Jody Huckabay has been playing the waiting game this year when it comes to mating mares.\nHuckabay and his wife, Michelle, own Elm Tree Farm in Paris, Ky., where they manage about 80 mares, mostly for clients. Taking a quick coffee break from farm work on a snowy day in early February, he said the economic recession so far has not damaged Elm Tree's business. But it has prompted the Huckabays and their clients to reduce their number of active broodmares, lower the amount they are willing to spend on stud fees, and hold off on bookings in an effort to get the best deals they can in the current buyers' market for stallion services. The Huckabays are not alone, and that's putting pressure on Kentucky stallion managers to find creative ways to market their stallions to a shrinking population of mares and their newly frugal owners.\nIn the slumping Thoroughbred sales market, breeders are taking a hard look at their mare bands and reducing numbers by culling, retiring marginal producers from the breeding shed, or delaying bringing fillies home from the racetrack. Increasingly, they are looking for proven sires with established records rather than the first-crop sires that were the hot fashion among buyers in recent years. And breeders want to pay less - significantly less - for those stallions' services than they did last year.\n"Our clients, knock on wood, are doing reasonably well," Huckabay said. "They're still playing in the market, they're still buying, but probably at a 30 percent to 50 percent discount versus what they were spending in the past for mares and seasons. Last year, we were bumping maybe $40,000 to $50,000 on stud fees, and this year we're probably looking at $12,000 or $15,000 to $20,000 or $25,000.\n"In years past, we started working on our matings and by October and November we were pretty well done. [This year] we did not even start until after November and had most of the stuff done by December. That was ahead of some people, but we still waited longer than we used to. Like most people, we were looking for a deal."\nBreeders in central Kentucky have found plenty of those deals. Pinched by the economic downturn and a subsequent reduction in active broodmares, stallion owners are aggressively pursuing the remaining active mares in an effort to keep their horses - and the state's signature Thoroughbred breeding industry - competitive.\nStallion owners have slashed stud fees at nearly every level, even for some of Kentucky's most successful sires. Lane's End Farm in Versailles initially cut fees for half its stallions, then came back and trimmed many of those again. In its second round of cuts, the farm reduced fees for its two most famous established sires, A.P. Indy and Smart Strike. A.P. Indy dropped from $300,000 to $250,000, and Smart Strike fell from $150,000 to $125,000.\nA.P. Indy and Smart Strike are still out of reach for most average breeders, but middle-class horsemen, too, are getting deep discounts on stallions at price ranges from $5,000 to $50,000. In addition to fee reductions, stallion managers are offering new incentives to lure breeders and their mares.\nCutting fees is the best way to attract breeders, said Michael Hernon, director of sales at Gainesway Farm in Lexington.\n"The fee is critical, and the terms of payment," he said. "We've gone to all live foal, stand and nurse, which I think is the right thing. If the fee's wrong, you miss the target and you don't make sales."\nMost stud farms have offered similar delayed stud-fee payments, ranging from Nov. 1 to stands-and-nurses to payment from sale proceeds. Others are offering more foal-share agreements, under which stallion owners waive the stud fee in exchange for a half-interest in the resulting foal.\n"We have done a couple of foal-shares that I really didn't think would happen," Elm Tree's Huckabay said, adding that before this year he hadn't done any foal-shares since the 1980s. "I just kind of threw the bait out there, and, lo and behold, they took it. But I think that goes with trusting the farm you're dealing with, and their being comfortable that you're going to raise a good product and take care of their investment."\nTaylor Made Farm near Nicholasville, Ky., cut its horses' stud fees between 17 percent (Unbridled's Song, who drops from $150,000 to $125,000, and Half Ours, from $15,000 to $12,500) and 60 percent (Forestry, who fell from $100,000 to $40,000) from last year. The farm also is offering incentives. The stud fees are payable on stands-and-nurses terms, but breeders paying earlier - by Nov. 1, 2009 - will receive a further 10 percent discount.\n"We have gotten more aggressive by calling breeders and getting them to book," said Frank Taylor, a vice president at the Taylor family's farm. "We realize these are tough times, and we want to give real value to the breeders. The bottom line is that breeders need to make some money if they are going to be able to continue. So we have priced our horses so breeders are getting great value.\n"We've also structured price reductions for multiple mare packages to the horses who have been slow booking," he added.\nThere is great pressure on stallion owners to offer incentives. In the early part of this decade, the cost of buying a top stallion prospect rose into the tens of millions, partly because improved fertility technology and larger book sizes allowed stud farms to make more money off each horse in a season. Now, farms that acquired high-priced stallions need to maintain thick books of mares to keep their revenue coming in - especially if they are paying off loans from their stallion acquisitions.\nThe drop in revenue, due to lower stud fees and a smaller pool of mares, will likely affect the price of stallion prospects in the next year or so as stud farms become more budget-conscious or even opt to skip adding a new stallion to their rosters.\n"We'll be looking for another horse for next year, but it's not written in stone that we have to get one," said Gainesway's Hernon. "It will depend on the horse, the situation, the timing, and the price. We can look after the store with what we've got.\n"I think there's a polarization. Horses that are perceived to be good value are in very aggressive demand, and, fortunately, we have several of those. But we have some horses who are not yet booked strongly, but those would be horses who stand at the lower end of the fee scale, and those traditionally come along later as we get into the breeding season and mares foal and people are waiting and looking for a deal."\nThe deal-making isn't limited to Kentucky. Stallion farms everywhere are getting creative in order to keep breeders in their stallions' books at a time when more mares are going out of production due to the poor economic conditions. That's got Kentucky stud owners worried that budget-conscious mare owners will opt to take advantage of other states' generous state breeding incentives, lower stud fees, and cheaper board rates.\nThat might already be happening in New York, where a lucrative statebred program and the promise of slots are even more alluring when set against the cost of shipping and boarding mares in Kentucky. That means more in-state owners are likely to stay put, rather than send their mares to higher-priced Kentucky stallions they might have visited in the past.\n"I think the economics we're going through actually promote breeding within [New York]," said Becky Thomas Ray, who owns Sequel Stallions New York with Dennis Narlinger. "As we go farther into a recession and don't know how long it is, if you've got a mare who's greatly devalued, are you going to spend an extra $5,000 to go out of state?"\nSequel Stallions stands New York's leading general, freshman, and second-crop sires in 2008: Freud, Read the Footnotes, and Hook and Ladder. The farm cut the fees for all to $7,500 this year and also is offering an array of options for breeders, including a 25 percent discount for contracts signed by Jan. 1.\nThrough January, Ray said Sequel's bookings were running ahead of last year's.\nIn the short term, such competition for fewer broodmares could make times tough for Kentucky's stallion owners, boarding farms, and sales agents. Many believe there is a long-term silver lining: Cutting stallions' book sizes and the Thoroughbred market's oversupply could boost prices, but getting back to a strong Thoroughbred economy will likely be painful.\n"Unfortunately, I don't think we're at the end of the cycle," Huckabay said. "We're looking at babies in the belly now that we have to pay the stud fees for, and it will be two years before we get those out and the sale proceeds back."\nFor now, breeders who can afford to take the long view are sticking to Thoroughbred breeding's original aim: Breed them as if you were going to race them, because you might end up doing just that.\n"The majority of my clients, including myself, are not afraid to race," Huckabay said. "If you believe in your product, put a reasonable reserve on it, and if it doesn't meet the reserve, don't be afraid to go to the racetrack. We got away from that for a while and were breeding for the commercial market. The economic times are making us refocus on breeding and raising the racehorse."