the racing is fast and exciting at the picturesque Woodbine and Woodbine Mohawk Park RAC trcks in Ontario Canada Woodbine standard bread home of the pepsy North America cup a Summer Classic Pebble Beach in Iran and Woodbine thorough red home of the historic King's plate the mighty Philly has devastated them full Fields exotic Wagers iconic events play Woodbine thorough bread and Woodbine standard bread today at your favorite wagering location Elite power elite power to the front at the 6p gun is second but Elite power elite power is moving clear and going to take the re dirt Sprint by a widening [Music] margin 900 and 900 Elite C does it again in the readers cup hit [Applause] 10834 at the heart of really what we come to do well is understand our clients understanding what the needs of the family are help them make some decisions preparing the Next Generation for what's to come being on a first name basis getting to know their stor working through their questions their concerns and and figuring out the solution that's best they trust us enough to come in and help them solve that you really feel at the end of the day when you add value there's a great sense of accomplishment and reward Henry David thorough once said it's not what you look at that matters it's what you see in managing wealth there's an awful lot to look at taxes and trusts family meetings and bonds and everything in between it's why we rely on those who know each of these fields so deeply that they can see where others are merely looking who can focus on what's best for clients over Generations after all that's what expertise is hi my name is Gary falter with the Jockey Club like to welcome everyone to today's online Zoom panel now this is the fifth panel in our series of 10 online Zoom panels this year and today's panel we're going to talk about the economics of our Sport and and specifically as it relates to third bread ownership but before we get started I'd like to recognize and thank our sponsors starting with our presenting sponsors uh the green group besser trust and sto Keenan Ogden and today's panel sponsor are jmont farm and Woodbine Racetrack I believe you saw their commercials early on and our Q&A sponsor today is West Point Thor Breads and our thanks to all the sponsors for their continued support of Thor bread ownership and helping us offer these webinars at no charge to you and if you see this screen this is a pretty impressive group of sponsors who are committed to third bread ownership so thank you very much sponsors so let's geted started like to introduce our speakers and I'll start off by saying we're very fortunate to have an out this outstanding group of speakers with us today so um I'll start with Everett Dobson welcome Everett thank you Gary good to be here so yes thanks so Everett is the co is the owner of Cheyenne stables and Candy Meadow Farm and he is the executive chairman of doser Dobson fiber which is a private landline fiber optic and data storage business based out of Oklahoma City and Cheyenne stable is owned and co-owned grade one Stakes winners Mastery Caleb's posi and Olympiad and he's also a member of the Jockey Club uh next I'd like to introduce Tom Rooney welcome Tom thanks Gary so Tom is the president and the CEO of the NT he's also a third breed owner and breeder who hails from one of America's great sporting families and I'll talk about that here in a second his family owns Shamrock Farm that's a thoroughbred breeding and layup operation in Maryland and Tom served uh the people of Florida the 16th and 17th districts in the US House of Representatives from 2008 to 2018 in Washington DC and he also served uh active duty as a captain in the US Army from 2000 to 2004 and you may recognize the the the name the Run family has been the majority owner and operator of the National Football League Pittsburgh Steelers since 1933 so all you Steeler fans in the audience uh Mr Rooney's family is the owner of that team uh next is Marshall Graham welcome Marshall great to be here thanks yeah we had you at Saratoga a couple years ago when we had our last inperson conference and uh and Marshall is a professor and chair of the Department of Economics at College in Memphis Tennessee so great to have you on this panel talking about the economics of our Sports so uh Marshall he has over a dozen academic publications related to the sport of horse racing Marshall has been an owner of race horses since he claimed his first horse back in 2008 uh he co-founded 10 strike racing in 2016 and 10 strike racing has won over 30 stakes races and won the owner's title at parks racing in 2016 and 17 and Marshall has also bred five stakes horses from his modest broodmare band so um those are our speakers today and and in audience we have a lot of ground to cover so if you have a question for our panelists just use the Q&A button at the bottom of your Zoom screen and at the end of the uh seminar we'll uh answer as many question as we can so so let's get started into the content uh speaker so I believe it's safe to say that nearly everyone in the industry knows that the thorad F crop has been on a downward slide for many years uh you may remember back in the 1980s the full crop peaked at 51,000 fos if you can believe that that's a lot of fos and for many years from 1991 to 2007 the full crop stayed fairly consistent at 35 to 37,000 fos but since then the full crop is has dropped considerably and in 2023 which is last year's full crop it's estimated to be 17,200 fos so 51,000 in 1980s to 177,000 and 200 So today we're going to take a deep dive into some of the economic data for industry and try to determine just where we are maybe how we got here and and what if anything could be done to reverse of some of these Trends and at the end of our session we hope that the panel has shed some positive light on on why the current state of our industry really makes this an ideal time to be a third red owner so we're going to start off by reviewing some economic data that comes directly from the Jockey Club Factbook so I am going to bring up the first screen okay so the first screen shows the full crop from 1990 so go back to 1990 we had 40,000 fos about 72,000 races uh 82,000 starters and purus were at $714 million and the average purse back then was right around $10,000 so that kind of gives us a baseline to start with so if you fast forward to 2 5 or 2005 my mistake the full crop dropped to 35,000 F so that's about a 13 14% decrease and and a lot of that is just adjustments I believe in the industry but look at the number of races the number of races dropped from 72,000 to 52,000 and likewise the number of starters Dro so we have fewer fos we had a lot less racing going on in 2005 and um you know I know there was a lot of RAC tracks that shut down some of the smaller tracks in the country um recently Arlington Park I think maybe back in this era the Hollywood Park closed up so we lost some racetracks during this time but look what happened to the purses at that stage they went from 714 million to over a billion dollars so here we we see a trend downward in fos races and starters and then a considerable uptick in purses and average purse so the purses went up by 51% and the average purse more than doubled so me go to one more slide here so fast forward to 2023 we've gone from 40,000 folds down to 17,200 so that's that's a almost a 60% drop from 1990 and 50 h a 50% drop since 2005 and the number of races likewise have dropped considerably and the number of starters and I guess that's to be expected when the FR crop drops by such large numbers but the thing that really catches my eye on this slide is the amount of purses has gone to almost 1.4 billion dollars so that's a 28% increase and the average purse is nearly doubled since 20 5 to $41,000 on the average per so I just wanted to kind of leave this slide up on the screen for a moment and and get your impressions on some of this data and and what do you think it's telling us if anything ever or Tom what are your thoughts I can I think I can you know start us off here um this is Tom you know obviously we're a gambling Sport and um with all the introductions of new types of gaming or gambling in that time period I mean you're talking about 1990 to 2023 uh I remember the Florida Lottery coming around 1990 in that time period uh how big of an impact that had on racing in the state um I'm sure it was similar to other states that had the introduction of a new type of gaming to where you know people didn't necessarily have to go down to the racetrack to gamble um of course you said I think you said Gary in there uh after a certain period around 2005 um the the full crop kind of leveled off at about 35,000 before dropping significantly recently and I think that that's the introduction probably of even more casino type uh game or access to those games and then of course to uh betting apps where you can bet uh on Sports on your phone so uh with all those things they're all relative obviously when you have full crops you have number of races you have number of starters I mean it all makes sense there um to to decrease with the introduction of other types of gaming I think but at the same time the legislator I believe most of these states um through e lobbying efforts in the racing industry to increase new types of gaming or introduce new types of gaming to try to get a piece of that pie uh with the lottery or with other types of gaming to where racing would get a piece of that um uh piece of that money for their purses and so I think that you've seen that increase um as racing has seen a decline in their uh number of fos number of races number of starters but they they've been able to successfully get the purses to continue to increase and so where we are now I think may be you know whether you call it attrition or a settling Point um it it could be a good spot uh for moving forward um all things being equal with gaming on your phone with Casino gaming whether it be on an Indian Reservation or otherwise um and then of course all the legalized other legalized gambling you have with lotteries and the like so um you know this might at first bless look like it's bad news of course with the purses it's good news um for those of us that are owners and breeders but um at the same time uh there is a concern with the amount of tracks that have closed our family's tracks being some of them in in that time period between 1990 and now um to where you have to make sure that obviously we have sort of like a farm system or a minor league of racing to be able to have the big tracks that we all enjoy uh and see more visibly okay uh Everett Marshall would you like to give us your thoughts on some of the the this data well I'll weigh in Gary I I um Echo a lot of what Tom said um it's pretty pretty evident when you look across the country where the purses have flourished and there's there is um obviously Pur support from primarily um gambling alternative gambling mostly historical racing machines but certainly some slot machines in certain jurisdictions um but there's always been some level of P support whe whether it's um you know when you buy a a horse at Keenan that part a portion of that money goes into Keenan's balance sheet and some of that is supported supports their um you know their racing you know racing purses uh for the two race meets the year you know there's also per support in Texas Texas is Lobby to sales tax on um you know e e related sales activity uh so you know you see Pockets where the purses have have done well you know years ago you would in most RAC tracks you were charged to get into the get into the track to to watch the festivities today it's with the exceptions of a few places like you know Saratoga and the Breeders Cup um we want our fans to come participate and we want them to come and and gamble with us so it's uh at least from the purse standpoint it's uh it's been hit and miss and it's largely structured around the alternative gaming that allows us to support those purses so you think the the pur structure that we have today you know $100,000 Maiden races $120,000 allowance races I mean that that factors into this number you think that's encouragement for owners to to stay in the game to expand their Stables or even new people to come into the game you know I'll answer it this way and that is 15 10 15 years ago there were a lot of people in the sport that said this is a dangerous path for going down gaming alternative gaming slot machines historical race machines supporting our purses the reality of it is it has proven to be sustainable over those you know 15 years or so or longer in some cases so is is it a risk factor I just don't think it is now certain States when when legislators determine that um it no longer supports their their needs in that particular State sure they're going to take they're going to take a grab at it occasionally but but by and large you know what is the leading indicator of success is sustainability and we've had that for you know going on 20 years in a lot of places so that's my answer okay Marshall what are your thoughts on this first screen well I I I think overall we we sort of look at the numbers and they're they're positive I mean the if you adjust for inflation purses are up 74% since 1990 up 23% since 2005 and you know that that covers that that period of Time covers in 1990 uh was sort of the end of an era back to 1990 you still 8 million done on track at s Anita so basically there was a nent days of simoc casting simoc casting would come in the early 1990s in 2005 was probably um you know the peak level for um uh you know handle overall all uh you know and and sort of the low point for the ratio of handle to purses and then as you sort of move to this to sort of the current ERA we're in which we've already talked about this era of gaming sustaining Thor bread racing um it's been very very uh you know great for Thor bread owners uh you know this doesn't even emphasize how much uh Maiden races and allowance races have jumped just dramatically over this you know 15 20 year time period uh the ratio of handle the purses of purses to handle now is you know pushing 10 to 12% which is historically you know much higher than it's ever been so from an owning standpoint I think that's really promising I do think that um you know when it comes to breeding and even when it comes to sustain ownership uh we have to think about what the future of the game would be you know out 10 15 years especially when we think of breeding right uh um you know being involved as a breeder you want uh you know a sense that the game is going in the right direction uh that there's less uncertainty um you know I even think about this as a New York breeder I I breed New York and suddenly I'm told there'll be no dirt racing uh in the winter and you know come 2026 2027 so so to me that's an uncertainty I mean I'm a dirt guy and I don't you know I have not not really much interest in racing on synthetics so you know that suddenly changes you know my outlook for something that I've inv invested capital in so you know all of these things and that's that's a small example uh is you know what you know what does the future bring I I I do worry more about our dependence on gaming I think we can look to West Virginia for an example of a state that had gaming and it and it allowed Mountaineer and charlest to really prosper and then the gaming went away and the purses fell um we can look at Florida and what happened to with the decoupling and uh the elimination of dog racing I think it's itical that that we as a sport figure out how to you know get fans back gambling on the races gambling on the races we can't solely be supported by um alternative gaming so but for now so you know in terms of thinking about your entry point as an owner you know in some ways claiming has never been better because you and PE for these great purses [Laughter] yearlings and twoy olds there's a little bit more of a Time Horizon but the maiden special weight purses make that a more practicable Venture breeding a little more uncertainty because we just don't know where we'll be five to 10 years from now and again I I hope that we can do more to me the first to handle ratio being above 10% is alarming right we need to do more more to be more self- sustainable okay so this next slide just kind of shows the trends and the F crop you can see the full crop you know and the and the number of races and starters they they've trended very similarly and then um the purses how the purses have increased substantially over the over the last uh 10 to 15 years so uh what I'd like to do now is is talk about some of the auction data uh that we've pulled since 1991 so this next screen shows The Yearling auction statistics and we're going to go from 91 to 20023 so in 1991 there were about 8,700 uh yearlings that sold which was about 22% of the crop um $29,000 was the average price and the median price at that time was right around 7,000 so um if you move forward and that kind of gives us our Baseline again to 2005 we went to 10,000 yearlings at the same time that the full crop dropped from 40 to 35,000 so and in 2005 that was a 15% increase in number of yearlings sold 29% of the full crop sold is yearlings uh a $54,000 average price which is pretty healthy an 87% increase and a 13,500 median price which was nearly double what it was in 1991 so it kind of gives a snapshot of what things were like back in 2005 as it relates to 91 and you look at 2023 the number of sale yearlings 7,43 340 from a full crop of in the 17 18,000 range so that's you know that's less obviously but it's 42% of the crop sold as yearlings and the average price $87,500 so that's almost a 60% increase from 2005 and is triple what it was back in 91 and and I think another good telling number is the median price in 23 was $30,000 which was more than double what it was in ' 05 and four times what it was back in 1991 so and I think that median price is always a good barometer of how healthy is the market from top to bottom it's not just healthy at the top but a $30,000 median in 2023 seems to be a pretty healthy number so also just like to spend some time talking about these numbers and how the full crop has dropped considerably but yet we still have over 7,000 yearlings going through the auctions and our average price at 87,000 and a median of 30 um you know should tell breeders that uh I would hope that they can recover some of their investment if not all what are you guys thoughts on on these numbers as a breeder well one thing and I just want to jump in you real quick one thing that's I think interesting to point out is that that while it's a 60% jump in average price for yearling it's actually inflation with 60% prices are 60% higher so in real terms the the sales price of the average sales price has dropped 3% since 2005 now the median is still up 38% uh and and again as Gary also already mentioned is there's you know many more horses that now go through the auction so you know again the 3% fall in in real in the average price you know I don't know that that's necessarily worrisome on the on the breeder side because so many more horses now go do the sale but I think it's just interesting to point out I mean do you all feel that the the health of the market is mostly at the top or is the middle and lower Market still a good place to sell I mean I I sell I I buy and sell mostly in in Maryland and um at Timonium and you know I don't know what the uh what the numbers are for there I mean obviously I don't think that our medium price is 30,000 or average price is 87,000 but um you know it's it's interesting sorry about that course right when I'm speaking the dogs go um when you go 42% uh that are going through the sales as opposed to 20 21 and 29 I mean obviously that means there's a lot less horses that are being bred to race which is mostly what I think happens more in the regional markets I could be wrong about that but that's what I do primarily um there's always the question of what stallion is commercial or not and what what's going to bring your investment back when you send that yearling through the sale versus well it might be a good nick uh to breed this stallion to this mayor but that stallion's not commercial so you're not going to get anything unless you're willing to raise some yourself and I think that that used to be obviously according to the numbers a lot more common place and now it looks like it's you know it's getting closer to 5050 for people that do that versus just raing to sell um and so I think to sort of answer your question it's more of a matter of like what what can you afford to do and for the the smaller breeder owner like me uh maybe Marshall you know there there's a there's there's still sort of this instinct to breed to race and um I just think that that's changing though okay yeah with 42% of the full crop going through the sale you're right there there is a lot less breeding to race that's that's taking place um ever any thoughts on your side uh that that's definitely what's transpired I mean the numbers the numbers point to it very vividly um you know we at at TOA a few years ago we we had a you know discussion along these lines and and actually convened a call with a lot of the State uh racing officials and um and breeders in various States and you know there was the takeaway that I had from that was that the state bread program were vastly different across all the country but the state the state breed program is very critical to the economics of those of the breeding within the states uh so my conclusion was that there's some best practices that perhaps we as an industry need to start exploring uh between what makes a successful State program and versus an unsuccessful program um but the economics are you know they're tough when you're you know when when it's a kind of a downward spir on the num um but look at the bright spot KY is doing exceptionally well and um it's it's holding up or the breeding side of the sport pretty significantly when you when you look at the the you know the number of the PO crop as well as the you know the sales volume so I I wish we would do more to get more breeders into the sport and and I honestly think that they you know per the revised per structure in some of the these markets is it should help uh it will help um I want to get you know my My Hope Is we get more breed to race people back into the sport and higher purses uh should should help that we've got a fa more favorable as favorable tax structure than we've ever had thank you Tom and for all your initiatives along those lines and so there's a compelling reason to to breed to race particularly when you when you consider what it cost to go buy a a viable racing product racing Prospect uh at public auction um so that's my spin can I can I add something to what ever just said sure I I totally agree with that by the way especially in in Regional markets like Maryland or Pennsylvania or New York or Florida um you know one thing that drives me crazy as somebody who's a smalltime breeder owner is is uh breeding breeding to my small group of Mayors the stallions that I think that are good for them getting them ready for the track getting them to the track only to have them claimed in the first or second race and disappear to a state that I get no bonus money from and you know like I did very well with with a horse named coffee with Chris who get actually went on to race in the pness Thousand stud fee to ride on curl and went on to win a bunch of local stakes races in in Maryland for me getting that check once a month as the breeder was awesome exactly what Everett's talking about how you get new breeders but if they disappear to West Virginia and they you know these horses went over there um I get nothing for that I I brought the I bred the horse I brought the horse up I started him did everything that I was supposed to do the right way they get claimed um because you know that's the level that these horses you know need to start to win um so I think the solution to that with things that you know when ever talks about you know what might be best practices outside of Kentucky is that maybe States like Maryland and West Virginia and Virginia and Delaware New Jersey maybe Pennsylvania can somehow get together and do some kind of a a bread fund Mid-Atlantic type bread fund or something like that to where even if my horses go race uh somewhere else in the region that I still get a little bit of a page day if I bred that horse or I had that horse and it lost to in a claim or something but it's so disheartening as a smalltime breeder to see a horse that you bred and brought up win in another state and you get nothing for it right yeah I've been there myself I know Louisiana is one of the state programs that pays first second third worldwide we actually had a Louisiana bread that we fold and it ended up in Korea and we ended up uh four years in a row getting breeders award checks uh from races in Korea but you're right Tom in most cases that horse leaves the state and wins elsewhere um and and the various programs are so different um but you know I've heard breeders say many times if if I can get a fair price at the sale for my weanlings yearlings whatever they sell I would breed more Mars the more stallion and the full crop might increase and the same I think would apply for someone who's breeding to race you know if the per structure was such that you know they have a chance to recoup some of their investment and and if you look at the numbers I believe we're we're either there or close to being there because these sale prices at 87,000 and 30,000 seem to be pretty healthy I know Marshall you had mentioned that the 87,000 average if you look at inflation it's probably just barely keeping Pace might even be a little bit behind but the 30,000 medium might be up a little bit U from 2005 yeah I think the you know the is is as a smalltime breeder and is obviously on the other side buying horses it does seem like you know a good horse of a good pedigree that's well put togethering right and there going to be a lot of people on it and it's the you know if a horse with less of a category that isn't put together as well you know those are going to U you know suffer in the market I I've generally been breed to race and in many ways breed to racing um because of the purses um seems a lot more reasonable like you mentioned entucky Pennsylvania New York and and I would definitely if you think about breeding look at the different state programs um it is very nice to get checks in the mail uh once your horses run uh um as a result of the state breed programs uh so I've had you know the I think those provide a real incentive to breed and and furthermore I think some of these State breed programs because you continue to get paid as your horse runs they continue they give you the incentive to breed a sound horse and I think that's good for the game I had a horse that that um I bred um this is the one of my most profitable horses I've ever owned was never much more than an a other than horse right won his Pennsylvania breed a other then but he RAC until he was 10 years old he won 10 races raced 80 plus times and I continued to get checks in the ma right because he was a Pennsylvania Pennsylvania SED horse and it encourages you to breed soundes and so I think for the he the game right you know one thing that we've talked about with all these numbers is well the average purses are up but horses race a lot less right so if um if you can breed a sound horse and even if furthermore the sport can incent breeding a sound horse I think that's both good for the pocketbook with breeders Awards State breed breeders programs and it's good for racing itself oh we a little bit of time talking about you know where are we with purses where are we with the full crop uh auction prices and so on but we really haven't talked much about the cost of ownership so let's just kind of change direction here and just talk about that so A few years ago the Jockey Club did a study on ownership cost and the results from this study show that the average cost to have a a racehorse in training was 40 to $60,000 40,000 in some of the smaller jurisdiction 60 ,000 in in the bigger jurisdiction and that number is probably low because that was a few years ago and what was included in that study were trainer day rates bet costs Transportation blacksmith nomination fees RAC day expenses so we tried to cover about all the expenses the only thing that wasn't in there was Insurance because that could very widely so you know knowing that the annual cost is upwards of 60,000 or more are are there any expectations that owners can have to offset some of those costs with purses with the purse structure that we have today so so what are your thoughts on me if it cost 60 to $65,000 to have a horse in training you know what are the chances of recouping some of that with the first structure that we have today well they need to be fast horses that helps sure fast fast than their competition anyway yeah that's for sure yeah you know it uh this is the same same argument we've had in this sport for as long as I can remember you you have a you know and you're right it's about 60,000 in New York and Kentucky maybe a little bit less depending on your trainer there there's some there's some trainers that charge less than others um and there's some trainers that medicate and and use more vitamins and chiropractors and so forth and other so you can shop around and find find Value and trainer just like you can and everything else um but yeah that it it's but if you run through your conditions you have a chance to if you get a a horse that's that's fast enough to run through the conditions and maybe maybe get some black typ you've got an economic model that works um obviously your entry level that where you bought that horse has a lot to do with it um but it's not inconceivable good Horsemen are are you know they're running successful Racing Stables right now not everyone but that's that's what makes this this sport so great wellever that kind of Segways into the next slide so I put this slide together as as a just an example of a p&l for a horse and training and this is like a best case scenario so if the annual cost is around $660,000 and the hor is running somewhere where the average person for a maiden special weight or allowance is around 80,000 and it takes them three years to run out their conditions you know just putting some numbers down on paper when they horse breaks its Maiden it's going to earn about $48,000 and that's gross not net because they got to pay your trainer in jock fee non-winners are two non-winners are three non-winners are three other than and there obviously be some placings in there you know the horse could earn upwards of two $240,000 over a few years and then if you look the expenses you buy the horse at a yearling sale you're going to have a few months worth of expenses on the horse and then your year one two and three expenses you know that's going to be upwards of $210,000 so when you look at this scenario and this is again is a best case scenario of a nice allowance horse it looks like there there is an opportunity to recoup some of your expenses with purses but we all know that if you have a stable of 10 horses they're not always going to be all be at this quality I mean some are going to be claiming horses some are going to struggle even to break their Maiden you know and those are the ones and and the cost the expenses don't go down so a horse that doesn't break its maiden or struggles or break it's made or goes into the claiming ranks it's still you know 60,000 plus a year to have that horse and training but you know if you look at a a scenario like this it does appear that there is an opportunity with the first structure we have today if indeed these annual expenses are are accurate to recoup some of your cost without even having a Stak source and if you have a Stakes Source or a horse that can run in the graded Stakes obviously you know the purses are higher and the benefits are even better thoughts on the cost of a horse and training well I I'll go first just from the standpoint that you know that's kind of my dream scenario right there is to be able to to net $29,000 you know I'm unfortunately you know spend a lot of time at the claiming level and if I get one that breaks up into the allowance level it's you know you got this hope that you know as i' I heard somebody say if you've got 10 horses you know it'd be good if you had one or two that were paying for the other you know eight or nine and that's the big gamble that we're all in in this industry though I mean when you play in this game you do it because you have a love for the horse you know my wife constantly reminds me that we don't make money doing this so why do we do it and the answer is always like that I love I love to do it and there's always the hope that you can get this one horse like the one that you have on the screen that runs through those conditions and that can help pay for your other horses that are at the claiming level um and then you know maybe if it's a if it's a Philly or a mayor that you can breed that may and get something out of it or or what have you I mean that's always the hope but I mean certainly at my level um going all the way through the those conditions is kind of like my best case scenario and you know hopefully someday I get to enjoy that kind of a horse okay any other thoughts yeah I E yeah I'll Echo what Tom says it's you know once you get to the three other then you're basically borderline Stakes horse and and those are hard to come by uh you know all that being said you you get a horse you win a maiden special weight you get the big purse that that point your horse has value and as we saw you know I just looked at the prices yesterday from the phasing tipped in July sale is you know there are horses that went for way more money than if they' thrown them in claiming races was sort of stun so you know they their ways out you would have made special weight and you get phone calls and and someone's offering you money and uh you know you most always want to take that money because we're always dreaming uh Hope Springs Eternal um but there's always the market for horses I mean there is there's um you know there they're more Online Auctions there more points where you can sell and get out of a horse or you can keep keep riding and keep hoping for the dream and so there are lots of In-N-Outs here and so um you know when you and I think of everything is lowering variance when you claim a horse or you buy a horse that's already racing you're lowering the variance of an outcome right when when I claim a horse you know typically you know might improve a little um um but uh you know has some limit to its upside and then it you know it might progress a little bit but you're limiting your downside as well is when you buy yearling or when you breed you know you're more or less buying a lottery ticket you could get anything right we look at the um the Derby winner this year was a was a homebred right so um uh you know to Golden sense I mean so you have you know so that is you know that um so there's real you know real Lottery T ticket aspect to those and you can see that in the yearling markets especially at the high end uh where you know the skies in terms of outcome so you know I think part of it is is you know what's your risk tolerance and um and um you know what uh you know what your kind of aspirations are I I do um agree with with Tom as well that you know I think you have to be in this game because you love the game right one thing that we sell to our partners is you know that that you know we're gonna have fun we're g to manage this the right way um we're going to try to make money that's of course our objective but this is this is fun if you don't go to the races and enjoy it um and get and have a real passion for for owning race horses and this is not for you because it's it's a real tough investment a lot of the horses that will buy they'll be too slow to race right um uh they they won't have the mental attitude to race or they'll get hurt right and then they'll slow them down and so you know just getting you know not all them make it to the races not all of them you know not many of them won't win you know maid in 20 much less made in special so right you know even for me you know I enjoy you know have I take great pride in having a horse that is a hard knocking claimer that's raced 30 to 40 times to me that's I get just as much in joy of that of a horse that has a long career like that you know we've been offering these owner conferences for about 10 years now both the in-person and the webinars and and and three things that have come out from many many of our panelists as it relates to ownership you know align yourself with good people that you can trust um don't come into the industry thinking it's going to be windfall profits and a lot of money made and and number three is have a plan have a business plan and I think part of that business plan is is understanding the economics of horse racing that not every horse is going to be you know an allowance or Stakes horse and and the cost is the same whether you're running a $25,000 claimer or a horse that's competing in in allowance and Stakes so so you know those those three things have come up many many times align yourself with good people you can trust uh you know don't get into this to make a profit because it's it's hard to do and and have a plan and stay with that plan U As you move forward so um Okay so we' we've talked about the state programs and I think that's another big factor in in ownership and the economics of ownership so for example you know if you race in New York and New York breads can race in restricted races it has many advantages and um you know the whole economics of of running and state gred races and also a lot of states have breeder incentives so as we talked about you breed a horse it races in a certain State uh at a certain level where you can recruit breeders Awards U from those horses so what I'd like to do next is is I've got a slide that just shows uh where we are with a lot of these State program and their full crops and so on so let me go to the next slide there we go so going back to 1991 Kentucky had about 7200 fos which is about 19% of the fold crop California nearly 5,000 FES Florida 3800 and you can just look down the list some pretty healthy numbers back in 19 1991 when we still had 40,000 FES being born but fast forward to 2021 so that's the latest data that we have for States look at ky's actually gone up in the number of fos that it's producing which is 44% of the full crop but what's concerning looking at these numbers is California's drop to 1300 Florida to 1300 Texas from 2100 to 360 state of Washington Maryland Oklahoma you know even New York has dropped some not as much as some of these states and when you when you do the math the the top eight states other than Kentucky make up 80% of the full C uh full crop reduction so just wanted to get your thoughts on the state programs is there anything that can be done to reverse these trends at the state level um or is it something that we're you know it's here to stay so just wanted to to get your thoughts on is there anything that can be done to help promote and encourage these states to produce more fos see what you think I'll I'll jump in the one the one reason Kentucky you know Kentucky with the purses now affect for Kentucky breads that's really helped and and you know for the longest time I focus primarily on the state bread programs because the Breeders Awards and incentives participating in Arkansas New York and Pennsylvania but I've started I've started breeding um horses in Kentucky as well because now um now to compete at Ellis Park and Churchill Downs and and Keenan uh they have big Kentucky bread money in the claiming races and allowance races and uh it's easy you don't have to pay to ship ship to Stallion and all those State you know all those the kuy's committed to dirt racing right and so um you know there's been a lot of it is is is is like we've talked about before is is if you're breeder you have to think about what do the next five to 10 years bring and so um I have about 15 brood bears and I stay in a stallion New York and so you know I'm thinking about what what is Pennsylvania going to be like in five years what's New York going to be like in five years the news of the synthetic only winter racing in synthetic in New York was standing a stallion in New York and having brood mares in New York was was um was really worrisome right because I've already I've already committed to breed horses and so uh um so you know I I think the state bread programs are really worthwhile looking at however uh you know a lot of them offer you you know excellent breeders Awards checks that come in the mail uh when your horse wins you're a fan of those horses you're incentive to breed a sound horse and so you know there's real value in them as a breeder and uh there's still also value in Kentucky all these states suddenly competitive environment where you want to breed it so so do you guys think that a lot of the state breeders have shifted their broodmares to Kentucky for Kentucky to be actually increasing in the number of fos versus decreasing as everyone else is oh I don't think there's any question of that I can I can site a handful of people from Oklahoma that have done exactly that and and in other states and Texas for that matter um a lot of the key breeders in those two states um have shifted their focus to to Kentucky for for reasons of not only are the the auction price is better the conception rate is higher um the facilities the care everything it's easier here it's just easier to to function in uh in Kentucky when it comes to the breeding but that doesn't mean that there's you know there's still obviously breeders in those States and we need to support them and we need to to help them and I think one of the best things we can do is make racing fun um people want to talk about their their race sources and if they bred a nice one and it's a you know it's a Indiana bread then you know that's that's gon to that's going to have some significant impact on on doing it again and why they would do it again but make it racing and the economics obviously ly ultimately going to drive whether or not someone is is is going to be in the in the so-called a business of of racing raising a race horse uh but it it has to be part of your you know your your it has to be socially fun for you and your family and your friends no one's no one there's not any commercial breeders to speak of outside of Kentucky um there used to be but it's it's very few as Tom said earlier it's mostly breed to race uh so there has to be elements beyond the economics that would entice someone to do it and and I think helping the state helping every state understand best practice around uh you know State breed programs and and even even assisting and encouraging I think would go a long way okay any other thoughts I I think that I think that to add on to that um you know the states also have to encourage uh people in in those states that the future is being taken seriously as far as the legislature goes this the governor goes the state goes like we've seen recently I I don't mean to keep getting back to to Maryland but you know theyve made a commitment to to pimo and the pness and a training facility I think you know New York has done some exciting things um Florida did an incredible job with their lobbying efforts of the legislature to help increase purses and pay for things like hea so it's kind of like this signal that states are sending to breeders and buyers and people that are interested in our sport that they're also interested in preserving our Sport and not just letting it go by the wayside I mean you see some of these states it's really disheartening um when you see uh a 73% drop in a state like California and I mean they're all negative but except for Kentucky but I think that there's some signals uh you know as Everett said of encouragement that certain states are throwing out there like Maryland or New York that they want horse racing to be part of their future and it's important to them as public officials and I think that that's huge okay all good points and and you know it seems like I see an awful lot of ads in the Publications from the various State programs but they seem to be advertising to the same people over and over again I've often wondered if some of those advertising dollars couldn't go to the general public to try to encourage people in these various States to become thorough bread owners and thorough bread breeders that don't really know a whole lot about our business uh because there there's only so many within our industry and people jumping from Pennsylvania to Mar Maryland to Indiana I don't think know of a whole lot of that goes on but uh um it would be great to see maybe some efforts uh I think somebody had mentioned that uh the best practices of some of these State programs and sharing that with other state programs to see if they could maybe collaborate and come up with a way to to you know get these numbers to increase by bringing in more breeders and more owners in their states so um so we're running a little short on time I want to jump to a couple more questions Tom anything going on in Washington legislatively that we should know about geared towards boosting thoroughbread racing and ownership anything that you'd like to share with us yeah just a couple things real quick I mean obviously everybody that's watching knows how uh efficient Washington DC is or not um but uh one of the things that when I was still in Congress I got to vote on which was in 2017 the tax cuts and jobs act um is starting to wind down um a new tax bill is due next year um we've been able to depreciate for several years up to 100% um and now it's down to I think 60 next year it's 40 and then 20 and then it goes away so obviously that's clearly something that we've been working on um in in in working with the legislators that own that that have racetracks in their District people like Andy Bar there in Lexington tonko up in up near Saratoga uh um Morgan McGarvey and Louisiana good thing about this these lobbying efforts is uh they're they're bipartisan um and so you know usually if we can get people on both sides uh to help us we'll be able to see some of those tax benefits that we've been able to enjoy it's hugely important at the sales to be able to write off the a lot of the cost when it comes to horse ownership um it just makes those sales a lot a lot better also real quick you know we saw the success of myracehorse decom with seiz the gray a lot of fractional ownership type um outfits like that uh unfortunately with the way that the SEC set up uh the way that they have to go and get approval for um a my racehorse is very cumbersome and time consuming so Andy Bar has a a bill out there that would make it a lot easier that once you get um something like my racehorse approved that every horse that you put forward after that doesn't have to go through the same approval process so uh that's called the race act it doesn't just it's not limited to just race horses but the impetus for the idea actually came from racehorses so um it's just a streamlining of of you know government um as as we as we see a lot of but that that will be a big help for fractional minority um shareholders in a horse like sees the gry which if you hung around with any of the people that own part of sees the gray you would have thought that they owned all of sees the gray so it does bring that excitement back into uh ownership even at a very small level and it was very exciting um for for for those people that participated so just a couple things there that hopefully will help uh our sport okay I'd like to just also just uh real quickly hit on on safety uh you know there been a lot of safety measures going on in the industry you know what are your thoughts on you know where we are today with health and safety of the horses and after care because when I started in this industry in 1981 there wasn't anything like after care like we have today and the safety of the I mean it's on everybody's radar so you know just so that newcomers especially in our industry for owners they know and understand where we are with you know some of the safety and Welfare of the horse and the jockey and the after care issues anybody want to chime in on those well I'll say I'll say a couple things about I'll say first of all thank you heisa but it's not it's heisa gets part only part of the part of the credit because there was a there was several initiatives that were underway that that predated heisa driven by you know unfortunate circumstances and and in various race and jurisdictions around the country we're learning a lot about the safety of the racehorse and the safety of the RAC tracks I I think we're on the upswing in terms of the success that the that the safety of the the racehorse and and the race tracks have brought to the sport I think it's an it's one of the most incredible stories that since I been doing it for you know 30 years so it's uh it's it's a there's a lot of momentum now driven in large part about uniformity and and um you know this just the sheer effort that have gone into the study of you know soundness the racehorse surfaces uh you know just you know you just go on and on I mean it's just a bright spot in our Sport and you know that momentum is going to continue if I have anything to do with it anyway very well put so you know just to kind of summarize before we get into the Q&A from the audience you know so we've talked about purses they're higher than they've been before of course the costs are also higher so there is some opportunity looks like to offset some of your expenses auction prices seem to be pretty healthy especially at the median price level um State breeding programs looks like there's some um some things that can be done there to improve their full crops you know medication reform that's leveling the plane field safety is on everyone's radar after care efforts have been wonderful for our equin athletes can have a long and and healthy second career so a lot of good things happening in the industry that hopefully those who are in the audience and people that they may know will will agree that now would be is a good time to be a third bed greeter and owner so um we've been going on for about an hour gentlemen I know it's going pretty quick um we're going to just jump off here for a second go through the questions in the Q&A but first we're going to hear from our Q&A sponsor West Point thbd and then we'll be right back with questions from the audience how do you become the gold standard in racing Partnerships one horse one partner one victory at a time congratulations to all our partners who have made West Point the gold standard for the last three [Music] decades okay so we're back so first question uh from the Q so this is a question asking about are the the trends here in the US for horse racing we just mentioned some of those trends that relates to safety medication reform you know purses and so on are are some of these Trends also seen in other countries worldwide or are a lot of the trends that we're seeing unique to us anybody want to take that one I don't know anything about the the you know the rest of the world has bigger sort of purse problems uh and fewer owners so I do think in a in a more centralized game so I do think that that from a health standpoint um you know our purses are part of the reasons that a lot of them ship over here and and Hong Kong and Japan are somewhat unique you can't just go over and race in Japan and Hong Kong is is really um sort of organized as a gambling event so um so you know from a health standpoint you know compared to you know Europe and South America our person are good but but maybe the others would know more okay was the related to per structure or safety just Trends Trends in our industry um are are other countries seeing similar Trends and and so I just threw in safety uh medication reform uh purses and so on well I think I I think everybody understands the per structure in Europe is not nearly as as good as it is uh in the US um Australia has actually had some success on all fronts similar to the similar to the US um I really not familiar much with South America um but I but I do think um safety is suddenly becoming more of a and it's and it's you know it's knowledge this is this is knowledge-based Improvement and knowledge goes is is going global so it makes sense and some of those initiatives happened started here some of them happen in Europe and elsewhere so safety is a worldwide phenomenon that everybody's keyed in on right now and I will say a lot of my counterparts in other countries you know they're they're also dealing with uh needing more owners and breeders in in their jurisdiction so uh it's not it's not unique to us so here's a question about total purse money and I believe our total purse money was well over a trillion dollars uh 1.4 trillion uh as of last year is the total purse money adequate to the support cost of ownership um and I believe I've seen some numbers to that effect and I believe the answer is no that it does and there actually more money spent in owning race horses than there is in purse money I don't know if anybody else has any thoughts on that I I hate to I hate to steal the floor here but I I honestly think Gary I think that just tells part of the story um and and let me explain it this way you know my I have a program that's that's not unique to me a lot of people have same s a program I'm trying to identify at The Yearling markets and and twoy olds to the lesser extent athletic well-bred Phillies that ultimately could come into my Racing Stable they get an introduction or excuse me they get an introduction to my broodmare band if they're they're successful in in the Racing Stable um so I I am spending on pedigree as much as anything at these at these auctions trying to identify an attractive broer Prospect so yes on a racing standpoint if I if if if I have a chance to buy a Philly and and break even on the you know the racing income as long as that Philly ends up with some black tipe then she's paid she's paid for my initiative in Spades and she's going to come home and she's going to live out a great life and she's going to be bed to the bred to the best day and so it's largely depending upon your program I know a lot of people that have created and and we all are all familiar with them these so-called stallion Partnerships where they're trying to identify yearling markets who the next $50 million stallion is well they that's a that's an economic decision that has nothing to do with the how many dollars come into the Racing Stable how many dollars essentially cost to race a horse against the PSE structure of those horses there's there the whole economic model of racing needs to be considered when you when you take into account you know what works and what doesn't work okay great Point yeah so um yeah racing Phillies can have its benefits whether it's uh you know the residual value they'll have as brood mares at some point and and Colts as you mentioned there are groups that purchase Colts just to have that shot at having a graded Stakes Winner and retire him as a stallion uh but you know most Colts end up there's not a whole lot of residual value in in in G and and people just need to understand that okay I'm going to jump to the next question there what are your thoughts on whether the game is leaving small owners who race at smaller tracks for example Emerald Downs behind and there won't be a place for us in the future of racing so what are your thoughts on the some of the smaller jurisdictions and what the future looks like for them I mean that's that's exactly my concern as well and I and I think that it gets back to something that we talked about before when you talk about these smaller Regional tracks um where the purses aren't anywhere near what they are in Kentucky um and whether or not it's worth it to take risks in those Regional markets and tracks um to breeding and and having a couple brood mares um and I think it gets back to those State bread funds and and whether or not there's some kind of a reward for putting yourself out there like that especially if you're breeding to race and I really believe and I don't have any quantifiable you know data to to back up uh the idea that I think that you need those racetracks uh to be able to have the claiming level races so that you know there are Churchill Downs with grade ones and Saratoga and that um I just don't know that a the sport can be sustained if you reduce the number of racetracks to say like the top 10 in the country and that's it and all the races are being raced there in a country that's as big as ours um you know I I do think that there there there probably needs to be some kind of coalescing in regions uh to compete with Kentucky and I think that that competition will be beneficial to everybody um so I'm not really answering the question with regard to what it is but I think that the states have to show the initiative that they one horse racing in their state and the state breed funds have to be structured in such a way that you're not just not you know bleeding money all the time um that you you will be rewarded wherever that horse might race um and so I think those are the things that states that want racing will have to address and they might have to do it together okay let me let me piggyback on that I think that that that very well ties into the sort of issue of of handle and the decline in handle is that you know people who ultimately you know far down the road become owners start out the game by start start out as betters or start out by going to the racetrack and by losing Regional racetracks you know we lose an access point to people becoming horse racing fans uh and so you know already you know the decline of Chicago for example or losing Northern California big population centers is very worrisome so um and again when you're committing to the game when you're buying racehorses to compete at a smaller track again you need some certainty so uh you know there's almost a there's not a disincentive to focus on handle uh handle is the biggest measure of fan base right people who who love horse racing are going to bet on horses right and um the fact that we are a subsidized sport we are subsidized by gaining money and that money can disappear to me that's a very worrisome thing and so you know ultimately everything ties back into what we can do to encourage people to uh wage r on horse racing and this is a great we have this great opportunity because of uh the pervasiveness of gambling in many ways we have a sport that fits the modern attention span right races are over in 72 seconds often right and and uh and they're contested uh um you know every day I'm I'm sitting here in this seminar and in the background I've got Finger Lakes thistled Downs parks and prescon right and so uh you know we need we need we need the flourishing uh we need flourishing betting product that can fund the sport and uh we can't always be um you know it shouldn't be that we have to spend our our time lobbying state governments for subsidies it should be that we're focusing on the horse player focusing on the fan and I'm worried that we're steering in that direction and that's fundamentally important for for not us it's fundamentally important for those people are going to come in as owners down the road readers down the road because there's got to be a starting point I was a horse player 20 years before I ever got into ownership breeding uh in everything I've been involved buying yearlings and two-y olds selling yearlings and two-y olds I mean ultimately it comes down to you know we talk about handle we we I think Marshall was trying to touch on takeout um before you know being being part of a family that own racetracks like what is what is the incentive for racetracks to keep their doors open and and and and Marshall's absolutely right I mean just you know being subsidized by other forms of gaming um but being able to have a racetrack in Northern California or Boston or Chicago which you know we don't anymore it's it's just it's and speaking of of Boston but you know there are there are exciting things to think about though when when you talk about online gambling sports betting and the like and that gets us into a whole another area of whether or not we can have fixed odds part of like FanDuel so younger kids that Marshall's talking about to introduce them to gambling on horses can put the Kentucky Derby or the Travers or the Whitney into their parlay with the Pittsburgh Pirates or or who you know Oklahoma City Thunder you know you know can I put can I put this winner and it's like well you can't put that into your parlay because it's paramutual that's a whole another webinar uh but I think that that's kind of another introd introductory point for a a new Gambler to come into our sport which could help the regional racetracks too as long as they're getting a piece of that action okay let can I take that small Market the small Market Big Market um concept I hope we don't lose the Emeral Downs in the Remington parts of this country but there's it's interesting to note and I come from the MBA I have an NBA a lot of knowledge of the economics of the MBA um and I there's there's a fundamental principle that is sacred in the NBA and I think it's it's it's actually similar in the NFL Tom you would know but there is the fundamental principle that's called parody for our product of our product between the small markets and the big markets that's something we don't have in in racing we fight like cats and dogs on a local market basis we deed ourselves up publicly over the policies and and and uh you know future of our sport that's something we don't you don't see in the NBA nor nor do you see it in the NFL I think we should I think we should take that as some a principle that we we should look to to make part of us um the we're we're not helping ourselves any and I'll just leave it at that and I'm not really pointing any fingers I'm just thinking to to elevate this sport there's a model there's a couple of models that I'm very familiar with that are fundamental to their Sports and I think it would help our sport too I mean I I love that idea and I I think one way that it at least it used to work is that there would the Breeders Cup would have Regional events like the Budweisers Breeders Cup would sponsor races long acres and now as a smalltime breeder I don't know about you Tom but as a smalltime breeder I'm just not sure it makes sense for me to to to you know pay $600 to nominate my folds you know it does they don't do anything for a lot of the tracks that I race at a lot of the smaller tracks uh you know it's all for you know all for these very very high-end horses and so um you know what about bringing back a program like that I think I think there are ways that it can be done you know that you know that involve some big Market small Market Market sharing and maybe the Breeders kep is the way to do it okay uh we're just about out of time in fact we are out of time I just want to throw one last question out do you have a chart showing how the cost of breeding has increased over the years and unfortunately we we really don't have data that tracks the cost of breeding or a lot of the stats like we have in racing uh I've always heard that two and a half times the stud fee if you can get that for a yearl you know you'll make a little money I don't know if that still holds true uh but there really isn't a lot of data and stats on the cost of breeding other than stud fees and boarding rates and and veterinary care but uh uh maybe that's something we can talk to Toba about okay so that wraps up our Q&A uh if any of our audience has any follow-up questions U please contact me you have my email address and I'm glad to forge your question to the appropriate speaker from today uh I'd really like to thank our panelists for your time for your insights to this important topic uh thank you Tom thank you Everett thank you Marshall for for being here today we really do appreciate uh the time you spent with us thanks guys thanks I'd also like to thank our audience for being here and to all owners for investing in our sport without owners we simply don't have an industry so we'll be back in August with another online webinar until then we wish you well and have a safe and enjoyable summer uh and we hope you visit the Winter Circle and you visit it often thanks everyone