10/28/2009 11:00PM

In tough times, stud market morphs


LEXINGTON, Ky. - The last decade's sharply rising stallion prices came to an abrupt halt last year. With yearling prices in a slump, it's much harder to sell colts' breeding rights, let alone for the tens of millions per horse that had become common in the last five years or so.

But the drop in stallion prospect prices doesn't mean there is no market for accomplished runners. Several North American markets - most notably Pennsylvania and Louisiana - also have more purchasing clout now as local breeders opt to stay home and patronize their state's stallions rather than ship mares to Kentucky. And some foreign markets still are seeking horses.

The downside: Buyers are choosier.

"My business is with the Korea Racing Authority, and it's business as usual for them," said bloodstock agent Tom Clark.

This year, the KRA bought Peace Rules, who stood at Vinery's Florida division, and One Cool Cat from Coolmore.

"They have a 10-year plan to buy stallions each year," said Clark. "The market in Korea is steady."

Korea's stallion purchases remain on course because the Thoroughbred business is smaller and largely controlled by the KRA, a situation Clark says has helped the business remain stable.

Southern hemisphere stud farms are also happy to take new stallions, but these days they would rather lease than buy.

"You can still sell horses overseas to Korea and Turkey," said Pat Payne, who handles private sales for Taylor Made Farm. "We used to have markets in Argentina and Brazil, where you could sell a good winner of $200,000 or $300,000. What's changed is now those farms are taking better stallions in lease deals. If you have a Grade 2 winner who won $400,000 or $500,000, even those are tough to sell in the southern hemisphere now."

Slots-fueled purses and strong statebred programs have maintained demand for stallions in a few domestic markets. But like the Koreans, those regional buyers are highly selective. They can afford to be pickier these days, agents say, because there are more horses on the market than even three years ago.

"I think there are more horses available because only the strongest tend to survive here," said Clark. "And there are so many good stallions here now, everything else is expendable. The number of choices has increased. There are horses that aren't necessarily on the market, but they can be bought."

Bloodstock agent Mike McMahon is on both sides of the fence, selling prospects and buying them for McMahon of Saratoga Thoroughbreds.

"From a bloodstock point of view, I had a call from New Mexico, and that seems to be a place where there's still good hope to sell domestically," McMahon said. "From a breeder's standpoint, we've been looking for a stallion to stand in New York. The hard thing there is, New York doesn't have Polytrack, and it's hard finding stallion prospects these days that have enough dirt form to be dirt stallions. That means you can't necessarily look at California horses, and you don't get a lot out of Kentucky, Chicago, or Toronto anymore. . . . That narrows the possibilities by two-thirds or even 80 percent."

Such selective requirements narrow sellers' possibilities, too. The best bets for stallion prospects now are states with rising purses, McMahon said. That generally means states where gaming contributes to Thoroughbred purses and breeding incentives.

"Those states, despite the national economy, have plenty of money to buy horses because they've got increased purses," he said. "It's almost like, 'National economy be damned.' "

That worries Kentucky breeders and stallion farms, who fear an exodus of mares and stallions. Kentucky's stallion population dropped this year by 4 percent and mares bred fell 14 percent this year, according to Jockey Club statistics. Those were smaller losses than the total North American breeding decreases of 9 percent for active stallions and 14 percent for broodmares; Louisiana, New York, and Ontario also had declines.

But Kentuckians fear Pennsylvania is the face of the future. The only state to show gains, Pennsylvania saw stallions increase 9 percent and mares rise 30 percent.

"Clearly, Ontario, Louisiana, and Pennsylvania have got extremely lucrative breeders' incentive programs, and particularly for horses sired within those states by stallions in the state," said Lincoln Collins, Lexington-based president of the Kern Thoroughbreds bloodstock agency. "Whether or not you want to see slot machines in Kentucky, we're trying to compete with states that are supporting their breeding industries at all levels with a lot of money that comes from those sources of gambling."

Until Kentucky finds a way to build purses and compensate breeders better, Collins said, stallions probably will continue to head for states that do.