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13.5 per cent less mares have been bred in the US in 2009 than in 2008

  PICTURE: Racing Post  

US fees down to level unimaginable in 2006

FROM the time that prominent breeder Virginia Kraft Payson observed during the plunge of the Keeneland September Yearling Sale that stud fees in America should be reduced in proportion to the market's decline, the question of how much stallion managers would adjust has hovered over the industry.

With the beginning of breeding season only about two months away, many farms have issued proclamations of lower fees for numerous stallions, dropping some to levels unimaginable during the halcyon days of 2006 and 2007.

But do the announced fees for 2010 match the descent of the market? Are they enough to buoy breeders caught in the colliding storms of the global economic crisis with a cyclical downturn in bloodstock?

A detailed study of the numbers reveals that advertised fees for the core of America's commercial stallions have not been cut nearly as much as the market has nosedived, creating the likelihood of ongoing adjustments as well as the possibility of a continuing crunch for those trying to breed and sell horses in the near term.

Turnover for Keeneland, Fasig-Tipton and the Ocala Breeders' Sales in Florida combined totaled $292,679,850 in 2009. That figure was down 32 per cent from the $428,941,700 generated by yearling sales conducted by those three organisations in 2008.

Conditions in the general market, where fees also are relevant with weanlings and mares in foal, were exactly as dispiriting.

Keeneland's sales for the year, including mixed bloodstock, yearlings and juveniles in training, produced the lowest annual turnover since 1996 at $396,216,000.

Added to all of Fasig-Tipton's sales, the total for the bulk of the American public auction scene was $559,525,150 - or 32 per cent less than generated in 2008.

Yet despite all the fanfare about stud fee reductions, many of which when examined on an individual basis truly are significant, fees in general have not matched what has occurred in auction rings.

Fees for 174 stallions - more than half of the 307 sires reported by The Jockey Club to have covered mares in Kentucky during 2009 and representing 22 farms - have been reduced by 21 per cent from 2009 levels.

Those 174 stallions covered 15,413 mares in 2009, or 81 per cent of the mares bred in Kentucky and 34 per cent of all mares bred in North America.

Richard Thalheimer, Ph.D., a nationally recognised expert on the economics of the American thoroughbred racing business, pointed out that another factor driving down bloodstock sales and thus ultimately affecting stud fees is the precipitous drop in wagering across the nation on racing and the related fall of prize-money.

Purses are down by $63.3-million through November for 2009 compared to 2008, while wagering has decreased by nearly $1.3-billion, according to figures released recently by Equibase.

Basic economics maintains that shifts in costs follow changes in revenue-and thus that stud fees would follow market swings.

"You would expect everything to adjust in proportion," says Thalheimer. "Stud fees and other costs have to adjust to keep people in the horse business. People are looking a year or two down the road and they don't see a recovery coming rapidly enough."

While Thalheimer has not studied 2010 stud fees, independent analysis of fee figures released by the farms shows that the 174 stallions from America's most high-profile breeding establishments will command combined advertised fees of $3,675,000 in 2010, or an average of $21,121. In 2009,those same stallions stood for a total of $4,642,900, or an average of $26,683.

An intriguing fact yielded by the analysis is that Darley has become the leading American stud by number of mares served. The 16 Darley stallions togethercovered 2,063 mares this year, for an average book size of 129 mares, a figure second only to the 134 average book served by the 11 stallions at Coolmore's Ashford Stud.

With top young sires Medaglia D'Oro, whose fee was raised from $60,000 this year to $150,000 for 2010, and Street Cry, who will stay at $150,000, on the roster, Darley adjusted fees minimally overall, dropping only a combined four per cent for its stallions (including Consolidator, who will move from Kentucky to Florida for 2010). Fees for ten Darley stallions were reduced, however.

Lane's End has the largest roster among prominent studs with 19 stallions (not including Kingmambo, who could not be assessed in the analysis due to the fact that his fee for 2010 has been listed as private. Kingmambo, who has suffered from various physical ailments, covered only three mares in 2009).

The other Lane's End stallions, who covered the second largest group of mares at 1,784 in 2009, willstand for a combined 29 per cent less in fees in 2010.

With the American breeding business shrinking under the aforementioned pressures - 13.5 per cent less mares have been reported bred in 2009 than in 2008 - there will no doubt be arace among farms to recruit mares before the breeding season begins.

Since America is the world's largest producer of thoroughbreds and a global exporter, what transpires there could affect every racing and breeding establishment around the world in some way and at some time.

 Farm  Stallions  Mares covered '09  Ave. book size  Change in fees in 2010
 Darley   16  2,063  129  -4.2%
 Lane's End  19  1,784  94  -29%
 Ashford  11  1,476  134  -28.8%
 Gainesway  10  993  99  -3.8%
 Hill 'n' Dale  11  915  83  -22.5%
 Airdrie  13  837  64  -24.5%
 Three Chimneys  11  828  75  -13.2%
 Taylor Made  7  721  103  -22.2%
 WinStar  6  716  119  -23.7%

*Stallions included in the statistics are only those which have had specific fees advertised for 2009 and 2010; others who have been listed as private for either year, such as Kingmambo at Lane's End and Smarty Jones at Three Chimneys, could not be included in the data.

Also, data for stallions that have been moved within the US since the 2009 season and whose 2010 fees have been announced are included, with Candy Ride and English Channel incorporated under Lane's End and Red Giant at Three Chimneys, although they stood elsewhere in Kentucky in 2009.

Stallions whose fees for 2010 have not been announced, such as Forest Danger who stood this year at Taylor Made, are not included in the statistics, although Southern Image and Half Ours, who have been moved from Taylor Made to farms in other states, have been included In the analysis.




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