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2015 Minnesota Breeders’ Fund: Great Year But Changes Needed to Fuel Growth | Midwest Paddock Report
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2015 Minnesota Breeders’ Fund: Great Year But Changes Needed to Fuel Growth

2015 Minnesota Breeders’ Fund: Great Year But Changes Needed to Fuel Growth

mare Tabby Lane and her Eastwood Dacat colt at Dove Hill Farm

Mare Tabby Lane and her Eastwood Dacat colt (Tabby Dacat) at Dove Hill Farm

When the cooperative marketing agreement between the Shakopee Mdewakanton Sioux Community and Canterbury Park was announced in June of 2012, the immediate beneficiary was the purse account for horsemen.  A longer term benefit, it was hoped, would be a rejuvenation of the Minnesota horse breeding industry.

The low tide mark of breeding in Minnesota was the 2012 foal crop when only 96 registered Thoroughbred foals were bred in the state.  Each of the last three crops, however, have been more than double that number, an indication that the agreement has had the desired effect on breeding as well as racing.

This year’s Breeders’ Fund payout reached 113 breeders who received 9% of eligible purses won by their foals, and 22 stallion owners who received 11% of eligible purses won by their foals. The Breeders’ Fund is split with 80% set aside for breeder awards and 20% for stallion owners.

$407,000 in award payments were made to breeders in the state for 2015.

“The combination of ease of eligibility and low cost participation, makes the Minnesota program very attractive to breeders. The quality and value of Minnesota breds also continues to rise as reflected by the $4.6 million in purses won by owners of Minnesota bred thoroughbreds this year at Canterbury alone”, stated Deputy Director Joe Scurto of the Minnesota Racing Commission.

However, the $407,000 in payments is down slightly from 2014 when $448,000 in award payments were made.  There is concern that several years of strong foal crops combined with a relatively flat breeders’ fund will lessen the impact to breeders.

Michelle, Dean, and Teresa Benson of Wood-Mere Farm (and Shelby!)

Michelle, Dean, and Teresa Benson of Wood-Mere Farm (and Shelby!)

“We need another source of revenue into the breeders’ fund,” says breeder Dean Benson, owner of Woodmere Farm.  “With more and more horses running for that money, the lower those awards are going to get. Live and simulcast handle is the only income into the Fund.  We should look at ADW as well as to the state for a way to increase the Fund.  Horse breeding is an agricultural business and brings a lot of revenue into Minnesota.”

Lisa Duoos, owner of Dove Hill Farm and Minnesota’s top earning stallion group, sees things getting even better in the years ahead, “The Breeders program here in Minnesota is no doubt getting stronger, and hopefully with new revenues from ADW legislation and other possible revenue streams, it will be strong for years to come.”

ADW, or Advanced Deposit Wagering, is currently illegal in Minnesota so the largest pool of likely bettors into the Canterbury Park races are prohibited from wagering if they cannot make it to Shakopee.  ADWs like TVG, TwinSpires and ExpressBet cannot take wagers on Canterbury from in state residents. Because the prohibition is legislative, the state legislature would have to take up the issue rather than the Racing Commission making a simple regulatory change.

“Those legislative wheels turn slowly,” noted Benson.

“I’m game for looking for more ways of funding to get money into the pot,” said Duoos. “It costs more money than the awards to breed a foal and get him to the races.  Our costs here are higher than in other locations with our higher land taxes, heat in the winter, etc. and if the foal numbers increase without adding to the fund, awards are going to get smaller.”

Lisa Duoos of Dove Hill Farm and one of the mares she will soon foal out, Tabby Lane

Lisa Duoos of Dove Hill Farm and one of the pregnant mares, Tabby Lane

In addition to a slight decline in the breeder’s fund, the foal crops appear to have leveled off since the big bounce from the 96 foals of 2012 to the 246 in 2013. The 2014 crop stayed relatively flat at 249 while this year’s crop looks to be checking in at 230.

Scott Rake, owner of Rake Farms, the owner/breeder of Minnesota bred champions Bourbon County and Sky and Sea and a Board Member of the Minnesota Thoroughbred Association, outlined the challenge breeders in the state face to build a profitable breeding business.

Scott and Angie Rake with jockey Dean Butler on Festival Day 2015

Scott and Angie Rake with jockey Dean Butler on Festival Day 2015

“We need to do more for mare owners if we are going to have a viable [Minnesota Thoroughbred Association] sale.  If you sell a yearling for $30,000 you’re making a very modest profit or breaking even.  If the horse makes $60,000 in purses [for its new owner]…you would likely get $5,000 as the mare owner.  You get that number up to $10 or $15,000 and it makes more sense.”

Dave Astar, a breeder and stallion owner in Minnesota (www.astarthor.com), sees some of the issues of expanding breeding in the state as being more systemic. He points out that the formula in determining stallion and breeder awards is complex, difficult to determine and even more difficult for potential breeders to understand which limits out of state investment in the industry.

The explanation of the fund on the Minnesota Racing Commission’s website doesn’t give breeders who may be thinking about foaling in Minnesota what they have to look forward to in terms of potential state bred awards.

“The product is antiquated and can’t compete,” Astar observes in his thoughtful Minnesota Thoroughbred Auction Summary Analysis. “With [MTA sale] medians under $5,000 breeding in Minnesota is simply unprofitable when fair value for labor is added to the tangible costs of what is required to bring a yearling to sale. When this price dynamic is coupled with a Minnesota state breeding program that does not allow breeders to project revenue, Minnesota breeder uncertainty remains extreme.”

“It’s difficult,” said one breeder, “to recruit folks from out of state to foal in Minnesota when you can’t coherently explain to them the answer to the key question: ‘How do I determine how much my breeder awards could be?’ I can’t lay out a simple formula for them.”

While there are still issues to be dealt with, the MRC along with state breeders are working together to continue to build upon the growth begun in 2013. Various alternative funding sources are being considered and 2016 could be the year when the legislature tackles the state’s ADW issue.

“The minimum goal should be to have a breeding program palatable enough that breeders and owners are willing to participate in numbers that are capable of delivering bettors a product they find attractive” said Rake. “If that’s the minimum standard than I think we are getting closer. Are we done looking to improve the program? Not by a long shot.”

 

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