07/21/2011 12:26PM

New York breeding gets boost as Aqueduct casino nears

Photo by Z
A New York-bred Flatter-Silence Please juvenile colt brought a sale-topping $925,000 last March, evidence that the promise of slots is lifting prices.

When Genting New York started construction on its Resorts World New York casino at Aqueduct Racetrack in Queens, the sound of hammers was music to the ears of Saratoga-area Thoroughbred breeders.

After 10 years of false starts, political maneuvering, and frustrating delays, the Aqueduct casino finally is heading for an October opening. Located within 10 miles of 5.6 million people, the ontrack casino’s planned 5,000 video lottery terminals and other gaming machines could funnel about $40 million in extra purse money and $6 million in breeders’ funds to New York’s Thoroughbred industry.

That economic stimulus won’t come a moment too soon, New York breeders say. Since the global economic meltdown and simultaneous downturn in bloodstock prices, New York’s Thoroughbred breeding numbers also have fallen sharply. Between 2001 and 2010, while New York Thoroughbred owners and breeders waited for the Aqueduct casino to become reality, the number of active stallions in the state fell by 54 percent, from 136 to 62. The numbers of mares bred also has dwindled by 51 percent, from a 20-year high of 2,749 active broodmares in 2003 to 1,343 last year, according to Jockey Club figures updated through July 1.

Video slot machine revenues could help reverse that trend. Genting projects that each of Aqueduct’s gaming machines will average $380 a day and that the entire facility − which also features banquet space for rent − could generate as much as $800 million annually. Initially, 6.5 percent of the casino’s overall annual revenue will go to purses and 1 percent will go to the state breeding fund. In the casino’s third year of operation, those percentages rise to 7.5 percent for purses and 1.5 percent to the breeding fund. That could be a boon not just to New York-bred horses’ owners and breeders but also to those who stand stallions or race in the state.

There are some hopeful signs already. Last fall, Frank Stronach’s Eclipse Award-winning breeding operation, Adena Springs, announced it would relocate five stallions from its Kentucky and Florida farms to McMahon of Saratoga Thoroughbreds. Adena’s director of sales, Dermot Carty, said the slots initiative was “very compelling” and added, “The prospect of improved purses as well as stallion and breeders’ awards was a strong motivation for Adena Springs Farm to support the New York state program with our stallions.”

The following month, another major Kentucky operation, Vinery, announced it would expand into New York by taking over management of Empire Stud in Hudson and Sugar Maple Farm in Poughquag.

Chris Bernhard, who owns Hidden Lake Farm in Otisville and also markets stallion seasons for Sequel Stallions New York, said: “I’ve had a lot of big Kentucky farms send me mares this year to foal out on the basis that the VLTs are coming, and I’ve definitely had a much stronger number of people from Kentucky recently ask me about taking mares to make them New York resident mares for next year’s breeding season. I’ve spoken to a number of people who plan on being aggressive buying mares at the fall sales. We’ve been talking to some clients about various options, like putting together partnerships to buy volumes of mares while the broodmare market is soft and you can get a nice mare for 60 cents on the dollar compared to what you had to pay five or six years ago. The 2012 babies out of those mares, with a stronger New York purse structure, we all feel there’s going to be a market for them. There’s just more demand from people wanting to be up here.”

Business has picked up enough for Bernhard that he’s planning to lease an additional acreage to accommodate more horses. “So I’m definitely optimistic, because the last couple of years it’s been downright painful,” he said.

Bernhard said that demand for Sequel Stallions’s New York horses has remained steady, but this year he saw out-of-state interest rise, particularly for its marquee stallion, Freud, a son of Storm Cat who commanded an $8,500 fee in 2011. Freud bred 110 mares last year, and that number will rise in 2011, Bernhard said, thanks to those out-of-state breeders.

“There were a lot of big out-of-state farms who sent mares up to him,” Bernhard said. “We’ve seen some of that in the past, but not to the degree we saw it this year.”

At Jerry Bilinski’s Waldorf Farm in North Chatham, business picked up this year for the sire Bustin Stones, whose book went from 31 mares last year to about 50 in 2011.

“In this environment, I thought that was very positive,” Bilinski said.

But Bilinski, a veterinarian and former chairman of the New York State Racing and Wagering Board, said he attributes much of that increase in Bustin Stones’s book more to advertising and breeders’ positive reaction to his first two foal crops. Bilinski has seen the mix of New York racing and politics up close, and he’s remaining cautious about how much today’s casino construction will boost New York breeding in the near term.

“There have just been too many stop-and-gos here in the last five to 10 years,” he said. “I think until the money actually starts flowing and the purses actually increase, people are still waiting on the sidelines to jump in. Some have, but I think there are a lot of others who will. Right now, they just can’t trust the way we’ve been doing things in New York.”

Commercial breeders hope the coming casino revenue will lift New York-bred horses’ prices. There’s some evidence that’s already happening. This year’s 2-year-old sales produced a spate of six-figure New York-breds. Most notably, a New York-bred Flatter-Silence Please colt bred by Doug Koch’s Berkshire Stud in Pine Plains, N.Y., sold to Kaleem Shah for an eye-popping (and sale-topping) $925,000 at the Ocala Breeders’ Sales Company’s March juvenile auction in Florida.

“I think it might be stronger,” Bilinski said of the market for 2011 New York-bred yearlings. “Last year, we were waiting for them to announce slots were going to happen, and they did that almost after the fact of the yearling sales. Now we know they’re going to happen, so that’s certainly going to make things less negative. I’m hoping we’ll see a good effect with this sale cycle, and it very well could. But I don’t think it’s going to start with a big bang yet. I think it’s going to take people seeing high purses at the Belmont and Aqueduct meets, and then they’ll jump in at the 2-year-old sales.”

The first major test for New York-bred yearlings this season will come on Aug. 13-14 at the Fasig-Tipton auction company’s New York-bred yearling sale in Saratoga Springs. That sale bucked a nationwide trend when it drew more entrants in 2011 at a time when other sales are shrinking in numbers. Fasig-Tipton president Boyd Browning says the prospect of VLTs finally coming online just two months after the auction might well increase the number of buyers looking for New York-breds.

“We know the casino facility isn’t just a possibility, it’s a reality,” Browning said. “One would think it would have to have a positive impact on the value of a New York-bred and the desire to race in New York, both for New York-breds and for all horses. Logically speaking, you would think it would have a positive impact on most of the horses. You wouldn’t think it would drive the value of all those horses up exponentially. I don’t think a horse worth $100,000 now will be worth $200,000 because of it. But you hope there will be a broader base of buyers and more capital available to buy those horses.

“There’s going to be increased purses for all horses, so it’s got to make it better for people who want to race in New York than it’s been in the past.”

Terry Finley, the founder and president of the New Jersey-based racehorse syndicate West Point Thoroughbreds, agreed.

“It’s influencing us not just in looking at New York-breds but in our overall buying of horses to take to New York.” Finley said. “The real focus is on New York. We like the New York-breds, but we also like other horses that we think will fit overall in New York.”

With bloodstock prices still much lower than they were five or six years ago and the prospect of slots-fueled purses in New York, it’s a perfect storm for buyers hoping to buy low and win more with their purchases, Finley said.

“It’s a plus for the end-user now,” he said. “And I think if you see a good, solid New York-bred, a good athlete, you’re not going to be afraid to pay a little bit of a premium.”

Those are welcome words for New York’s breeders.

“I’m cautiously optimistic and excited,” said Bernhard of Hidden Lake and Sequel Stallions New York. “It all affects the bottom line, and, if you’re going to be in this business and you’re not looking seriously at being in New York, you probably need to get your head examined.”