Anne M. Eberhardt

Stud Fees: Where Are They Headed?

With the prices for sale yearlings falling and world economic problems rising, many breeders are hoping to save money on stud fees in 2009. Stallion managers in Central Kentucky are expected to begin announcing the amounts they will charge soon, and several of them told The Blood-Horse they would be more likely to keep their fees the same than go down. They also plan to raise the fees for some stallions whose progeny have been performing well on the racetrack.

“I think the stallions that need to go down will go down, and the stallions that need to go up will go up,” said Mike Recio, the stallion nominations and marketing director for Frank Stronach’s Adena Springs. “But I think people will be very careful about how far any fees go up. I do think there are going to be a lot of stallions whose fees stay the same.”

As for Adena Springs in particular, “what we would like to do is stay the same on most of our fees and kind of give some relief to the breeders,” Recio said. “But I can’t comment right this minute on exactly what we’re going to do because it always has to go to Mr. Stronach for approval.”
Recio added that Adena Springs would consider proposals from breeders who were seeking to reduce their stud fee costs.

“We’re not opposed to helping the breeder with multiple mare incentives or anything like that,” he said. “If someone has something to present, don’t be afraid to present it. We’ll look at every option.”

Case Clay, the president of Three Chimneys Farm, said his staff had a preliminary meeting about stud fees during the Keeneland September yearling sale, but that no prices had been set yet.

“Fewer breeders are making money, so I think, in general terms, there is downward pressure on stud fees,” he said. “I think you have to go stallion by stallion and ask yourself, ‘What is today’s market going to bear?’ And this year’s market is not the same as last year’s market. Only one of our stallions probably is going to go up slightly and the rest are either going to stay the same or go down.”

Bernie Sams of Claiborne Farm wasn’t planning to make many changes in the fees of the nursery’s stallions.

“I think our stud fees are going to stay right where they are,” he said. “They’ve all been pretty fair, and the yearlings by the stallions we’ve got seem to be selling pretty well.”
And at Lane’s End Farm, there won’t be across-the-board stud fee reductions, according to owner Will Farish.

“Some of our stud fees will be up, and some of them will be down,” he said. “I don’t think it’s going to really be tied to what’s happening in the economy even though that will play a role to some degree. Basically, I think some of the stallions have earned a bump and some of them haven’t. I don’t think we would change our plans unless the country remained in this sort of financial crisis, which would obviously change everything. Personally, I think the situation is going to level out even through we’re economically going to be in a recession or a tight bear market for a while.”

Duncan Taylor, president of Taylor Made Farm, said breeders got some relief from stud fee costs last year after Sheikh Mohammed stepped up the competition in the Central Kentucky stallion market after purchasing major stud prospects such as Street Sense and Hard Spun for his Darley USA operation.

“I think the whole market in general is coming down, but there will be individual stallions like Tiznow  (who stands at WinStar Farm as a Taylor Made/WinStar venture), whose fees will go up because of their performance,” he said. “There were a lot of adjustments in 2008 because of Sheikh Mohammed’s increased involvement in the (stallion) market. He stood his horses at some reasonable fees, and he had some creative terms, so many people had to follow what he did because the consumer started expecting that. I think breeders are in better shape on the horses they bred last year than they were before, but that’s doesn’t mean we might not readjust them (stud fees) further.”

Charlie Boden, the stallion nominations director for Darley USA, said he, Sheikh Mohammed’s bloodstock manager John Ferguson, and Darley USA chief operations officer Oliver Tate will consult with Dubai’s ruler in setting the operation’s 2009 stud fees.

Street Cryis probably going to go up, and everybody else will probably stay the same; that’s the short answer to your question (about stud fees),” Boden said. “We’re in a unique position because a majority of our stallion roster is young, and at some level, there is a thought that lowering a stud fee before a horse has his first runners is a little bit like abandoning the breeders who have already put their money in at a certain number. So, I don’t want to hurt the guys who haven’t gotten their yearlings to a sale yet by lowering a stud fee. We also know from the demand we’ve experienced in the first years of these horses’ lives (as stallions) that they are good value priced as they are.”

Sheikh Mohammed can help breeders in other ways besides lowering stud fees, according to Boden.

“We’re sensitive to the plight of the breeders, and the difficulty they have,” Boden said. “When Mother Nature isn’t kind, we try to show up and be kind one way or another, whether it’s a (stud fee) credit for bad foal that they lose money on at the sales with or forgiving a stud fee on a foal that’s not commercially viable.” By Deirdre B. Biles