Frankly Speaking: Give Them A Break

Last month I addressed the sales model of the show/performance industry and how lowering the standard commission would help producers and encourage growth. That’s one step. But there are many more steps we need to take along the way, as we continue along a road where we are constantly sideswiped by the marketplace’s shrinking base.

Economically and demographically, we’re not where we were 10 years ago. And yet our business model is still chugging ahead as though it’s a decade back. 

Lowering sale costs, like I said last month, is a good first step in the forward direction. But, the process actually begins with the costs related to the production of our horses. Labor, feed, hay, vet, mare care and stud fees are all expenses that factor in to whether or not a breeder realizes a profit. Margins are pretty thin these days. In my mind, there isn’t much we can do to lower commodity prices and wage scales, but there are some things within our control that would absolutely impact the bottom line. 

Right now, I’d like to talk about stud fees and how the rise in those prices has dampened the breeders’ resolve to continue to produce quality bloodstock.

A breeder usually desires to achieve a profit from the sale of his product. At least that’s the goal. But, so often the check arrives and there’s still a deficit – despite the breeder’s best efforts, wisest decisions and biggest expectations. We can all name breeders who have left our industry recently because, over and over, the numbers failed to pencil out. Yes, some breeders are in the business for fun and profit is not their primary motivation. But I contend those make up the minority. Even for those who are very wealthy, losing more money – year after year – is not pleasant. It’s disappointing and it gets old. 

Now, I realize that many factors contribute to those shortfalls, such as death, poor decisions, sickness, unsoundness and unsatisfactory results in conformation. But I would argue that, more often than not, breeders hang up their passion for breeding horses because the money coming in repeatedly falls short of the production money going out. 

Last month I asked leaders in the sale industry to change their models in order to pass along savings to horse breeders. Today, I am advocating change in the stud barn. If every stallion owner made the decision to lower his fees – if all of the stallion owners united – it could spark a turnaround. It might bring back some breeders who gave up and encourage them to try again. 

Right now, I’m concerned that, if left in it’s current state, the performance horse industry could go the way of the gaited horse and the Arabian horse businesses, where there are a limited number (far fewer than there used to be!) of very wealthy people who are satisfied to trade dollars amongst themselves for the simple pleasure derived from participation in an elite activity. We should be able to learn from the mistakes of others and recognize the pitfalls that befell their once vibrant industries.

It makes no sense to lower costs in one segment of an industry while everything else stays too high. All of us have to realize the truth – namely that membership numbers, registrations and transfers are dwindling each year in this business. This is happening across the board! I’m not saying this, the numbers are. Every year the final reports come out and we learn there are fewer breeders than the year before, and we see direct evidence that many horsemen purchase their prospects at sales because that option is usually less expensive than breeding prospects at home. That dynamic can’t change until the economic model in our industry changes. 

I’ll give you a very good example: About 10 years ago, production numbers, sales figures, and numbers of breeders started to wane in the face of rising costs associated with producing Thoroughbred racehorses. That industry underwent a sweeping reduction in stud fees in an effort to save the business model and bring breeders back into the fold. The recovery is far from over, but some light is being seen at the end of that tunnel. At least breeders are trying again. 

So you see, horsemen possess the ability and knowledge to affect positive change; they just have to be willing to do so for the sake of the whole, not just themselves. The facts are what they are, and change for the better won’t happen without a united front.

I challenge all of you to ask yourselves: Are you better off now than you were five years ago? If the answer is no, then do you have the resolve and passion to make your situation better by demanding an economic renaissance in our performance horse industry?

We need to look to the longterm. And it can’t be just a few of us – it’s going to take ALL of us. This crusade requires “All the King’s horses and all the King’s men” to put the horse business back together again!

As always, I remain,

Frank