Commentary: Performance-based

In a perfect world, professional athletes would all have one-year contracts. The results of their previous season would determine whether or not they would receive a raise for the following year.

Unfortunately, team owners screwed that up long ago, when they started offering signing bonuses, long-term contracts, and agreed to free agency.

The Thoroughbred industry is different because there should be only one factor to determine the stud fee of a stallion with runners: racetrack performance.

Unfortunately, oftentimes it seems stud fees are set more because of slick marketing, sale results, and inflated prices paid to acquire a horse.

The tide appears to be turning.

There were 162 stallions that stood in Kentucky in 2007 for a fee of $10,000 or more that are scheduled to stand again in 2008. Of that group, 55 stallions do not have runners on the racetrack yet, so their fees for 2008, obviously other than those standing their first seasons, are determined by market acceptance of their offspring. And some of them have not been that well received, judging from the fact that of those 55 stud horses, all will stand again for the same fee next year except for nine whose fees will decrease even before their first starter springs from a starting gate.

Of the remaining 107, 20 will stand for more in 2008 than the figure breeders were charged to mate a mare this year, 39 will stand for less, and 48 have a fee that is unchanged.

These numbers make more sense than in many recent years. Living a year longer is not enough of a reason to stand for the same fee, much less a higher figure. Though stallion managers will say market demand sets fees, and they are right, market demand should be determined by racetrack performance.

Even before fees were set for the upcoming breeding season, it was not hard to put together a list of those stallions whose fees deserved to be raised. Chief among them are Smart Strike and Mr. Greeley, two examples of stallions who began standing at modest fees and whose offspring’s performance has demanded their fees rise over the years.

Smart Strike, by Mr. Prospector, took up residence at Lane’s End Farm in 1997 and stood for $30,000 his first six seasons. His fee dropped to $20,000 and then began to rise, moving to $25,000 in 2004 and then jumping from 2005-08 to $35,000, $50,000, $75,000, and now $150,000.

The 15-year-old stallion was represented by 13 stakes winners in 2005 and 2006, and then this year, he has 16 stakes winners, including the probable Horse of the Year, Curlin. Smart Strike has two other grade I winners this year, Fabulous Strike and English Channel, and after previously finishing in the top 10 on the general sire list three times, will pick up his first title in 2007.

Most importantly, with 10% stakes winners from foals of racing age still being the cutoff to determine the truly top sires, Smart Strike is at 9.5%.

Mr. Greeley began his stud career at $10,000 in 1995 at Dixiana Farm, where he stood five years, moved to Spendthrift for five, and will be standing his third year at Gainesway Farm. He was at $35,000 in 2006, jumped to $75,000 this year, and increases to $125,000 in 2008.

Though they are the same age, Smart Strike and Mr. Greeley have little else in common. Mr. Greeley, by Gone West, has had much more success in Europe. This year, for example, every one of Smart Strike’s stakes winners is in North America. Mr. Greeley has eight stakes winners, but two are multiple group I winners in Europe—Finsceal Beo and Saoirse.

Mr. Greeley has a lower percentage of stakes winners, 5.4%, because of so many more foals, but 22.5% of his stakes winners are grade/group I winners.

Increasing stallion fees based on racetrack performance is how it should work.