David Hayden has a message for his fellow commercial breeders: “Change or die.”
The ability to be flexible during hard times, he said last week at the Keeneland September yearling sale in Lexington, is the key to survival. And Hayden, who plans to keep raising horses for many years to come, has looked at everything from production costs to where he will market his yearlings in an effort to remain profitable and avoid drowning in a sea of red ink.
Hayden and his wife, JoAnn, own Dark Hollow Farm in Maryland. He operates an advertising agency/design studio, and she is a former teacher. Together they bred Safely Kept, the champion sprinter of 1989.
“It is definitely doable,” said David Hayden of staying alive in a struggling business. “But trust me, luck is involved. You definitely have to have some real serious luck, and we’ve been lucky for many years. You also have to continue to bring the right product to the sale and be honest with people. That’s something that JoAnn and I have going for us. It’s gratifying to us that there are a number of people who buy our horses who are repeat customers and end users.”
For this year’s Keeneland September yearling auction, the Haydens had six horses cataloged in the Dark Hollow consignment. Three were scratched; a Malibu Moon – Kinlin colt sold for $400,000; and a Medaglia d’Oro – Delta Danielle filly brought $50,000. In October, Dark Hollow will have a consignment at the Fasig-Tipton Midlantic Eastern fall yearling sale in Maryland.
“JoAnn and I are more than pleased with what we got for the Malibu Moon colt,” Hayden said. ‘If you have a horse that ticks all the boxes, you’re going to be rewarded. But quite honestly, they’re hard to find and they’re hard to produce, but you need to have a home run horse to survive. It doesn’t make your whole year, but it sure does help.”
Recent changes at Dark Hollow include a reduction in the size of the broodmare band.
“If you go back two years, we had 31 or 32 mares on the farm; right now we have 20,” Hayden said. “A good chunk of them are ours and then we have some mares in partnership. We also have some clients’ mares.”
The cutback “definitely was planned,” Hayden said. “I’m 66, and JoAnn is 62. We’re fortunate that we’re not leveraged at all, and we want to enjoy the life and start smelling the roses. We felt like that if we cut down the numbers we’d be able to do a lot of things that we’ve been wanting to do. What we’re really trying to do is to gear down to 12 mares and to sell their offspring primarily in Kentucky. The regional markets are drying up. You can’t take the $5,000 or $10,000 mare, breed her to a $2,500 stallion, and then be all excited when you go to a sale and get $10,000 for the yearling. The way we take care of our horses, we’re going to have close to $20,000 in them -- not including the stud fees and the depreciation of the mares -- from conception to the time they get to the sale ring as yearlings, and you can’t make money if you sell a yearling for $10,000. If you’re trying to survive in a regional market (as a commercial operation) the game is over. In our program, the yearling that’s going to sell for $5,000 gets the same exact treatment as the horse that sells for $500,000, so it’s just too cost prohibitive to keep mares and raise babies that aren’t working financially.”
The Haydens also plan to make a reduction in another area, cutting their budget for stud fees significantly 2010.
“I don’t think I’m going to have to reduce my stud fees; I think the stallion managers are going to have to reduce their stud fees,” Hayden said. “The maximum stud fee that we pay next year may be $40,000; I can’t see us going above that. In the past, we’ve spent $75,000 for a stud fee, and we’ve spent $125,000. But right now in this market, that doesn’t work. You have to recapture too much to even get the stud fee back. We look at the physical compatibilities of our mares and the stallions we breed them to very carefully and try to match everything up and get the right pedigree. But, guess what? If the yearlings aren’t perfect, you’ve got to race them, and we’re prepared to race them.”