Analysis Supports Breeders Incentive Fund

An economic study supports a nationwide/international breeders incentive program that would reward breeders of Kentucky-breds that win a maiden special weight race anywhere in the nation or world.

The study, completed by Dr. Paul Coomes, professor of economics at the University of Louisville and five other specialists in equine economics, was commissioned by a sub-committee of the Kentucky Horse Racing Authority (KHRA), which is charged with overseeing the fund, to best determine how a newly created breeders incentive fund should be distributed. The Kentucky Thoroughbred Farm Managers Club, the Kentucky Thoroughbred Owners and Breeders' Association, and the Kentucky Equine Education Project (KEEP) funded the study.

Dr. Coomes and his staff analyzed the two main incentive fund proposals: a KTA/KTFMB plan to reward the breeders of Kentucky-breds that win maiden special weight races across North America or any Part I country recognized by the International Cataloguing Committee, and a KEEP program that would reward breeders of winning Kentucky-breds that race at in-state racetracks only.

The study did not consider any political implications of how the funds are distributed or the potential impact legalized gaming could have on the state.

In supporting the option of rewarding breeders of Kentucky-breds winning at any racetrack in the nation or world, the study said "To restrict the breeders award to performance of those foals whose owners chose to race in Kentucky would be to penalize those breeders of Kentucky-bred horses who perform well in all markets at all levels.

"The reason for restricting breeder awards to breeders whose Kentucky-bred horses win maiden races anywhere in the world is to significantly increase the per-horse performance award over a policy which also awards winners of lesser quality maiden claiming races.

"The supply side Kentucky breeders' incentive program provides no monetary incentive for owners of Kentucky-bred racehorses to choose to race their horses at any one particular location over another since they are not reward recipients. For this reason, the conclusion that field size would be increased at any racetrack either in or out of Kentucky as a result of the Kentucky breeders' incentive program is difficult to support."

The study also supported a residency requirement for mares that are bred to Kentucky stallions to be eligible for the incentive fund. "We recommend that the residency requirement be that the mare boards continuously in Kentucky between cover and foaling," the study said.

The incentive fund will provide about $12 million annually for the Thoroughbred industry. The money will come from the 6% state sales and use taxes on stud fees paid for breeding a stallion to a mare in Kentucky. Two other funds- for Standardbreds breeders and other horse breeders- were also created. Funds began accruing July 1.

Sen. Damon Thayer, who drafted the legislation creating the incentive fund, said he was pleased with the results of the study.

"The program should recognize Kentucky's position as a leading global exporter of Thoroughbred bloodstock," Thayer said. "I think there has been healthy debate in the horse industry for several months, but I believe based on this report that it is time for the industry to unify and for the Kentucky Horse Racing Authority to move forward with developing a program that follows the recommendations made by Dr. Coomes and his associates."