How can breed to sell operations sustain themselves??

[Mood Swings]

I just saw a post referring to sales prepping costs ($50/day) I have not been able to follow the Keeneland sale as my computer has been down but I have heard that prices are down, etc. It really shocks me to look at some of the prices now. What makes people want to continue to sell at TB auctions? People are regularly dropping $10, $15 and $30 K and up on stud fees, then dishing out day rates up to $45/day for mare and foal care, not to mention farrier fees, veterinary costs, prepping costs, consignment fees etc. Then you watch your yearling sell ... I am quite certain that more often then not people lose money. So why do SO many people do it? It's like a vicious circle. People chasing a dream of selling "the big horse" or breeding "the big horse" and all the while more horses flood the market bringing prices down. Am I the only one that feels this way? Perhaps I had my cynical O's for breakfast this morning ....

[LB]

I would imagine that everyone gets into this business thinking that they're the ones who are going to out-perform the averages. Unfortunately that's only true for a small percentage of them.

Many, many breeders took a beating over the last 2 weeks--and when this sale ends, the Mid-Atlantic yearling sale starts with 1,000 more horses.

I expect that the breeding stock sales in November and January are going to be flooded with mares--especially low-end ones.

[KMO_racing]

As far as rates go, I think $50 a day is expensive. My fees are $ 35 a day for sales prep. I also only charge $15 a day for mares with out foals $18 a day for a mare & foal. I do not think my fees are extreme.
I do think you have to breed with common sense regarding choosing stallions. If you breed to race you can always get good deals. If you breed to sell , you better be lucky. You need the flavor of the month in a stallion and put the kids in a bubble so they can't get hurt, because if they get a blemish or anything your are up the creek. You also have tolook at the mares page and it has to carry a lot of weight to play in the big leagues. So, luck, money and praying is what you have to do in the end, and you still might sink.

[bdw0617]

on a more fundamental level, I have a question in the same regard.

Explain to me how in the end, it's pretty much luck that would make you profitable or being unlucky that would make you unprofitable in stricly breeding to sell.

you can have brilliant pedigree matches, but you are at the mercy to how a fool comes out and who is looking at him, how the markets are playing.

Yes there is more to it than that but at a pretty basic level you are at the mercy to the whims of how people at the sale feel for that day.

You having a good year or you having to go out of business can depend on if the guy who was looking at your horse had his morning cup of coffee.

That and another thing is that why are there more people getting IN the business. we have too many T Breds as it is. you are diluting the market with more foals.

[griff]

Successful commercial breeders do not pay the advertised fees, they do not board their mares and horses with other people and they cull hard.

griff

[KMO_racing]

It is true that alot of commercial breeders don't pay the full amount on the stud fee. It is also very true that most have their own farms and don't pay day rates. But, a lot do. All of my boarders are from out of state breeding in LA, they are all commercial breeders. They have very nice mares and know where and when to sell their babies. Alot of breeders race when they have to... So if the babies don't bring what they want they bring them home.. They also cull the mares when they are not producing what they expect them to produce.

[Jenny]

Oh, and here is Canada you better be part of the "Old Boys Club" or you are not going to make a red cent. But they always seem to manage!!

[JCBloodstock]

Successful commercial breeders do not pay the advertised fees, they do not board their mares and horses with other people and they cull hard.

griff

You have to be careful in Kentucky who to do partnerships with but it can be successful with lesser farms trying to make themselves.As an example:

Purchased a mare for $25,000;Set up a deal with a farm where the only additional expenses paid by the partnership is half of any stud fee's,breeder's cup nomination and sales consignment fee's and half of the agents sales commission.

Farm pays for all mare care and half of the fees listed above.

Since purchase of the mare in 2003 total stud fee's paid are $35,000 total sales receipts are $454,000;So for a total investment by the partnership of just over $50,000 has netted them over $200,000:

My advantage to setting up their partnership has been they come back to me to make individual purchases for them.

The farm fits the babies but then they go thru the ring with a good sales agency.I usually refer clients to Eaton Sales or Paramount mainly because they talked to me when I was a nobody.They actually represent your horses instead of treating them as just a number.They also have a good pool of mid-range buyers that are regulars with them year to year.

As far as deals on stud fee's;The time I ever see deals on stud fee's is either late in the season or a stallion whose commercial appeal is waning greatly.Most of the viable first year commercial stallions they rarely do a deal on and many of the proven,older syndicated stallions you have to purchase a season to them to get to them.My experience with Claiborne has been that way.Every time I've ever inquired on a stud there they've refused the mare yet when they've covered her after purchasing a shareholder's season I get this is a really nice mare.That included one time a daughter of Regal Classic once that was 2 ticks off the world record for 6 1/2 furlongs and a 1/2 sister to Java Gold.Claiborne refused her to Conquistador Cielo but I got to him by purchasing a season.

[zinn21]

JC, very enlightening but your Claiborne Farm scenario has me scratching my head. What advantage does Claiborne receive turning down your mare only to accept her? The season is already sold. The mare is the same mare. It seems so stupid.

[cng]

There are corrections going on in most U.S. markets right now. It would be foolish not to expect it to follow in the thoroughbred business. The prices have been artificial for years and sustained only by whether or not the sheiks want to play. The rewards are greater on the high side of the business but watch out. I was in this business before the influence of the sheiks and false values. If you know what you are doing and have the money to deal in that sort of stock you might continue to make money for a while but I would hate to be too deep in horses of any kind right now. This is no time to invest or hold on. It is time to bail out and keep no more than you can comfortably lose money on. It is going to be a long bumpy ride.

[Sysonby]

JC, very enlightening but your Claiborne Farm scenario has me scratching my head. What advantage does Claiborne receive turning down your mare only to accept her? The season is already sold. The mare is the same mare. It seems so stupid.

I know someone who did the same thing. There is a secondary market of stallion seasons owned by shareholders that Claiborne doesn't control.

[ratherrapid]

I only know what I believe and have zero experience other than consigning a secretariat look alike pancho villa yearling to Keenland and getting 0 bids.

seems to me "breed to sell" will be totally speculative and dependent on blind luck until the market adjusts to realistic prices. To watch indistinguishable horse after horse selling for $400,000 is mind boggling to anyone that knows what they are doing. You could probably say the same thing about $50,000 on up.

Since horses are never worth this price except for the lucky, the question would be why would anyone pay such a price? My opinion (and it's just an opinion--zero proof) is that they don't, in general. Am I reading these Keenland stats at just below the Sheik-Magneer levels correctly that I see farms exchanging horses. I'll buy your yearling if you'll buy mine, and maybe we can entice a schill here and there for a $400,000 buy and make some $$$.

In short, I'm speculating a good part of the upper level part of the sale is an advertising sham that year after year depends on drawing in a few new very wet behind the ears rich new owners.

For these new guys and gals, I'm wondering where are the blood stock agents advising these folks that you can buy a terrific horse for $25-40,000, and put your money in training and care?

If the suspicion above is correct that much of the sale results from scheming together a false market, and opinons welcome, can anybody out of the loop in this enviroment expect to make a profit on a normal business plan?

[griff]

It's also very nice when your new stallion's yearling or 2 YO get averages $100k plus at Keenland..

griff

[jennywho]

What I'm wondering, as a small breeder, is how we can expect to stay alive when the market DOES correct itself.

As it is, we hope for the big horse to cover our expenses, but this market correction that causes sales prices to lower is not causing day money, stud fees, vet bills and feed costs to decrease. I guess the market may eventually lower stud fees, but the daily costs of owning and raising TB's in a breed to sell operation is skyrocketing. If you board or if you raise your horses at home the cost of everything is going up while sales prices are going down.

Honestly, we would be down to one broodmare, but we can't even give the others away. That's the only thing keeping us in.

[cng]

I only know what I believe and have zero experience other than consigning a secretariat look alike pancho villa yearling to Keenland and getting 0 bids.

seems to me "breed to sell" will be totally speculative and dependent on blind luck until the market adjusts to realistic prices. To watch indistinguishable horse after horse selling for $400,000 is mind boggling to anyone that knows what they are doing. You could probably say the same thing about $50,000 on up.

Since horses are never worth this price except for the lucky, the question would be why would anyone pay such a price? My opinion (and it's just an opinion--zero proof) is that they don't, in general. Am I reading these Keenland stats at just below the Sheik-Magneer levels correctly that I see farms exchanging horses. I'll buy your yearling if you'll buy mine, and maybe we can entice a schill here and there for a $400,000 buy and make some $$$.

In short, I'm speculating a good part of the upper level part of the sale is an advertising sham that year after year depends on drawing in a few new very wet behind the ears rich new owners.

For these new guys and gals, I'm wondering where are the blood stock agents advising these folks that you can buy a terrific horse for $25-40,000, and put your money in training and care?

If the suspicion above is correct that much of the sale results from scheming together a false market, and opinons welcome, can anybody out of the loop in this enviroment expect to make a profit on a normal business plan?

I think you have a pretty firm grasp on the situation. Unless you can do it all yourself - you are going to lose in the thoroughbred business (even then it's risky).