Updated on 09/17/2011 11:44AM

Breeders hurting Breeders' Cup

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ARCADIA, Calif. - Two decades ago, Thoroughbred breeders created horse racing's definitive championship event. Now they are spoiling it.

John Gaines, the owner of Gainesway Farm, conceived the Breeders' Cup because he understood that the game needs a showcase for its biggest stars. He hoped that its large purses would encourage owners to run their horses instead of retiring them prematurely to stud. His vision became a reality that has generated some of the greatest drama in the sport's history.

But as the Breeders' Cup is run for the 20th time at Santa Anita on Saturday, the economics of the horse business are out of whack. It is so much more profitable to breed good horses than to run them that Thoroughbred stars are being retired with unprecedented haste, affecting the Breeders' Cup and whole top level of American racing.

Mineshaft, the leading contender for the Horse of the Year title, underscored the seriousness of this issue. After he won the Jockey Club Gold Cup and his stud fee for next season was announced at $100,000, owner Will Farish and trainer Neil Howard started hedging about running him in the Breeders' Cup Classic - presumably because a loss might devalue him.

"There's so much more at stake now," Howard told Daily Racing Form. "The breeding industry - that's where it all starts."

When Howard announced that Mineshaft would be retired and miss the Classic, he said the decision was dictated by a bone chip in the colt's ankle. Whether this was a compelling reason or a face-saving device, the point was already clear. After a horse has established that he will be enormously valuable at stud, there is little incentive to race him further.

At least Mineshaft campaigned through the age of 4. More and more horses are being retired as 3-year-olds, even if their careers are incomplete.

* Dalakhani won Europe's most prestigious race, the Prix de l'Arc de Triomphe, but he won't run in the Breeders' Cup Turf. Instead he is being retired after a nine-race career. "My operation starts with breeding," his owner, the Aga Khan, explained.

* Empire Maker was probably the most talented 3-year-old in America, but nagging foot problems kept him from living up to his potential. If he raced next season he might have proved that he is a genuinely great horse, but he won't get the chance. After an abortive career in which he won four of eight starts, he will be retired so he can start collecting a $100,000 stud fee.

* Sky Mesa, like Empire Maker, began his 3-year-old season with great promise, but a foot bruise undermined his entire campaign. He, too, might have redeemed himself at 4; he might have been in next year's Breeders' Cup Classic. But why should he run if he can command a $30,000 stud fee despite a 0-for-3 record as a 3-year-old?

Sending horses to stud is so lucrative because the whole Thoroughbred market has been booming. Buyers are paying high prices for yearlings - 27 youngsters sold for more than $1 million at the Keeneland sale in September - and because of this demand, stallion values increase, too. The nation's leading sire, Storm Cat, commands a $500,000 stud fee. These fees translate into enormous profits. In Secretariat's day, stallions were bred to only about 40 mares a year, but with improved management techniques on horse farms, they frequently mate with 100 mares a season - or more. The stallion Grand Slam serviced 215 mares in 2002.

It is not difficult for any owner to do the arithmetic: If Empire Maker can command a $100,000 stud fee and service 100 mares, he earns $10 million in a year. Even if he fulfilled all of his potential and had a sensational racing season in 2004, he probably could not earn half that amount on the track.

These bottom-line calculations would be persuasive to ordinary people, but many owners of top horses are the super-rich who are regularly described in racing publications as "sportsmen." Khalid Abdullah, owner of Empire Maker, is a fabulously wealthy Arab prince.

He loves the sport and loves his horses, so shouldn't he want to see Empire Maker run and live up to his potential? Otherwise, what's the point of getting into the sport in the first place?

Yet even the super-rich must look at the bottom line of their operations. Gaines points out that when an owner comes up with a rare talent like Empire Maker or Mineshaft, it is usually because he has bought many expensive horses - most of whom didn't pan out. An occasional stallion prospect offsets a lot of losers. "It's hard to fault someone for protecting their assets," Gaines said.

Is there any way to keep top horses in action longer? It is not feasible for racetracks or the Breeders' Cup to raise purses to such astronomical levels that racing horses could be as profitable as breeding them. There is one way to restore some kind of balance between racing and breeding, but it is a painful remedy.

The breeding business today is beginning to look like a speculative bubble. People buy Thoroughbreds for lofty prices with little expectation that they can make money by racing those horses; they hope to make a profit by selling later in an ever-rising bloodstock market.

This is just the rationale that once led investors to pay exorbitant prices for stocks in dot-com companies that never made a profit. And, of course, it is just the scenario that unfolded in the horse business during the 1980's, until a crash wrecked the industry and bankrupted some of the world's most famous breeding farms. After the crash, horses were not rushed into stud duty. If history repeats itself, racing horses for a

$4 million purse in the Breeders' Cup Classic will once again look like an attractive proposition.

(c) The Washington Post 2003