Breeders Say Stud Fees Need to Be Cut More

Commercial breeders at the Keeneland September sale want to reduce production costs.

Stallion managers slashed stud fees last year after this country’s recession deteriorated into a financial crisis and spread around the world. With prices for Thoroughbreds continuing to decline after falling significantly in 2008, commercial breeders are calling for even more stud fee reductions for 2010. During the first three days of the slumping Keeneland September yearling sale in Lexington, a common theme during interviews with sellers was the need to continue to cut their production costs.

“Stud fees have got to come down again; there’s no question about it,” said Virginia Kraft Payson after selling an Unbridled's Song– Strawberry Reason filly for $1 million through Arthur B. Hancock III’s Stone Farm. “I think they probably need to come down as far as the market has come down. They could all be reduced by half, and that would make sense. So many of these yearlings are failing to bring their stud fees, and nobody can stay in business that way, so maybe it (the struggling Thoroughbred marketplace) will finally bring everything down to some kind of normalcy.”

Jane Lyon of Summer Wind Farm near Georgetown, Ky., expressed a similar opinion after she and her husband, Frank, sold a Storm Cat– Fleet Indian colt named Storm ’n Indian for the highest price of the September auction so far, $2,050,000, through Taylor Made Sales Agency.

“I think it’s frightening,” she said of the big drops in prices at the September sale. “We’re all going to have to reevaluate what we spend to get our foals here. We’re going to have to look at stud fees again, and we’re going to have to look at the mares we mate. Maybe we won’t mate all the mares (next year) that we mated this year. I don’t know. Certainly, if you’re not getting your stud fee back in the marketplace, you can’t keep paying it. I would think that would be pretty obvious.

“I would like to see stallions maybe not breed so many mares,” Lyon continued. “Everyone who has a stallion is probably going to hate me, and I’ve sorry for that, but I think we’ve had such an overproduction (of foals) that it’s got to start somewhere. Even with the foal crop down and close to 30,000, I still think that’s still too many. If there’s no one to buy them, what are we going to do about that?”

Dr. Gary Knapp, whose Central Kentucky breeding operation is known as Monticule, didn’t start selling his yearlings until the third day of the Keeneland auction, but he had monitored the market during the opening sessions and was concerned about the setbacks he saw.

“I would guess that stud fees have to come down substantially,” Knapp said.  “If you look at what breeders are able to get for horses in this sale, this year’s (2009’s) stud fees don’t make it anymore. You look at all these stallions and their yearlings are selling for way less than their stud fees. Who’s going to breed to those stallions? I will breed to stallions that I think I can make money with.”

And if stallion managers don’t cut the fees of horses that Knapp has supported in the past, “I’ll find some other stallions that make sense,” he said.