12/02/2010 12:29PM

Florida breeders keep the faith

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LEXINGTON, Ky. – First, the bad news. Florida’s breeding industry has shrunk dramatically. Between 2007 and 2010, the number of mares bred there fell 52 percent, from 6,383 to 3,076, according to Jockey Club statistics. In the same time frame, the stallion population went from 253 to 123.

But Florida has had good news recently on the national racing scene. Florida-breds Awesome Feather, Big Drama, and Dubai Majesty won three Breeders’ Cup championship races this year, and Florida-breds turned in a one-two finish in the Nov. 20 Delta Jackpot with Gourmet Dinner beating Decisive Moment. Those performances probably won’t translate into quick investment dollars, Florida sales executives and breeders say. But they do put the spotlight on Florida-breds at an opportune time. Breeders and stallion owners are celebrating industry-backed stimulus initiatives they think will benefit racing, such as extending card room hours at parimutuel facilities and cutting the state’s tax on slot-machine revenue from 50 percent to 35 percent. And they’re working to shore up purses for 3-year-old racing in a bid to make Florida purses, and Florida-breds, more valuable.

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Fred Brei, a small breeder and the president of the Florida Thoroughbred Breeders’ and Owners’ Association, acknowledges Florida’s breeding business won’t turn around overnight

Brei just cashed in on every small breeder’s dream by selling homebred Awesome Feather for $2.3 million two days after her Breeders’ Cup Juvenile Fillies win. But he’s realistic about the challenges Florida and its breeders still face. As elsewhere, the credit crunch has hit Florida’s commercial breeders hard, especially those who funded their Thoroughbred operations with property-based credit lines.

“We’re really in no different position than the general merchant who’s hoping like heck that Christmas bails him out this year,” Brei said. Like the Black Friday merchant, Florida’s breeders are pushing the product, and pushing it hard, to potential racehorse owners. Those big Florida-bred success stories are good advertising, but the statebred program is Florida’s best selling point, Brei believes.

“The overall program is still in place and is still successful, given our times,” said Brei. “We have the highest purse structure for a 2-year-old stakes program in the country. We’ve seen that anything we do to make our 2-year-old product better makes our handle higher. When we get the handle higher, we get more funds to reward breeders with.

“We don’t have it accomplished yet, but now we’re working on a 3-year-old program. In the past, we’d lose horses when 2-year-old racing was done because they virtually had to go somewhere else in order to have a decent purse structure racing against their 3-year-old peers. About four months ago, the majority of stallion owners on the FTBOA board decided they would no longer get breeders awards for their stallions, as long as those funds would go into augmenting purses for a 3-year-old program. Our board is absolutely convinced we need an overall, ongoing racing program in Florida to keep our Florida-breds going. It’s the only way we’re going to get our Florida-bred owners back.”

Mike O’Farrell, owner of Ocala Stud and a director of the breeders and owners association, calls the economy “dicey” but says he spots investment opportunity in those plans. Lower bloodstock prices make upgrading cheaper, and the state’s decreasing foal crop could put owners in a good spot to collect on any higher purses, he said. Ocala Stud has bred eight stakes winners this year, and in 2011 O’Farrell said the farm will have 54 foals, its biggest foal crop in 30 years.

“I think the law of supply and demand comes into effect,” he said. “When everybody else quits breeding, there’s still demand for racehorses, they’re still running races, and there’s still money to be won. Purses are better today in Florida than they were 1 1/2 years ago. Hopefully, with the same demand and fewer horses to choose from, it could bode well for those still in the business and selling racehorses two or three years from now.

“Take the Delta Jackpot. We sold Gourmet Dinner for $40,000. He won $600,000 in the one race, and now he’s earned $800,000. There are a lot of people still wanting to do that, and they’ve got to buy horses from somebody.”

At the Ocala Breeders’ Sales Company, which auctioned Gourmet Dinner as a yearling, smaller supply might hurt the bottom line in gross sales. But the company’s sales director, Tom Ventura, points out that price stabilization, and a higher price per yearling, would benefit everyone.

“The fact that we’re selling fewer horses should mean that even if the demand only stays steady, the lower supply should help prop things up a little,” he said. “It’s going to be a while before we get back up to larger numbers. But I think as things pick up and as you see some effects from some of the legislation, like the slots tax reduction, the purse structure will improve, and in the end that will help keep this market stable.

“Marketability starts with purses, but you also need sire-power. The stallion managers and syndicates that are taking some chances on standing new horses right now, if they’re able to come up with a quality horse and stay here, they’ll benefit tremendously in the long run.”
In the meantime, Brei said, his best advice to Florida’s breeders is to “gut it out.”

“Before I retired 15 years ago, I was a lifelong builder and developer,” Brei said. “You saw the same thing in the construction industry every time recession hit. And there’s no substitute for doing things the right way. We’ve got to get back to the basics of people wanting to own a Thoroughbred for the trip, whether it’s for ego or for the rush. We need those owners back.”