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Studs playing a waiting game on stallion fees.

Byline: Sid Fernando

JACK WERK, president of eNicks and Werk Thoroughbred Consultants Inc - a leading consultancy in the States based in California - follows stud fees like you or I might follow sports scores. When he speaks on the subject, it pays to listen.

He says: "Most years, stud farms would release fees before, during, and right after the Keeneland September yearling sales.

"Of course, there would be the few new horses running in the Breeders' Cup races that would have fees set based on how they ran, but for the most part I'd say more than 80 per cent of fees would have been announced by October 1."

Last year, fees were announced later than that because of the onset of the financial meltdown.

Werk says: "Most of the fees were still announced last year before the November mixed sales, and that was still late. But this year we've had - and are having - a real waiting game.

"Claiborne was the first to announce fees, and they, and a few other farms, did so in the middle of October. And since then we keep getting announcements, but we've probably only heard from about 60 per cent of the stallions so far. I've never seen this before."

Werk provided the accompanying chart of stud fees, which lists all North American stallions standing for $75,000 and above that had been announced up to Wednesday.

There are nine stallions on this list, led by a trio at $150,000 each - Darley's Street Cry, Three Chimney's Dynaformer, and Lane's End's A.P. Indy.

In total, these nine horses will stand for $975,000 in 2010. In 2009, their combined fees were $1,160,000. This represents a cumulative decline of 16 per cent, but it's probably not low enough, especially for commercial breeders.

Before the financial crisis hammered the commercial markets last year, there was universal acknowledgement that stud fees had been raised to precipitous levels and that a correction was near.

Because of the overall damage to the general economy in the US caused by the crisis, however, it's difficult to now deduce how much of the hole in the commercial markets was exactly attributable to overblown stud fees.

"Farms waited this year and some are still waiting because no one wants to drop fees too low and leave money on the table," Werk said.

"They dropped fees last year when stud fees were announced, and then some farms had to announce again that they were dropping fees even more because they hadn't dropped them far enough the first time.

"I think that every breeder in the country knows that when they now call a farm, they can negotiate the stud fee, with the exception of a few notable horses, of course."

Of the nine on the list, only Medaglia D'Oro has had an increase in fee from 2009 to 2010. Four of the nine have had declines in fees, and four stallions had unchanged fees.

The largest percentage rise was Medaglia D'Oro's at plus 66 per cent, while the biggest dippers so far have been Adena Springs' father-son duo of Awesome Again and Ghostzapper at minus 60 per cent each.

The last column of the chart lists the median price for each sire at major auctions in the US in 2009, pulled from the database. The correlation of these figures to 2009 and 2010 stud fees are a starting point for commercial breeders in analysing and comparing market effectiveness of horses.

The median figures also show why some fees had to drop, why others may still need to, and why others may be priced right for breeders.

An example of two who weren't priced right in 2009, are the Adena stallions - Awesome Again and Ghostzapper stood for $125,000 this spring yet their yearling medians were only $30,000 and $35,000, respectively. At $50,000 each in 2010, they are obviously more palatable.

The nine stallions on the chart saw their cumulative fees drop by 16 per cent from 2009. But consider that the market-making Keeneland September yearling sale this year was down 41.5 per cent by aggregate and 40.5 per cent by median versus last year.

Expect another round of cuts for some before the breeding sheds open.
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Title Annotation:Sports
Publication:The Racing Post (London, England)
Date:Nov 20, 2009
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