How can breed to sell operations sustain themselves??

[Tonno100]

Nobody has a right to make a profit, especially when they're breeding the kind of horses that haven't been selling for several years, this didn't happen overnight.

[bdw0617]

Free markets hand out brutal justice. The TB market place is a free market in the wild west sense of the word; there is almost zero regulation or accoutability.

Having said that I also believe the market is justifiably giving a lot of the breed to sell breeders exactly what they've earned. Too many people are breeding horses to sell like it is a hobby not a business. If it is a business, you start your marketing before the stallion is booked. You know who will be interested in your foal and what they are likely willing to pay. You don't ignore the 30-10 rule of thumb (only the top 30% beat sales average, the top 10% turn a healthy profit) and you make sure your mare will produce into the top 30%. If she won't, then you better change your plans because the market is unforgiving and you have to deal with the risk that your foal won't be a perfect specimen on top of all that. Too many people think they are running a business, but they rely on the marketing of the stallion and the effort of the sales agent to sell their horse and then wonder why they can't break even on their horses. This is a very tough market, those who work their a**** off to market their horses in the most appropriate market for those horses will survive. Those who expect buyers to run up to their barn door with wheel barrows full of money will not.

I know this might come across as a little harsh, but it really isn't any different than any other tough business. Building relationships with your customers and providing them with the product they are willing to pay for, is the only way to survive in business.

Dave,

I have been on this forum for about a year and a half.. and this might very well be the best post I have ever read.

THANK YOU for being logical. You are stating something that I have been saying only to get laughed at becuase ovbiously I don't know what I am talking about

The hrose racing business is just that. A business that involves horse racing. it's a business. it's not some pie in the sky shame, some grand scheme where people are out to trick you to do things to ensure you can't make a profit.

Truth be told is that most people in the horse racing business have no business running a business. they would rather turn to illogial arguements than to look at facts. Rather blame the market than themselves for not having a full grasp of what needs to be done.

I said this about 5 months ago. 95% of all businesses fail. Not just horse racing businesses. Businesses. it's no harder "out there" than it is "here".

Part of the reason you can't make a dime is simply becuase you wont' realize this, and learn something from a business perspective.

[Tonno100]

Free markets hand out brutal justice. The TB market place is a free market in the wild west sense of the word; there is almost zero regulation or accoutability.

Having said that I also believe the market is justifiably giving a lot of the breed to sell breeders exactly what they've earned. Too many people are breeding horses to sell like it is a hobby not a business. If it is a business, you start your marketing before the stallion is booked. You know who will be interested in your foal and what they are likely willing to pay. You don't ignore the 30-10 rule of thumb (only the top 30% beat sales average, the top 10% turn a healthy profit) and you make sure your mare will produce into the top 30%. If she won't, then you better change your plans because the market is unforgiving and you have to deal with the risk that your foal won't be a perfect specimen on top of all that. Too many people think they are running a business, but they rely on the marketing of the stallion and the effort of the sales agent to sell their horse and then wonder why they can't break even on their horses. This is a very tough market, those who work their a**** off to market their horses in the most appropriate market for those horses will survive. Those who expect buyers to run up to their barn door with wheel barrows full of money will not.

I know this might come across as a little harsh, but it really isn't any different than any other tough business. Building relationships with your customers and providing them with the product they are willing to pay for, is the only way to survive in business.

Dave,

I have been on this forum for about a year and a half.. and this might very well be the best post I have ever read.

THANK YOU for being logical. You are stating something that I have been saying only to get laughed at becuase ovbiously I don't know what I am talking about

The hrose racing business is just that. A business that involves horse racing. it's a business. it's not some pie in the sky shame, some grand scheme where people are out to trick you to do things to ensure you can't make a profit.

Truth be told is that most people in the horse racing business have no business running a business. they would rather turn to illogial arguements than to look at facts. Rather blame the market than themselves for not having a full grasp of what needs to be done.

I said this about 5 months ago. 95% of all businesses fail. Not just horse racing businesses. Businesses. it's no harder "out there" than it is "here".

Part of the reason you can't make a dime is simply becuase you wont' realize this, and learn something from a business perspective.

Seconded as a brilliant post, you'd imagine that a successful small breeding operation doesn't stay small for long

[bdw0617]

being "small" has it's perks.

everyone's dream isn't to own the biggest company in the world or even a big one.

In the 48 laws of power, the 2nd to last law is "in victory, no when to stop.. dont' go father than your mark".

when I had my computer company had I set my personal goals up and worked backwards I might still, Might being the operative word, be doing that today. The company got bigger than I thought it would, which at first was great, but with more money comes more work, alot more work, alot more responsibilities, alot less personal time, alot more stress, alot more things that keep you awoke at night. And it wasn't that I didn't want to be very successful, it was that if I was going spend my entire life devoted to one business, it wasn't going to be a computer business.

there is something to be said for the breeding operation that stays at 10 or so mares a year and turs a tidy profit year in and year out.

[Sock Monkey]

The hrose racing business is just that. A business that involves horse racing. it's a business. it's not some pie in the sky shame, some grand scheme where people are out to trick you to do things to ensure you can't make a profit.

I agree that there isn't some giant conspiracy in commercial breeding. But, it is a tough business b/c people ARE out to trick you into spending as much as possible. And because you are dealing with live animals, it there is a lot of room for that. Thing are a little more cut and dried with widgets because there are fewer variables.

Dave, how can you ensure you mare will produce in the top 30%? A great mare can have a subpar foal. There are no guarantees.

I think the problem is much more complex than simply a matter of people making poor breeding decisions. Yes, there are people making breeding choices based on obscure pedigrees and things like dosage, etc. but for the most part, those people aren't commercial breeders. And the commercial buyers aren't even looking at those foals so they don't have any impact on sales figures - at the higher level sales. Regional sales may be a different story.

I agree with what Fireslam says about a lack of end users. There just aren't that many buyers. Just look at a forum like this one. How many people are breeding and how many people are racing? There are more breeders than racing owners. I personally know a good number of people who breed yet are unable/unwilling to race the foals. Not because they aren't producing good foals, but because they prefer the breeding side of things and/or they choke on the costs associated with getting a horse to the races.

Tonno made a point about the sheer volume of horses to look at. As a buyer, I use the same method at a small sale as I do at a big sale. I may be abnormal, but I doubt it. I go through the catalogue and find horses by sires I like and/or from families I like and make a point to inspect them. While in the barns, I look at others who are not on my list. If I see an individual I like or a consignor says "you need to see Hip X" I will take a look. A notable example was at OBS: walking between barns I saw I colt I really liked that was out for someone else. I checked him out, put him on my list and then looked at his page. He was a Mongoose which does nothing for me. But he stayed on my list. I didn't buy him and he sold cheaply and I'm still curious about him. But, I think most buyers do that - when I stand in the back ring it always cracks me up how we're all on the same horses. When I'm back there and I see something I like physically, I'm never alone - there are usually a couple of others who saw the same thing I did, all of us were impressed with the individual and we all have the same taste.

To be clear, I both breed commercially and race. I've been in this business long enough to know the issues are very complex - more so than is apparent from casual observance. There is a reason I attend sales even when I'm not actively buying or selling. It's easy to say people are making bad decisions but it's a lot tougher to actually figure out how to make the right decisions.

[reedhill]

If the suspicion above is correct that much of the sale results from scheming together a false market, and opinons welcome, can anybody out of the loop in this enviroment expect to make a profit on a normal business plan?

I don't think so. It happens in every breed of horse and with registered cattle. This makes the little guy that might have a great plan for breeding or training stay out of it all together, or produce in such a small amounts, no one notices, for fear of the low bids or breaking even which doesn't spur progression and improvement of their program.

I'm beginning to think my husband is right in that the only steady way to make money is owning a lot of land, and running commercial black cows for beef. Good land is always in high demand, and almost everyone likes a good thick "angus" steak or burger ! LOL

[reedhill]

If the suspicion above is correct that much of the sale results from scheming together a false market, and opinons welcome, can anybody out of the loop in this enviroment expect to make a profit on a normal business plan?

I don't think so. It happens in every breed of horse and with registered cattle. This makes the little guy that might have a great plan for breeding or training stay out of it all together, or produce in such a small amounts, no one notices, for fear of the low bids or breaking even which doesn't spur progression and improvement of their program.

I'm beginning to think my husband is right in that the only steady way to make money is owning a lot of land, and running commercial black cows for beef. Good land is always in high demand, and almost everyone likes a good thick "angus" steak or burger ! LOL

[Sysonby]

At the risk of being considered completely naive, my thoughts based on about a decade of attending the sales with buyers, consignors and breeders and seeing what happens both on the podium and back at the barn, I think true shenanigans are less than 10 % and generally only happen where the real money is ie horses selling for more than $50K.

Much below that, in the waters most of us swim in, lies a brutal calculus: at the time of his first start, is your yearling likely to be worth more than the $20K it will probably take to get him there from the sale? If the answer is that experienced horsemen think that your yearling will probably debut at maiden $8000--IF he can stand training (no sure thing)--your yearling is essentially commercially worthless. No conspiracy, no grand scheme.

This is why people shouldn't breed cheap mares to cheap studs unless they want to pursue this as a hobby and that's enough of a reward for them or they want to dig deep themselves and do what the market will not.

That's not to say that the market's always right (Xtra Heat anyone?) but before I jump on anyone's conspiracy train, I'd like to know what these uberhorses no one wants to buy actually do in the real world. If they are stone runners being kept artificially cheap by the "in crowd", to hell with them--I'll bring my money and buy them. Who can resist a bargain?

[bdw0617]

The hrose racing business is just that. A business that involves horse racing. it's a business. it's not some pie in the sky shame, some grand scheme where people are out to trick you to do things to ensure you can't make a profit.

I agree that there isn't some giant conspiracy in commercial breeding. But, it is a tough business b/c people ARE out to trick you into spending as much as possible. And because you are dealing with live animals, it there is a lot of room for that. Thing are a little more cut and dried with widgets because there are fewer variables.

Dave, how can you ensure you mare will produce in the top 30%? A great mare can have a subpar foal. There are no guarantees.

I think the problem is much more complex than simply a matter of people making poor breeding decisions. Yes, there are people making breeding choices based on obscure pedigrees and things like dosage, etc. but for the most part, those people aren't commercial breeders. And the commercial buyers aren't even looking at those foals so they don't have any impact on sales figures - at the higher level sales. Regional sales may be a different story.

I agree with what Fireslam says about a lack of end users. There just aren't that many buyers. Just look at a forum like this one. How many people are breeding and how many people are racing? There are more breeders than racing owners. I personally know a good number of people who breed yet are unable/unwilling to race the foals. Not because they aren't producing good foals, but because they prefer the breeding side of things and/or they choke on the costs associated with getting a horse to the races.

Tonno made a point about the sheer volume of horses to look at. As a buyer, I use the same method at a small sale as I do at a big sale. I may be abnormal, but I doubt it. I go through the catalogue and find horses by sires I like and/or from families I like and make a point to inspect them. While in the barns, I look at others who are not on my list. If I see an individual I like or a consignor says "you need to see Hip X" I will take a look. A notable example was at OBS: walking between barns I saw I colt I really liked that was out for someone else. I checked him out, put him on my list and then looked at his page. He was a Mongoose which does nothing for me. But he stayed on my list. I didn't buy him and he sold cheaply and I'm still curious about him. But, I think most buyers do that - when I stand in the back ring it always cracks me up how we're all on the same horses. When I'm back there and I see something I like physically, I'm never alone - there are usually a couple of others who saw the same thing I did, all of us were impressed with the individual and we all have the same taste.

To be clear, I both breed commercially and race. I've been in this business long enough to know the issues are very complex - more so than is apparent from casual observance. There is a reason I attend sales even when I'm not actively buying or selling. It's easy to say people are making bad decisions but it's a lot tougher to actually figure out how to make the right decisions.

I won't get into the "well we deal with real live animals" argument. it's silly.

You do also realize that horse racing people are not the only people that deal with live animals, shoot not even the only business that deals with HORSES!



And again, it goes back to my original point. not every one is meant to be a business owners. some people just can't hack it. that is the very bitter, harsh, reality. Some people adjust to change quicker, some don't. Some people are willing to put in the work it requires to be successful, some aren't.

There is only so much room for so many competitors before the market gets too crowded. The cream always rises to the top and the cream is the top 5% that find their niche in the market and can year in and year out, in any business, ensure profits of various levels. I love everyone on this forum, but the harsh reality that it is not mathematically possible for everyone here to be successful. While I care deeply about everyone here, and i mean that, I know that the only way I can make it is to offer something, bring something to the table that separates me from the vast majority of people here.

I can't stress it clear enough, 95% of all businesses fail within 5 years of conception. IN this since, horse racing can draw a number and get in line.

Yes there are things that are unique to the sport/business, but that can be said for every single different business sector in the world. The fact that it's "live animals" doesn't make it tougher, just unique.

I can line up 500 different guys from 500 different sectors and all will preach how different their business is. Some to varying extents might be tougher than others. I'm sure running a micro biology stem cell research company has a higher threshold for complex problems than running a toy factory.

I'm not saying I'm better than anyone. I'm saying that I realize that 95% of all businesses fail and in that sense, it's no different than any other business, which is why I'm taking my dear old time, much to a particular someones dislike to jump in head first.


to staple my point.. what do all of the major "big wig" farms have in common?

Coolmore, lane's end,Claiborne, Darby Dan, even Bob and Beverly lewis, stonerside stable, Adena Springs? And I could go on and on.

All of these people were extremely successful before they entered the horse racing world. Yes, I"m sure you will say "yes that's why they have so much money".

These are people who have used the fundamental business practices they learned from other businesses and applied them to horse racing, the business that can't be like anything else becuase it's sooooo unique and have made a mockery of "horsemen" in the horse racing business world.

Coolmore before it became coolmore, it was an extremely successful farm.

The Farishes didn't get lucky with lane's end farm. Will Farish well before horse racing was even in the picture was an extremely successful business man in the energy business, a financial company and his father was the president of standard oil. The same qualities that made him successful in the "business world" makes him successful in the horse racing world.


John Galbreth who founded darby dan made a fortune as a business contractor before horse racing. The same qualities that made him a successful business contractor made this enterprise successful.


Even bob lewis of Silver charm fame was a successful Brewerly distiller before getting in the horse racing business.

Yes they have money. But do not discredit the fact that they all are extremely savvy business people. And those are just people I know off the top of my head. I'm sure there are thousands of other people in the business who brought their success from one business venture to this one.

[Crystal]

BDW,,, I will follow your business plan after you have picked up a pitchfork. People will better listen to your side of the business after you have been on BOTH sides of the rail.

[Sock Monkey]

I won't get into the "well we deal with real live animals" arguement. it's silly.

You do also realize that horse racing people are not the only people that deal with live animals, shoot not even the only business that deals with HORSES!

How is it silly? It's reality. They ARE live animals, they do change and it IS hard to know what's best to do with them. With a widget, it either passed QC or it doesn't. With a foal, you wonder if you should do some cosmetic surgery. Or some expensive supplements. Or whatever. This business has a lot of variables and a lot of room for people to take advantage of investors. So, it CAN seem like everyone is out to get you. There is a reason so many people who are successful in other business ventures do poorly in the horse business.

BDW, I think you're wise to do your research before jumping into the business, but until you are in the business you are basing you're just making assumptions.

[Tonno100]

I won't get into the "well we deal with real live animals" arguement. it's silly.

You do also realize that horse racing people are not the only people that deal with live animals, shoot not even the only business that deals with HORSES!

How is it silly? It's reality. They ARE live animals, they do change and it IS hard to know what's best to do with them. With a widget, it either passed QC or it doesn't. With a foal, you wonder if you should do some cosmetic surgery. Or some expensive supplements. Or whatever. This business has a lot of variables and a lot of room for people to take advantage of investors. So, it CAN seem like everyone is out to get you. There is a reason so many people who are successful in other business ventures do poorly in the horse business.

BDW, I think you're wise to do your research before jumping into the business, but until you are in the business you are basing you're just making assumptions.

That last statement is one of my most hated aspects of people in racing, people think being "in" the business makes their views and opinions more valid, when they are in fact often the most biased and blinkered of all. People in that situation cannot separate their own experiences from the overall picture. More and more the racing and breeding industries appear to be a classic case of perception equalling reality, people on all sides take their own experiences as gospel.

I hope to be in the business too one day (I'm only 23 at the moment), have gotten myself a job as a pedigree researcher for one of the worlds foremost racing/form analysts. I'm hoping this detachment will enable me to be successful in the long term, my job often leads me to analyse the horse population and the sales industry, without being clouded my any of my own chip on my shoulder experiences of trying to break into the olds boys club. If I haven't done my homework then its my fault.

[Sock Monkey]

Being in the business does make opinions more valid b/c you have the experience to back up your point and things tend to look a little different when you are playing with real money versus Monopoly money.

[griff]

Giving credence to the ramblings of a novice would be equilivant to appointing a U.S. Senator as Commissioner of Baseball or head of the FIC. .

Go to some of the stock broker sites and play with their pretend investment games and then put real money up.. It's a BIG differience.

griff

[LB]

That last statement is one of my most hated aspects of people in racing, people think being "in" the business makes their views and opinions more valid, when they are in fact often the most biased and blinkered of all. People in that situation cannot separate their own experiences from the overall picture. More and more the racing and breeding industries appear to be a classic case of perception equalling reality, people on all sides take their own experiences as gospel.

If I wanted to learn how to play football, I'd ask a football player--not someone who sits on a couch, drinks beer, and watches a lot of games on TV even though I'm sure the latter person would think his opinions are very valid.

The problem with this board and others like it is that those who are involved in the TB industry--as breeders, racehorse owners, and bloodstock agents--are far outnumbered by those who watch the game from the sidelines. So the voice of experience tends to get drowned out by the multitudes who are very willing to tell everyone how things should be done even though they've never had to lay their own money on the line.

It's easy to be a genius with the benefit of hindsight. But when you're actually making the decisions--two years ahead of time for yearlings that will go to sales, for example--the job is much more complex. And anyone who can succeed in doing that has an opinion worth listening to, in my opinion.