered an overreaction to the concept of a free market, as in too much of a good thing can drown you.

Stallion syndicates, hard number syndicates that restrict access to premium stallions and control the supply of yearlings as a result, are one option. This is considerably different from the current free-for-all that seems to be sending more breeders to the poor house each year.

Instead, a syndicate with a contractual cap on seasons and members would be a return to the style of syndicates from the 1950s and '60s and '70s, when everyone made money in horses. And somehow the horses were even better and raced more and seemed more like fun, than what we have now.

The post Bloodlines: The Declining Foal Crop And The War On ‘Average’ appeared first on Horse Racing News | Paulick Report.

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The foal crop projection is computed by using Reports of Mares Bred (RMBs) received to date for the 2021 breeding season. RMBs are to be filed by August 1 of each breeding season.

Additional foal crop information is available in The Jockey Club's online fact book at jockeyclub.com/factbook.asp and in the online state fact books.

Stallion owners who have not returned their RMBs for the 2021 breeding season are encouraged to do so as soon as possible. Interactive Registration, which enables registered users to perform virtually all registration-related activities over the Internet, is the most efficient means of submitting RMBs and is available at registry.jockeyclub.com.

The post The Jockey Club Projects 2022 Foal Crop Of 18,700 appeared first on Horse Racing News | Paulick Report.

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Making predictions at the beginning of 2020 meant starting with certainty and taking a wild detour after COVID-19 changed the world. Assuming the distribution of the vaccine goes to plan and normalcy returns by the end of 2021, we could see the inverse.

Regardless of the start and end points on a global scale, the bloodstock market rolls on as ever. With a new year ahead of us, I have five predictions for how the marketplace will play out in 2021.

1) Into Mischief Will Repeat As Leading General Sire

Into Mischief had a season for the ages in 2020, setting the single-season record for progeny earnings, spearheaded by probable Horse of the Year Authentic, and Breeders' Cup Filly and Mare Sprint winner Gamine.

The Spendthrift Farm resident has been set up for a long reign at the top, thanks to the two things that put any stallion in a position to succeed: quantity and quality in his books of mares. Arguably no other stallion in North America has a stronger pipeline of future runners to keep him at the top of the sire list for the foreseeable future.

Into Mischief is annually at or near the top of the list when The Jockey Club's Report of Mares Bred reveals the most active stallions of a given breeding season, and that was true in 2018, when the 2-year-olds of 2021 were conceived. He has 199 registered live foals among his 2-year-old crop of 2021, which is 41 more than next-closest Klimt. Adding that group to the list of later developers who will certainly mature into stars during their 3-year-old and 4-year-old seasons, that's a strong platoon of runners that figures to get stronger.

Furthermore, Into Mischief covered the strongest book of mares of his career in 2018. That fact was true for several years before that season, and it's certainly true for every season that's followed. Now that he's reached the top of the mountain, that doesn't figure on changing anytime soon.

2) The Report Of Mares Bred Will Continue To Decline, But Not By Much

I could go into all sorts of tiny details as to why the number of mares bred, and the ensuing foal crop, will continue to reach depths not seen in decades, but the simple reasoning here is, “Why wouldn't it?”

The commercial market is trending slightly downward; COVID-19 and its biological, social, and economic ramifications will still be a hindrance for most folks during the bulk of the breeding season; and purses are going to be a mixed bag in 2021 until live handle starts hitting the accounts in full force and supporting casinos are back at full capacity. In short, there just isn't a compelling reason to assume the number of mares added to production will surpass those taken out.

That doesn't mean the bottom's about to fall out, though. Last year's November sales displayed a “hold” market, both in terms of the horses that weren't cataloged and the ones that were bought back. This suggests that breeders are willing to ride out the current uncertainty with the hand they've got, instead of getting out altogether.

There's not a compelling reason to think the number of mares bred will go up, but there's also not a compelling reason to think they'll tank, either. We haven't found the bottom yet, but I think we're close.

3) Practical Joke Will Be The Leading Freshman Sire Of 2021

There are typically two roads to the top when it comes to the freshman sire race. One can flood the market with foals and succeed by attrition by getting a lot of runners into the winner's circle, particularly in minor stakes races (Overanalyze). Others are spearheaded by a star runner or two who vault them to the top with big performances in big spots like the Breeders' Cup (Cross Traffic, Dialed In, Nyquist). Sometimes, a true star will hit both targets (Uncle Mo, American Pharoah).

Practical Joke hits that sweet spot in between, where he has a ton of foals ready to go in his debut crop, and he was well-supported by home farm Ashford Stud and outside breeders. He has 147 juveniles of 2021, which is the fifth-most of any North American sire. He'll have plenty of bullets to fire.

Practical Joke also has the pedigree to back it up. His sire, Into Mischief, is one of the most proven sources of juvenile success going today. Practical Joke was himself an example of that success, taking home a pair of Grade 1 wins as a 2-year-old, and a third in the Breeders' Cup Juvenile.

Physically, Practical Joke is a ball of muscle, which should translate to an early developer who can get the job done around one turn. There's no reason to expect the Practical Jokes won't come out firing. If a few can get it done on the graded stakes level, he could run away with it.

4) The COVID-19 Vaccine Won't Change Much

There are a lot of industries where the COVID-19 vaccine figures to be a magic bullet to return things back to normal. Regardless of when that normalcy returns, and the general public can freely return to the races and sales, I don't expect the bloodstock market to experience quite the same sudden resurgence.

This is a market that was already starting to show fissures from the record-setting highs of a few years ago, and like many industries, the complications of COVID-19 sped up the downturn. Even if returns are up in 2021, there is a fair bit of ground to make up to bring things back to where they were, and that was going to be a challenge whether the world came to a grinding halt in 2020 or not.

Working in the market's favor is the fact that the sale calendar should largely be back to normal in 2021, after the initial uncertainty of last spring decimated the 2-year-old sale calendar and the first half of the yearling season. Assuming the schedule holds, the security of knowing when horses are going to be bought and sold should help both sides prepare appropriately.

We'll learn a lot from the early 2-year-old sales, which will not only will show us how buyers are feeling about spending money on racehorses, it will set the bankroll for a large chunk of the buyers during the ensuing yearling season. The yearling market felt the effects of the scrambled 2-year-old calendar and shaky economy in the spring of 2020, and this spring will either speed up that inertia or reverse it.

Perhaps most importantly, the reason the vaccine won't change much about the bloodstock market is that the bloodstock market went on without one in 2020, especially in the latter half of the year. There are some complications that figure on being eased once more people are able to travel freely, especially in terms of international buyers, but the climb back will not be as high as a business that's had to operate without one of its major sources of income, like a restaurant without a dining room.

More or less, life went on for horse trade in 2020. Because of that, there's not as much ground to make up when life starts to go on again for everyone else.

5) Get Stormy Makes The Leap

After covering 111 or more mares in his first two seasons at stud, things got quiet in the breeding shed for Crestwood Farm's Get Stormy.

At first, it was the usual lull that befalls many stallions in their third and fourth books. Then, his first couple seasons with runners on the track were solid, but lacked the superstars the market demands to line up the trailers on Spurr Road.

In 2018, Get Stormy's runners found their mojo. Got Stormy launched her superstar career with three stakes victories, including a Grade 3 score. The stallion also rung up Grade 3 wins that year with Storm the Hill and Go Noni Go, and he had a handful of others bring in graded stakes placings. He finished the 2018 season in the top five among third-crop sires by stakes winners and tied for second in that group by graded stakes winners.

Breeders took notice, and nearly doubled Get Stormy's book from 47 mares in 2018 to 86 mares in 2019. Between then and now, Got Stormy has become a true star of the turf, Fifty Five has become a millionaire, and Clyde's Image has multiple Grade 1 placings. Get Stormy was a top-10 sire by graded stakes winners on turf, and by total turf stakes winners in 2020, both with fewer starters than any active stallion ahead of him.

Get Stormy is still looking for his first serious juvenile runner, but he has the opportunity to send more 2-year-olds to post in 2021 than he's seen since his second crop hit the track in 2017. The stallion's foals conceived in 2019 had a roadmap to what makes a graded stakes-winning horse with Get Stormy, suggesting the quality and intent of the mares sent his way were clearer than before. This should, in turn, give him the best chance of his life of getting over the hump with a good 2-year-old.

Looking at the breeding season, Get Stormy's stock as a sire of runners has been on the rise, and his average yearling sale price has been climbing steadily year-over-year. It wouldn't be unreasonable to expect Get Stormy to eclipse 100 mares in 2021, especially at a completely reasonable stud fee of $7,500.

Get Stormy is on his way to becoming a made man in Kentucky. This year could be the one that fully establishes it.

The post Making Claims: Joe Nevills’ Five Fearless Predictions For The Bloodstock Market In 2021 appeared first on Horse Racing News | Paulick Report.

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