The Newish Player and Being Smart About Stud Fees

Original article written by Regina Moore posted 11 years 1 week ago

If you’re a new or junior player, you’re probably struggling with having enough padding in your bank account to breed a few mares, without plunging yourself into poverty. Hopefully, you won't undertake the task of breeding more than a mare or two, until you have a few hundred thousand.

Once you’ve decided you’re going to breed a particular mare, the most important decision is which stallion to select for that mare. If you have to keep a wary eye on your bank balance, then the amount of the stud fee is going to be a key factor in that decision.


STUD FEES DO NOT EQUAL ABILITY
First, one of the worst things you can do is sort a list of stallions by stud fee (whether in the Stud Book or via the Search page), and then assume that the highest stud fees represent the best sires. Just as harmful is assuming that the lowest stud fees represent bad stallions, or good stallions with value.

Stallion owners have all sorts of reasons for making a stud fee higher than the norm. It could indeed be that the stallion has a long history of siring outstanding foals, and many would agree that the fee is deservedly high. It could be because the owner sees the stallion as a money making machine, and chooses to price the stud at the highest possible level the market will tolerate, in order to maximize profit. It could be because the owner believes that a high fee will prevent owners of low quality mares from breeding to the stud, thereby increasing the likelihood that the stallion will have successful foals. And so on.

Stallions with lower end stud fees also have owners with various reasons for making the fee such. It could be because they want to be “nice” and make the stallion easy for everyone to breed to. It could be because they feel that the stallion has a less impressive race record that his peers, and a low stud fee is the only way to encourage more mares to be bred to him. It could be that they feel fees should start out low until the stallion proves himself capable of siring quality horses, and then raise the fee as the offspring become successful. And so on.

The point here is to not let the stallion owner – via the stud fee -- dictate the worth of the stallion. Make your own assessment of the stallion’s worth.


THE PROBLEM WITH THE “EQUALS AVERAGE EARNINGS” STUD FEE
In my opinion, one of most obvious clues that one is overpaying for a stallion that has had at least a few crops racing, is when the progeny's average earnings are equal to or lower than the stud fee.

Sometimes, stallion owners will deliberately set the stud fee so that it roughly matches the offspring’s average earnings. Perhaps this seems a “fair” way of establishing a stud fee.

I don’t think it makes any sense at all.

First, let’s pretend for a moment that average means common or ordinary – in other words, what the everyday foal from that stallion can be expected to earn. So, let’s say you breed your mare to a 30k stallion with average foal earnings of roughly 30k, and your foal indeed earns 30k in its career. Guess what? You’ve given the foal’s entire profit to the stallion owner. You, as the mare owner, make absolutely nothing from that foal.

All the stallion owner did was sit back and collect the money. You paid board on that foal, stall fees, perhaps did the tedious work of doing workouts to establish its equipment, and then shipped it to tracks and farms. Maybe it ran it in some stakes races and you paid entry fees. Perhaps you spent money to ask the horse whisperer about its track condition preferences. Perhaps you had the foal vetted a time or two. After all of that, the foal was so-so and earned 30k – all of which went to the stallion owner. You, as the breeder, raced that foal at a loss.

If the foal was maybe multiple stakes placed – or even won a small stakes -- and earned 40k, you might have a minuscule profit.

So, do you really want to pay “average” and give all the earnings to the stallion owner if the foals turns out average? I hope the answer to that question is no.

There’s an even bigger problem with the “average earnings” method of determining a stud fee. The word “average” is often misunderstood from a statistical standpoint, and actually does not mean common or mid-level. Average numbers are obtained by adding up a list of numbers, and then dividing by how many numbers are in the list. Therefore, one or two extremely high numbers can bloat the average way out of proportion to the middle earnings. In other words, a foal that earns a million can make a stallion have a much, much higher average than what most of that stallion’s offspring are likely to earn.

Let me illustrate this with one of my own Quarter Horse stallions. He sired a daughter that won 550k on the track, which is an impressive sum for a Quarter Horse. Guess how much his second best offspring has earned? 35k. I’m not kidding. The third through fifth best have earned 24k each. The average earnings of this stallion’s foals is slightly more than 23k, due to that outstanding daughter. If I rounded his stud fee to 25k, based upon the logic of average earnings, then every single one of his foals would have lost money for their owner/breeders, with the exception of the best daughter, and the second best earner. The latter would have squeaked out a small profit. If the top daughter is removed, then the average earnings for that stallion is only $8500.

That’s the problem with the “average” method. If you own one of the top few earners by that stallion, great. Otherwise, you’ve left yourself little room to make a profit.

If you want to know what the mid-level offspring earnings are for a stallion, you need to use a statistic called “median”. That’s the middle number in a list of numbers. In other words, if you list all of the stallion’s foals that have raced, with the highest earnings on top (you can do this with the “progeny” tab, sorting by earnings, and then eyeballing the horses with earnings; ie, those that have raced), the median is the number where half have earned more, and half have earned less. Theoretically, your foal has a 50/50 shot of obtaining that level of earnings.

Whether you’re talking average or a rough median, a single raw statistic rarely equals genuine value. It’s important to actually look at the stallion’s offspring on the progeny tab, and get an idea of what the ones old enough to race are earning, horse by horse. (You can use the “Type” column to sort by age.) That’ll give you some idea of whether the stud fee amount is reasonable or not.


SIMPERIOR
If you’re serious about trying to breed good horses, then do yourself a big favor and subscribe to SIMperior. For one thing, you have access to the Stud Book, which makes stallion evaluation much, much easier. Not only are there lots of stats, but you can rank stallions by breed and type, and even the younger ones by number of foals crops, so you can do apples to apples comparisons. The ones with the higher stats in multiple categories, while having the lowest stud fees, can often be the best value.

Also, SIMperior provides the weekly Edge newsletter. For each issue, The Steward writes an article on a stallion. Often, the stallions featured are ones that have affordable stud fees, and/or might not have the impressive race record that is likely to catch one’s eye, but has a pedigree that The Steward herself can believe in.


SUMMARY
When you’re a newish player, you’re likely forced to limit how much you can spend on breeding each mare. A low budget doesn't mean that you can’t find good stallions with affordable fees. There’s plenty out there.

If you’re really, really fond of a top quality stallion with a high stud fee, you can try sending a private message to the stallion’s owner, asking if he or she is willing to discount the fee, in deference to your limited budget. Maybe they will, maybe they won’t, or maybe they will if they approve of your mare. It can’t hurt to try.

When you have many millions in your bank, you can afford to splurge on high stud fees, if you desire, without it causing much harm if the foals turn out lousy.

In the meantime, be smart about paying stud fees.

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