Spendthrift Farm

Spendthrift Farm

Anne M. Eberhardt

Bloodstock & Markets - Proven Sires Rule

Multiple-mare discounts help fill young sires' books.

Managing a stallion is a lot more difficult than it used to be because of economic setbacks within and outside the Thoroughbred industry. Cash-strapped breeders are reducing the number of mares they keep, and their budgets for stud fees are smaller. They prefer proven sires over young stallions, making it tougher to launch the careers of new studs. And they aren’t very loyal, fleeing with their mares when a veteran stallion’s progeny cool off competitively.

While the challenges are daunting, they’re not insurmountable. B. Wayne Hughes’ Spendthrift Farm near Lexington enjoyed a “banner year” during the recently completed breeding season, according to the nursery’s stallion director, Ken Wilkins.

Seven stallions stood at Spendthrift in 2011. They included Malibu Moon , who ranked sixth on North America’s list of leading sires through July 21 with progeny earnings of more than $3.8 million. Also in the group were three new studs: grade I winners Warrior's Reward  and Line of David and grade III winner Temple City .

“We bred just shy of 850 mares this year, and the three new stallions had about 360 mares among them,” Wilkins reported.

Malibu Moon’s success as a sire helped keep the breeding shed busy at Spendthrift. But the farm’s stallion operation got another big boost from Spendthrift’s “Share the Upside Program,” Wilkins said.

The program is designed to promote new studs and provide them with large books of mares to cover early during their stallion careers. There have been variations in how it has worked with certain horses. But, in general, a breeder puts down a deposit of several hundred dollars, agrees to breed a mare to a stallion during his first and second years at stud, and pays a stud fee when each resulting foal stands and nurses. After the two foals have been born and the stud fees have been paid, the breeder receives a lifetime breeding right in the stallion. Hughes retains a 50% interest in each stallion.

“This idea has grown some legs and seems to be popular,” Wilkins said. “I think it has helped drive quite a bit of business to us.”

Spendthrift already has sold out two Share the Upside packages in grade I winners Archarcharch and Paddy O'Prado, who will enter stud at the farm in 2012.

“The days of syndicating a stallion by calling the guys in your Rolodex and getting them to take a share are gone,” Wilkins said. “You’ve got a few guys who can still do it, but you don’t have the list that you used to. The stallion market has gotten really, really tough, and our program is an easy way for breeders to participate that isn’t a huge difference from what they would have to do anyway to breed their mares. We’re able to give a young stallion the best opportunity we can, and, hopefully, he’ll hit big and it will be a win-win situation for us and the breeders. We’ll be happy and they’ll be happy.”

The Blood-Horse contacted a number of other horsemen at Central Kentucky farms to find out how their breeding seasons went in 2011. Here’s what they had to say:

Charlie Boden, head of sales, Darley: “We bred a few less mares in general, but not considerably less. We still bred around 1,700, and that is healthy for 16 stallions. There is no question that the aversion to unproven stock has become more apparent. We are fortunate to have some very attractive young stallions that still manage to get plenty of mares. Interestingly, Street Sense  probably was full earlier this year in his pivotal fourth year than Bernardini  was last year at the same point.”

Neil Howard, general manager, Gainesway Farm: “The breeding season went very well. We have three stallions in Afleet Alex , Birdstone , and Tapit , whose offspring have had very good success at the racetrack. Another one, Corinthian (whose first 2-year-olds race this year), has had offspring that have looked the part. Those horses were relatively easy to sell.

“Anything (with stud fees) from around $20,000 to $75,000 sold out just like that. But those stallions that were around $10,000, they were very difficult to sell. People (in Kentucky) are breeding fewer mares that demand that kind of season. The people who were sending mares from Indiana or New York to breed to that kind of stallion down here are staying at home because of the economics.”

Case Clay, president, Three Chimneys Farm: “The breeding season overall felt better this year than it did last year. There was more call-in traffic to breed to our stallions, and the receivables are looking a little better.”

Bret Jones, Airdrie Stud: “This year was actually very encouraging. Our numbers (for mares bred) were up across the board from last year.

“Our main initiative was to reward breeders who were breeding multiple mares with discounts. We had a very positive response from that. We also were very fortunate that some of our stallions were doing very well. That kept the phone ringing.”

Bill Farish, Lane’s End Farm: “We saw very, very solid demand for our stallions. Right now, proven stallions are getting a lot of attention.

“While the first-year horses are still doing OK, the second-, third-, and fourth-year horses are struggling. But Curlin  (who entered stud in 2009) got a very good book. He was such a good racehorse (earning Horse of the Year recognition twice) and had such a following that people stayed with him.

“The market has gotten a little harsher in its treatment of stallions that don’t seem to be making it. They (breeders) jump off the bandwagon even quicker than they used to.

“Our experience has been that the kookier you get promotion-wise, the less it works. People either are going to breed to a stallion or they’re not. There are certain things you can do (to make a stallion tempting to mare owners), but the main thing promotion-wise that gets people’s attention is lower stud fees.”

Eric Hamelback, general manager, Adena Springs Kentucky: “In general, I would say, we were pleased with the way our breeding season finished up. Awesome Again ’s numbers were up, and Ghostzapper ’s numbers were way up.

“What we saw the biggest turn toward is breeding to proven horses. I think the young horses—not just at our farm, but every farm—are struggling at this time to get quality mares. The market has made a bit of a shift and is rewarding the stallions that are proven.”

Ben Taylor, vice president, Taylor Made Stallions: “The breeding season went great, really. I was pleasantly surprised. With more mares leaving Kentucky, I thought some of the stallions in the lower (stud fee) ranges would be tough to fill up. It wasn’t easy, but we got them all over 100 mares.

“Stud fees have come down across the board, so we tried to get ours in line with the market, and we also did a few deals. We offered a multiple mare discount that helped people breeding two or three mares by giving them a little off (the stud fee) for each one. It worked all right, but I don’t think it sold a whole lot of seasons.”

Grant Williamson, stallion director, Vinery: “We had a really good year. More Than Ready  and Congrats  were obviously our two big horses. They both had good years (with their progeny on the racetrack) last year and they benefited from that this year. We tried to keep their stud fees realistic for breeders so they could look forward to profits (at yearling sales) down the road. Pioneerof the Nile ’s first crop on the ground looked great and the breeders came back, so his book (of mares) was strong.
“Once you get past the top stallions and get to the horses in their third and fourth years, it gets harder. We dropped the (stud fee) prices again this year on most of those horses.

“We reached out to the breeders who have supported us every year and said, ‘Let us help you.’ We tried putting packages together for people to sort of entice them. There was no set formula; it depended on the number of mares they were breeding. They got some sort of discount.

“Congrats was a horse that was very popular this year. To sort of thin it out some, we said, ‘If you want a season to him, then breed one (a mare) to another stallion.’

“You have to play it by ear. Each horse is different and each breeder is different. I’m very conscious to make sure any deal is fair. If it’s not, it will affect us (negatively) in the long run. We have a very small group of clientele and the word gets out.”