It’s an Industry in Search of a Rebirth

Even before Sept. 11 hit New York and the rest of the nation in 2001, horse racing was on its way to a soft year.

The sport had lost its newest potential star when Point Given was retired less than a week after winning the Travers. Betting was running well below levels of the previous three years. Garden State Park, once a proud venue for some of the best horses, was shuttered. And in Kentucky, the heartland of the breeding industry, farm managers were finding that tomorrow was seldom just another day.

This was the year of what came to be known as mare reproductive loss syndrome (MRLS), an insidious biological attack that carried over into 2002 and threatened to capsize the breeding business. Almost 3,000 Kentucky mares either aborted their fetuses or delivered stillborn offspring in 2001, which resulted in a 30% loss of the potential foal crop.

Only recently, scientists at the University of Kentucky concluded that ingestion of Eastern tent caterpillars, whose population peaked in 2001, probably caused the mares to lose their foals. The caterpillars were carrying cyanide after eating the leaves of black cherry trees, which abound in the area. Cyanide occurs naturally in damaged leaves of the black cherry.

The damage to commercial breeders, who rely on selling yearlings at the highest-priced auctions in the country, was devastating. Fifteen farms took advantage of low-interest federal loans to stem their reverses.

Keeneland, which has been conducting its July Selected Yearling Sale since 1944, canceled the auction this year. Eight Breeders’ Cup winners have been sold at this sale, among them Classic winners Alysheba, Sunday Silence and A.P. Indy, who was bought for $2.9 million in 1992.

Reiley McDonald, co-owner of Eaton Sales, a leading consignor at Keeneland, agreed with the decision to call off the July sale.

“The number of mature, well-developed yearlings that have historically been suited to this sale was down 70%-80%,” McDonald said.

Some of the horses that might have been sold in July were offered at Keeneland’s marathon 12-day sale in September, which on paper qualified as a needed comeback for the industry. Almost 3,000 yearlings were sold, for an average of $92,000 a horse, a record for the sale. But even though 27 horses were sold for $1 million or more, two trade publications were not doing back flips over the results.

“The upturns weren’t enough to improve the bottom line for some commercial breeders, who paid record-high stud fees to produce this year’s yearlings,” the Blood-Horse magazine said. “Based on [our] calculations, only 23% of the horses offered were profitable, a slight improvement from 20% in 2002.”

The Thoroughbred Times, another magazine, noted that after a slam-bang start to the sale, when the catalog of horses was the strongest, buying fell off dramatically.

“The inevitably lower prices of Week 2 brought home the realities of commercial breeding,” the publication said.

A good sign for Keeneland in the sales pavilion was the presence of two diverse buyers, Sheik Mohammed of Dubai and Bob and Beverly Lewis of Newport Beach. The sheik and his brothers, who race internationally under the stable names Godolphin and Darley Stud, have been Keeneland regulars, and this time spent more than $33 million there, accounting for 12% of the total receipts. The Lewises, who won the Kentucky Derby with Silver Charm in 1997 and Charismatic in 1999 -- horses that cost less than $300,000 combined -- had told friends before the sale that they might back off on their equine investments, but they were the fourth-leading buyer, purchasing 18 yearlings for $8.59 million.

“I thought this was a wonderful sale,” said Nick Nicholson, president of Keeneland. “We had quality as well as quantity. It was well-received, and there was a lot of excitement.”

Nicholson said that Keeneland would consult with consigners in December and decide about resuming the July sale in 2004.

The horse population -- the pool of foals that grow up to fill races at all of the U.S. tracks -- declined 19% from the 1980s to the 1990s, according to statistics supplied by the Jockey Club, and in the last 15 years, the number of stallions in North America dropped more than 50%.

What has happened is that current stallions are being asked to do more work in the breeding shed. When Secreto was bred to 100 mares in 1986, he was one of a kind. Last year, 93 stallions were bred to 100 mares or more, and Grand Slam and Giant’s Causeway were bred to more than 200. Thunder Gulch, the 1995 Kentucky Derby winner, was bred to a record 216 mares in 2001. The 20-year-old Storm Cat, whose stud fee is a record $500,000, was bred to 123 mares last year.

For racetrack operators, hungry for horses to fill their races, there still aren’t enough breeding machines like Grand Slam, Giant’s Causeway and Thunder Gulch around.

In 1960, the average horse ran in 11 races a year. Last year, the number was down to fewer than seven. The average field in 1960 was nine horses a race. Last year, that number had shrunk to eight. There might be large fields in the Kentucky Derby and Breeders’ Cup races to stimulate betting, but in between there are far too many races -- including Grade I stakes with lucrative purses -- that draw only five or six horses.

California, with year-round racing, also struggles to fill fields. West Coast tracks are reluctant to give up race dates, even though many days only a few thousand people attend.

At the current Oak Tree meet at Santa Anita, where the 20th Breeders’ Cup will be run Saturday, attendance has been routinely under 4,000 on many weekdays. One day, across the street at the Los Angeles County Arboretum, Arnold Schwarzenegger, campaigning for governor, drew an estimated crowd of 5,000.

“Too bad he couldn’t have crossed the street,” said one racetracker. “He could have doubled the crowd at the track.”

Sherwood Chillingworth, executive vice president of the Oak Tree Racing Assn., which leases Santa Anita and will be host for Saturday’s Breeders’ Cup, said that attendance was off 8% early in the meet, even though the marketing budget was increased by $500,000. Chillingworth has revised his estimated Breeders’ Cup crowd from 60,000 to 55,000.

In California, there were 366 registered stallions in 2002, compared to 427 in 2000. John Van de Kamp, in a recent report to the membership of the Thoroughbred Owners of California, said that the Del Mar yearling sale showed a 20% dip in average price, median price and gross sales.

A survey of TOC membership in 2001 indicated that owner costs were the biggest concern, followed closely by short fields. According to Van de Kamp, Del Mar trainers, frustrated by the rocketing costs of workers’ compensation for their employees, considered a boycott of the entry box at the summer meet, which was an industry exception with substantial business gains. Van de Kamp said that owners received a $100 credit for each horse they started, as Del Mar tried to cushion their financial problems.

The National Thoroughbred Racing Assn., which has had budget shortfalls of its own since its launch in 1998, is still hopeful. The NTRA points to a September ESPN sports poll that showed that 36% of adults are fans of horse racing, a slight increase over the previous survey. This being the year of “Seabiscuit,” that popular movie alone might have accounted for the boost.

The last Breeders’ Cup race will be run at 2:35 p.m. Saturday, and then the embattled sport will once more be on its own.