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Bluegrass Thoroughbred’s Stuart sees challenges for new stallions
John Stuart, president of Bluegrass Thoroughbred Services, was born into the Thoroughbred world. His mother started the Stallion Service Bureau in 1960 in Virginia with Tyson Gilpin, and before that, she worked for a decade at Liz Whitney Tippett’s Llangollen Farm.
“I grew up to be a bloodstock agent,” said Stuart, 62, who is from Upperville, Va., not far from Paul Mellon’s Rokeby headquarters, which provided one of Stuart’s most memorable sales consignments. “I was lucky to sell the last crop of Mr. Mellon’s yearlings for his estate.”
In 2007, Stuart and Jamie LaMonica co-founded The Stallion Co., which privately brokers stallions and stallion seasons. Stuart has since sold his interest in that business but continues to operate Bluegrass Thoroughbred Services with his longtime agency partner, Peter Bance. The agency handles the contracts for Calumet Farm’s stallion roster and recently hit the headlines as advisers for John Moores’s and Charles Noell’s Merriebelle Stable, which last month bought Ireland’s Kilfrush Stud bloodstock.
In 1999, Stuart urged Josh Pons of Country Life Farm in Maryland to look at a young sire prospect he liked who was retiring from racing in Southern California. The horse was Malibu Moon, and he became one of the leading sires in the country after starting his career at Country Life. Stuart also assisted WinStar Farm last year in acquiring its interest in 2012 Florida Derby winner Take Charge Indy, who recently retired after sustaining an injury in the Monmouth Cup.
In addition to brokering private deals, Bluegrass Thoroughbred Services consigns at the major Thoroughbred sales. As agent for Calumet, it consigned the highest-priced yearling at this year’s Fasig-Tipton Saratoga select sale. The filly, by the late Three Chimneys sire Dynaformer, sold during the sale’s first session for $1,225,000 to the Borges Torrealba operation. The sale-topping horse was the most expensive yearling filly ever sold by Stuart.
Daily Racing Form’s senior bloodstock correspondent, Glenye Cain Oakford, spoke with Stuart before Fasig-Tipton’s Saratoga select yearling sale.
How is the market for stallions and stallion prospects different now from what it was before the 2008 market crash and global financial crisis?
It’s harder to get mares and money for the stallions that come to Kentucky that aren’t the highest-level stallions. There are 35, usually, new stallions a year in Kentucky. Eight or 10 are perceived as high-end stallions, and those can get syndicated. Usually, each big farm has one of them, and they get well promoted, and they get mares the first year. But below that, it’s become really hard to syndicate and to buy horses and put together deals. That’s mainly because there are a lot fewer mares in Kentucky than there have been in 30 years, probably. In addition, Spendthrift in particular has been really aggressive in getting mare owners to breed to their stallions through their various incentive programs. ... For a fellow that wants to spend $1 million on a horse and stand him for $5,000 to $7,500 and get enough mares to the horse so that he’ll have a chance, it’s harder than I’ve ever seen it.
On balance, do you think incentive programs like Spendthrift’s are a good thing or a bad thing?
They’re better for the mare owners – and I’m not talking about the very top end, which is a different market, but the ones breeding for the middle September market or breeding to race – it’s a good thing. But it’s not a good thing for the other stallion owners that compete, because they can’t pay for the horse. So, you don’t get as many stallions getting a shot as you would have in the past. Therefore, you don’t get a variety of sire lines and types of stallions. You don’t get a group of people getting together to bring in different sire lines from different countries and that sort of thing.
I take it you think that’s bad for the breed.
I think so. Not only are there fewer mares, the stallions that are really popular breed a lot more mares than they would have when I started or up until Coolmore got into the market standing stallions. Then we really got into the big books. There’s a lot less stallion availability; there’s a lot less stallion operators that can put together stallion deals on horses that probably deserve a chance. It’s not hard to attract the money for these stallions; it’s just hard to attract the mares. You can get people to invest in the stallions – again, that’s easier on the higher end. On the lower end, the problem is getting the mares to them.
Are you already seeing evidence of market concern over a diminishing number of stallion lines that are available in the United States?
The Europeans will tell you, “We’re not interested in buying your yearlings for two reasons: One, you use drugs, and two, you just don’t have stallions that appeal to us.” I guess there’s a point to the second one in that there have not been many European stallions that have been bought and syndicated to stand in America in the last 10 to 12 years. We don’t tend to want to breed to stallions that are really good grass horses, that are two-turn horses, that would appeal to foreigners.
A variety of sire lines and types of horses has been pretty important to the quality of the American breed down through the last 50 or 60 years. There’s a lot to say for the need to outcross.
What are you hearing from foreign-based buyers, particularly Qatari interests, about the medication issue in the United States? Is it becoming a deal-breaker for overseas buyers considering American horses?
Definitely. The Europeans, their way of making money on their horses is to sell them once they run. If you win a maiden race in Ireland as a 2-year-old first or second time out, there’s automatically 200,000 euros for the horse to go to a different racing jurisdiction, whether it’s the Middle East or Hong Kong or Australia. That money is there, and they move them. The English don’t sell as much, but the French and the Irish do.
But there’s none of that happening for American horses. Our horses aren’t bred for those kinds of races, but medication is also a factor. Now, the European breeders and sellers have a business to protect, so it’s easy [for them] to say, “Those horses can’t run with ours because they’ve got to have help.”
Do you think that message is sticking for buyers overseas who hear it?
Yes, it’s sticking. I scratch my head and think, “Surely people around the world will wake up and realize that our horses somehow are still the best, I think.” I look at the European results for 2-year-olds, and the American 2-year-olds have beaten them up. There are four or five American-bred 2-year-olds that have raced in Europe this year, and they’re the best 2-year-olds. But we don’t do a very good job of telling the rest of the world, “Look at the evidence.” It’s partly perception.
What are you expecting out of the yearling market in the near term?
I think this year is going to be good. Prices are going to go up, and overall, breeders will [be better off] than a year ago or the year before that. There’s a lack of quality, numbers-wise, and I don’t think anybody should ever underestimate when the government is giving you tax breaks. It helps our business. It helps the stock market because they’re juicing the economy. It helps the horse market because we’re probably in the last year of the 50 percent accelerated depreciation, where a fellow can buy a racehorse and write off 62 percent the first year. Or, if I’m a breeder, under the Schedule 179, I can spend up to a half-million bucks on a mare, and I can write it all off the first year. I know I have clients who buy yearlings, and that’s a significant thing for them. The upswing isn’t just supply-and-demand numbers. It’s a slightly improved economy, too, but mostly, it’s tax incentives.
What’s your advice for yearling buyers?
I think more and more that well-bred fillies – really well-bred fillies – you need to buy them if you’re going to be in the business long term, because it’s tough to find well-bred fillies and mares, and quality has always held up in the horse business. That’s something my breeder-oriented racing clients are looking for, and that’s where I’d advise them to go. The scarcest commodity out there is a really well-bred filly, and that’s what we look for.
BLUEGRASS THOROUGHBRED SERVICES
BLUEGRASS THOROUGHBRED SERVICES’ TOP GRADUATES
Blue Bunting – English and Irish classic winner
Bwana Bull – G3 winner
Coy Coyote – Canadian G3 winner
Doremifasollatido – G2 winner
Dreadnaught – Two-time G2 winner
Eddington – G1 winner, classic-placed
Elloluv – Two-time G1 winner
G City Gal – G1-placed
John’s Call – Two-time G1 winner
Ride the Rails – G1-placed, SW
Rio de La Plata – French G1 winner and classic placed; two-time Italian G1 winner and highweight; English G2 winner
Riskaverse – Three-time G1 winner
Rodman – G3 winner
Stopshoppingmaria – G1-placed, SW
Theyskens’ Theory – G1-placed; English G3 winner
What a Song – G2 winner