By Glory Ann Kurtz
Feb. 27, 2008

This breeding season promises to be one of the most challenging in recent years. I have talked to many of those in the horse industry, asking what the breeding season is going to be like, and the consensus of opinion is that the really popular stallions will have no problem and will probably breed more mares than ever. But the average stud may not get as many mares as usual.

As breeders, we need to take a close look at the stallions that are out there and make good financial decisions when breeding your mares. In other words, what you spend on breeding your mare should give you a return on your investment down the road.

I believe that the major reason that individuals breed their mares and make decisions about breeding their mares is because they expect to sell them for a profit. (At least that’s what they tell the Internal Revenue Service). I also don’t believe in reinventing the wheel.

The Thoroughbred industry has a way of determining if it is feasible to breed to a stallion – it’s called “ratio of stud fee to sale average of offspring.” Since it’s an important barometer for them, it should also be an important barometer for us – they’ve been at it for longer than we have. So I took all the horses that were marked “sold” by Western Bloodstock during the 2007 NCHA Futurity Sales. I then ranked them by sire and determined the average price of the offspring that sold, as well as the median. (Median is the price of the horse that is halfway between the highest- and lowest-selling horses. This method sharply reduces the chances of the sale company or stallion owner being able to manipulate the charts by auctioning off several very high-dollar horses. This is also how the Thoroughbred industry determines value.

While the chart located at the end of this article will not include some of the new, popular stallions that do not have offspring on the ground, it does include most of the major stallions which had offspring sell during the 2007 NCHA Futurity sales, which are the major sales in the cutting horse industry. Listed are sires of three or more offspring selling for a total of $50,000 or more and they are ranked by the average and median price of their foals divided into the stud fee. This gave a percentage, or ratio, of the stud fee to the median and the average.

The chart published at the end of this article is ranked by the median (where the lower the ratio or percentage of the stud fee to the median, the better the deal you are getting). However, also listed is the average and the percentage of stud fee to the average.

You can print the chart  and dissect it, making your own observations; however, following are the ones I found.

OBSERVATIONS OF THE CHART: (Chart is located at end of article)

1) The average is almost always higher than the median, usually due to some high-selling horses. However, if you see a stallion that has over a $5,000 difference in the median and the average, that means that stallion had one or more really high-dollar horses sell, and since we knock out the very top and very bottom of the horses selling, they don’t rank as well in the median as they do in the average.

An example of this would be Zack T Wood, a stallion owned by Dick Gaines that ranked 23rd in the percentage of stud fee to median (With a $9,200 median and $5,000 stud fee, his stud fee was 54.35 percent of what his offspring sold for). However, in the percentage of stud fee to the average, he would have ranked first because the average of his nine offspring that sold was $67,600. That divided into his $5,000 stud fee gave a percentage of 7.40 percent.

I’m not saying that selling high-dollar horses is bad – it’s just that those unusually high figures are easy to manipulate, either by the seller or the sale company. Other than checking out the buyer’s or seller’s private checking account, the Thoroughbred industry has found that using the median is the best way to not skew the results.

In this case, Zack T Wood was the sire of Curlys Cowgirl, the all-time selling yearling filly, out of Curly Gray Hair by Grays Starlight, bringing $500,000. Consigned by Dick Gaines, she may have been worth that since she is the full sister to Wood I Never ($268,819) and Wood Ya Wanna ($249,281), and sold to Stan Thomas in the Preferred Breeders Sale Session 1. Nine of  Zack T Wood’s 10 consignments sold from that high of $500,000, all the way down to $2,200 for a DNA-registered gelding. With nine selling, the fifth horse selling brought $9,200, which was the median.  (The average of $67,600 was determined by adding all nine horses together and dividing the total by nine.)

3) Some of the older, most popular stallions that have been around for awhile had a lot of offspring that won a lot of money, so their stud fee had risen. They didn’t rank well because of the high stud fee. But it was interesting to note that only four stallions commanded a five-figure stud fee, led by High Brow Cat with $22,500. The lesson learned here is that if you choose to breed to one of the proven, high-dollar stallions, you better have a mare to match. She must have a lot of black type and be a high-dollar, proven producer or a high-dollar money earner. That way, the stud fee could be well worth the gamble.

4) It’s interesting to note that the stallion on the top of the list is a young, emerging stallion WR This Cats Smart, whose first colt crop of 26 won’t show until this year. The gamblers in this industry like to breed to young, unproven stallions, while their stud fees are low. That way, by the time, the offspring are ready to sell, the stud fee will have gone up, theoretically making the colts worth more. According to the AQHA, he has a total of 160 foals registered.

If you were to take his average (8.71%) and his median (9.72%), he is the best bargain across the board, with his stud fee only being $3,500 plus a $600 chute fee. Owned by the Wagonhound L&C, Douglas, Wyo., the the 8-year-old son of High Brow Cat stands at Valley Oak Ranch in Oakdale, Calif., and has lifetime earnings of $236,514. He is out of The Smart Look by Smart Little Lena. She is the only mare to produce an NCHA Open Futurity, Open Super Stakes and Open Derby Champion, and her offspring have won over $1 million.

Second in the median (15.38%) is San Jo Lena, who also ranks well in the average (10.65%). The 1982 son of Peppy San out of Jo O’Lena by Doc O’Lena, has 375 total foals and stands at the Oak Valley Ranch in Athens, Texas, for a $1,500 stud fee and $500 chute fee. With lifetime earnings of $131,917, his offspring have earned over $3.3 million. He has some age on him but he’s definitely a bargain and a good investment.

Third is Meradas Money Talks, a 1993 son of Freckles Merada out of Money Talks Rio, was purchased during the NCHA Futurity sales by David and Phillip Solum from Bishben Quarter Horses, who held a complete dispersal during the Futurity. He will be standing the horse at Crawford Stallion Station in Blanchard, Okla., for an introductory fee of $1,500, which includes the chute fee. He is a million-dollar sire with his offspring’s average earnings being close to $27,000. With a ratio of 7.62% on median to stud fee and 15.79 on the average, he’s definitely a good buy.

SR Instant Choice, a 1989 son of Doc’s Hickory out of Stylish Lynx by Doc’s Lynx, has sired offspring earning over $4 million. With a $3,000 stud fee plus chute fee, he is standing at Joe Landers, Inc., in Weatherford, Texas. The ratio of median and average to his stud fee is less than 20 percent, also making him a good buy.

Hickorys Indian Pep is another fairly young stallion, with his first crop of foals (24) being born in 2002 and showing in 2005. The son of Doc’s Hickory out of La Peppy Petite by Peppy San Badger, with $140,583 in lifetime earnings, sold last year to Danny Miller and Benny Martinez, and is standing at Oswood Stallion Station, Weatherford, Texas, for a $2,000 fee and $650 chute fee. His offspring have earned over $386,366. His ratio to stud fee is 10.65% in the average and 15.38 in the median.

Check this chart out before you decide which stallion to take your mare to. And if the stallion you like isn’t on this list, check out the stallion’s offspring average lifetime earnings and divide that into the stud fee. The return on your investment is critical in today’s market.
 
(If for some reason, the chart will not show up in your mail, just e-mail me at glory@glorykurtz.com and I will send you a copy of it.)