Presentation to the Darley Flying Start Conference at Keeneland, Kentucky
July 2007

William Rainbow vs Eden Harrington
Debate: Kentucky will be the world stallion capital in 2030

The argument for: William Rainbow

Good afternoon ladies and gentlemen! My name is Bo Rainbow and yes, I am from Ocala. Today, I have been charged with convincing you that Kentucky will be the stallion capital of the world in 2030. Now, it is hard for an Ocalan to say this, but I firmly believe that Kentucky has the strongest concentration of sire power now and will still have the best stallion population the world has to offer in 2030. In the next ten minutes, I am going to show you why Kentucky is so dominant in the breeding shed and what is going to keep it at the top of its game twenty-three years from now.

First, I think we must discuss what makes a place the stallion capital of the world. Lexington entitled itself the ‘Horse Capital of the World’ by painting it on their water tower first. I wish we had thought of that down in Ocala, but I think that the argument for ‘Stallion Capital of the World’ should have a little more thought put into it. So, what should make a place the stallion capital of the world and how can we predict that an area will be standing the best stallions 23 years from now? Should the world stallion capital have the greatest number of stallions in an area? Maybe the stallions should have the highest average books of mares. Or should it have the highest average stud fees? Or is it some other factor or a combination of many factors? In my opinion, the criteria for determining of one geographic location to be the world stallion capital is a bit grey, however by comparing and contrasting the major stallion population areas in Japan, Ireland, England, and Australia to Kentucky it will become clear that Kentucky will still have the top stallion population in 2030.

Now, let’s look at stallions by the numbers in a geographical area. The number of stallions in Kentucky in 2007 is 360. These stallions bred just over 21,000 mares which translates to approximately 58 mares per stallion. That is the highest average of mares per stallion for any population of stallions from around the world. Ireland maintains about 400 stallions that average about 43 mares each, however only half of those stallions are advertised for flat racing. The other half race over jumps! Weatherbys stallion book advertises just over 100 thoroughbred stallions in England and those stallions have an even smaller average book size. So Kentucky still wins there. Now, Australia has about 830 stallions which produced 17,000 foals, but don’t worry. Like United States, the thoroughbred industry is spread out across the continent. In New South Wales, the premium breeding area in Australia, there are only 265 stallions. In 2004, Japanese breeders had a choice of 329 stallions, but the number if mares is so much low, that the average book size is below 20. So, of all the major thoroughbred breeding areas in the world, Kentucky still stands more stallions. However, the sheer numbers of active stallions in a geographic area alone does not make a place the world stallion capital. If that was true, then California would have been the world stallion capital in the 1990’s when more that 900 registered thoroughbreds were listed as active stallions!

Then, how do we know that Kentucky is the world stallion capital right now and that it will be in 2030? The answer to this is seen in the demand of its stallions, especially its young stallions. It is evident that Kentucky stallions are the highest in demand around the world because they stand for the highest average stud fee and breed to largest books of that any other population of thoroughbred stallions in the world. In 2006, 96 Kentucky based stallions bred over 100 mares. However, in New South Wales Australia only 43 stallions bred books of mares greater than 100 and 18 of them are shuttle stallions based in the Northern Hemisphere and 10 of those are based in Kentucky! Thoroughbred breeders have faith in the Kentucky based stallions to produce offspring that will be successful in the sales ring and at the racetrack. It is more than optimism. The offspring of Kentucky based sires have consistently performed better on all levels than sires from other breeding center. 76% of all Kentucky Derby winners have been Kentucky breds. Eight of eleven Triple Crown winners were Kentucky bred and 70% of all Breeders’ Cup Champions are Kentucky bred. Kentucky stallions consistently outperform stallions from other regions. That is way there are 30 stallions in Kentucky that stand for over $50,000 USD. Ireland, England, and Australia all have less than a dozen at the comparable stud fee. Therefore, anyone with a top stallion would looking to capitalize on its popularity would retire the stallion to a Kentucky zip code. If we look at the retirement of stallion prospects off of the racetrack from the last six years, Kentucky’s young guns are attaining the highest average stud fee of retiring stallions than anywhere else in the world. Six racehorses have retired starting with six figure stud fees: Vindication, Mineshaft, Empire Maker, Smarty Jones, Ghostzapper, and, Bernardini. These young sires are attracting books of high quality mares that are sure to produce outstanding foals that will continue the stallion’s reputation. In 23 years, these stallions will be the Elusive Quality’s, Awesome Again’s, AP Indy’s, Kingmambo’s, and Storm Cat’s of the future.

Many people feel that Kentucky is losing its grasp on the world stallion capital to Japan, because Japanese based sires are dominating the world leading sires list by earnings. I see their point. American based sires used to have a much greater presence on the list, but the fact of the matter is simply that one of the two horseracing authorities in Japan, the JRA, happens to have an extremely generous purse structure that allows them to pay out purses far greater than anywhere else in the world. Their average purse is approximately $300,000 while the average American race is only about $20,000. At one point, the Kentucky stallions were not as affected by the Japanese race purses because there were so many horses being exported to Japan that many stallions were receiving a significant boost from their progeny earning Japanese purse money. However, Japan’s business recession led to a decreased amount of foreign horse purchases and as a result, more races were won by the progeny of Japanese based stallions. So in my opinion the world leading sires list by earnings is not an effective way to rank stallions, because Japan’s purse structure causes such an anomaly. If we remove Japanese earnings from the list or even equilibrated it to other nations, Kentucky based stallions would once again clearly dominate the international sires list.

Another related argument is that America is selling all of its top stallion prospects at yearling sales to foreign interests and thereby losing its genetic superiority. I think this too is misunderstood. While about 30% of Kentucky’s foal crop is exported, the migration of the top breeding stock back to Kentucky is clearly strong enough to offset these losses. Let’s think about that for a second. If American breeders were going to irreparably sell off all of its top breeding prospects at the yearling sales, then Kentucky would not be the world stallion capital right now. About twenty three years ago, a very large quantity of select yearlings were sold out of Keeneland July and shipped to Europe. Clearly there is a migration of the world’s best breeding stock to Kentucky and their not just coming up from Florida. We need not look further than the American bred and European raced Giant’s Causeway, who after standing one season in Ireland was quickly relocated to Woodford County, Kentucky. Anabaa has proven himself for years in Europe and now he has been relocated to Kentucky. Even Invasor’s sire, the late Candy Stripes was brought back to the Northern Hemisphere when his ability to produce high quality runners was noticed by Kentucky breeders. And now Invasor, a Argentinian bred two time Breeders’ Cup Champion will stand in Kentucky. This shows that the best stallions will still find their way to the 859 area code.

The investments that have been made by American breeders into studs and bloodstock ensures that the best stallion prospects will reside in Kentucky. Sheikh Mohammed and the Darley America team for one have been busy acquiring top stallion prospects, but there are obviously many other breeding operations that have invested heavily in the future of Kentucky’s breeding business such as Hill n’ Dale, Vinery, Claiborne, Walmac, Ashford, Taylor Made, Winstar, Stonewall, Castleton Lyons, and Adena Springs. The prominence of these farms is immense and the amount of competition among them to be the best drives them to continually breed the best and look for the next racing champion that can ultimately retire to the breeding shed.

While the state of Kentucky has not been as generous as Ireland with regard to taxing stallion revenue, it recently started a state bred breeding program that generously rewards breeders who breed to Kentucky based stallions and keep their mares in Kentucky throughout the gestation. The 6% sales tax revenue collected from stallions seasons pays out approximately $12 million per year to Kentucky bred winners around the world. This encourages people to breed to Kentucky stallions because they know that no matter where the offspring race, breeders will be rewarded for their accomplishments.

Other states cannot compete with such an exclusive program because they need the Kentucky bloodlines. Every year about 4,000 foals of Kentucky stallions and registered into other state bred programs where the only requirement is that the mare foal in that state. Breeders who use Florida, New York, or most other state bred programs only earn bonuses on the progeny that win at racetracks in their state breeding program whereas Kentucky breeders earn bonuses on their progeny around the world.

Finally, Kentucky has an incredible infrastructure for remaining the world stallion capital. It has great soil, temperate climate, large number of skilled horsemen and women. There are also some of the best equine veterinarians in the world working in Kentucky. The government is also supportive of the industry because horses are Kentucky’s number one cash crop and are so iconic they define it as a state. Furthermore, it is home to Keeneland, the world’s gathering place for bloodstock and buyers. A sales ring that does more business in September than any other equine auction house does in a year. It is tradition, it is habit. If you are looking to breed to a great horse in a strong market, look no further than Kentucky.

To recap my main point, Kentucky will be the stallion capital of the world in 2030 because the Kentucky stallions attract the highest books at the highest prices. As a result, people will continue to retire their best stallion prospects to the bluegrass.

One final thought, when Lord Derby was looking for a suitable mating for his Champion mare Ouija Board who has won Group 1 races around the globe, she made the trip to Kentucky.

Thank you very much for hearing my half of the debate and I look forward to entertaining any questions you may have regarding Kentucky’s status as ‘World Stallion Capital’ in 2030.

The argument against: Eden Harrington

In a dynamic world thoroughbred economy those who progress the fastest will single themselves out as stallion centres of excellence. Kentucky has earned the title of the stallion capital of the world on the score of decades of hard work and astute purchasing. And it has maintained its ranking not because it stands the most stallions, but rather because it stands the most high quality stallions. It is access to top tier sires that elevates a region above others as a stallion capital.

But already there is evidence to suggest Kentucky’s reign as a solitary superpower is about to come to a close. It won’t be usurped by another single entity. Rather, indicators point to the world’s talent pool on stallions becoming more uniform. This is most likely because:

• America’s racing industry is riddled with problems and is failing to remain self sufficient
• Shuttle stallions fast tracking the spread of world class bloodlines
• Kentucky not bringing in new bloodlines from beyond its shores
• Growing prosperity in regions such as Australia, Ireland and even Argentina.

The next 20 to 30 years will see a shift in the structure of the thoroughbred world from one leading centre to three and possibly four jurisdictions of prominence. It would be foolish to think that Kentucky will no longer have a global influence, but it won’t hold the prized hand it currently does.

Right now the US has the lead. It has an established brand, it has a controlling interest in many of the world’s top stallions and it dictates the image of the thoroughbred industry that many countries see. But to maintain its post as the stallion capital of the world, Kentucky, and the US as a whole, must continue progressing at a rate equal to or greater than other thoroughbred centres. Right now that looks a forlorn hope.

Here in the Bluegrass, where we are cocooned in a world of heavy international investment, the issues facing the thoroughbred industry as a whole seem very distant. Yet you only need to drive to Turfway Park to be reminded of just how real they are.

The industry in the US is riddled with problems and it is naturally going to have a flow on effect to the country’s primary breeding arm in Kentucky in the next two decades. After all, this is a supply and demand game and the bulk of Kentucky’s stock is sold and raced locally. Racing in the US continues to feel the pressure of a limited fan base, poor revenue streams and the image of a dying sport. Outside the Kentucky Derby it is hard to become noticed by the mainstream media and the code is only breathing with the help of a short term life support aid in racinos.

Already 11 States and 36 tracks have licensed racinos and the number is growing. Each one is no more than a plug in a leaking boat.

• Statistics from the Jockey Club show that betting revenue in the last decade has fallen from $2.9 billion annually to $1.7 billion.
• That the number of races nationally has declined in 14 of the last 16 years.
• That field sizes are stagnant with just over eight runners a race
• Statistics in the Thoroughbred Times that were compiled between June 30, 2006 and June 30 of this year show that of the 12 biggest racetracks in the country only three increased their average daily purse distribution on the previous season.

The time for unity couldn’t be more important and yet that in itself is a false hope with the authorities in this country fragmented into state run organisations rather than coming under one national entity. How can the industry move forward as one under such a set up?

Yet this is the foundation America must use to push off into the future. And when placed against other jurisdictions that are continuing to grow at a faster rate there is a very real chance that the US will not be able to hold onto its most promising stallions or stallion prospects in the coming years.

The commercial arm of Kentucky’s breeding industry would be fool hardy to believe that they have a god given right to the bulk of the world’s foremost stallions. What needs to be remembered is that Kentucky earned its place at the top of the heap through judicious purchasing and hard work. It singled out the best stallion prospects across England, Ireland and Europe and opened purse strings that had been swollen by a buoyant economy and a wave of interest in racing.

How times have changed

Now rapid growth and industry prosperity is being felt in other racing centres such as Australia, Ireland and Argentina and it is likely that in the next 23 years buyers from these locations will be able to access a higher percentage of the best stallions in the world. Trends are already showing that more international buyers are pillaging a higher percentage of US breeding stock to blend with the best they have from back home. Yet there is no real push in Kentucky to better its status quo. It has been a long time since established stars such as Herbager, Forli, Blushing Groom and Caro were imported to the Bluegrass. Instead the Kentucky stallion market is remaining exceedingly introverted, reliant almost exclusively on Storm Cat, Mr Prospector and Seattle Slew blood.

How does Kentucky believe it can maintain its role as the world’s stallion capital if it doesn’t evolve? What is going to happen when Storm Cat, Dynaformer, Kingmambo, A.P. Indy, Seeking The Gold, Theatrical, Royal Academy, Woodman, El Prado and Quiet American pass on? Kingmambo is the youngest of these and he will be 18 when next years covering season comes around.

In recent years stallion power of the ilk of Distorted Humor, Malibu Moon, Successful Appeal and Songandaprayer have been transplanted in Kentucky having made successful starts in other States. Just like Mr. Prospector and Halo before them. It is these kind of stallions that the industry is relying on going into the next decade.

But what is going to happen if States like Florida, Maryland and New York hold onto some of these horses and don’t automatically move them to Kentucky? After all, the breeder incentive programmes in some other US States are more lucrative than what is offered here. Florida and Pennsylvania have better programmes and New York can match the Bluegrass dollar for dollar. And how is Kentucky preparing for the next big change, the shift from dirt to polytrack? Other centres control the world market on turf runners and there is no suggestion that dirt runners are superior on the new surface.

In contrast Australia, South America, Japan and even Europe continue to evolve by having stallions shuttled to them to test the best from afar against the local product. The intention is to broaden available bloodlines, breed more commercial stallion prospects and strengthen brand awareness.

There is no better example than Australia as to the impact the shuttle stallion phenomenon can have even in a decade. No where else on earth has had access to a smorgeousbord of Breeders Cup winners, Arc heroes, Derby stars from Ireland, England and America, Guineas victors, Japan Cup successors as well as champion juveniles from near and far and all at a cost price.

It has seen the industry blossom and now the one time minnow is verging on being a very big fish. Expect similar results in South America. Australia’s Redoute’s Choice may not be a household name in most Kentucky homes but he may well be very soon.

His statistics are so astounding that he can attest to siring more Group or Grade One winners than Dynaformer, Giant’s Causeway, Distorted Humor, Unbridled’s Song, Forestry, Awesome Again and El Prado and his oldest progeny are only five. Statistics show that he has produced 11 individual Group One winners, or one every 25 foals of racing age. No stallion in Kentucky can match such a feat.

So glaringly astounding is this prepotent son of Danehill that he covered 34 mares to northern hemisphere time earlier this year from his home in the Hunter Valley, many at the insistence of John Ferguson acting on behalf of Sheikh Mohammed.

Redoute’s Choice isn’t a one off. Rather he highlights a trend that has arisen during Kentucky’s golden era of success. And that is, that with so much talent around you it can be hard to see what lies beyond your shores.

So here’s an update

Ireland’s Sadler’s Wells, Montjeu and Galileo are more than a match for Storm Cat, A.P. Indy and Forestry.

Europe’s Monsun, Pivotal and Invincible Spirit stack up well against El Prado, Unbridled’s Song and Johanesburg.

Australia’s Redoute’s Choice, Encosta de Lago and Flying Spur have had a greater impact than Giant’s Causeway, Distorted Humor and Mr. Greeley.

And Hussonet and South Africa’s Jet Master have records so dominant that Elusive Quality and Fusaichi Pegasus pale by comparison.

I am not taking a stance against Kentucky because opportunity permits. Rather, the intention is to show Kentucky the rest of the world, much in the same way that the world has been shown Kentucky. Some of the trailblazers of the code are already realizing what lies out there and are starting a new trend. They are shuttling southern hemisphere horses north of the equator. Indeed, more and more often operations in respective hemispheres are sharing in ownership of high priced stallion prospects and ferrying them between seasons.

Darley’s Exceed And Excel is one of the more popular young sires in either hemisphere. Coolmore’s Choisir is one of Europe’s leading juvenile sires and John Magnier himself turned to Encosta de Lago to cover his own mares in Ireland when George Washington’s fertility became more than a concern.

These are just a few of the stallions helping spread the talent pool more evenly. And in an industry that is becoming more uniform with every season you can no longer be so narrow minded as to dismiss a stallion or his progeny’s Group or Grade One successes because of the country they hail from.

After all, the best horse to race in the States in the last 18 months heralded from Uruguay, Europe’s premier older horse was born in Germany and the last decade has shown that the best source of short course speed is found in Australia. It isn’t inconceivable that racing’s next star could be bred in Japan, New Zealand or even Argentina.

In this dynamic world thoroughbred economy those who progress fastest will rule and changes are upon Kentucky. Some will be within your control, some won’t be. The impressive growth of southern hemisphere thoroughbred centres and the financial prosperity Ireland is undergoing cannot be changed. There appears to be no easy solution to making the US racing industry self-sufficient in the long term. And stallion talent that was once the Bluegrass’ alone continues to be shared thanks to international conglomerates, shared ownership and shuttle stallions.

Kentucky’s reign as the world’s stallion capital is coming to an end. It won’t be usurped by another single entity. Rather the world’s talent pool on stallions is becoming more uniform.

Click here for a complete list of July 2007 Keeneland assignments