The business of standing stallions

The first call I had yesterday was from a prominent breeder who asked me the question: “What do you think of the Arrowfield fees?”

Arrowfield Stud, as usual, is the first commercial stud to release its stallions’ service fees for the 2010 season – and I’d say never before has such an announcement been so eagerly anticipated by breeders and fellow farms.

These are Arrowfield’s 2010 fees (including GST):

Redoute’s Choice $176,000, down from $198,000.

Flying Spur $55,000, down from $82,500.

Manhattan Rain $49,500 (new for 2010).

Starcraft $38,500, up from $22,000.

Charge Forward $33,000, up from $27,500.

Snitzel $27,500, up from $22,000.

Danzero $16,500, down from $22,000.

All American $16,500 (new for 2010).

Not A Single Doubt $13,750, no change.

Hussonet will cover mares on a foal-share basis only. In 2009 his fee was $71,500.

My reaction is that there is little about the announcement that surprised me, as it’s about where I thought Arrowfield would position its stallions. That said, Manhattan Rain at $49,500 is $10,000 more than I thought he deserved to be, but he’s going to be very popular and Arrowfield is capitalising on that.

It’s worth pointing out that because Manhattan Rain is son of Encosta de Lago and a half-brother to Redoute’s Choice – both out of the Canny Lad mare Shantha’s Choice – mares by the two headline stallions in Australia won’t be visiting his court, although he’s a perfect match for a host of mares by Danehill and other Danehill-line stallions, including Encosta de Lago’s close relation Flying Spur.

Redoute’s Choice at $176,000 gives breeders of Easter quality horses the chance to make money if Redoute’s Choice can continue to average around $480,000, as he did at Easter this year off a $330,000 fee (although he had 15 yearlings that made between $150,000 and $375,000, and another nine that didn’t make reserves between $150,000 and $400,000). Importantly, it’s a fee level that will help those with Magic Millions quality yearlings to get a return. But, even at this new price, over-mating your mare to get a Redoute’s Choice foal is a decision fraught with economic danger.

As is the case with these high-price stallions, breeders should not send “average” mares to the stallion in the hope that the stallion’s profile will lift the value of the progeny. It doesn’t work and there is a marquee full of breeders from this year’s yearling sales who will attest to that. There is no doubt that Redoute’s Choice has covered too many inferior mares in the past, and those breeders have suffered for that extravagance.

I believe Arrowfield has taken the unusual option of declaring Hussonet a foal-share stallion rather than try to find a fee for him. In 2008, Hussonet’s fee dramatically rose from $38,500 to $137,500, but the results since, on the racetrack and in the sale ring, haven’t supported such an increase, and he’s been tumbling since.

Foal-sharing – pay no fee, pay all costs and split the yearling sale return – is a risky proposition at any time; and where do those people, who want to go to the stallion for his bloodlines sit under this arrangement, if they don’t plan to sell the progeny in the sale ring. I suspect Arrowfield will negotiate a fee under those circumstances.

As for my breeder mate, he’s not happy at all. He is the one who has been spending the big money in recent years on service fees, and he believes they are still too high. “I expected Starcraft to go up a little bit, but he’s risen 75 per cent on the strength of the success of one top 2YO (Blue Diamond winner Star Witness), some good yearling sale results and a lot of hype,” he said. (At the time of writing, Starcraft has sired only two winners from his first Australian crop).

It’s true, but Arrowfield believes it is on a winner with Starcraft, and I’m a big fan (I declared 12 months ago that he was the young sire to watch). Arrowfield’s expectations are that $38,500 will be cheap when the results of 2010 matings are being sold as yearlings in 2013. Time will tell in this game that mirrors the risks and gambles of the stock exchange.

The popularity of the underrated Danzero rises and falls like a Bondi swell. At $16,500, he’s tremendous value for anyone wanting to breed to race, and especially for a breeder wishing to kick off a young mare’s breeding career by using a proven stallion. Danzero had five yearlings (plus one passed in) average $166,000 at Easter.

At $55,000, Flying Spur, rising 18, a year younger than Danzero, is in a position to make him very commercially viable. His fillies, especially those from good families, are well sought after, but his colts can be a hard sell, although his colts and fillies have shared equally billing at the 2010 sales – Flying Spur has had 38 yearlings sell for $150,000 or more from a band of mares that would rank as one of the best he has covered in a spring in which his fee rose from $44,000 to $99,000.

John Messara, Arrowfield’s larger than life principal, is a businessman, and he controls a big share of the thoroughbred breeding business. Pricing his stallions is an important part of his acumen, and fortunately the aberration of Hussonet’s $100,000 fee rise in 2008 is one of his few misjudgements.

Picture: Hussonet parading at Arrowfield.