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D. G. Van Clief, Jr.
Chairman; Sales Integrity
Monitoring Committee.

Thursday, Aug. 14, 2008

DG Van Clief

D.G. Van Clief has spent his career in the Thoroughbred industry serving as chief executive officer of Nydrie Stud, as the CEO and founding chairman of the NTRA and the president of Breedersí Cup Limited.

Van Clief currently serves as the chairman of Fasig-Tipton and is a member of the board of Trustees of the Breedersí Cup, Jockey Club Foundation and Blood-Horse Magazine. He is also a former trustee of the Thoroughbred Owners and Breeders Association (TOBA), NTRA and is former president of the Thoroughbred Club of America.

Van Clief received the Eclipse Award of Merit in 1998, the TOBA industry service award in 1997, was elected to membership in The Jockey Club in 1991 and is the recipient of the inaugural Jockey Club Medal. He currently serves as the chairman of the Sales Integrity Monitoring Committee.

About the Sales Integrity Program

In 2004, the Thoroughbred Owners and Breeders Association (TOBA) created the Sales Integrity Task Force in response to an expressed desire within the Thoroughbred industry. The Task Force sought to improve the opportunity for buyers and sellers at public auction sales to feel informed, understand the various aspects of the process and be confident they were being fairly treated.

The Sales Integrity Task Force, which consisted of 22 members, met several times during 2004 to formulate a code of ethics for Thoroughbred auctions. The code was geared to new buyers, however it recognized that the interests of consignors, breeders, agents, veterinarians, sales companies and horses needed to be protected as well and that all public auctions involve inherent risks for all concerned. Key elements of that code included articulating the fraudulent nature of dual agency without disclosure and pre-sale price manipulation; providing for a sample legal agreement for use between buyers and bidding agents; requiring disclosure of physical procedures that alter conformation permanently; banning temporary alteration of conformation; requiring veterinarians to sign a legal form (prior to entering the repository) disclosing any equity interest in horses offered for sale and encouraging full disclosure of ownership while protecting rights to privacy. After the release of the code of ethics in December 2004, the Sales Integrity Program was established to implement the recommendations in the code through a communications and education campaign.

In 2007, pursuant to an agreement between the Thoroughbred Owners and Breeders Association (TOBA), Consignors and Commercial Breeders Association (CBA), Fasig-Tipton, Inc., Horse Owners' Protective Association, Keeneland Association, Inc., Kentucky Thoroughbred Association (KTA) and Kentucky State Representative Larry Clark, the Sales Integrity Task Force reconvened to develop industry consensus on licensing of bloodstock agents and consignors, transparency in ownership in the sales arena and transparency in medication in the sales arena, all of which were implicated by Kentucky House Bill 388. The task force recommended a bloodstock agent code of conduct be added to the conditions of sale, voluntary ownership disclosure in an ownership registry, updated prohibited practices and exogenous anabolic steroid testing at the buyer's discretion.

As with the first Sales Integrity Task Force, the Sales Integrity Program was charged with overseeing the implementation of the task force's 2007 recommendations. The Sales Integrity Program is managed by the Thoroughbred Owners and Breeders Association (TOBA).

Lexington, KY:
What job or industry capacity have you enjoyed the most?

Van Clief:
I am fortunate to have been given opportunities to work with some great organizations, people and horses through the years. It is impossible to select a single favorite job, but I can tell you that the most rewarding and exciting times have occurred when involved in team environments with new initiatives, especially those where we were working against the odds. Whether it was launching the Breeders' Cup in the '80s, rebuilding Fasig-Tipton in the '90s, or developing the NTRA 10 years ago it was always deeply satisfying to be part of bringing something new from the drawing board to reality.

Pismo Beach, CA:
How long after the application of a anabolic steroid a horse will still come up positive?

Van Clief:
The type of anabolic steroid given, the dose and the route of administration all effect the withdrawal time, however, generally speaking, the withdrawal time is 30 to 45 days.

Lexington, KY:
As a consignor, what can I do to help first-time buyers?

Van Clief:
Make sure that the new buyer is as knowledgeable as he or she can be about the product, risks, rewards, and market before committing to buy. Also any new buyer should have ongoing, ready access to reliable sources of expertise. The approach to buying Thoroughbreds should be no different than entering any other market as a first time buyer.

Additionally, salesintegrity.org is a great resource for first-time or seasoned buyers and sellers. The Thoroughbred Owners and Breeders Associationís (TOBA) website, toba.org also offers information to new buyers about what to expect when buying a horse at public auction.

Lansing, MI:
Can anyone attend a Thoroughbred auction?

Van Clief:
Anyone can attend an auction, but anyone who intends to buy must establish sufficient credit with the sales company in advance of bidding.

San Antonio, TX:
Are (or will) physical procedures that alter conformation be announced in the ring?

Van Clief:
The conditions of sale require announcement of some but not all medical procedures. I am confident that when the industry finds a way to provide consignors with portable, accurate and verifiable medical records for each horse that disclosure of all such procedures will become the norm.

Ocala, FL:
How does one become a bloodstock agent? What kinds of things are covered in the bloodstock agent code of conduct?

Van Clief:
Licensing is not required for bloodstock agents but the new code of conduct does provide enforceable ethical guidelines. You can access this information by going to the Sales Integrity Program website at www.salesintegrity.org.

Versailles, KY:
What information is available for new sellers at auctions?

Van Clief:
As in the case of new buyers, I would encourage new sellers to seek expert advice, in this case, in the form of a reputable, experienced sales agent. A good agent or sales agency will have in depth knowledge of the market and can help you place your horse in the right niche to your best advantage.

Syracuse, NY:
As a potential Thoroughbred buyer, what's the single most important thing I should do before making a purchase?

Van Clief:
As mentioned previously, obtain the services of a trusted, knowledgeable advisor. As a newcomer to the market you probably wouldn't buy securities without the advice and assistance of an expert. The same goes for Thoroughbreds.

Chantilly, France:
Thank you Mr. Van Clief and Breeders' Cup for banning anabolic steroids in future BC stakes across the country and overruling pro-drugs states. Do you regret that your home state (and the KY HBPA) is stalling the protection of its horses against anabolic steroids with lame excuses? Do you believe that all race horses should be equally protected not just stakes horses? Will cortisone be next to be banned because it is so abused and so destructive?

Van Clief:
Thank you for recognizing the leadership role Breeders' Cup has taken. I look forward to the harmonization of medication rules both in the USA and globally, and agree that the quicker uniformity can be achieved the better. This includes the elimination of anabolic steroids in line with Breeders' Cups' recent action. I will also look forward to the day when quality, uniform testing procedures are adopted universally.

Additionally, a Kentucky Horse Racing Commission Committee is expected to vote today to effectively ban anabolic steroids at the stateís Thoroughbred tracks.

Richmond, Virginia:
Thank you for taking time to answer our questions. For someone of "modest means" looking for a partnership, how do I go about finding a trustworthy entity? My best to you and your lovely wife, whom I know from our days in college!

Van Clief:
If you already know someone knowledgeable in Thoroughbred breeding and/or racing it is possible if not probable they can guide you. If that type of expertise is not readily available to you then you should contact the Thoroughbred Owners and Breeders Association (TOBA) in Lexington, Ky, www.toba.org. Part of their mission is to equip new investors and I think you will find their guidance very helpful. Also you can contact your state's breed organization for advice. In your case that would be the Virginia Thoroughbred Association in Warrenton.

Thanks for your kind wishes and best of luck with your new investment.

Lexington, KY:
What do you think horsemen in disciplines other than racing can learn from the Thoroughbred industry's new sales integrity and welfare efforts? Is any work being done to communicate these efforts to other sectors of the greater equine industry?

Van Clief:
Other sectors of the horse industry have been involved in development of the Sales Integrity Program, including representatives from the Standardbred, Quarter Horse, and Show Horse worlds, and I know from additional inquiries we have received that there is interest in the implementation of sales integrity reforms across the nation. Although the most recent sales integrity recommendations (now implemented as conditions of sale by Keeneland and Fasig-Tipton) were the direct result of working with the Kentucky House Licensing and Occupations Committee, sales companies in other states have been studying, and will be implementing, some or all of the elements recommended by the Sales Integrity Task Force. I believe most people understand that markets must be trusted in order to remain healthy and will ultimately take the steps necessary to ensure that trust.

Great Falls, MN:
I don't mean to put you on the spot, but do you have a favorite Breeders' Cup? One year when everything went as good as could be expected with the right track and the right races?

Van Clief:
We have had the opportunity to operate at some wonderful venues and with some great people over the years so it is very difficult to single out just one event as "the best". Nonetheless, 2001 in New York will remain with me as an extraordinary experience. As the first international sports event to operate in New York City following the attacks, we had an opportunity to help the families of the victims while demonstrating racing's solidarity with New Yorkers and Americans everywhere. Through the generosity of fans and horsemen, with the support of the global Thoroughbred community, and with superlative work on the part of the NYRA along with local law enforcement, the Championships raised $5 million in aid while delivering first class Racing when it was needed most.

Arcadia, CA:
I am not sure I understand the relationships of all the integrity organizations. You have the Sales Integrity Task Force, the Sales Integrity Program, and the Sales Integrity Monitoring Committee. Who is ultimately responsible for making sure the recommendations are implemented and are being effective? And who follows up to make changes if they are needed?

Van Clief:
The Sales Integrity Task Force was created by the Thoroughbred Owners and Breeders Association (TOBA) in response to a call by Kentucky's legislature to address the issues of medical disclosure, ownership disclosure, and the licensing of agents. The task force studied these issues at length with the help of technical and legal experts, ultimately handing down a series of recommendations for implementing market reform. The recommendations were reviewed and approved by relevant members of the Kentucky Legislature and were implemented by Keeneland Sales and Fasig-Tipton Company in their conditions of sale this year. The Sales Integrity Monitoring Committee is now responsible for assessing the effectiveness of these market reforms and making recommendations as necessary to modify them. The Sales Integrity Program consists of the reform implementation mentioned plus the communications necessary to educate sales participants about them.

Omaha, NE:
Please share your opinion on the recent changes made to the Breeders' Cup? Do you like the two-day format?

Van Clief:
I applaud the current Breeders' Cup board and management for working to build the Championship's brand value and event footprint. The two day format with a spotlight on females Friday offers some interesting marketing and sponsorship opportunities as well as the chance to expand the event's connection to additional racing divisions. Changes in format of this magnitude always take some time to prove themselves and we will all be able to judge the format more accurately in a couple of years.

Lexington, KY:
Mr. Van Clief, Thanks for being a guest. You've been involved in the industry at the highest level for a long time. Do you have confidence that consignors and bloodstock agents will embrace the recommendations of the Sales Integrity Task Force and make some real changes?

Van Clief:
Thank you. I do believe that the vast majority of individuals who operate in our markets will adhere to the new standards. Those who are tempted not to do so face the very real threat of severe sanctions. This fact combined with higher levels of awareness should combine to discourage those who might be tempted to operate on or outside the ethical fringe.

Alexandria, VA:
A staggering number of yearlings come to public auctions after undergoing conformation-altering surgeries. Should these procedures be communicated to potential buyers with the same emphasis that we now afford "cribbers"? And, what is the potential impact of these procedures as these horses mature into sires and broodmares?

Van Clief:
I believe that such procedures should be disclosed as a matter of course. While I do not posses the knowledge to warrant an opinion on the likelihood that various conformation defects would be passed from one generation to the next, I do know that as a buyer of breeding stock I would like to have access to the relevant history. This opinion mirrors that of the original Task Force (2004). To the best of my knowledge, uniform disclosure of the type of medical procedures you mention are currently inhibited by the lack of verifiable individual medical records.

Houston, TX:
We hear the stories about deals at sales, kickbacks, horses sold before the sale, etc. How prevalent are such things?

Van Clief:
My own observation is that instances of malfeasance are rare. The good news is that with our industry's increased awareness, recent reforms, and higher levels of disclosure both the temptation and the opportunity to indulge in unethical practices will be further reduced.

Oklahoma City, OK:
In your opinion, is there too much emphasis on breeding today for the commercial market?

Van Clief:
While I think that market fashion may narrow the range of options from which a commercial breeder will choose in selecting matings, I have always believed that market breeders have the same motives as any other breeder...to breed competitive race horses. This is especially true if one owns and plans to keep breeding the same mare(s). There has been much speculation recently that the breed is not as durable as it was a few decades ago due to an over emphasis on certain sire lines, but once again I do not have the expertise nor do I believe we have sufficient data to draw those conclusions.

Trenton, NJ:
What is your opinion of all the additional Breeders' Cup races, in particular the Ladies Day concept, and the name change of the Distaff? Also, do you have any concerns about the Breeders' Cup being run on a synthetic surface this year, especially an untested one, and for the next two years?

Van Clief:
I like the Ladies Day concept and supported the name change from Distaff. After all, most people need a dictionary to define "distaff", and if the effort is to draw a broader audience then making the names more user friendly for the public should only help. As I mentioned earlier, the Ladies Day concept should provide an opportunity for additional promotions and to attract new marketing partners.

Any time you are within 6 months of running the Breeders' Cup and there is a question about the racing surface it is a concern, even if the issue is only one of perception. That having been said, I am confident that Santa Anita will present a first class strip for the Oak Tree meeting and the Breeders' Cup. We have had track issues before and in every case the track surface has been ready in time for the event. Often the biggest job is making sure your horsemen and bettors have the correct facts. As to synthetics generally, while the debate continues, I believe North American racing will eventually go to synthetic surfaces. Creating greater uniformity from track to track will be a step forward for the sport.

Lexington, KY:
Hi D.G., if they gave out gold medals for service to the industry, you would rival Michael Phelps. It seems that the industry is somewhat out of balance, with significant value on the breeding/sales side as opposed to the racing side. That Curlin received such kudos for staying on the track this year, only proves the point. What can be done to keep our Graded Stakes winners on the track in order to create and build fan interest?

Van Clief:
This issue was exactly what inspired John Gaines to design and found Breeders' Cup Limited. At its heart, the Cup was an effort to tip the economic balance in favor of keeping our equine stars on the track and in front of the public longer. The difficulty in keeping those stars in training due to injury or the rewards offered by going to the breeding shed persists today. There is no easy solution. The industry must continue working to ensure that owners have adequate incentive to keep going with a good horse.
P.S. Thank you for the nice compliment.

Eugene OR:
Why did the racing industry wait for scandals, tragedies, unmanageable bad PR, public outcry, PETA lawsuit and a serious threat from Congress to start cleaning itself?

Van Clief:
I would argue that the sport has been more conscious of protecting its image and its athletes than your question might suggest, but I probably wouldn't argue that we have done the job well enough. While there have been numerous efforts to prevent injuries and great strides in veterinary medicine, we lack the necessary structure and funding to effect reform and implement uniform regulations at a desirable pace. Racing needs more uniformity in its racing surfaces, medication rules, the quality of its drug testing capabilities, rules of racing and its communication with the public. So long as it resists the need to create unity and uniformity it will be at risk from the type of threats enumerated in your question.

Detroit, MI:
My questions pertain to the Breeders' Cup Races. My biggest pet peeve about the BC races is that all the horses wear the same purple saddle cloths. This makes it nearly impossible during the race for me to pick my horse out of the pack. Why do the powers-to-be at Breeders' Cup still allow this antiquated practice to continue? Even the KY Derby is run with colored saddle cloths. Time is running short but I still think there's time to order colored saddle cloths for the upcoming BC races at Santa Anita?

Van Clief:
This is a frequently asked question and we nearly went to color coded saddle cloths a couple of years ago. Ultimately the argument that the Breeders' Cup signature towels were important to the "event brand" won out. It is a good question and you may want to ask the folks at the Breeders' Cup office in Lexington if it might be reconsidered.

Paris, KY:
Do think it is possible to have a commissioner for our industry?

Van Clief:
In line with my comments above...not until the sport decides it will grant enough authority to the Commissioner's office for a Commissioner to do the job...and then give him or her the chance to do it.

Lexington, KY:
Are all the auction horses steroid tested and what is the cost of a typical test?

Van Clief:
In accordance with the newly implemented Sales Integrity Program, buyers of weanlings and yearlings have the option to test for anabolic steroids. A positive gives the buyer the right to rescind the sale. The cost of a test is about $500. At the recent Fasig-Tipton July and Saratoga yearling sales approximately 22% and 30% of the sales were tested respectively.

Shelbyville, KY:
What are your feelings about this year's Congressional hearings into horse racing? (Particularly the use by U.S. Rep. Ed Whitfield of the following quote attributed to you: "We have endeavored to adopt uniform rules governing the use of medication for years without success despite the clear need to do so.")

Van Clief:
While I concur with the need for unity, uniformity, and the centralization of authority in our sport, I am not yet convinced that Federal intervention is the correct solution. Until we understand what the cost to our industry of Federal regulation might be, it will be difficult to build support for it. On the other hand if the industry doesn't get its act together we may not have a choice.

Bagdad, KY:
Having been involved in the processes of the industry-driven Sales Integrity Task Force, what are your feelings about the laws passed in Florida which are attempting to regulate horse sales, medication, and disclosure, among other things?

Van Clief:
We are in close contact with Ocala Breeders Sales and are aware of the procedures which they have adopted to insure integrity and facilitate conflict resolution in their marketplace. While they do not mirror the policies adopted by Fasig-Tipton and Keeneland we are confident that they support the same standards of conduct and integrity. Ultimately I believe it would be desirable to harmonize standards and practices nationally.

Harrisburg, PA:
What are the pros and cons of mandatory ownership disclosure at public Thoroughbred auctions?

Van Clief:
Our Task Force Committee spent three months debating the pros and cons but I will try to be much more concise: The debate came down to an evaluation of whether mandatory disclosure would provide a barrier to real or perceived market abuse and whether a seller's right to privacy should be subordinated to the need for ownership disclosure. After an evaluation of other auction markets (automobiles, art, produce, real estate, etc.) and consultation with our legal advisors, and after an evaluation of whether required ownership disclosure would be effective in preventing the type of abuse about which the task force was concerned, the decision was reached to recommend making disclosure voluntary. It was believed the market would dictate whether or not ownership information is a key component in making bidding and buying decisions. Although it is early yet to draw conclusions, Fasig-Tipton has received one inquiry regarding ownership during the course of its July and Saratoga yearling sales.

Cincinnati, OH:
Can anything be done to keep horses in training longer before retiring to stud?

Van Clief:
As discussed in an earlier answer, this is a difficult proposition. Unless the economic balance tips in favor of keeping horses in training longer, the temptation will always be strong to move some of our best athletes from the track to the breeding shed.

New Brunswick, NJ:
This is the 25th anniversary running of the Breederís Cup. Would you reflect back and comment on what the Breedersí Cup has meant for the growth of the North American Thoroughbred industry?

Van Clief:
That is not as easy a question as it should be. There have been so many external and internal forces affecting racing during the past two and a half decades that it is difficult to track with precision the impact of any one element. Here are a few thoughts: BCL has definitely raised racing's profile. It has been directly responsible for hundreds of hours of television exposure and countless column inches of print coverage. It has changed the pattern of racing as intended by its founders with the establishment of a year ending Championship. It has provided additional incentive for owners to either remain in or enter the business with the prospect of additional purse money and the chance to participate in a multi divisional, mega- event. It has played a role in enhancing international communications amongst racing owners and officials by bringing key players together. It created an event model which has been emulated and adapted domestically and around the world. While it is probably impossible to quantify the economic impact Breeders' Cup has had on the sport overall it is easy to claim it has had an important and beneficial effect. Looking forward, perhaps the sport has just begun to capitalize on its true potential.

Lexington, KY:
Is anything going to be done to correct the practice signing fake buyers for rna's? If you are a member of the integrity committee isn't it a little disingenuous to participate in this practice.

Van Clief:
The Sales Integrity Task Force was asked by the Kentucky House Licensing and Occupations Committee to study three areas: ownership disclosure, medical disclosure, and licensing of agents. Thus, the process of issuing post sale information was not considered. Nonetheless, the accuracy of such information has surfaced as a discussion item amongst committee members. I believe that where accurate, verifiable updates to sales results can be provided that they would be desirable, and I expect this area will get some attention from our committee.

LAST UPDATED: 2:59 P.M. (ET)

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