Before he pulled out of Saturday’s start at Belmont, I’ll Have Another and his handlers had much to rejoice about during the past few months. They trained a great horse, stole a sizable chunk of the nation’s sporting spotlight, and made a killing in the process. The equine industry as a whole, however, hasn’t shared their joy. Revenues across the sport are down, reports of brutality are on the rise, and owners can no longer demand the six-figure breeding fees for some of their animals. Sadly, horse racing’s once unshakable luster is beginning to fade away.
“It certainly is a different sport going back 10 to 20 years,” says Bob Curran, vice president of corporate communications at The Jockey Club, a breed registry that works to support and improve thoroughbred breeding and racing.
The equine industry’s plight is both national and localised. In the farmlands of Kentucky, where horse rearing and training is a way of life, owners and breeders have taken the biggest hit. No longer are they being courted by wealthy investors looking to make a fortune off of a colt. Instead, “for sale” signs are cropping up at once lucrative stables and auctions are seeing fewer horses and diminished prices.
According to tax firm Dean Dorton Ford’s 2009 Assessment of the equine industry, total horse auction sale revenue plummeted in 2009 to a little above $600 million, drastically down from the $1.2 billion that changed hands in 2006.
Additionally, the average price at auction for these cherished racers fell. Broodmares — female horses used for breeding — sold for nearly $70,000 a horse in 2007. In 2009, they were auctioned for nearly $45,000 a horse.
Breeding prices, once a leading source of revenue for horse owners, have also fallen sharply. Blood Horse, which maintains a comprehensive sire database, listed Storm Cat’s stud fee (mating fee) as $500,000 in 2004. Currently, however, the highest stud fee belongs to the horses Street Car and Bernardini, who each demand $150,000. Other fees on the database are significantly lower. Flower Alley, I’ll Have Another’s sire, has an unlisted stud fee on the website, assumedly due to the horse’s newfound fame.
Like the subprime mortgage crisis, the collapse of the equine trade was caused by over-leveraged buyers speculating on fantastical prices. Horses were overbred, qualified buyers became scant, and those who purchased horses borrowed too heavily to do so.
The disastrous economic effect on local owners quickly became a statewide problem. As prices dropped and patrons gambled less on the horses, the state experienced a significant drop in the tax revenue that it normally receives from the sport. Horse racing in Kentucky, The New York Times reports, is responsible for over 100,000 jobs and holds a $4 billion economic impact.
With decreased betting wagers and auction prices, a spike in foreclosed farms, and lower breeding prices, those local economic figures stand to diminish tremendously, maiming the livelihoods of breeders, farmhands, and trainers in the process.
Nationally, the sport and its caretakers are also suffering. According to McKinsey&Company’s 2011 review of the racing industry on behalf of The Jockey Club, figures across the sport are experiencing a massive free fall. Handles — the money bet on horse races — were down 37 per cent from 2000-2010 and attendance during the same period dropped 30 per cent.
The way fans experience horse racing has also changed, according to Curran. “In the past if you wanted to participate you went to the race track,” he says. “Now OTB’s and simulcast have altered the point of sale.”
McKinsey found that not only was the racing fan base shrinking by 4 per cent every year, it increasingly held a negative view on the sports as a whole. If the industry doesn’t shape up, the report warns, owners could experience a 50 per cent loss in profits by 2020.
The industry has pledged to reform itself and rebound from its losses, but you may want to think again if you plan on riding I’ll Have Another’s coattails to equine riches. Horses are never a surefire investment, and the turbulent equine economy isn’t helping matters.
“If you’re going to invest in a horse, learn something about the sport and its financing first,” recommends Curran.
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