Stallion cap reaction: Kentucky farms have their say on controversial move

Several Kentucky stallion owners and managers have said they would prefer to see market demand determine the number of mares bred to any given stallion, after the Jockey Club of North America announced on Thursday it had adopted a book size cap of 140 in the US, Canada and Puerto Rico for colts born from this year onwards.

"I believe in allowing the market to be the driver. I believed that when this was proposed, and I still believe that," said Headley Bell with Mill Ridge Farm and Nicoma Bloodstock. "We put in our syndicate for Oscar Performance that we were going to limit his book to 140 mares, so we believe in that, but then it should be up to each farm to make that decision. Then you allow the consumers – the breeders – to decide. If they don't believe in that policy, then they won't support the horse. Markets should be drivers; it is a free economy."

"I prefer that the free market dictate what people do," added John Sikura, the president of Hill 'n' Dale Farms. "Eventually, we'll have two tiers of stallions, one tier that can breed an unlimited book of mares that could be as young as five and one that is breeding with limits. I'm not sure what that's going to mean. Anytime you artificially impose restrictions in markets, there is the possibility of good things and the possibility of unforeseen complications."

As for threats to the thoroughbred population's health due to narrowing diversity in the gene pool, both Bell and Sikura said they had not seen enough evidence supporting this position.

"I don't buy into the genetic diversity argument just because a horse breeds a lot of mares," Sikura said. "The stallion could be an outcross, so that is a specious argument."

Other farm owners and managers said they thought the new rule was an important, positive change.

Walker Hancock, the president of Claiborne Farm, supported the rule change as an important first step toward allowing the thoroughbred breeding industry to be more sustainable and to produce sounder horses over the long term.

"There are a lot of positives I think that will come of this, even though we won't see those benefits for 10 years or so," he said. "This is a long-term plan. The sustainability of our industry is what's important."

North American Jockey Club adopts rule restricting stallions to 140 mares

Bill Farish with Lane's End said he's been a proponent of this rule change from the start and still feels strongly that it is in the best interest of both breeders and the future health of the breed.

"The comments received were overwhelmingly supportive of the rule change," Farish said. "People recognised for the good of the stallions and for the good of the breed, this is the right thing to do."

"I can see how this decision can benefit the industry at this point in time by increasing diversity and spreading the wealth of mares," added Brian Graves, the general manager at Gainesway.

The team at Spendthrift Farm has been one of the most vocal critics of the mares-bred cap. The Lexington-area farm owned by B Wayne Hughes stood 26 stallions in Kentucky during the 2019 breeding season, which included four stallions who bred 165 mares or more in 2018.

In September, Spendthrift general manager Ned Toffey said capping book size could dramatically increase stud fees and impose economic barriers for a lot of breeders.

"If you were to reduce Into Mischief's book, his becomes a very expensive stud fee, and the way it is now works for a lot of smaller breeders," Toffey said in September, adding that he was skeptical the rule change was truly about genetic diversity. "We would like to see the data. I think there is no question that there is an economic factor here. Is it about the gene pool or about competition?"

Asked on Thursday about the rule going into effect with its implementation starting with the future stallions born in 2020, Toffey declined to comment.

The time frame for implementing the rule received the most support among stallion owners and managers.

"The way they did it is probably the smoothest path toward the goal of limiting the books to 140," Hancock said. "It is not really fair to people who spent a bunch of money on a stallion thinking they had unlimited breeding certificates. Now the rules are in front of us, everyone knows what to expect, and the playing field will get levelled."

"I appreciate the time frame in which the rule was enacted, with the consideration to stallion farms' current investments and valuations," Graves said.

'The real winner might be the shuttle marketplace'

Many also recognised the potential benefit of the cap providing more support to stallions in their second through fourth years at stud, when attracting mares can be a struggle.

"Even with good horses now, you get to their second, third, and fourth years, the market dries up. This is probably going to help those later books some," said Ben Taylor, the vice president of Taylor Made Stallions.

Sikura said he could see pros and cons but added the benefits will always be judged stallion by stallion.

"Spreading the mares among different stallions will always depend on the stallions someone has. I have some successful horses that should get more mares but don't because we're breeding 200 mares. I also have very popular horses that breed more than 140 mares," Sikura said. "This gives a lot of lead time, which is important."

Sikura also speculated that the long implementation period could make a legal challenge unlikely because it does not affect any stallion who has been purchased or affect one who has been managed under the previous rules.

"Everyone has been forewarned," he said.

While any long-term effect of the rule change is unknown at this point, some expect capping the number of mares to eventually lower the market value of stallion prospects while potentially increasing the demand for shares in the most popular syndicated horses.

"Back in the 1970s and 80s, you almost had to buy a share in a horse if you wanted to breed to him," Taylor said. "Then there was no use buying a share because they were breeding so many. We're not going back to those earlier days but certainly more toward the middle. People might start getting more aggressive in buying shares."

Because the mares-bred cap only applies to the US, Canada, and Puerto Rico, Sikura said this change could open up opportunities for farms in South America.

"The real winner in this might be the shuttle marketplace because of that gap in income. You can make it up in the Southern Hemisphere," Sikura said.

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