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Surprising Minnesota Thoroughbred Breeding Facts?

10/1/2016

1 Comment

 
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I was asked by an old friend, from my Humana days in Louisville, about breeding. He is retiring and wants to start a Thoroughbred breeding operation. He's considering either southern Indiana or Kentucky as locations, and asked me which state I thought would offer him the greatest benefit. After looking at his economic plan, broad based state by state data, and state breeder fund programs, I suggested Indiana may offer him some advantages. With this said however, Kentucky is the unquestionable home of the highest quality breeding operations in the world.

After completing my analysis, it struck me that some of my Minnesota comments were so surprising to him that I may take for granted that other Minnesota breeders and owners know what I know. Upon reflection, they may not, so I'm publishing one of the slides and observations for Minnesota breeding friends.

This scatter diagram reflects the 2015 average "state bred" yearling sale prices and "state bred" Earnings Per Starter (EPS), for the major breeding and selling states in the country. The observations related to Minnesota folks include:

1. An obvious and a direct correlation between Earnings Per Starter (EPS) and price. In other words, as EPS goes up or down, yearling prices will follow.

2. Minnesota is 1 of just 3 states on this chart where yearling prices do not exceed earnings. (MN yearling prices were 23% under EPS.)

3. Minnesota is the only Upper Midwest Racing/Breeding state where prices do not exceed earnings.

4. Minnesota is in the bottom quartile of all states in EPS, and dead last in EPS in the Upper Midwest Racing/Breeding states.

5. There will likely be little change in Minnesota's competitive position when 2016 numbers become available. The "2016 Minnesota yearling auction sale price average" did go up to $10,558 but as indicated in the chart, the "2015 Minnesota bred average yearling sale price nationwide" was $10,448.

For Minnesota state bred breeding to "really become competitive" in both volume and quality, the direction of purse funding might need to be addressed. I say this because of some related facts.

As a result of the 2012 Mystic Lake arrangement, Minnesota "total paid purses" went up 118% by 7.95 million dollars from 2011 through 2015. People may have been so enamored by this development that they missed this surprising fact. Minnesota bred horse earnings only went up 36.5% by 1.4 million dollars. We might want to review the nearly 6 to 1 ratio in additive purse dollars which favored non-Minnesota bred horses. This is particularly true considering the competitively low Minnesota state bred earnings and prices. 

As I said, I have known that our Minnesota EPS was competitively low, our yearling prices were extremely low, and the majority share of additive purse dollars were used to attract non-Minnesota horses and stables to Minnesota. I assumed everybody knew this and conscious decisions to keep state bred earnings and prices the lowest in the Upper Midwest were being made. Maybe not!

Frankly, I believe the distributions should be addressed for the long term health of both racing and breeding in Minnesota. The loyal, and in many ways captive, state bred racing populations are significant in all states. They become more significant as inflation eats away at purses. Focusing more diligently on state resident breeder and owner economic benefits may be beneficial to Minnesota racing and breeding results long term.  

1 Comment
joe koberstein
10/3/2016 09:35:03 am

I was surprised by the California stats. Lower than I would have expected. Their purses seem high, great pools and small fields.

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    Dave Astar

    Dave Astar is a race horse owner, stallion owner, breeder, 40 year business executive, and 50 year handicapper.

    (Astar Thoroughbreds, LLC., astarthor.com)

    He first made a name for himself as an underwriter, which is a sanitized title for a professional gambler in the insurance business. He has successfully utilized predictive methods for assessing variation throughout his career.


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