Duncan Taylor is president of Taylor Made Farm and Sales Agency. Taylor Made is a family operation run by Duncan and his brothers Ben, vice president of Taylor Made Stallions; Frank, vice president, boarding operation; and Mark, vice president of public sales.
Taylor Made Sales Agency has long been the largest sellers of Thoroughbreds in North America, selling more than $1.6 billion worth of bloodstock since 1978, so it was no surprise that they offered the winners of two legs of this year’s Triple Crown in Lookin At Lucky and Drosselmeyer as yearlings. Like everyone else, Taylor Made has had to make adjustments as the global economy, and the market for Thoroughbreds, has changed over the last two years. The company is working on new ways of delivering the same high quality of service while also tightening its belt.
Duncan Taylor is a member of the Breeders’ Cup board of directors and its board of trustees and serves on Keeneland’s board of directors and its executive board. He recently sat down with The Blood-Horse’s executive editor Evan Hammonds to discuss Taylor Made, the Breeders’ Cup, the Thoroughbred industry, and the upcoming Fasig-Tipton July yearling sale.
Q: The Taylor Made Sales Agency consigned the winners of this year’s Preakness (gr. I, Lookin At Lucky) and Belmont Stakes (gr. I, Drosselmeyer). What does that do for your operation and sales team when you have that kind of classic success?
That fires up everybody. In a business like Taylor Made, it takes a team, and it points out that everybody on the team can enjoy that success. A lot of people don’t realize there are so many factors that go into the horse business—there are so many things that can be done right, and many things that can be done wrong.
Most of the time in any business, you’re not going to get one big competitive advantage that makes you better than everybody else; it’s just some outfit is going to be a little bit better in a lot of different areas that separates one team from the other. Whether it’s the night watchman foaling the mare or the person getting the office ready when people come to visit around the Derby, or the maintenance crew making sure the paddock is safe; those people’s contributions are as important a function as the CEO or the vice president. If those things aren’t done right, then all of the stuff that is discussed in the meeting rooms isn’t going to pan out. We are blessed with a lot of good people that work here, and we have a lot of people that have worked here a long time.
For somebody like Gulf Coast (breeders of Preakness winner Lookin At Lucky)…they’ve been great clients for 20 years. They (Lance Robinson and Jerry Bailey) actually put that horse with us in the Keeneland September yearling sale. I would have liked to see the horse bring a lot more money, but he didn’t and they bought him back. Lance and Jerry did an astute job of re-marketing him and putting him in the (Keeneland April) 2-year-old sale where Bob Baffert and Mike Pegram and his partners bought him, and they’ve taken it on from there.
Just to get that horse where he is…that sequence, with everything that happened, or could have happened, it ended up being big. Then we ended up selling the dam last year for $2 million, and that’s another reward for our team. It was a financial reward where we can keep the place going and serve the customer.
Q: You are the largest sellers of Thoroughbreds. As the market is contracting, what is Taylor Made doing from a business standpoint to cope with this?
We’re looking for new ways to do things for people and to provide the services electronically, more efficiently. But in the horse business, everybody wants the personal factor and wants to lay their eyes on it.
We haven’t had any layoffs. We’ve had people leave and we haven’t replaced them. But we’ve hired a few new people, too. We’re looking for different skill sets and ways to manage better. I look at myself now and at some of the changes we’ve made and I think, ‘Man, I’ve done a bad job of running this business.’ There was a lot of waste that I didn’t realize was out there.
In our agency business, we’re like everybody else: We’re trying to deliver new things to the customers, and we’re trying to target quality horses. But we’re not turning away horses if people want us to sell their horse. We’re not too good to sell somebody’s horse if they want to use our services, but we have to be prudent and make a profit doing that. We stopped leasing one of the farms we leased, and we’re consolidating because there are not as many mares.
We’re blessed. We don’t have any debt, and we’re basically going to keep being Taylor Made and give good service and tend to our customers’ needs.
Q: How about the stallion business?
With the market contracting, we’re being very patient in the stallion business. We’re looking for a win-win situation for a customer who has a good horse who’s going to come to us and want to be with some people who have made stallions and who want us to build their stallion for the future. We’re looking for that unique horse we can take to the next level, like an Unbridled's Song.
We’re not out there in the market to get every stud that’s out there and bring him over here; that’s not us. You have to be careful in the business because you’re dealing with a lot of capital, so we have to make sure it’s the right horse. We’re becoming more conservative, you might say, and looking at what we want to do and what part we want to serve.
Q: How important is the Fasig-Tipton Kentucky July sale as a gauge of the health or strength of the industry?
I’d love for it to be good, and it would be a boost if it came out and it was a good sale, but I don’t think the sale really says what the whole market is going to do. You have to get through Keeneland September. After that you’ll know where the market is. You can sell a few horses at the Fasig-Tipton sale and you can sell a few horses at Saratoga, but when you look at the numbers after September, that tells you what the market has really done.
Just from what I’ve watched since we hit the recession, or economic downturn, or whatever you want to call it, is that the Thoroughbred industry is lagging a year to a year and a half behind the stock market, so we still don’t know exactly where we are. Whether Fasig-Tipton’s up or down isn’t going to be an indicator. But, anything good that happens builds confidence.
Q: How about a prediction of how the yearling market’s going to be this year?
The downturn in the stock market…I said we’re a year, year and a half behind the stock market, and I think people are less sure today. Let’s say the stock market tanks between now and September. I think we could be down 25%. I think if the stock market holds its own, we could be right even. In some cases, if some really good things happen, it could be up some. In my gut, if I had to pick a number right now, I would say 10% down from last year.
Q: One of the important components of the Fasig-Tipton Kentucky July sale is the New Sire Showcase. What are your thoughts on the showcase when you are presenting a first-crop stallion?
It’s a good concept, and it’s good to show off the new stallions and try to put them out there. It’s a good marketing concept that has worked well for Fasig-Tipton.
One of the reasons first-year sires sell so well is, for example, take a great stallion like Northern Dancer. What did he get, 20% stakes winners? So that means if he had five horses, the owners of four of those horses were going to be unhappy and one was going to be happy. You have this whole population of people buying horses, and when the best stallion gets one out of five, that means there are four guys out there saying, ‘Well, I bought one of those, and it didn’t work out.’ With a new stallion, nobody has bought one that didn’t do any good, so they are more accepting to that stallion.
You always like to come out of the box well with your new stallion. From the stallion manager’s point of view, it’s an important first step. In a perfect world, I would have a good individual that X-rayed well in that sale. That’s what I’d be trying to achieve. I don’t think you need to have a lot of them…just take over a few that look good.
But that doesn’t always happen, and the stallion manager doesn’t always have that control. Sometimes he has to take what he’s dealt. I don’t think you can condemn a new sire just because he doesn’t have a good sale over there, but you know how quick we are to judge in the horse business. It can definitely hurt you.
Q: This year’s New Sire Showcase features eight yearlings by Master Command, who stood at Taylor Made Stallions but had an unfortunate accident in March and had to be euthanized. Talk to us about your thoughts as those Master Command yearlings go through the sale.
I think that that’s part of the horse business, and a bad part of the business. You’ve always got hindsight. I think we have one of the safest and best built stallion facilities. It’s not as fancy as some of them, but we were thinking of the welfare of the horses. But accidents can happen.
What I really loved about Master Command is he was such a beautiful specimen by one of the greatest sires we’ve seen in my lifetime, A.P. Indy. A.P. Indy has been awesome. When you show up in a grade I race, more than likely you’re going to be running against an A.P. Indy. For us to get a stallion of Master Command’s breeding and quality to the farm and then put together two or three books of mares to him, it’s sort of like we’re thinking, ‘Now, we’re ready to go; we’re ready to launch, and we might have another Unbridled’s Song.’ But Master Command’s death is just part of the business. We’re not going to be walking around moaning. These yearlings are good-looking horses, so we’re going to go out there and try to sell them.
Q: Let’s talk about the stallion market. Let’s compare the stallion market of 2010 to that of a few years ago.
It’s been a huge adjustment. Even before the recession came, Sheikh Mohammed came into the market big. Of course, at that time everybody was enamored with the first-year sire. If commercial breeders are going to breed to an unproven horse, they’ll breed to it in the first two years. So he had a lot of the good semen, and he was willing to change the structure and be flexible with payment terms for the customers. So even before the recession, the stallion landscape was changing in Kentucky. Sheikh Mohammed had a business plan, and basically it was good for breeders; so, what’s good for breeders should hopefully be good for the business.
Now, however, instead of getting paid in September, you’re getting paid, maybe in November, and if you’re getting paid in November, even on a good stallion, you’ve got to give a discount. And if you don’t get paid in November, you’re going to get paid when the foal stands and nurses. So, from back in the days in the ’70s and ’80s, when you were paying $1 million for Northern Dancer no-guarantee….we’ve come a long way the other way.
If you look at the breeder, they’d probably say that stud fees still aren’t low enough. So it’s always a tradeoff.
Q: What is different about selling a horse today as opposed to when you started the sales agency?
One of the things I like is full disclosure, and I like putting everything out for the new buyer. However, what is so painful for me about that is there is too much information out there. We all know from selling horses that some have things that vets see on an X-ray, but the horses outrun them. So until people get used to how to assess all this information being disclosed, it seems like it’s harder for the seller to get a horse that passes all of the hurdles to make a good sale. That’s one thing I guess we’re just going to have to suffer through.
If you go back 10 years and see what the people selling horses at a yearling sale were revealing and you see what they’re revealing now, you know it’s come a long way toward favoring the people buying horses. Full disclosure is a good thing, but the overall horse business is dwindling in popularity in society, even though we’re doing a lot of things right. Maybe we should have been doing some of those things all along.
Q: Taylor Made Sales Agency seems like such a large operation. Walk us through how you would deal with a prospective client.
The first thing our team likes to know about a client is what is their dream? Can they paint a picture of what success would be for them? If we know what that success looks like, then we have the team to put behind that. That’s our mission statement. ‘Our customer’s success is our primary focus.’
Once we find that out, we want to put all of our resources together to get them to where they want to be. That is the critical first-step foundation of what we are trying to do. It’s sort of like a stockbroker. Everybody has a dream…so then what is your economic situation and can it work? Can your dream work, given those economic constraints? So you have to lay out a budget and say, ‘This is where we can go, and this is how we are going to do it.’ Or sometimes it’s ‘I don’t really think you can get there with the budget you have.’ Then you have to start over and maybe tone down the dream a little bit.
Q: You have quite a powerful web site. How has Taylor Made’s marketing changed in the last couple of years, and how important is the Web to your marketing strategy?
It’s becoming more a part of our strategy all the time. If you’re not out there on the Web or into the electronic media, I think you’re missing the boat.
It’s not coming in the horse business as fast as you’d like it to come. It’s great stuff for your clients, but we have some of them that say ‘I never get on that computer…talk to my assistant.’ There’s a learning curve to anything, and it’s definitely going toward electronic media, but where a specific customer is…now it’s harder for business in my opinion because you have to keep enough of the old way along with the new way to make sure you’re touching all the key people.
Q: You are on the board of the Breeders’ Cup and Keeneland. What can the industry do to bring in more owners?
That’s the Mount Everest we’ve got to climb. I’ve never gone mountain climbing, but I know if I were, I would want to be unified with the people I was going up with. I would want to know they had my back and were going for the good of the team and not just for the good of themselves.
That’s an easy thing to say, but in the horse business as in any other business: the customer has to be first. If I owned all the horses, owned the racetracks, and had the government as a partner--but they weren’t telling me exactly what I could do—what would I do to please this customer? I would define my customer. But what the horse business lacks is structure: you’ve got the owners here, the tracks there, and the government over there.
How often do you think Barack Obama or (Kentucky governor) Steve Beshear wakes up and thinks about the customer at the racetrack? How often do you think the track operators wake up thinking about this customer? I think they may do it more, but I don’t think Thoroughbred owners, in general, wake up thinking about the customer.
These owners are Taylor Made’s customers and Lane’s End’s and Darley’s, but they are really putting on the show. If we want our business to grow, they’re the ones putting on the show for the people that attend horse racing, bet on horse racing, and enjoy watching horse racing. We have no structure here.
I don’t believe the owners have one group strong enough to represent them. I don’t believe the Thoroughbred Owners and Breeders Association can represent the owner and breeder equally. TOBA does a lot of good stuff—they are an awesome organization--but I think it’s flawed from the beginning that they are representing owners and breeders. There needs to be a strong, unified owners organization that would send representatives to the table and they would have their structure. The tracks would have their election process and structure to send people to the table. The government? I don’t know what to do with that…to me, I would like to have the federal government in control. Most people would think I’m an idiot, but I would rather deal with one federal government than 38 state governments all doing favors for all these different people that aren’t using common sense for serving this customer. If you could get these three groups in line, they could hire the chairman and he would have an organization that could serve the customer.
This is a long-winded answer for how you get people into the business, but we also need to come up with different products.
When the customers come out and put their money down on wagering events, a lot of the time they are telling us ‘I don’t like your event. I don’t like your products.’ They don’t say they don’t like the horse; they don’t say they don’t like a beautiful track. I don’t think they have voted ‘no’ on that. They’re all about that. I’m a Roman Catholic. I’d say we’ve got the Catholic Mass and we’re still speaking Latin. That’s what we’re bringing our customer to.
If we can come up with some new wagering products, then the popularity of horse racing is going to be exposed to more people, more people are going to want to get into the business, and we’re going to have more horse owners. We’ve got to get more people exposed to it so more people are at Clocker’s Corner at Santa Anita getting to watch the horses go by and the festivities. I can sell that. If I put some good food out there, we should be able to get 5,000 people out there.
For some reason, it’s not happening. That should be an easy sell. Would you imagine if Clocker’s Corner was at Disney World? How many people would choose to go over there and watch the horses? But we don’t market it; we don’t tell anybody about it. It’s like our own little microcosm of awesomeness that we’re not marketing to anybody. And it’s a free, natural asset that God gave us with those (San Gabriel) mountains.
Q: What can the industry do to promote racing?
I think Churchill did something good. That bet they had, the guy who made the $100,000 bet on the Derby, jumping around after he bet on Super Saver . If I ran the Breeders’ Cup, I would have a handicapping contest that started out earlier in the year with my classic series leading up to the Breeders’ Cup Classic (gr. I). I’d have a ranking, a leader board, interviews with the guys…it would look more like poker on TV today. Why aren’t we doing this? We have a little handicapping contest over here and a little one over there…we need to blow one out of the water. It could be a series of handicapping contests and the Breeders’ Cup could print the PPs in USA Today. That could expose our product to a bunch of different people.
Q: What is Taylor Made doing to bring in new customers?
The main reason that people don’t enjoy the horse business is that we don’t provide a good enough service. If somebody’s got, say $50 million, they’re used to being waited on and they’re used to a certain kind of service, so if we don’t give them that service, they’re going to go and do something else. They can do plenty of different things. What we do have is an awesome business that can be enjoyed as a family. You can go to the races, you can bring your children, and you can watch the horses…there are a lot of families that have been in the business and have been successful.
We have a lot to offer in the beauty of the animal, but we have to be honest. We have to be hard-working, and we need to be humble servants for those people and work hard to make sure they have a good time. Just like when you go to McDonalds as a customer: They can deliver a certain quality every time and make sure that their customers overall are happy. That’s what we should all be doing: finding out what people want and trying to deliver it.
If we’re being honest, and treating people fairly, then other people that are wealthy are going to say, ‘Hey, I’m enjoying this; these people are taking care of me.’ Then, they’re going to tell their friends.
What we have to do is take care of this customer and get better purses for owners…this has to happen for the tracks to do better and for the owners to do better and for the government to do better because of horse racing. Of course, the government doesn’t have as much in the game. They don’t care if it’s a slot machine, a lottery ticket, or whatever it is. But if they really look at it and examine it and see what we bring to the table as far as jobs and the infrastructure, then they would pick us over a lot of those other ones.
Q: What else can be done?
We need to bring the racing syndicates in. They’re the first step. We need to bring those guys in because…common sense tells me…not everyone will do what Satish (Sanan) did and come in and buy $8 million worth of horses. Most of the time, it’s a progression. One of the things, by not having this organized structure, is that we don’t really have a well-identified process of getting people into the business. However, if they go to a racing syndicate and the syndicates do a good job, they serve them well, and they try to make sure they have a good time, then the guy says, ‘Hey, I want to go out on my own.’ And that’s going to grow the business.
So Taylor Made is facilitating that, and we’re looking at different avenues of different types of people we see that have certain characteristics…for example, yacht brokers. I think we can co-venture, where they could meet some of our customers and we could meet some of theirs. We’re looking at the same type of demographic, but it doesn’t mean they’re going to do it, but they could entertain their people at the Breeders’ Cup, and we could take our people down there and take them on a yacht.
Q: Where do you see the industry five years from now?
I see Taylor Made as a growing company. We can’t outgrow the market, so if the market constricts over the next five years, we’re probably not going to make great advancements, but we can grow if we give better service to our customers and care about what they want. If we can get them to make the right decisions in buying and the right decisions selling, and provide them fun and entertainment, we can keep our customers happy. So, finding better ways in keeping up with their wants and desires is our main focus and our strategy.
What I would like to see is some unity. One positive thing I see is that the Breeders’ Cup just went through the strategic planning process. I thought the strategic planning process was awesome. I thought a lot of good ideas came up there.
I am a big advocate of unity. If you looked at my selfish desire, I want more for owners. I want a fair chance for owners. When I say ‘more for owners’ what I mean is dollars into purses.
The Breeders’ Cup was basically built and funded by the breeders, and the ultimate goal was to make it better for the owner and to market our sport better. It was an attempt for us to get more customers to the track so the economics got better for owners; therefore, it would flow back to the breeders. It was a very long-term strategy that John Gaines had. It reached a certain level, and it’s done a good job of staying at that level. But if you could say when Mr. Gaines started the Breeders’ Cup, it was on a journey up Mt. Everest, I would say we haven’t gotten one-tenth of the way up the mountain.
I think the Breeders’ Cup can be a leader in unity. We’ve got some money that’s stacked up, and that’s a good thing if we do the right things with it right now. It’s not going to anybody except to promote the sport. So it’s for the good of the sport. We need to build a vehicle to combine racing across the season and tie into the World Championships so the World Championships can grow. We’ve got the Triple Crown that the public understands, but what if we had a Classic series--which was one of the strategic pillars--that was across the season? What if we all said that was good and we were in it together, not competing and hating the other track because they got it? Then we could start to do something and focus on the customer. It’s not that difficult.
Q: Your father died six and a half years ago. And Taylor Made is a family-run operation with your brothers Frank, Mark, and Ben. What are some key elements your father taught you that you hold true today?
We’ve got a document that’s called the ‘Taylor Made Way,’ and it parallels what my dad did for us. My dad didn’t start Taylor Made. It wasn’t like, ‘I’m the founder and CEO and I’m giving it over to my sons,’ but, actually he did a similar thing. He built us up. He trained us to be good horsemen and to work hard, and my mom trained us to be honest. She was always all over that. She was in the back room praying, and Dad was in the front room getting all the credit. That’s why they were a good team. He taught us the practicality, and she taught us to be honest. Through years of praying, he actually became a greater teacher of character and morals than she was!
My parents were on the ‘Roman Catholic business plan.’ They had one son, then two daughters, and then a son every two years until there were six boys and two girls.
Basically, Mike Shannon and I started Taylor Made. My dad sent us the business from Gainesway. Mr. Gaines didn’t want to keep the mares. He wasn’t in the mare business. So he started sending some of them to us, and we just started taking care of them and started to grow a little bit. Pretty soon we started selling seasons and then started selling horses at auction. When I had to go into administration and into the office to do more, I had another brother come along to take my place.
If it was just me, I would have hired the cheapest guy I could hire, and it would have fallen apart because I wouldn’t have had the right guys. We were able to grow because all of us moved up and the next guy that took over had been trained by my father the same way and had the same view of the customer and what you needed to do to take care of the person you were working for, so it made it a lot easier.
So my dad’s little ways run all through our business. It’s like any other father who has raised his children the correct way--he’s going to be a big part of your success.