01/17/2002 12:00AM

Value in stallions depends on what you're looking for


LEXINGTON, Ky. - After the economic and political troubles of 2001, some people were concerned that the horse markets were headed for more problems, but the results of the January sales, which showed a renewal of enthusiastic buying, and some healthy foal arrivals in the Bluegrass have encouraged breeders.

One of the points of concern for many farm owners and stallion managers is that "people have been buying seasons later than in recent years, waiting for fees to go down," according to Rick Trontz, owner of Hopewell Farm near Midway, Ky. Trontz stands a group of young stallions at Hopewell, including 1998's Horse of the Year, Skip Away, Royal Anthem, Crafty Friend, and freshman sire Souvenir Copy. In addition to standing stallions and breeding horses, he also runs Bluegrass Bloodstock, which buys and sells horses and seasons.

Trontz noted that because of the uncertain demand, "stud fees, in general, are less than last year. A popular horse is full, but the others are looking for mares, and the prices reflect that."

As a result, some breeders looking for a Kentucky stallion may find themselves in a relative buyer's market this year.

Prices are competitive in general, and the only exception to this is among the top-tier commercial sires and those young sires who are standing their first or second seasons. And among these elite stallions, the competition is fierce to secure access to them.

Underlining this competitiveness, Rob Whiteley, director of operations for Carl Icahn's Foxfield, said, "Recent attrition among proven stallions - for instance, Mr. Prospector, Nureyev, and Unbridled by death, and French Deputy and Tabasco Cat by sale to foreign interests - leaves us currently with a shortage of quality successful sires.

"This forces breeders to focus on a small number who have already established their worth and on a small number of promising new stallions. In the midst of this relative vacuum, however, stallion owners who are lucky enough to have one of the few commercially exciting or well-proven studs have a great supply and demand imbalance in their favor and therefore have a license to inflate stud fees beyond reasonable limits for breeder profitability."

Whiteley continued by saying that the challenge for savvy breeders is to find horses who are good sires at a good price. He said, "Finding value in today's market is very difficult, and most of the real value exists with older, proven stallions, such as Danzig, Deputy Minister, Cozzene, Crafty Prospector, Dynaformer, Silver Deputy, and Conquistador Cielo. There's a lot of money out there chasing pretenders and contenders, instead of the proven article."

All those horses have proven themselves as consistent sires of high-quality racehorses, and in the case of Danzig and Deputy Minister, as leading national sires.

Trontz agreed about the importance of seeking value and noted that "I'm a contrarian to some degree, and I like to look for places where a breeder can find value, because I see this as prudent portfolio management."

The reasons for the market imbalances are primarily popular perception: What have you done for me today?

Trontz believes that there "is always value out there, but you have to seek it in unusual places. Some top horses are lower this year. Deputy Minister, for instance, is available at great value for the money. He's a multiple leading sire, and he's going to get more top horses. So you couldn't go wrong there. Also, Cozzene and Lear Fan are great values."

To explain the difference between quality and value, Trontz believes that "currently the market is so driven by the Quarter Horse type with the big hip and the look of early maturity that we lose sight of other types."

The classic type or the late-maturing type doesn't bring big money at the yearling sales. Not surprisingly, the horse who can win you the Kentucky Derby or the Belmont or the Breeders' Cup Classic doesn't look like a juvenile sprinter. Both in physical traits and in their development, these are different types of racehorses, over all. But the market, some breeders believe, has fixated on a single type to the detriment of the larger picture.

In addition to finding value among proven sires without a current champion, Trontz said that "third- and fourth-year horses present the greatest risk but also the greatest value to breeders. With Souvenir Copy, John Mabee has 62 2-year-olds and has supported him very strongly each year the horse has been at stud. So this year, he's either going to prove a success or not, and nobody wants to be on the bubble."

With sales indicators showing strength from the general economy, as well as optimism from owners and buyers, there are opportunities in the season market for breeders who are wanting to breed racehorses, which is the primary goal for all of us. There are also commercial opportunities, although with risk. Good horses are being overlooked because of timing (fourth-year horses, especially), but some of them will hit. The question for breeders, then, is at what price does the potential for profit justify the risk.