Stallion Farms | Horse Racing Free Tips

Bought yourself a mare in Lexington this week? Good for you. You have kept the faith. In many cases, that will be because you have seen it all before: you’ve ridden out bumps in the economy, and eked out value from these stoical and enduring creatures by borrowing their impassive engagement with the patient rhythms of Nature. It’s a long game, after all, one that will absorb pandemics and presidential cycles like a passing April shower.

But even the longest journey starts with a single step. And many of you will already have had an assignation in mind for your new mare from the moment you first folded down the catalogue page.

As we know, the stallion farms have done their bit to animate a market stricken by anxiety about the current strain on the global economic system. All the big commercial operations have made headline cuts in fees for 2021, and I’m already salivating over some of the value to be identified in our annual winter appraisal of the stallion market.

Some people, however, have muttered their scepticism as to the substance of these gestures. Has there really been a comprehensive remodelling in the base cost of breeding a Thoroughbred? Or have farms merely camouflaged the decline they had invited in overpricing particular types of stallion?

Well, I thought that might be worth investigating. Intake by intake, I’ve taken a look at the relative decline, between stallions at different stages of their careers, at 12 leading farms in Kentucky. We know, after all, that few sires ever again command a fee as high as their opening one; and that they will generally take repeated trims until either discarded, or achieving something to suggest a long-term viability.

How much deeper than “normal”, then, were the cuts this time round? And where were they concentrated?

This table charts the decline, in each of the past two years, in the aggregate stud fees charged by sires at the same stage of their careers on these 12 farms.

It’s a broad-brush exercise, very soon complicated by stallion traffic in and out of the Bluegrass by the likes of California Chrome (out), Laoban (in) and Daredevil (out and in). But my feeling is that when these farm owners talk about us all being in this together, they could also be addressing their stallions. Because they do, in the round, appear to have led sires young and old out onto the high road to meet the breeders halfway.

If there is divergence in the angle of the knife making these cuts, then it’s not so much between stallions at a different stage as between stallions on different farms. And you won’t find it hard to decide which were in deadly earnest, and which were pretty much making standard business decisions about individual stallions who would have been in trouble anyway.

Authentic–priced at $75,000–is the most expensive of the 2021 intake of new stallions to date | Breeders’ Cup/Eclipse Sportswire

New stallions for 2021 vs. in 2020

I suspect that the one and only group of stallions that are being protected, as a class, will turn out to be those making their entrance to the market. These, presumably, are again guaranteed books of grotesque size; certainly a lot of them appear to have been priced that way.

But there’s no point comparing their fees with those who started last spring, as every intake varies in commercial appeal: a $150,000 tag for Justify, for instance, helped to elevate the aggregate fee value of those who started at these 12 farms in 2019 at $480,000, compared with $262,500 for those who began earlier this year. The point here is to compare the relative loss of value suffered, by each intake, at the equivalent point of their careers.

And that’s certainly instructive in the case of those who entered stud in 2020, whose first foals will be delivered in the new year. Collectively, the sampled farms send these stallions back to market in 2021 at an aggregate fee cost of $220,000, down 16.2% from the $262,500 they collectively charged in their debut season.

This is a major departure from the way studs have sought to maintain values at least until a first crop of weanlings has entered the ring. In 2020, by contrast, the same farms were able to charge $477,500 for sires entering a second season, virtually unchanged from an opening $480,000.

This time around, even the stars have been repriced–most strikingly at Spendthrift. A mare apiece to Omaha Beach, Vino Rosso and Mitole would have cost a total of $100,000 last spring; now you can get to them all for $75,000.

Sires with first-crop yearlings in 2021

The next group, meanwhile, is now reaching the stage–with their first yearlings about to go into the ring–when commercial breeders typically abscond to the next round of cadets, and books start to erode. This year, sires who entered stud in 2018 were charging $270,000 from $247,500, down 8.3%, with five of 13 taking cuts. But the group who entered stud in 2019 will be charging $382,500 from $477,500, down no less than 19.9% on their last set of fees. Only four of 19 stallions in this group have managed to hold their 2020 fees.

The Factor is an example of a sire whose fee has held | Lee Thomas

Fourth-year (and beyond) stallions

Next we reach a group that tends to cause breeders really to back off, unless their first yearlings have enjoyed a conspicuous market vogue. Because in his fourth year we start to learn whether a stallion’s first juveniles can actually run.

The sires who entered stud in 2017 duly eased their 2020 fees by 10.2%, from $317,500 to $285,000, albeit the majority of farms actually held their nerve and their prices. Those who entered stud in 2018, however, will be taking the equivalent step in the new year at $191,000, down fully 22.8% from $247,500.

Hereafter comparisons become harder. This is the crossroads of every stallion’s career, with the whims of the market now measurable against results on the track. So you’ll have one guy packing his bags for Turkey even as the next turns out to be Constitution, upgraded to $40,000 and now $85,000. In terms of aggregate fees, then, the winners will very often redeem the damage done by the losers. For present purposes, the flux is such that it is more instructive to assess those who come out the other side of this winnowing process.

For instance, the handful still on these farms with three crops of runners (entered stud 2015) are certainly sharing the pain. The bare half-dozen still in business will be charging $67,500 between them in 2021, compared with $85,000 in 2020 and $125,000 the year before.

Consolidation, already so difficult because of the commercial infatuation with unproven sires, is becoming harder and harder. Move on a couple of intakes, to those with a fifth crop of runners (entered stud 2013), and it speaks volumes for The Factor, say, that he can hold even a fee he has already outpunched when a studmate as accomplished as Union Rags must take a cut of no less than 50%.

With exceptions, even stalwarts like Tapit have seen cuts going into 2021 | EquiSport Photos

Benchmark sires

And what of those who set the standard; the happy few who, having established their merit and viability, represent the model for those still trying to make a name for themselves? Operating at all levels of the market, from War Front to plucky achievers like Midshipman, they comprise the solid foundation for the whole stallion industry.

Sure enough, after a long bull run in the bloodstock market, these older sires (a total of 35 across our 12 chosen farms) collectively maintained their covering value in 2020 at $2,280,000, up marginally from $2,225,000 the previous year. For 2021, however, despite the odd hike (Into Mischief, Uncle Mo, Speightstown and Munnings) they have slipped 8.2% to $2,041,500.

That’s just about half the percentage loss, then, of those embarking on their second season. Normally, these are the two stable bookends to all the fluctuations in between. But even this lesser erosion implies some exceptional opportunity among the kind of proven sires who can make a mare, who can build a family, pending any return to the mechanical commercial exploitation of unproven sires.

I do see, nowadays, how that kind of thing is primarily driven by breeders; and I no longer blame the farms for loading the books of new stallions when the resulting stock will be given such a brief window of opportunity on the track. At the best of times, farm accountants have a terribly difficult balancing act. And, in reacting to the present crisis, it looks as though that balance extends at least to their collective use of the scythe. Admittedly, you’ll find that the cuts may be a little more jagged on some rosters than others. But the overall result is that there is opportunity across the herd.

So if you do insist on using a newcomer, with such luminous value across the rest of the spectrum, then good luck in your incorrigibility. Because if the overall “supply” did need some kind of correction, then so too, unmistakably, does our demand.

The post This Side Up: Cutting Down Scepticism on Fees appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

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As we have come to expect, in a trading environment that nowadays owes so much to their boss, it was the guys at Spendthrift who first put their heads over the parapet.

This week, anyway. To be fair, the original lead actually came from Chuck Fipke–a match for the unorthodoxy and initiative even of B. Wayne Hughes, and prepared way back in the spring to waive his 2020 stallion fees altogether.

Fipke reasoned that his entire pitch was to small breeders, who were already looking down the barrel as the pandemic took hold; and also that he owned his stallions outright, duly having no responsibilities to shareholders. This week, however, Spendthrift became the first in a rapid series of big farms to grasp the nettle with some extremely purposeful fee cuts, at every level, for 2021.

It’s a fascinating situation, because you could argue that stallion fees have in recent years ceased to make sense from either side. For those breeders who must retrieve costs in the sales ring, the commercial imperative to use only new sires tends to require them to spend far too much on unproven potential. For farm accountants, equally, the window of opportunity is so narrow that corralling adequate books even into years two and three is becoming harder and harder; so much so, that even exorbitant opening fees may not square the ledger.

But now they have no alternative but to lead their stallions out to the crossroads and help the breeder save on gas. Our business operates in unalterable cycles, initiated by the choice of a stallion. His fee sets the bar of viability for every project. Add keep and labor–which, in contrast, scarcely vary whatever the value of your mare–and you’ll have your break-even number.

That’s how organically everyone is connected. And that’s why the guy setting the fee must read the marketplace for young stock, and give all parties the chance to come out ahead. Because he or she will need them to retain the funds and morale to do it all again. That’s why John Sikura, who views the big picture as dynamically as anyone in the business, was at such pains in pricing the Hill ‘n’ Dale roster to stress that “we are all in this together.”

And let’s not forget how slowly the wheel turns. At a time like this, that’s actually a comfort. Following a bereavement, I haven’t been ringside at the Tattersalls October Yearling Sale until the past couple of days, but the staggering resilience of the market there has been most instructive. Everyone, pending the promised land of vaccines and cures, shares the same misery over COVID and its indefinite span. But the breeding and trading of Thoroughbreds tends to develop in our insular, eccentric community–even in the pinhooker, fluttering from flower to flower–a patience and perspective that could, for once, be usefully emulated out there in the “real” world.

The reality is that plenty of horsemen made good money out of a bull run extending a decade since the last big market shock. If they can now tough out a couple of lean years, they will surely keep faith in a system that has served them so well. After all, they can’t just leave those horses chewing grass out there. And they have been broadsided, out of nowhere, by something completely unaccountable and extraneous. As and when they get back on an even keel, they know they have the maps and compasses to chart a sustainable course.

And that’s without admitting to ourselves that our business is exceptionally well positioned, should economic recovery be neither V- nor U-shaped but, as we increasingly hear, K-shaped. Trading in luxury goods, horsemen rely on “trickledown” from the most affluent in society. Among that class, even so, perhaps at least the old-school paternalists–a type of conservative often drawn to the Turf–will seek nothing more precious from the next four years, tax breaks included, than a little more political and social stability. Because we are, indeed, all in this together.

At every level of the industry, these fee cuts can trigger a communal reset. It boils down to a single word: opportunity. As I keep saying, the great harvests of capitalism are often sown in the thinnest soil. This winter, once again, we’ll be running a value check across all Kentucky stallions–and already we’re salivating over some of the fees announced this week.

Some prospectors may even resolve to invest in mares to take advantage. No sector of the market demands more patience, of course, than breeding stock. But you can guarantee that we’ll look back, a few years hence, and discover that many a top-class racehorse was bred from mares more or less “stolen” from the forthcoming sales.

Ah, racehorses! Remember them? There could be no more wholesome corrective, out of this crisis, than restoring our focus to the racetrack; than renouncing this addiction to the self-fulfilling, artificial values that begin and end on a sales rostrum.

In fact, whisper it, but it might be no bad thing for the commercial market to falter long enough for breeders to abandon these fast-buck stallions, scarcely any of which will ever again command so high a fee, for the kind of yeoman achievers that might build up a family with a few rosettes on the track instead. We will all have our different favorites, but already know that many will be priced to make that a very far-sighted strategy.

Hindsight may also show us, of course, that one or two weanling colts selling this November will eventually figure among the first stallions confined to 140 mares. That will certainly set a new puzzle to those careworn farm accountants. On the other hand, perhaps by then people will have grasped that breeding animals that can actually run ultimately makes more sense than wiping out families in pursuit of fleeting commercial gain.

It’s an ill wind, as they say, that blows no good–and that applies even to the tempests of 2020.

The post This Side Up: Fee Cuts Can Reboot the System appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

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