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Originally Posted by DaHoss9698
I agree, what they are doing at sales and such isn't good in the long run. It's lining some pockets now, but what happens when they get everyhting they want. I think you are right, it'll be kind of like Juddmonte. The point I was trying to make about saying where they are from is honestly, and again I'm not saying anyone on here, with the exception of one person, I think if these horses were owned by someone like Bill gates, or even someone like Mary lou Whitney, there wouldn't be such an outcry about it. And trust me, I for one am totally against the premature retiring. I understand where the owners are coming from, but as a racing fan, I like to see racing, plain and simple.
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I dont think they'll ever get everything they want. I think the way they work against the good of both racing and breeding is the unrealistic surge in bloodstock prices that is going to crash eventually. All markets eventually bottom out but by the same token they all have a peak and we have to be getting close. A lot of the suppliers of stock (breeders) do this as a business and as such borrow money for farm upkeep, mare acquisition, insurance, stud fees, etc. Because they prices of the top level prospects keeps going up and with it stud fees and mare prices, they must borrow more to continue to produce the same product. Therefore putting themselves further in debt. The odds that you will sell a huge homerun horse are still reasonably the same but the urgency is greater, especially with interest rates climbing. Also dont forget that many of the non-arab, mega-purchases are also rarely without some kind of "extra" cost right off the top.
I have clients that sold a horse for $750k a few years ago. After they had paid expenses, consignor fees, sales company %, and a cut to the agent who bought the horse thier take was down to $400k. Considering that the stud fee was 125K and the mare cost them 220K, the amount of "profit" was not all that much. And to the outsider it looked like a home run.
As stud fees rise, it is harder to make a profit on horses. The few farms that are big enough to stand many high dollar stallions still do well but the medium sized farms with the hard knocking stallions that cant afford to go after the bigtime stallions are going to suffer as their expenses keep rising but thier market(the middle to lower) is stagnant.
The reason that this whole economic situation affects racing is that because the "end users" are forced to spend more to purchase horses. With purses being flat with the exception of slot tracks and regular expenses rising, the odds that an owner can make any money decrease therefore causing owners to buy fewer horses which ultimately hurts the middle market more than the high end where the expenses are less important. The bloodstock market CANNOT go up forever and when it slips due to industry problems, global problems (terrorism/ another 9/11) or the fact that the democrats in control of Congress are far less likely to pass economic relief to the "rich" through tax cuts or incentives, the flood of farms and trainers going out of business will be ugly.
Now this is not all due to the Arabs spending habits but they are the big carrot dangling out in front of this whole industry.