HORSE RACING : Short Fields Are Sign of Lean Times

Laurel Race Course put on a program a couple of Tuesdays ago that nobody could enjoy. Most of the races consisted of six- and seven-horse fields that produced small payoffs and little excitement. Only four runners went to the post for the supposed feature event.

Fans in Maryland frequently have complained this year about small fields, and the tracks’ management was so concerned about the problem that it canceled plans to race six days a week at Pimlico in the spring. But even with a five-day-a-week schedule, the racing secretary’s office frequently has struggled to muster a quorum of horses.

“We used to have 2,500 horses on the grounds of our tracks,” said Laurel Vice President Tim Capps. “But during the last year we’ve had 200 to 300 horses less than that -- for no discernible reason.”

Despite its problems, Maryland is in much better shape than many other racing areas. On the same Tuesday Laurel put on its skimpy program, Monmouth Park didn’t have more than 10 horses in any race. Philadelphia Park ran an eight-race card; all of the fields were small, and in almost every race one or two horses wound up hopelessly distanced. The racing secretary evidently had dragooned horses with no chance so that the track could have some eight-horse fields.

Such conditions are not limited to the crowded Mid-Atlantic region. Even Arlington Park and Santa Anita have suffered from small fields. This is a national problem and, to many fans, an apparent mystery:

Where have all the horses gone?

Small fields inevitably generate a great deal of finger-pointing and excuse-making. Fans blame the track management, and especially the racing secretary, for the failure to put on good cards.

Management may blame trainers for a failure to enter their horses in sufficient numbers. Trainers cite injuries, viruses and bad weather that disrupt their horses’ training.

But such explanations are incidental to the fundamental reason for small fields: The United States is producing fewer and fewer racehorses.

In 1986, more than 51,000 thoroughbreds were foaled in this country -- a record total. Last year, the number was down to 44,000. This year, the total was about 42,000. Experts predict that the size of the annual foal crop may drop as low as 32,000 within the next few years, a figure that would suggest some tracks won’t be able to put on racing programs at all.

The reasons for the decline in production are tied to the complex economics of the horse business. Anyone who wants to understand why he is seeing too many six-horse fields at his local track might start by looking back to that peak year of 1986.

The great boom in the thoroughbred breeding business had crested the year before; horse prices had reached an all-time high, and a 1-year-old colt had been sold for the incomprehensible sum of $13.1 million. Experienced breeders and neophytes alike were scrambling to cash in on the boom, dreaming of selling a seven-figure yearling to an Arab sheik. So many people were eager to breed horses that the number of thoroughbreds born in 1986 was double the size of a typical foal crop in the 1970s.

As some sanity returned to the market and yearling prices began to dip, breeders found themselves caught in a trap from which there would be no escape. They had paid sky-high prices for mares and stud fees. Now, as prices dipped, they couldn’t sell foals for enough to recover the cost of their investment. Many breeders went broke as a result. The headline-making bankruptcy of Calumet Farm is a direct result of the excesses of the boom years. All the bad news about the sport’s economics discouraged newcomers from getting involved.

People in the horse business were so preoccupied by the gyrations of the market in 1986 that they didn’t seem too concerned by the major economic event of that year: passage of the Tax Reform Act. In fact, the majority of horse owners were people in upper-income brackets who cheered the reduction of most tax rates to 28 percent. But the implications of this legislation would soon become clear.

“Horse racing fares best when tax rates are high,” said Tom Aronson of the Racing Resources Group. “The dollars you lose in business cost you more when the tax rate is low because Uncle Sam is not picking up as big a share.” Owners were far more inclined to risk their money on horses when they could write off their losses and let the government absorb 50 or 70 percent of the tab. But with only a 28 percent tax saving, horse buyers were suddenly playing with real money rather than the government’s.

Buying a racehorse has become such a bad investment since 1986 that one can scarcely employ the word investment at all. Economist Robert G. Lawrence published a lengthy analysis of purse money in America in the Thoroughbred Times, and it was a disheartening set of statistics. While purses have risen dramatically over the last decade, the growth of the horse population means that the average horse doesn’t have an improved chance of turning a profit.

If the annual cost of keeping a horse in training is $20,000, only one horse in 10 manages to pay for his upkeep (let alone the original cost of purchase). The odds may not have been much better in the boom years of the 1980s, but in those years an owner had the chance of hitting a jackpot because good horses could command astronomical prices when they retired to stud -- as Conquistador Cielo did when he was syndicated for $40 million. But the value of a top stallion prospect today is not even half of what it would have been in the 1980s.

For a prospective owner, the downside risk is greater than it was five years ago because the tax system won’t cushion losses.

The upside potential is smaller than it used to be because of the decline of the breeding market. So owners aren’t buying as many horses and they aren’t willing to pay as much for the ones they do buy.

At the top of the market, the price of yearlings has plunged. The average price at the elite Keeneland sales recently was $319,578, down from $601,467 in 1985.

And at the bottom of the market, many people who own mares are deciding that the smartest thing to do is not to breed them at all.

“You can keep a mare relatively cheaply -- for about $4,000 a year,” said editor Bill Oppenheim, whose newsletter Racing Update monitors the economic pulse of the horse industry. “But when you raise a foal, it costs $15,000 from the time of foaling till you sell it in the September sale. And of course you’ve got to add the cost of the stud fee. We’ve looked at all the yearlings sold in the September sale and we’ve found that only one out of six makes money for the breeder.

“Those odds are not much better than sending the horse to the racetrack. People are getting out of the breeding business because they’re losing too much money.”