Darby Dan Farm announced today the launch of the "Darby Dan Profit Protection" plan for its stallions that stand for less than $10,000.
"It's a twist on the traditional 'pay from proceeds' plan," said Davant Latham of Darby Dan Bloodstock Services. "The concept is that we'll split net proceeds 50-50 with the commercial breeder up to a maximum of 125% of the stud fee. It allows the small breeder some relief if he has a losing horse."
Profit Protection allows for stud fees to be paid from the proceeds of a weanling or yearling sale. "The key is that if the sale is financially disappointing, the breeder still retains 50% of the net sales income regardless of would have been due on the stud fee," Latham said. "Profit Protection should go a long way to ease the concerns of commercial breeders relegated to the second half of any sale."
An example of how the profit protection might work is when a commercial breeder acquires a nomination in a Darby Dan stallion under the profit protection plan for $5,000 live foal. Should the mating produce a weanling that sells for $7,000 the sales expenses are deducted (commissions and entry fee, approximately $2,000), leaving $5,000 to be split equally between the mare owner and stud nomination owner ($2,500 each). Should the sale be more successful, say $25,000, then after sales expenses are deducted, the stud nomination owner would earn the original $5,000 fee plus 25% ($6,250) and the breeder/seller would receive the remainder (approximately $16,750).
"This gives the little guy less risk and gives him a chance to make lick without much downside," Latham said. "This also helps protect the stallion. We don't want to devalue our stallions."
John Phillips, owner of Darby Dan, said, "We will maintain the traditional format for breed-to-race owners or those who simply prefer the traditional format."
The plan is elective, so if a client is breeding to race, he'll pay the regular stud fee. "If the breeder thinks that he'll have a better foal, he can pay the standard stud fee," Latham said.
Darby Dan stallions that apply are: Matty G ($7,500 fee in 2003), Hap ($5,000), Pyramid Peak ($5,000), and Repriced ($5,000).