Anne M. Eberhardt

Changes Sought for KY Breed Incentive Fund

Recommendations were made to change the Kentucky Breeders' Incentive Fund.

The Kentucky Breeders’ Incentive Fund advisory committee May 10 unanimously approved key changes in the program, which has become an important part of the state’s Thoroughbred industry in very challenging times.

The recommendations now go to the Kentucky Horse Racing Commission, which oversees the Breeders' Incentive Fund, for a vote May 18. If approved, new regulations will be submitted to the Legislative Research Commission.

The recommendations stem from multiple committee meetings at which the scope of the about $10 million program was discussed. The committee and others believe there is disparity in the awards paid in Kentucky versus out of state given the fact the Kentucky breeding market is considered international.

For instance, the proposed regulations would award the same $7,500 to the breeder of a grade I winner in Kentucky or elsewhere in the United States and a breeder of a group I winner in a foreign country. In 2010, according to KBIF statistics, the award for a grade I win in Kentucky (excluding the Kentucky Derby and Kentucky Oaks) was $25,000 versus $5,000 for comparable races in other states and in foreign countries.

Grade or group II and III winners that are Kentucky Breeders' Incentive Fund-registered would earn $5,000 under the recommendations. In 2010, the average award per race for grade II and III races in Kentucky was $23,692, according to Breeders' Incentive Fund statistics. In other states and in foreign countries, the average was $2,483.

“I firmly believe if we hold ourselves out as the horse capital of the world, we must be equal on graded and group (stakes awards),” said Breeders' Incentive Fund advisory committee member John Phillips of Darby Dan Farm. “Parallel awards are very important.”

Officials anticipate having about $10 million for the Thoroughbred program this year; funding comes from the 6% state sales tax on stud fees. Estimates based on last year's numbers suggest the Breeders' Incentive Fund would pay about $9 million in awards this year, leaving about $900,000 in reserve.

Other recommendations include an increase in the total amount paid to the breeders of winners in maiden special weight, allowance, and allowance/optional claiming races. The same percentages and maximums would pertain to such races at Woodbine in Canada under a new category.

Committee member Headley Bell of Mill Ridge Farm said the additional money for those categories is an important part of the proposed scheme.

“That $2.5 million difference is significant,” Bell said. “As long as we’ve got the money, I’m an advocate of that.”

In addition breeders’ awards for winners of the Kentucky Derby and Kentucky Oaks would receive $50,000, down from $100,000; and breeders of the top 20 horses with the most wins in claiming company would share in $200,000 a year ($20,000 for first down to $6,000 for 20th).

Currently the breeder of the top claiming horse at Churchill Downs, Ellis Park, Keeneland, and Turfway Park earns $25,000, with another $100,000 for the overall top three finishers at those four tracks and Kentucky Downs. More individuals would share in the funds under the recommendations.

Committee members suggested the revised regulations contain language protecting the fund’s reserve, which can be used in the event of overpayments. They also called for education of legislators on the recommended changes in the program given the fact some may assume more money will going out of state.

“”Some legislators may be squeamish about more money leaving Kentucky,” committee and KHRC member Frank Jones Jr. said. “There may be a need for people to come to the legislature and explain the money is not leaving Kentucky.”

Many such horses are bred in Kentucky but later sold privately or at auction and compete elsewhere.

If the recommendations are approved by the KHRC, the Breeders' Incentive Fund plans to devise a marketing plan explaining program benefits.

“I feel like we’re not done yet,” Bell said. “We need to sell this to be the most competitive we can be.”