Global Symposium on Racing addresses declining foal crop, microshare partnerships

TUCSON, Ariz. – Officials of state breeding associations are highly concerned about widespread declines in the foal crop but have also seen promising signs regarding the willingness of industry organizations to work together to find solutions, according to panels held this week at the Global Symposium on Racing.

The decline in the national foal crop – 40 percent since 2000 – is currently one of myriad problems facing the racing industry, and officials of state breeding associations said that the decline is closely intertwined with those other challenges. However, unique to the breeding industry is that breeding activity runs on a significant lag, considering it takes three years to go from a mating decision until the resulting horse first arrives at the racetrack.

And that is where breeding officials are most concerned, given that the racing industry has been facing existential questions all year due to fallout from a highly publicized spate of catastrophic injuries at Santa Anita Park in Southern California earlier this year.

“We saw a big decline in the number of Cal-bred horses arriving at the racetrack this year, and that was based on decisions made three years ago,” said Doug Burge, the president of the California Thoroughbred Breeders Association, during a Wednesday panel at the Symposium examining breeding activity. “So my concern is that if we are seeing this now, what are we going to see down the road?”

In addition to Burge, the panel included representatives of state breeding associations in Florida, New York, and Pennsylvania. All said that statebred breeding programs are becoming more and more important to their local circuits, due to the fact that many statebred horses are staying at home to take advantage of lucrative purse bonuses that have grown markedly in many states due to subsidies from casinos.

Jeff Cannizzo, the executive director of the New York Thoroughbred Breeders, said that New York-breds made 57 percent of the starts in the state in 2018. Even at venerable Saratoga Race Course, with cards loaded with high-profile races, 37 percent of the starters were New York-breds, Cannizzo said.

New York’s foal crop last year was only 7.66 percent of the national foal crop, according to figures from The Jockey Club.

“We’re a small component of the national landscape, but we’re critical to the region,” Cannizzo said.

But all members of the panel said that declines in the foal crop can’t be laid at the feet of breeders, as breeding activity is a response to demand from owners. That demand, the breeding officials said, has become more selective, putting small breeders at peril of not being able to consistently generate profits in the auction arena. Simultaneously, the cost of raising horses has gone up dramatically, and many small breeders cannot shoulder the costs to get their bred horses to the racetrack.

“We’re talking about a business with very small margins,” said Lonny Powell, the chief executive officer of the Florida Thoroughbred Breeders and Owners Association. “They’re not afraid of risk, it’s part of what they do. But they have to have a reasonable shot at reward.”

On the ownership side, several panelists who have started selling microshares in horses said on a Tuesday panel that they believe their efforts have succeeded in bringing new owners into the sport. The panelists were Michael Behrens, who started MyRacehorse.com, and Tom “TK” Kuegler, who started the Maryland-based Wasabi Ventures Stables. Both operations sell shares in horses for as little as $100.

Behrens started the company as a way to modernize racehorse ownership in an economic environment that increasingly offers “trials” to new customers, such as a free three months for streaming services. Behrens said his goal was to “build a large vibrant community of people who love horse racing,” one that is very comfortable with using digital tools to stay informed.

Kuegler said that of the approximately 600 people who have bought shares in horses owned by Wasabi, 78 percent had never owned a horse before, and, incredibly, 28 percent had never been to a racetrack prior to buying in. He also said that two dozen of the new owners had gone on to buy horses outside of Wasabi.

While the microshare companies have been successful in attracting thousands of new people to racehorse ownership, the structure of the companies mean that those people account for a very small fraction of the racehorses running today, meaning that they do not significantly impact overall demand for racehorses. But every bit helps, Behrens and Kuegler said.

Both Behrens and Kuegler did say that many racetracks were at first unwilling to accommodate such large ownership groups, at least initially. But over the past year, racetracks have had a change of heart, they said, and have now begun reaching out to the companies to bring as many of their owners to the track as possible.

Behrens said that Saratoga Race Course allowed 200 microshare owners into the winner’s circle this summer to watch their horse run. “It’s just great for these people, because when you own a horse, it’s hard to stay away,” he said. “And all of them have three or four friends who they tell what a great time it was.”

The breeding association representatives also said that they are seeing far more cooperation from racetracks and other industry constituencies to work together to address the issues affecting foal crop and demand for owning horses, perhaps because the racing industry is right now facing such significant difficulties on so many fronts.

“I think that spirit of cooperation is here to stay,” said Powell. “I think we are all beginning to realize how badly we need each other.”