Best and Worst Stud Fees Values for 2007

Commercial Breeders will have to make important decisions soon about what stallions to use in the up and coming breeding season. The decisions they make will have an impact two years from now during the yearling sales of 2009 and later on at the races. Making such a long-term decision carries with it a huge amount of risk. I will touch upon the main risks to which breeders are exposed to each year and give my opinion on the stud fees that offer the best and the worst values for breeders for 2007.

There are four main risks that breeders face.

First, Breeders must contend with market risk. The thoroughbred industry has been going through a bull market in recent years and as a result stud fees have been steadily rising and outpacing the market, especially in the upper stud-fee ranges. Because of this, breeders are seeing their profits diminish. If the market was to fall, breeders will be stuck with significant losses, as the market would not provide them with enough income to cover their costs.

Second, breeders are exposed to mare specific risk. The risk that a mare will not get in-foal, will abort or produce a stillborn foal. In evaluating risks and costs of a breeding program breeders must take into account the fact that mares do not get in foal on certain years. Virtually every healthy mare will miss a year or more during her productive life. This risk increases dramatically as the mare gets older.

Third, breeders also have foal specific risk that they must contend with. Foals can be born with deformities, bad conformation or be too small in size to be commercial. Even the best matings produce less than ideal offspring. In an environment were only 23% of foals produced are actually profitable for breeders, anything less than an ideal foal can create a loss for breeders in the sale ring.

Finally, there is stallion specific risk, which means the risk that the stallion used will fall out of fashion. Many stallions that are ‘hot’ or commercial at the time that the breeder pays the stud fee can have a couple of off years and lose commercial appeal by the time the yearlings hit the sale ring.

Breeders may diversify and diminish the last three risks by increasing the number of mares they own and breeding to different stallions, this is why partnerships make sense in the breeding business. But breeders will always be exposed to market risk. Because of this, it is important for commercial breeders to carefully monitor the costs of their operation. The single largest cost that a breeder faces, by far, is the price of stud fees. Therefore, it is critical for breeders to demand value when selecting a stud for their mares.

The single best investment for commercial breeders in recent years has been to breed to first year stallions and selling the resulting foals in public auction. Breeders that breed to race, however, would be well advised not to use first year stallions; there is little value in them if you do not offer their first foals for sale because of their high initial stud fees. Rather, if a breeder feels strongly about using a recently retired race horse, it would be better for them to wait until the sire’s third or fourth season at stud. The gamble is better because breeders would have more information on the sire, for example by examining the weanlings or yearlings of that sire and they would be able to purchase the season at a discount since most sire’s fees are reduced during their third or fourth season at stud.

There are still very good values to be found in proven older stallions for both commercial breeders and those that want to breed to race. The following list provides my analysis of the best and worst stud fees of 2007. This list does not mean to criticize the quality of a given stallion but rather explore the value that the stud fee provides to breeders. I have divided the list in two, one for stallions whose stud fee is above $25,000 and one for those whose stud fee is below that amount.

Stallions with Stud Fees Above $25,000

Worst Values

Maria’s Mon ($60,000) Having produced stakes winners like Strong Contender, High Limit and the sensational Wait a While in 2006; the stud fee for Maria’s Mon has increased a whopping 140% from the previous year, the largest fee increase of any stallion. He has an average earning index of only 1.61, the lowest of any stallion standing for over $50,000. He produces only 5% stakes winners from foals, also one of the lowest percentages for stallions in his price range. Maria’s Mon represented very good value last year when he was standing for a $25,000 stud fee. This year’s increase has gone too far and offers absolutely no value to breeders whether breading to race or to sell.

Mr. Greeley ($75,000) One of the best and most valuable labels a stallion can receive is to be deemed a ‘sire of sires’ by the market. And so it has been with Mr. Greeley and the success of one of his sons, El Corredor. As El Corredor established himself as a very useful sire, Mr. Greeley’s foals began to exceed all expectations in the sale ring, with yearlings selling for as much as $5,700,000. Before all this happened Mr. Greeley had been struggling and he had seen his fee dropped to $35,000, and he was a great buy at that price. His current fee represents a 114% increase over 2006 but his fundamentals have not changed much. His Average Earning Index of 1.46 is pathetically low for a $75K sire. He also produces only 4.9% stakes winners from foals. He represents an extremely poor value for breeders that breed to race and commercial breeders may find the market disenchanted with Mr. Greeley if those high priced yearlings do not perform to expectation.

Best Values

Smart Strike ($75,000) what a terrific stallion this guy has been! 2.60 Average Earning Index, his CI is 2.07 so he continuously brings up his mares. He produces an astonishing 10% stakes winners from foals, half of which win graded stakes. I predict that this stallion’s stud fee will soon be in the over $100,000 range as buyers begin to figure out his true value. He is versatile enough so that his progeny win on dirt and turf. He is ideally suited for European buyers and his progeny will probably do very well on polytrack. His only down side is that his foals only sold for a median of $75,000 but these numbers should improve as foals by him out of better mares hit the track.

Successful Appeal ($40,000) what can you say about a sire who produced 9.4% stakes winners from foals and that has an Average Earning Index of 2.50 that were produced from very mediocre mares with a CI 1.35? Answer: That he is a fantastic buy at this level. We are certain that Successful Appeals numbers will improve as the products from better mares hit the track. Whether a breeder breeds to race or sell, he offers great value.

Cozzene ($35,000) there seems to be a bias against older stallions and Cozzene is definitely getting up on years. I personally do not believe that the age of a stallion is such a big issue as long as the stallion is still healthy. So breeders should take advantage of this very low stud fee. With a 2.42 AEI and 8.4% stakes winners from foals breeders cannot go wrong with this guy at this price.

Stallions with Stud Fees Below $25,000

Worst Values

Buddha ($10,000) has gotten to an awful start at stud with only seven winners from 120 foals. He has currently an average earning index of 0.32. Dramatic improvement may be needed for him to maintain any hopes of remaining in KY and even then, Breeders should not be jumping to send him mares at this price after the dismal performance of his two-year olds.

Doneraile Court ($10,000) with a 1.13 AEI he is considered a bad value even in Chile where he has done southern hemisphere duties.

Golden Missile ($10,000) this guy has been given plenty of opportunity as he boast a CI of 2.10 but has not done anything with those opportunies. He only has 2% stakes winners from foals and is another overpriced stallion at Adena that is not worth the asking price.

Best Values

Dehere ($20,000) with an AEI of 2.04 and 5.4% stakes winners, the return of Dehere to KY is good news for breeders. He is very well priced at this level and judging from Dehere’s accomplishment breeders should take advantage of this great value.

Five Star Day ($20,000) has 7.4% stakes winners from foals and consistently improves his mares. Even with a 33% fee increase this year Five Star Day remains a solid purchase at this level.

Mutakddim ($12,500) he has always been very solid and has gotten some high-class runners. It has taken breeders in the US some time to realize just how much quality this guy has. With 1.93 AEI and 5.7% stakes winners, he is worth the price.

Hold that Tiger ($10,000) great looking son of Storm Cat with a fantastic family, he is ¾ brother to Hennessy and ½ brother to Editor’s Note. Won the Grand Criterium G1 in France before placing third in the Breeders Cup Juvenile (after a horrible start). He has plenty of 2yos around who should come out running early. The stud fee for this guy will not stay this low if his first crop shows any ability whatsoever. It is not out of the question that he will be fighting for top honors among his freshman class next year with horses like Empire Maker and Mineshaft producing more late maturing foals. This horse could be the best deal at the price range. This is the year to breed to him and take a chance.

Exchange Rate ($10,000) has done wonders in Florida and remains at the same level as last year. With a 1.90 AEI he should improve by getting better mares than he has so far since his CI is only 1.37. One of the best values today especially for the regional breeders.

New Stallions for the 2007 Breeding Season

The new breeding season is almost upon us. Starting in early February, stud farms, that are now quiet and peaceful places, will begin to function with the efficiency of large factories. Stallions all over the US will go to ‘work’ and start covering mares that will produce one of the most expensive and beautiful of agricultural products—the racehorse. As the beginning of the season comes closer, no group of stallions invites more speculation and is awaited with more fervor then the freshman Stallions. Fresh off the racetrack, these stallions have nothing but promise ahead of them. Any of them could be the next Northern Dancer, Mr. Prospector or Danehill.

Unfortunately, the reality is that most of these new stallions will fail at stud. This year will bring them the best book of mares they will ever breed to and the highest fees they will earn. Even those that are successful will still charge a lower stud fee in the next year or two. However, breeders know that market demand will be very strong for the first yearlings out of these stallions. They know that there is no better return on investment available to them than the returns that are produced by the offspring of the first year stallion.

It is important to find value when selecting a freshman sire. Although this group consistently produces superior returns than the general market for breeders, overpaying for a stud fee can greatly diminish the upside of the investment.

There are 58 sires with stud fees above $3,000 that are entering stud in the US this year. Below are my predictions of the best and worst values in this group.

Best Values

Bernardini ($100,000 AP Indy-Cara Rafaela by Quiet American) Bernardini proved to be one of the best horses of his generation. He won 6 of 8 starts and earned just over $3 Million. His dam is the Grade 1 winning mare Cara Rafaela. He is also physically the best looking horse to retire to stud this year. After seeing horses like Giant’s Causeway, Fusaichi Pegasus, Mineshaft and Ghostzapper retire to stud with stud fees higher than $100,000, I believe that even at this prize he is still a fantastic buy. Darley has priced him very conservatively; no doubt they want to have a high demand for his services and pick and chose the best mares for his first book.


War Front ($12,500 Danzig-Starry Dreamer by Rubiano) great looking colt that is also impeccably bred. He hit the board in 10 of 13 starts with 8 triple digit Beyers including a high of 114. By the great sire of sires Danzig, he is very well priced and should be very well supported at Claiborne.


Bellamy Road ($12,500 Concerto-Hurry Home Hillary by Deputed Testimony) He is a fantastic individual, winner of 4 races in 7 starts. He was the favorite for the KY Derby off a track record performance in the Wood where he recorded a 120 Beyer. He had speed to spare and showed great ability at two, he was very badly managed as a 3 year old and injuries did not allow us to see his true potential. He is very well priced; mostly because he does not have a fashionable pedigree, but he will throw good looking foals and breeders who believe in him will get a good return.


Worst Values

Giacomo ($12,500 Holy Bull-Set them Free by Stop the Music) Adena sometimes asks a little too much money for some of their stallions. Giacomo is no exception. The KY Derby winner is still not a good buy at this price. He showed he was a useful graded stakes performer but was never able to prove that his Derby win was nothing short than a fluke. With only 3 wins from 16 starts, no wins at a distance of less than a mile and a sixteenth and being by Holy Bull, who is not exactly a sire of sires, we do not think Giacomo will be a good value to breeders.

Borrego ($20,000 El Prado-Sweet as Honey by Strike the Gold) Borrego ran his best as an older horse, most notably in back to back Grade 1 races, first in California and then an incredible romp in the Jockey Club Gold Cup in New York. He was a very good horse at 3 winning and placing in many of the elite 3yo stakes and managed two wins as a 2yo. So it is not out of the question that Borrego will make it as a sire. However, he was a distance horse better suited for longer distances as shown by the fact that he never won going less than a mile. What bothers me most about him is that he was not a very nice yearling; he was awkward and did not come into his own until later in life. Breeders should take that into consideration before ending up with a non-commercial yearling and 20k in the hole.