Kentucky Breed Incentive Plan Apparent Compromise

A Kentucky Horse Racing Authority subcommittee has recommended a Thoroughbred breed incentive program that would have national and in-state components. The proposal caps awards at $10,000 per race and offers no incentives for claiming races.

Meanwhile, the sponsor of legislation that created three breed incentive programs in Kentucky said he endorses the subcommittee "consensus plan" for the Thoroughbred industry that could be considered for adoption by the KHRA at its Nov. 21 meeting.

Republican Sen. Damon Thayer said he met Nov. 7 with Gov. Ernie Fletcher to discuss implementation of the Kentucky Thoroughbred Breeders Incentive Program, which is valued at about $12 million a year. Money for the fund comes from the 6% sales tax on stud fees, revenue that used to go into the state general fund.

"I've urged the racing authority to vote in support of this on Nov. 21 and I suggested to the governor that he should strongly consider signing an emergency regulation because my legislation calls for the program to be in place by Jan. 1," Thayer said Nov. 9. "I think its important to send a strong message to breeders who are making mating decisions right now that this program will be in place and here are the parameters."

The subcommittee recommendation, released Nov. 8 soon after Thayer offered his endorsement, bases awards on the residency of mares. The plan has a Kentucky component, national component, and bonus component.

The Kentucky component would offer incentives to the breeders of the winners of all maiden, allowance, and stakes races in Kentucky. The bonus would be equal to 25% of the winning purse, excluding supplemental funds, and the maximum bonus to the breeder would be $10,000 per race. There would be no age limitation for the horses.

The national component would grant incentives to breeders of the winners of maiden and allowance races held in other states for 2-, 3- and 4-year olds. The bonus would be equal to 10% of the winning purse, excluding supplemental funds, with a maximum bonus of $10,000 per race.

The subcommittee could return a portion of any surplus to the fund in order to provide a "cushion" for paying the first two components. Additional considerations are for a "bonus" incentive to be awarded for certain stakes in Kentucky and/or the United States.

Said KHRA member Doug Hendrickson, chairman of the subcommittee, in a release: "Our subcommittee worked very diligently in crafting this recommendation, relying upon data from various sources, but especially The Jockey Club, in order to create a proposal that would have the greatest economic impact on the state. While the recommendation was not unanimous, a majority of the subcommittee believes it accommodates the greatest number of interests, will do the most to create jobs, and stimulate the horse breeding industry in Kentucky."

Another $2 million will go toward Standardbred breeding, and $1 million to all other breeds in the state. The about $15 million for all three programs began accruing July 1, and the KHRA is charged with having regulations to govern the funds in place by the end of this year.

The Thoroughbred incentive fund has been controversial. The Kentucky Thoroughbred Association and Kentucky Thoroughbred Farm Managers' Club have sought a system that rewards Kentucky-breds no matter where they race; the Kentucky Equine Education Project believes the awards should be based on performances at Kentucky racetracks. Some of the models included claiming races, which make up the bulk of races.

"I fully endorse the recommendation of the Kentucky Horse Racing Authority Subcommittee on Breeders Incentives," Thayer said in a release. "Its consensus plan draws from the best components of the different industry points of view and should serve to unify the horse industry. It provides significant incentives that will create jobs and economic impact within Kentucky.

"I've always supported a plan that recognizes Kentucky as the leading global exporter of Thoroughbred bloodstock, and this plan does exactly that. I commend the subcommittee members for their hard work and diligence in developing this policy and urge the full authority to adopt the plan at its next meeting."

Thayer's release was the first indication the subcommittee was prepared to issue recommendations. When asked if the plan is a compromise to bring all parties together on the issue, Thayer said: "I think it's the best plan that includes various industry points of view. It should attract more mares and create jobs in the state. It does have a national component, which was critical for my support, and a strong component tied to races in Kentucky."

Fletcher included breeder incentives in his 2005 tax modernization plan at the urging of Thayer. After the Nov. 7 meeting with Thayer, Fletcher issued the following statement: "I am supportive of Sen. Thayer's efforts on the breeder incentive fund and have encouraged him to broker a plan for the industry that increases the number of mares in Kentucky as well as the number of jobs in Kentucky."

Thayer said he would attend the Nov. 21 KHRA meeting to endorse the subcommittee's recommendations. KHRA executive director Jim Gallagher said the issue "very likely" would be on the agenda for that meeting.

The KHRA asked the KTA, farm managers' club, and KEEP to work out a compromise on the Thoroughbred incentive program. After several meetings and months of going back and forth, they were unable to all agree on a plan.

"We tried to fight a clean fight," said Ken Wilkins, who has served as president of the farm managers' club for the past year. "We tried to keep it on the high road and provide as much information to our membership as we could. We always wanted to work with the other groups, and would still welcome it."

KEEP executive director Jim Navolio said the morning of Nov. 9 he still had not seen the recommendations.

"I only know what I've seen in the press," Navolio said. "My hope would be that if this breeder reward plan is finally adopted by the racing authority that priority would be given to the small guy (breeder)."