NEWS
Economy is the big story
Posted: Saturday, December 22, 2001
Effects of MRLS on the breeding industry a major news story, as is the arrival of VLTs in New York
Biggest story of 2001 in the Thoroughbred industry is mare reproductive loss syndrome (MRLS).
The loss of foals due to MRLS will be felt for years. Many commercial breeders in Central Kentucky have already seen their present income-and will see their future income as well-reduced because their mares lost their foals this year or were not able to get in foal. Stallion owners and owners of stallion shares have seen their income decline or lost completely due to seasons sold on a live-foal basis and the mare did not conceive or aborted her foal.
According to a study by Richard Thalheimer and Bob Lawrence, the economic impact of MRLS on the Thoroughbred industry will total $300-million. That is based on 516 lost foals of 2001 and about 3,000 lost foals of '02. Not included in the calculations is the future loss of foals due to fillies that were never produced as a result of MRLS. For a commercial breeder with a top mare, losing a well-bred filly from the 2002 foal crop can equate to an economic lack of opportunity for the next decade.
First Newsmaker of the Year, in 1983, was John Gaines, who founded the Breeders' Cup, which held its first running the following year. Since then, Newsmakers of the Year have included such people as D. Wayne Lukas, Woody Stephens, and Frank Stronach, and such organizations as the National Thoroughbred Racing Association, but this is the first time the top newsmaker is a disease.
Well, it is not really a disease. No one really knows what it is. While a variety of hypotheses have been put forth, the source or sources of its origin remain a mystery. There is a strong likelihood we will never know, short of it returning and the researchers and veterinary community being able to collect enough data and samples of soil and grass the next time around.
We hope it does not come to that.
Tough year
The year 2001 will be viewed as one that tested the resolve of every American. The terrorist attacks of September 11 have had a negative effect on every industry, and, when coupled with the deleterious effects of MRLS, the commercial Thoroughbred breeding industry was severely tested. Its resiliency was something to behold.
In 2000, Newsmaker of the Year was the bloodstock market, cited for its strength in prices for yearlings and juveniles in training, as well as the increase in stud fees and syndication prices for stallions. The industry had not seen such buoyancy since the mid-1980s.
That should have been viewed by many as a warning sign, because we all know what happened after prices peaked after the last run-up: Average prices for yearlings declined almost every year from 1985 through '92.
Do we expect that to happen this time around? No. The big difference between then and now is the underlying purse structure. In 1985, the average purse was $8,478. In 2000, the average purse was $18,053, with more than $1-billion in purses being distributed in North America.
The positive effects of full-card simulcasting on purses may be near their potential, though California in 2002 will join states that allow account wagering. That should help keep purses on an upward path.
The most positive impact on purses in the coming decade will likely come from video lottery terminals, which already have been a tremendous source of revenue.
VLTs have single-handedly supported racing in Iowa and have led to a windfall for horsemen in Delaware, West Virginia, and New Mexico. Other states, including Kentucky, are considering them.
In 2002, VLTs will yield the mother lode. New York State enacted legislation allowing tracks to begin operating VLTs. The resultant contributions to purses will help make the major tracks in New York leaders once again in daily purse distribution. Estimates suggest VLTs will lead to an increased daily purse distribution at Belmont Park from $464,337 at this year's spring meeting to about $700,000 per day. That would make it the highest in the country, exceeding the Keeneland Race Course spring meeting ($647,200).
If the New York Racing Association's Aqueduct begins operating 2,500 VLTs or more, as is likely, the prediction from these quarters is that $700,000 per day will be low. We may see an average of $1-million per day at Saratoga Race Course in several more years.
That would give the breeding industry a nice economic foundation.
