Op-Ed: Lack Of Owners Remains Key Concern

[Wandering Eyes]

Those who thought they might manage forty winks on a very hot morning during the Thoroughbred Breeders’ Association’s AGM last week were in for a shock when board member Philip Newton took to the floor.

On delivering the preliminary findings of an economic impact study conducted on the TBA’s behalf, Newton was moved to describe the British breeding industry as having a “seismic crack” in it. Admittedly, this was just one soundbite of a forerunner to the publication of the full report in the coming weeks, but on choosing his words, Newton will have been fully aware that such a phrase would make people sit up and listen and generate a headline or two.

The British breeding industry is relatively small in comparison to its counterparts in the USA, Australia and Ireland but it’s fair to say that it has always punched above its weight. Records show that there are currently 3,318 breeders and around 9,000 registered broodmares. Of the £3.1 billion contribution to the UK’s gross domestic product (GDP) by the horseracing industry in general, approximately £500 million of that comes from the breeding sector.

What has set the alarm bells ringing for the TBA is the fact that there’s been a decline of 8% in the number of individual breeders in Britain over the last five years. Moreover, since the previous economic impact study in 2014, the level of breeders operating at a loss has risen from 45% to 66%.

Britain is of course fortunate to be home to some major owner-breeder operations, including Juddmonte Farms, Darley, Shadwell, Cheveley Park Stud and Lanwades, as well as the more commercially-orientated Newsells Park Stud. All of these studs also support a stallion roster. There have been some welcome additions to the breeding sector, such as Saleh Al Homaizi and Imad Al Sagar having made significant investment at Blue Diamond Stud, likewise Andrew and Jane Black at Chasemore Farm, and Geoff and Sandra Turnbull at Elwick Stud, which now stands its own stallion, Mondialiste (Ire).

However, some familiar studs have been lost to the Thoroughbred industry recently. Despite initial interest from John Dance, the Barnett family’s Fair Winter Farm is now home to a herd of alpacas and Normandie Stud, sold in 2016 by Philippa Cooper, is now a private sport horse farm, though both Dance and Cooper are still very much active breeders.

To a certain extent, when it comes to the ebb and flow of participants and property in racing and breeding, ’twas ever thus. What the TBA will want to do forthwith, however, is ensure that the flow of small breeders leaving the industry is reduced to a trickle at best. Convincing some to stay will not be easy.

Figures revealed by Newton show that a breeder offering a yearling for sale in the rarefied environment of Tattersalls October Book 1 could reasonably expect to make a profit of £118,000, while for a Book 3 yearling the average loss, when taking into account production costs, is £23,500. That will make grim reading for some as we sail into a yearling sales season on the back of a challenging breeze-up season, for it must not be overlooked that the breeze-up pinhookers account for a significant portion of the yearling sales market. By nature they are a fearless crew, but it seems reasonable to expect a little belt-tightening here and there.

Since the British Horseracing Authority’s chief executive Nick Rust gave his inaugural roadshow address in 2016 during his first year in office, it has been clear that the BHA’s aim is to maintain the current fixture list level—regarded as overcrowded by some—and Rust called upon breeders for an extra 20,000 horses to fill the demands of the British racing programme which currently numbers some 1,500 meetings. Of course it’s not just British-bred horses racing in the UK. In fact, only about 50% of the Thoroughbred population in Britain originated in the country and Britain remains Ireland’s biggest export market by a long way. Horseracing Ireland figures show that of the 5,245 Irish-foaled horses of various ages to be exported from Ireland last year, 4,037 were bound for Britain.

The BHA will perhaps have taken encouragement from the fact that foal crops in Britain and Ireland remain on an upward curve. Following sharp drops in the wake of the global financial crisis—which coincided with a time of overproduction—the numbers have climbed steadily. In Ireland the rise has been quicker but the initial drop had been greater. Between 2008 and 2011 it fell by just over 39% while in Britain the contraction was almost 22%. Between 2013 and 2017, there’s been a rise of 25% in Ireland and 8% in Britain.

The number of foals born in Britain last year was 4,778, almost exactly half the number of the Irish foal crop which peaked at 12,663 in 2007, while Britain’s high came in 2008 when the number of foals reached 5,920.

Depending on whom you speak to, we are either heading back towards overproduction, or we’re already there. Simply put, however, if the level of supply exceeds the demand then there are too many foals being produced, in which case the train pulled into that station several stops ago.

These days it’s not just about finding a buyer for your yearling, it’s finding a sales slot in the first place. To a certain degree, the elite Book 1 and Orby sales are self-selecting in composition and routinely draw a wide selection of international purchasers. But both Tattersalls and Goffs have seen significant increases in demand for places at their middle-tier and lower-market yearling sales this year and will currently be trying to solve the impossible puzzle of how not to upset breeders by saying no while keeping a tight control on catalogue sizes in an already packed sales calendar.

Of course many of the problems in British racing come back to prize-money, or the lack thereof when set against other major racing nations. The BHA has certainly helped to improve that situation in the last year with a near-doubling of purses at grass-roots level, though for most lower-rated horses—vitally needed to fill the race programme and costing their owners much the same to keep as Group horses—this still isn’t enough for them to pay their way even with a couple of wins per season.

The TBA has also been proactive in trying to improve the situation in Britain by pushing for increased opportunities for staying-breds and now the possibility of a supercharged variation on the Plus 10 bonus scheme solely for GB-breds, for which the association needs industry backing to launch next year. For those operating in Britain, both of these could serve either to encourage more breeders to put horses in training, or to increase sales returns.

Newton and his fellow board members will be fully aware that this business is cyclical and it seems likely that a self-imposed market correction will be seen over the next few years, which could see a further drop in the number of breeders.

Certainly we need to ensure that this decline doesn’t become too severe, but breeding racehorses is only viable if there’s a strong demand from people willing to race them.

 

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