By Peter Neilson
The top of the yearling market has never been hotter. Outside of Australia, however, it is difficult to make money in the middle market and the bottom is a disaster if you are selling.
Most of us do not have a mare that enables us to operate at the very top end, producing stallion prospects that will find a place at stud even if they never win a race. At that level, when you can combine great conformation, early maturity, and a pedigree to die for, you can sell a million-dollar yearling off a $40,000 to $300,000 season price using the best first-season and proven sires. One conformation fault or blemish, however, and you may not be able to recover the stud fee.
Other strategies exist to keep you in the Thoroughbred racing game, but they focus on breeding or buying to race rather than breeding for the yearling sales. Racing that horse may be your best cost recovery strategy and for that reason I only breed colts that I would be prepared to race myself and only fillies I would be prepared to use as broodmares. This approach reduces your options but it also provides some protection if you do go to a sale and end up having to retain a colt or filly to race.
Strategies for Survival
One survival strategy goes in the Australian direction—breed horses that look like runners with enough of an active pedigree page to be promoted and sold to syndicate members.
Australia has a healthy market for racing shares with most individuals taking a 1-10% share in a horse. The result is a healthy middle market for yearlings and ready-to-run horses that sell between AU$50,000 to AU$400,000. In Australia just about every second taxi driver or hairdresser you meet has owned a share in a racehorse.
Many people can spend $1,000-10,000 to buy a share in a horse and spend $10 dollars a day on training. Very few people can spend $250,000 or more to buy a horse and then $100-200 a day on training and other costs. Having many more people involved in racing by owning a small share in a good horse is probably the best way to expand Thoroughbred racehorse ownership in North America.
Another strategy is to buy in the bottom half of the yearling catalog where currently most horses are selling for less than their cost of production, including the season price. You or your adviser will need a sharp eye for an athlete. While it is easy to avoid train wrecks, you will be competing with many other good judges. The teams of scouts now operating at most sales makes it much harder to find a hidden gem.
The final strategy is breeding to race using lower cost, but proven stallions that are able to sire a good stakes horse or even a headliner.
The cost of preparing for a first race is comparable with the cost of professional sales preparation. If you are breeding to race at the state level you cannot afford to spend more than $15,000 for a season and preferably less. This strategy can be enhanced in the U.S. by using proven stallions registered with lucrative state-bred programs.
Another way to save on season costs over the longer term is to buy into a, "Share the Upside" stallion you like when it retires to stud. The people who did this with Into Mischief at Spendthrift Farm, are now reaping the benefits and probably recovered their investment cost with the first four covers.
It should be noted that most "Share the Upside" candidates—like most stallions overall—will fail commercially, so I only recommend using that strategy if you have two suitable mares you can use with any "Share the Upside" stallion. In her first four seasons you should try to alternate between proven and unproven stallions to minimize the potential downside of your mare going four times to a promising stallion that turns out later to be a disappointment.
In my view, if a new stallion is worth using he is probably worth buying a share in, provided you have more than one suitable mare.
In Praise of Older Stallions
Using a proven stallion early in the career of a young broodmare is a sound strategy. Most stallions and mares fail, so it's important to find out as quickly as possible if your mare has what it takes in the breeding shed. If you use upgraded, proven stallions and the mare's progeny do not perform then you can safely cull the mare from breeding. If you use an unproven stallion on an unproven mare then you do not know who's to blame.
Some proven value stallions are smaller than average or are known as filly sires. Filly sires have a tendency to become very good broodmare sires and smaller horses are typically easier to keep sound and will race longer. These are not negatives if you want to survive in the horse business by breeding to race.
Concern that older stallions are less fertile and, with age, become less likely to produce stakes winners is valid as older stallions do tend to have lower fertility and stakes production than earlier in their careers. If a stallion produced 8% stakes winners to foals of racing age earlier in his career, then he might only produce 6% stakes winners in his last few years. The good news is that 6% stakes winners is some two to three times the rate first season, unproven sires will achieve, on average.
If an older stallion's fertility is in free fall it is likely the farm will suggest you go elsewhere and release you from your contract. Doing business with a reputable bloodstock agent who deals in seasons may help you negotiate with a farm and provide objective advice on getting the most value for your dollar. They will also know which stallions may be struggling in the breeding shed.
During May and June it is not uncommon for stallions that had a full book earlier in the season to become available, sometimes at a lower-than-advertised season price.
In May and June it is actually easier to get your mare in foal since with longer days since you're not fighting nature and breeding sheds are less busy, which makes it easier to get your mare covered and in foal. Traditionally this has been a good time to obtain extra value for your dollar particularly on third- and fourth-year stallions.
This year the incoming first-year stallion season prices were higher than when this year's third- and fourth-year stallions entered stud. Stallions such as Shanghai Bobby , Declaration of War , Violence , or Will Take Charge have not had their stallion season prices substantially cut. It's possible that some of the older proven stallions that can take the load will become available at closer to my value price point for breeding to race of no more than $15,000.
In the current market breeding to race may be the only viable strategy for most of us to stay in the horse breeding and racing business. A number of proven stallions that have shown to upgrade their mares are listed on the associated table.
There are other stallions that can produce a good racehorse such as Lookin At Lucky , Sky Mesa , and First Samurai that are currently available for around $15,000. They do not have the same ability to upgrade mares but are worth considering as breed-to-race stallions. They may not be on your go-to list of stallions if you plan to sell at the yearling sales, but it would be a mistake to overlook them for siring racehorses.
While I have seen most of the Kentucky stallions on my list, this is only a statistical analysis. All breeders or their agent should inspect the stallions being considered to see if they are likely to upgrade a particular mare both physically and mentally.
Check out my lists of proven value sires available for $15,000 or less and best of luck for your own stallion season bargain hunt this year.
Peter Neilson lives in New Zealand and has bred Thoroughbreds there as well as in Kentucky and Australia. A student of pedigrees for nearly 40 years, he was lucky enough to breed a champion jumper Cuchulainn in New Zealand from his first planned mating. He has also bred the dam of group 1 winner Veloce Bella and recommended matings for three graded stakes winners. He is an economist and a former Cabinet Minister in the New Zealand government. His Kentucky-based Speightstown mare, Crimson Cabaret, in foal to Fast Anna will foal at Jody and Tony Guida's, Nighthawk Stud in June. An Uncle Mo filly he bred in Australia, named Secretary General will race on lease in the Southern Hemisphere spring.