Incentives for small breeders

Lambs to the slaughter.....

"fate of many middle and small breeders"

The sales ring is influenced by the main players in the game - studs and large breeders.

I'm amazed how certain stallions can be perceived as "cold" and after the 18+ months of raising a horse [that you bred to 11 months before the foal was born], the stallion of your yearling could be considered "on the nose" affecting your sale price in the ring.

Small and middle size breeders are just the pawns in the game, influenced by the juggernauts that advertise hot new stallions and push marketing pitches down the throat of all digital magazines - declaring this next crop is "the best".

There is only so much room to promote stallions and it's all about securing the next service fee, which is positively affected by ensuring certain stallion's progeny have strong sales ring results, hoping for success on the race track

many small breeders are selling for a loss at the auction rings

What about the smaller breeder [so many are passionate about the sport and have an historical understanding of Sires and may even have memories of also watching their stallion parentage race] - true passionate racing people.

They often cannot afford the best broodmare, nor can they afford the commercial value of the new overpriced stallions.

The small breeder incurs all the costs for 18+ months before the sale ring:

• Service fee of the stallion - due on live foal.

• Daily agistment for mare and weanling/yearling 18+ months.

• Veterinarian fees. [pre-birth, foaling and aftercare]

• medications and other treatment for horse regular well being.

• Costs of operation/s for minor issues that lead to large bills.

• High preparation of 6-8 weeks costs to be ready for the sales event.

• X-rays and transport costs for the sale.

• cost of attendance and handler's accommodations etc for the sale.

• Sales entry fees by the providers [Magic Millions and Inglis etc].

• Sales commissions withheld by companies before financial dispersal

• Waiting for your payment of 35-50 days [even though above costs need to be financed].

When that sold horse is of racing age and wins a race - the breeder receives "ZERO" in compensation for the success of that horse.

Are the current "huge prizemoney distributions" received by the trainer and ownership group within 7 days of winning a race, relative to the return that the small breeder of a "lost leader" sale at the auction ring ???

Furthermore, syndicators have already recouped their outlay [at 50% syndication sold] by selling shares at 2-3 times the value of their purchased price at the auction ring.

What about the breeder that "may have been" slaughtered at the auction ring and often already committed to another future foal by the time of this sale..... where does he sit in the timeline of the success of that future winning horse he designed and bred.

1% distribution to the breeder

It would be a much fairer "reward for result to the breeder" If every metropolitan meeting in capital cities throughout Australia withheld 1% of the "winner's purse" and this was distributed to the "active breeder" of the winning horse.

I understand conditions like "must have bred a horse in last 23 months" [he may be a breeder of just 1 horse and the mare went barren the previous year etc]. So many other variables and tax issues to consider - yet the "ethos" or rewarding the breeder remains.

Is this not a fair reward and correct use of distribution to keep small breeders active and with some distant reward for their role and risk associated with the racehorse ?

The general financial certainty in all sectors of the immediate years 2025-2027 is unknown and I cannot imagine that the auction ring will be flowing with money falling out of buyer's pockets.... in particular floating around the boxes where small breeders have their horses for sale.

Compare the risk and return of future revenue

This is a basic snapshot or overview of where the breeder misses out in the success of a racehorse and the distribution of prizemoney, not to mention ongoing vet costs etc:

STUDS - active stallion services

• They sell shares in a new stallion

• They set a price for the stallion service fee [with unconditional future rise/fall clause] to suit their needs.

• If a racehorse [offspring] is successful - they have the opportunity to increase their future revenues through increased service fee of that Stallion.

• They have the opportunity to breed their own future stock [stallions/broodmares].

• Injury to stallion - insured costs covered by individual share holders

BUYERS - syndicators and trainers

• They sell the purchased horse at 2-3 times the sale price received by the breeder.

• A lower breakeven point or risk [purchase vs syndication]

• Immediate revenue stream once horse is syndicated [cost plus mark up]

• Extra revenue of their percentage of winning races - paid within 7 days

• injury to horse - vet bills covered by syndicate

BREEDER

• All the aforementioned costs and risk as mentioned in the opening of document

• Once the horse is sold - "that is it" - no other revenue stream from that racehorse

• If sibling successful, speculation you might get a higher future price [depending on foal].

• broodmare or weanling have vet requirements - all covered by breeder before sale

I am positive that a solution will be found for the small to middle size breeders, as such I am active in creating a solution that will be my own I.P and self-financed - more to follow

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Of course lots of necessary wealth is associated with the sport of kings and no more obvious than at the auction rings throughout the country.

What creates some of these buying decisions and who is "publicly" providing the audit of "sales result vs race earnings" after their first two years of racing - 2yo and 3yo, this should be the ultimate litmus test for future sales.

What is driving big investor buyers [that by admission are not racing experts] to invest so heavily into a yearling ?

Is it for any of the following reasons:

• the highly advertised stallion that sired this yearling ?

  • buyer thinking it's a guarantee of future success

• the influence by stud farms promoting "new and best" stallions ?

  • reinvestment by shareholders and studs influencing price of certain lots

• the Pareto affect [or similar] ?

  • when purchasing a filly - ensuring a future high caliber return when sent back to juggernaut stud that will heavily advertise and promote future sales when she is a broodmare [fail on the track, still succeed in long term investment]

  
  

• risk vs return - based on high prizemoney of early 2yo races ?

• Future as a stallion or broodmare ?

  • buy the best and hope for the best, trusting the residual of future income

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As indicated, I am developing a product to assist the smaller breeder, as such more information on this matter in the near future.

Thanks for taking the time to read this blog.

regards

Trevor Donaldson

Progeny Consulting