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Thoroughbred breeding down 3rd year in a row

Shrinking worldwide demand for horses and oversupply in the auction market have driven down Thoroughbred breeding nationally for the third consecutive year, and in Kentucky for the first time since 2002.

In North America, more than 4,000 fewer mares were bred this year than last, a 7.7 percent drop, reported The Jockey Club, the industry's record-keeper, on Thursday.

The number of mares bred in Kentucky declined this year by 1.9 percent (a drop of 407 mares from last year), small compared with the state's breeding competitor, Florida, which lost 16.6 percent, or 1,060 mares.

"I bet all over (breeders) wished they owned fewer mares right now," said Richard Hancock, executive vice president of the Florida Thoroughbred Breeders and Owners Association. "I think this year and next have been the biggest hits we've taken."

The 2008 statistics "indicate a further reduction of Thoroughbred breeding activity across North America," said Matt Iuliano, The Jockey Club's vice president of registration services.

This is only the second drop for Kentucky since 1993, when the numbers of mares bred was thousands fewer: 14,162 in 1993 vs. 21,317 in 2008. In 2002, some breeders moved mares out of state after a wave of thousands of foal deaths and abortions.

Dan Metzger, president of the national Thoroughbred Owners and Breeders Association, said Thursday that many breeders feel the decline is not necessarily a bad thing.

He said the industry will be studying the drop in the coming months and analyzing the factors behind it, including the global economy.

"Sometimes a contraction may not be all that bad when you're looking at the bottom end of the market," Metzger said. "A lot of those horses are not going to have any chance to recoup their production costs. A lot of breeders say, 'We're over-breeding. We don't have enough buyers.'"

Recent dismal Thoroughbred sales at Keeneland and other auctions illustrate the problem many breeders face. The overall gross at the Keeneland September sale was down 14.8 percent from a year ago.

"Prices at public auction are not meeting production costs and this decrease in the report of mares bred also may reflect that some of these lesser mares are being taken out of production," Metzger said.

Kentucky has been insulated somewhat from the national decline because of the state's dominance in the market. Many of the stallions that stand here are in the top tier, with five-figure stud fees and dozens, if not hundreds, of mares to breed to.

Of the stallions that bred the most mares in 2008, only one in the top 10 does not stand in Kentucky. Of the 113 stallions that bred 100 mares or more, only 16 stand outside the state.

"Stallions with a book size of less than 25 accounted for 78 percent of the decline in the number of stallions and 30 percent of the drop in mares bred," Iuliano said.

While the slumping world economy has breeders scrambling and stud farms, such as the renowned Claiborne Farm in Paris, dropping stud fees, what really worries the breeders here are states like Pennsylvania that bucked the trend.

Kentucky has been hoping to fight off states that covet its market share with a taxpayer-funded breeders' incentive fund that over the last two years has poured more than $28 millioninto keeping mares here.

But Pennsylvania got expanded gambling two years ago and their breeding statistics reflect that. The number of mares bred there increased 31.5 percent (296 mares) and the state has more stallions, too.

Mark McDermott, executive secretary of the Pennsylvania Horse Breeders, said they are "ecstatic" over the numbers.

"We have had a very good state breeding fund program for 25-30 years," McDermott said Thursday. "Then two years ago when slot machines came to the tracks, that money jumped from $8 million to $20 million. So the prospects of breeding horses in Pennsylvania took a really good turn."

New, better stallions came to the state to be eligible for the fund, and mares that would have gone out of state to breed stayed home, he said. Pennsylvania cracked the top 10 breeding states in 2007 and it has stayed there.

While not in the top 10 states for mares bred or numbers of stallions, Indiana had a bigger percentage jump in both statistics than even Pennsylvania. Indiana also recently got expanded gambling, and in 2008 the mares bred there increased 41.8 percent, up 195 mares. Those numbers illustrate what can be done to foster the equine industry, said Metzger of the owners and breeders group.

"Until the industry addresses the challenging and harsh economic realities facing racehorse owners, ... it will be increasingly difficult to attract a sufficient number of new owners to meet the supply of Thoroughbreds produced," Metzger warned.