Stud fees trending lower for 2008

LEXINGTON, Ky. - A number of central Kentucky stallion farms already have issued their 2008 stud fees, and most appear to be taking a conservative line by cutting fees or keeping them near 2007 levels. That comes as a relief to commercial breeders, who hope to maintain or improve their profit levels.

Even the redoubtable Storm Cat, who led the fee list with his $500,000 fee in 2007, had his fee trimmed sharply to $300,000, a reflection partly of a drop in prices at the top of the select yearling market.

Overbrook Farm's flagship stallion will be 24 this year, but he certainly hasn't lost his touch on the racetrack. He's had a dozen juvenile winners so far this year, including Group 2 winner You'resothrilling, and his leading runners this year include Grade 1 winner After Market and Grade 2 winners Essential Edge and Burmilla. But the average price of his yearlings in 2007 was $581,316, and their median was $300,000, according to SireAverages.com. That's down from a $1,288,684 average and $800,000 median last year, when the top of the select yearling market was booming.

"The simple reason for dropping Storm Cat's fee was a reaction specifically to his yearling average and, more generally, a reaction to the softening of the top of the yearling market, to which his yearlings have their appeal," said Ric Waldman, who manages Storm Cat for Overbrook.

Storm Cat is the headline-grabbing example, but conservatism shows in the rest of Overbrook's roster, too. All but two of its other stallions will stay at the same fee as this year. Cape Town and Tactical Cat both took cuts - Cape Town from $10,000 to $7,500 and Tactical Cat from $5,000 to $3,500.

Another farm that issued its fees this week, Darby Dan, showed much the same trend. Its fees had only one change from 2007, and that was to move Saarland from a $10,000 fee to a private fee. All the rest remain at 2007 levels, including Aldebaran, the farm's most expensive sire at $30,000.

"We're trying to really listen hard to our fellow breeders out there," said Darby Dan managing partner John Phillips. "They've been pretty adamant that fees are really high and squeezing the margins pretty close."

"Certain fees of very successful horses are going to have to go up, like Smart Strike [who goes from $75,000 to $150,000 in 2008], and we understand that," said breeder Martha Jane Mulholland of Mulholland Springs. "But if you look at sale results for any individual stallion, it's surprising how many do not make a profit."

Many commercial breeders say it's harder to make a profit in recent years, especially for stallions likely to sire 100 live foals that will compete with their own in the marketplace.

One who welcomes any sign of cooling stud fees is Idle Hour owner David Hager.

"I try not to spend more than $30,000, because it's too much exposure, especially in today's market, where they focus on the physical," he said. "If you can breed a nice physical specimen from a $30,000 stud fee, take it to market, and get the same amount you would have for a $50,000 to $100,000 stud fee, why expose yourself? Be a little more conservative. Everybody wants to breed to those expensive stallions, but then when you go to the sale and can't make any money, it's hard to keep doing it."

Stallion owners say holding the line on fees isn't as easy as it looks, considering the high cost of acquiring new stallions and the pressure stud farms feel to "make" a young horse early by breeding as many mares as possible to him in hopes it will boost both his immediate income and his total future progeny earnings. But commercial breeders who patronize those stallions say they're happy to see it.

"We struggle to make a profit, and any time the stud fees don't go up, it gives the commercial breeders a little more hope that they can make a profit," Mulholland said.